Improving profitability through differentiation
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Q1. The top management team of a fast food chain is keen to improve profitability through differentiation. They believe that using fresh, high quality, and ethically sourced ingredients will enable the company to charge a premium and increase profit margins. From a business strategy perspective, what are two important factors that the team must consider before going ahead with this plan and why? (20 points)
Q2. Amby Sheus is the CEO of a US based industrial pumps and motors manufacturing company. Amby tells her CFO “We have a lot of excess cash on our balance sheet. It is about time we started diversifying into other industries such as renewables, software, and financial services by acquiring other US companies. Doing so will stabilize revenues and profits since good times in one industry will offset bad times in another. Also, there are several promising Silicon Valley start-ups that lack funds – we should buy a couple of them.” Do you agree with Amby? Why/Why not? (25 points)
Q3. A Japanese automotive parts company, known for its exceptional product quality seeks to expand into the United States, where it has no prior business experience. It has identified a suitable US manufacturing location where costs are low and skilled resources are available. Which entry mode would you recommend and why? Please state any assumptions you need to make in order to answer the question. (25 points)
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