What threatens these full-s ere still very serviceable.new a , and the average d
ID: 1171751 • Letter: W
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What threatens these full-s ere still very serviceable.new a , and the average dereg investeviceable. Since dereg Relate this to our discussion in this chapte 5. Before deregula tion in the late 1970s, airlines invested h planes, even though the old airplanesw ulation, airlines are flying their airplanes much longer their fleet has lengthened considerably. Why do you think the airlinesof ualk irplanes? (Hint: In the chapter we have reduced their investment in new a about the effect of deregulation on the airlines.) In the early days of personal computing, s industry, in which individuals wrote program code in their homes. Now e the early days of personal computing, software development was crosoft dominates the sofrware industry. If you wanted to form a small ware development company by investing in a few computers and le some office space, what entry barriers would you be facing now? ditficulties you would have that Bill Gates and his contemporaries erring to Question 6, in spite of the dominance of Microsoft these small developers have followed? market opportunities: differentiation and cost leadership. we have provided ot have 25 years ago. developers continue to thrive. What competitive strategy do you t 8, In the chapter, we suggested two competitive strategies for capitalizing on are probably intimately familiar-fast food. Which fast-food companies an 9. Many years ago, W.R. Grace was a steamship company operating passenger energy products manufacturer. Why do you think W.R. Grace made such an 10. What is the minimum rate of return that an investment should provide in or- 11. Why do companys such as DuPont and Microsoft vigorously protect their 12. A company diversifies, in the words of the CEO, "to reduce our dependency some examples of each in the chapter. Consider an industry with which vou pear to follow each of these competitive strategies? liners between the West Coast and Hawai. Now it is a specialty chemical and abrupt change in its line of business? If you had been a shareholder of W.R Grace, would you have welcomed the change? der to be acceptable to the company's investors? , patents and copyrights? a single product and smooth our operating earnings." As a stockholder, should you rejoice or despair over this announcement? 13. There has been a trend for companies, such as Hewlett-Packard, to restruc- ture themselves. Quite often, this means divesting some lines of busines while keeping the core business. What prompts a company to undergo such a restructuring? 14. Classify projects a-g by the following categories: Replacement project Expansion project Diversification project Dispersion project Mandated (by law) project a. A computer maker opens retail electronics stores. b. A computer chip manufacturer installs new electrical fixtures in its plant to adhere to the fire code c. A wholesaler upgrades its fleet of delivery vans. d. General Motors buys Hughes Aircraft Company.Explanation / Answer
Depending on a single product is not feasible and profitable in today's business environment until and unless the product is extremely unique and there are no competitors offering the same product in the market. However, if there are less barriers to entry, new players may enter the market and offer the same/better product at a more reasonable price. This can adversely affect the business operations and the margins of the company. Therefore, diversification is a must for every organization. Diversification, not only, increases the potential for generating higher revenues and therefore, profits, it also reduces the risk of losing business opportunities and market share. Again, it is extremely important for the company to perform a cost-benefit analysis while taking and implementing any such decision.
From the point of an investor, diversification may indicate expansion initiatives on the part of the company. Such a decision is generally viewed in a positive sense by investors. As a stockholder, I would have rejoiced over the company's decision to diversify.
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