Exercise 2
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Sarah DeGeronimo
Rothaermal Exercise 2
BUSI 690
Liberty University
November 6, 2016
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Discussion Question 6.1
According to Rothaermal (2015), there are two types of generic business
strategies. The first one is differentiation and the other one is cost-leadership. One of the
risks of employing a broad generic business strategy is that they can be utilized by any
type of organization and as such can be utilized by a competitor within a firm’s market.
Another risk would be that firms would either have to remain in the cost leadership
model or the differentiation model without trying to comingle the two strategies. This is
what is known as strategic trade-off.
Discussion Question 6.3
Ryanair is a cost leadership firm. As such their internal value chain would consist
of, inbound logistics, operations, outbound logistics, service schedule, and supporting
services.
Lufthansa is a differentiation strategy firm. Their value chain would include;
operations, marketing and sales, service, human resources, procurement and technology
development.
JetBlue is a firm that utilizes the value innovation strategy. Their value chain
would include; inbound logistics, operations, outbound logistics, marketing and sales and
service.
Discussion Question 7.1
The life cycle for a software firm would look like this:
1. Introduction – the innovation of the home computer brought plenty of
opportunity to software developers in many different avenues. This
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phase of the business cycle and strategy would have relied heavily on
research and development and sales and marketing. When a new
industry emerges, marking is crucial to connecting consumers with a
need for a new product they have not previously had any demand.
Barriers to market entry are low in this phase and have relatively few
competitors (Rothaermal, 2015).
2. Growth phase – this is the phase were demand grows rapidly. There is
also increased competition during this phase as new software firms
enter the market and offer different products and choices. Industry
standards begin to form; for the software industry those standards
would have been based on operating system. From here innovation
moves from product to process (Rothaermal, 2015). What this means
for the software industry is that existing graphics or logic or speed is
improved as a way to gain a hedge over competition in the market.
3. Shake-out – during this phase there is less growth in the industry and
competition amongst firms is head to head (Rothaermal, 2015).
During this phase only the strong firms in the market will continue on,
while weaker firms fold or become obsolete. For the software
industry, IBM suffered in the shake-out phase as they did not keep
pace with their competitors.
4. Maturation – during this phase there is limited demand in terms of new
products and the emphasis shifts to replacement or repeat purchases
(Rothaermal, 2015). For the software industry, the best example of
this is Windows based operating systems. In order to regenerate
demand, new versions of Widows needed to be created to entice
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demand from the market for a better product then what they currently
were utilizing.
5. Decline – this phase is noted by a contraction in the size of the market
(Rothaermal, 2015). There is no more product innovation, nor is there
any process innovation (Rothaermal, 2015). During this phase
managers have four strategic choices; exit, harvest, maintain or
consolidate (Rothaermal, 2015). DOS based operating systems have
experienced the decline and consolidate strategy.
Discussion Question 7.2
I consider Apple to be a highly innovative firm. Apple used both incremental
innovation and radical innovation over time. In the beginning when Steve Jobs set out to
build a personal computer for everyone to use he utilized incremental innovation. Each
new Apple Computer was improved upon from the previous version, all by building on
knowledge base that was developed and improved over time. The market for computers
already existed thank to the Commodore 64 and IBM’s offerings. Then when Apply
launched the Ipod; they utilized radical innovation. The Ipod was a completely new
device and there was nothing like it on the market. There was no other product offering
cloud based access to music and then video’s, like the Ipod would be able to offer. The
technology had not previously existed, nor had the market.
Discussion Question 7.4
Operation Christmas Child is a low technology innovation that has connected
many Christians to the needs and concerns of children in Third World countries. The
simplicity of the strategy that was used by Bob Pierce and Franklin Graham as the
foundation for launching Samaritan’s Purse in the 1970’s (History, n.d.). Bob and
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Franklin were able to connect the hearts of Christians around the globe to the hearts of
children in need through the sharing of the Gospel and the simplicity of a small shoe box
stuffed with gifts. From their Samaritan’s Purse has grown to cover both domestic and
international crisis relief, Operation Christmas Child, Marriage Ministry for service
members and medical care to those who need it around the world (History, n.d.).
Discussion Question 8.1
When Wal-Mart entered to incorporate grocery stores into their existing store,
they utilized the corporate level strategy of diversification. By offering groceries at
existing Wal-Mart locations, the company was offering an increase in the variety of
products that was already offered on a limited basis (Rothaermel, 2015). Rothaermel
(2015) notes that “diversified companies compete in several different markets
simultaneously (Rothaermel, 2015, p. 272). By opening the Wal-Mart super centers, Wal-
Mart entered into the grocer market. This new market added growth to the other
Discussion Question 9.1
Non-equity – most common types are supply agreements, distribution agreements
and licensing agreements (Rothaermal, 2015).
1. Benefits – they are easy to initiate and terminate because they are
contractually based agreements (Rothaermal, 2015).
2. Downsides – they are temporary and can produce weak alliances that are
plagued with trust issues and lack of commitment (Rothaermal, 2015).
Equity alliances – are based on partial ownership of one partners firm in the
other’s firm (Rothaermal, 2015).
1. Benefits – stronger commitment between alliance members, greater
knowledge sharing and personal sharing (Rothaermal, 2015). There is
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also the benefit of stronger ties and increased trust between partners
(Rothaermal, 2015).
2. Downsides – high investment needs, decreased or lack of flexibility and
there is a reduction in speed in implementing ideas or products as a result
of equity alliances (Rothaermal, 2015).
Joint ventures – this is a “standalone organization created and jointly owned by
two or more parent companies” (Rothaermal, 2015, p. 306).
1. Benefits – long term commitments for all parties involved, both explicit
and tactical knowledge is shared and there is a high level of interaction
between personnel of all firms involved (Rothaermal, 2015). Joint
ventures are also a good way for foreign firms to enter foreign markets
(Rothaermal, 2015).
2. Downsides – negotiations can be very long, there is an even higher
investment level needed and failed joint ventures are very costly to
dissolve and take a long time to dissolve fully (Rothaermal, 2015).
Discussion Question 10.3
Rockwell Automation is a manufacturer of industrial automation equipment
(Rockwell Automation, n.d.). Rockwell Automation is currently utilizing a global-
standardization strategy. Rockwell utilizes this strategy to reduce manufacturing costs
and also to create a local presence in every country around the world. Rockwell
Automation maintains sales office all over the globe, but also manufactures specific parts
at varying international locations in order to leverage best in class capabilities and lowest
cost opportunities for the diversified product mixes that Rockwell Automation offers.
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Rockwell Automation offers standardized products and solutions to manufacturers around
the globe for their control system’s needs (Rockwell Automation, n.d.).
This has not always been Rockwell Automations strategy. Originally starting out
as a domestic firm based in Milwaukee, WI, Allen Bradley was originally formed in the
early 1900’s (Rockwell Automation, n.d.). It was in the 1980’s that Rockwell
Automation entered the international markets with their programmable logic controllers
(Rockwell Automation, n.d.). During their initial entry into the international market,
Rockwell Automation utilized a transnational strategy.
Reference
History. (n.d.) Retrieved November 6, 2016, from https://www.samaritanspurse.org/our-
minsitry/history.
