Wassim Zhani

BUS 401
Dr. David Robinson

Chapter 1, Exercise 2
Question: From your perspective as a cable or satellite service consumer, does Comcasts
strategy as described in Illustration Capsule 1.1 seem to be well matched to industry and
competitive conditions? Does the strategy seem to be keyed to maintaining a cost advantage,
offering differentiating features, serving the unique needs of a niche, or developing resource
strengths and competitive capabilities rivals cant imitate or trump? Do you think Comcasts
strategy has evolved in recent years? Why or why not? What is there about Comcasts
strategy that can lead to sustainable competitive advantage?
Answer: In my opinion, Comcasts strategy is well matched to industry and competitive
conditions. Comcasts strategy is awfully good. It will lead Comcast to achieve sustainable
competitive advantages.
Comcast is planning to increase its revenue by providing internet service and enhancing
sales force. The company will continue to provide high-speed internet or broadband service
for customers. This service helps the company generate revenues of nearly $5 billion every
year. Furthermore, Comcast was the biggest broadband service provider in the U.S. and it will
increase its sales force. It is planning to employ more sales to sell advertising to businesses.
Even though this plan will increase the cost of labor, the sales of advertising will have a great
improvement in the next few years. Comcast continues to use voice over internet protocol
technology to offer subscribers internet-based phone service at a low cost, and provides its
Comcast digital voice service for its customers in 2006. It is the resource strengths that give
the company competitive capabilities its rival cannot easily imitate.
Comcasts strategy has evolved quite well in recent years. The revenue of Comcast in
2010 was 40.86 billion, which is twice as much as in 2004. The companys strategy has
played an important role in the improvement of revenue.
Comcast is going to achieve competitive advantage by significantly improving its
customer service. Comcast will win the competitive advantage by doing a better job than
rivals on customer service. From the Illustration Capsule, we find that most customers are not
satisfied with the caliber of customer service offered by their local cable companies. A good
customer service will gain customers loyalty.

Chapter 2, Exercise 1
Question: Is the vision for Heinz articulated by Chairman and CEO William R. Johnson
sufficiently clear and well defined? Why or why not? Are the companys objectives well
stated and appropriate? What about the strategy that Johnson outlines for the company? If
you were a shareholder, would you be satisfied with what Johnson has told you about the
companys direction, performance targets, and strategy?
Answer: In my opinion, the vision for Heinz articulated by Chairman and CEO William R.
Johnson is sufficiently clear and well defined. From the letter, the company will focus on its
top 15 brands, and the foreign market is extremely important. The innovation of new product
will bring competitive advantage to the company.
 The companys objectives are well stated and prove appropriate. Heinzs profit in 2004
planned to be for full-year EPS in the range of $2.15-$2.25. Brand growth, innovation, more
competitive pricing and product differentiation would be the key for Heinzs performance in
the year of 2004. Innovation was a key growth factor in the year of 2004. The company will
continue its innovation, for instance, the summer launch of our convenient and flavorful EZ
Marlnader in the U.S. Heinz will continue to focus on the portfolio. They are planning to sell
some non-core underperforming assets, which will improve the companys operating cash
flow in future. Heinzs focus is on its top 15 brands which contribute about 60% of total sale.
They are going to spend more time and money to keep the growth of these brands. Heinz is
an international company because its sales are all over the world. The company will proceed
to build business in some rapidly growing countries.
Heinzs strategy is based on four imperatives, which are driving profitable growth,
removing the clutter, squeezing out costs, and measuring and recognizing performance. These
imperatives have the same purpose: to focus on greater human and financial resources
towards supporting the growth of our brands around the world.
As a shareholder, I will be satisfied with what Johnson has told me about the companys
direction, performance targets and strategy. The company needs to conduct some innovations
in order to have some advantages in the market. It is good to spend money for innovations.
The company should focus on its top 15 brands because they contribute most profit of the
company. Heinz needs to involve in some fast growing markets such as India and China.

Chapter 3 Exercise 1
Question: Draw a five-forces diagram for the fast food industry, and briefly discuss the nature
and strength of each of the five competitive forces in fast food. Do whatever internet research
is required to expand your understanding of competition in the fast food industry and do a
competent five-forces analysis.
Answer: The Five-force Model of competition includes: buyers, suppliers, potential new
entrants, firms in other industries offering substitute products, and rivalry among competing
sellers. As a fast food restaurant owner, I own an understanding of the advantages of my
restaurant. From the buyers point of view, almost everyone has eaten fast food, some of
whom even have it every day and their demand of fast food is rigid. Numerous people prefer
fast food for convenience and saving time. Eating fast food will help them save at least half
an hour, which is of great significance to office workers. Eating fast food is great for those
that drive for a living because of the drive through. As for the suppliers, menus are limited to
certain foods, making it easy for inventory, purchasing, and logistics. I have run this fast food
restaurant for many years. Now I have accumulated stable suppliers and we have kept a
cordial working cooperation. Fast food restaurant has a high capital requirement. The large
amount of dollar investment is required to enter the market successfully, which will limit the
pool of potential entrants. Brand is of great significance in fast food industry, which
represents the customers loyalty to the retailers. A multitude of customers have a deep
fondness of a certain brand of food, which imposes huge restraints on those newly built
restaurants. My restaurant has already established good images in this district. Compared to
other restaurants, fast food restaurant boasts its unique strengths, such as fast service, cheap
prices as well as good flavors. A consumer can get the food he or she needs within three
minutes, and it costs no more than six dollars. Convenient drive through makes great
contributions to the development of fast food. Drivers can get delicious food without getting
off the vehicles. It also improves the restaurants efficiency of preparing food. In fast food
industry, competition is exceedingly fierce, everyone get a good hand based on his service,
quality and price. Our restaurant is firmly convinced of quality first principle, striving to
bring delicious fast food with excellent service and reasonable prices. The customers
comments on our restaurants are constantly improving.

Chapter 4 Exercise 1
Question: Does the growing popularity of downloading music from the internet give rise to a
new music industry value chain that differs considerably from the traditional value chain?
Explain why or why not.
A. Yes. Recording company will produce less CD than before. They will put the singers
music on sales on the internet. Distributor and wholesaler will have difficulty in gaining
money by selling CD. Selling songs directly to online buyers will be a big part of
recording companys revenue.
Question: what costs are cut out of the traditional value chain or bypassed when online music
retailers sell songs directly to online buyers?
B. The cost of pressing of CD and packaging and average wholesale distributor markup to
cover distribution activities and profit margins can be reduced if online music retailers
sell songs directly to online buyers. The price of the song will be reduced by $3.15
Question: What costs would be cut out of the traditional value chain or bypassed in the event
that recording studios sell downloadable files of artists recordings directly to online buyers?
C. The cost of pressing of CD and packaging, average wholesale distributor markup to
cover distribution activities and profit margins, and average retail markup over wholesale
cost will be reduced if recording studios sell downloadable files of artists recordings
directly to online buyers.
Question: what happens to the traditional value chain if more and more music lovers use peer
to peer file sharing software to download music from the internet?
D. If more and more music lovers use pee-to-pee file-sharing software to download music
from the internet, not only the retailers but also the recording studios will be struck by
the reduction of incomes. The negative influences arising may result in the difficulties of
business operation for CD makers and Disc companies. Moreover, the incomes of many
singers may drop acutely, and there will be fewer and fewer high-quality songs.

Chapter 5 Exercise 4
Question: Which of the five generic competitive strategies do you think the following
companies are employing?
Answer: A The Saturn division of General Motors is using focused strategy based on
differentiation. B Abercrombie& Fitch is using overall low-cost provider strategy. C
Amazon.com is using a focused strategy based on low costs. D Home Depot is using a
focused strategy based on low costs. E Mary Kay Cosmetics is using a best-cost provider
strategy. F USA today is using a broad differentiation strategy.
Chapter 6 Exercise 3
Question: To what extent is the Goodyear vertically integrated? What segments of the
industry value chain has the company chosen to perform? Based on the companys discussion
of business unit performance, does it appear the company is becoming more vertically
integrated or choosing to narrow its range of internally performed activities?
Answer: Goodyear extends its competitive scope with forward integration. From Goodyears
annual report of 2010, I found that Goodyears specializes in the development,
manufacturing, distribution and sale of tires, as well as those of related products and services
worldwide. This company not only manufactures tires, but also distributes and sells tires. It is
towards end-users of final product. Forward integration enables the company to make lower
distribution cost available. Goodyear has its channel to distribute products. Whats more, it
directly sells tires to consumers, which lower the price of tires.
Goodyear involves in four segments of industry value chain, namely, operations,
outbound logistics, marketing & sales, and services.
After reading the annual report, it can be found that Goodyear is becoming more
vertically integrated in future and will continue to focus on its main business. It will
develops, manufactures, markets, distributes, and sales tires for most applications. It also
manufactures and markets rubber-related chemicals for various applications. Furthermore, it
operates nearly 1500 tires and auto service center outlets.

Chapter 7 Exercise 1
Question: is caterpillar pursuing a global strategy or a localized multicounty strategy?
Support your answer.
Answer: Caterpillar is pursuing a global strategy. Caterpillar is pursuing the same basic
competitive strategy. The strategic goals of Caterpillar are best team, superior results, and
global leader. Caterpillar sells same products under the same brand name worldwide. They
are focusing on building global brands. The companys plants are based on the maximum
locational advantage. These plants will be located in the place with the lowest cost. For
example, a large engine manufacturing facility has been built in China. It will reduce the cost
of products. A new distribution center in Dubai is part of Cat parts distribution network in
Europe, the Middle East and Africa. Caterpillar coordinates marketing and distribution
worldwide. The companys largest distribution center is located in Illinois, which is
responsible for each country. The technologies in each plant in the world are the same.

Chapter 10 Exercise 1
Question: Would it be fair to characterize the payment of contingent commissions by
property-casualty insurers as nothing more than thinly disguised kickbacks? Why or why not?
If you were the manager of a company that hired Marsh& McLennan to provide risk
management services, would you see that Marsh had a conflict of interest in steering your
companys insurance policies to insurers in which it has an ownership interest? What sort of
fines and penalties would you impose on the company for its misdeeds?
Answer: No, it is not fair. Employees who accept the payment of contingent commissions by
property-casualty insurers is unethical. That kind of action is kickbacks.
I will see that as a conflict of interest in steering my companys insurance policies to insurers.
I think the company should be charged at $2 billion fines. The unethical actions need to be
terminated. Unethical behavior damaged shareholders a lot. The stock price of MMC had
fallen by 48 percent because of unethical behavior.

Chapter 11 Exercise 1
Question: How does Home Depot go about building core competencies and competitive
capabilities? Would any of home depots competencies qualify as a distinctive competence?
Please use the chapters discussion of building core competencies and competitive
capabilities as a guide for preparing your answer.
Answer: There are three stages for building core competencies and competitive capabilities.
The first stage is to develop the ability of doing something. Home Depot selects people of
relevant skills or experience, and it will expand individual abilities as needed. At the Home
Depot, they help employees get even better by offering a variety of training courses,
leadership programs, mentoring programs, promotion opportunities and tuition
reimbursement. Home Depot offers a number of jobs for their employees. Retails,
distribution centers, call centers, and corporate & affiliates are hiring people now. As the
working experience has been built, the employees ability can be translated into a competence
or a capability. Home Depots capability or competence usually merges from establishing and
nurturing the collaborative relationships between individuals and groups.
If a companys performance is superior to its rivals, the competencies will become
distinctive. Home Depots customer service is distinctive competence. The companys
customer service is much better than its rivals. The customer service center of Home Depot
is composed by three parts as follows: installation sales, installation service, and internet
customer service group, which have the ability to provide excellent customer service on every
call. They are rather patient and helpful.

Chapter 12 Exercise 2
Question: Identify at least three companies that offer Six Sigma training and find at least 25
companies that are six sigma users. Prepare a report to your instructor detailing the
experience and benefits that a company has realized from employing six sigma methods in tis
operations.
Answer: The following companies offer Six Sigma training: The Six Sigma Group, Six
Sigma Training Company, and BMGI.
The list of companies that have successfully implemented Six Sigma: Air Canada,
ALCN, Amazon.com, AXA, Bank of America, Canada Post, Chevron, Caterpillar, Dell,
Delphi Corporation, DHL, General Electric, HSBC Group, Korea Telecom, Shinhan Bank,
LG Group, Merrill Lynch, Motorola, Network Rail, Nielsen Company, Patheon, Pepsico,
Rayrtheon, Samsung Group, SGL Group, Toshiba.
Caterpillar is the worlds largest manufacturer of construction and mining equipment,
diesel and natural gas engines and industrial gas turbines. Caterpillar implemented the Six
Sigma worldwide in January 2001. The first year benefits exceeded the cost to implement the
program. Six Sigma teams are helping grow the business, improve quality, and reduce the
cost. According to Jerry Palmer, a Caterpillar vice president, Caterpillar gained $200 million
in profitability in 2003, and $138 million of that was from Six Sigma methods. In all, 22,000
employees worldwide, about one third of them have involved with Six Sigma. The maximum
production capability improved by 67 percent, exceeding the goal, while the cost per unit
produced decreased by 25 percent by using Six Sigma. Six Sigma helped Caterpillar to do
things better, faster, and at lower cost.