CHAPTER 8 Implementing Strategies: Marketing, Finance/Accounting, R&D and CIS Issues True/False The Nature of Strategy Implementation
1.
Less Less than than 2 perc percen entt of stra strate tegi gies es for formu mula late ted d are are succ succes essf sful ully ly impl implem emen ente ted. d. Ans: F
2.
Bein Being g long long term term in natur nature, e, str strat ategy egy impl implem ement entat atio ion n affe affect ctss top top and and mid middl dlee managers and not the lower-level employees. Ans: F
3.
Page: 276
Sabot Sabotag agee of str strat ateg egyy-im impl plem ement entat atio ion n effo effort rtss is possi possibl blee on the the par partt of mana manage gers rs and employees who are not committed to the business. Ans: T
4.
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Page: 276
Thee lives Th lives of all all emp emplo loye yees es are are dir direct ectly ly affe affect cted ed by by str strat ateg egy y impl implem ement entat atio ion. n. Ans: T
Page: 276
Marketing Issues
5.
An exa examp mple le of of a mar marke keti ting ng deci decisi sion on is is whet whethe herr or not not to limi limitt the the shar sharee of bus busin ines esss done with a single customer. Ans: T
6.
Page: 276
Give Given n that that mos mostt info inform rmat atio ion n on ind indiv ivid idua uals ls is is avai availa labl blee onlin online, e, the the ext exten entt to whi which ch companies can track individuals’ movements on the Internet is not a marketing issue of great concern to consumers today. Ans: F
Page: 277
169
7.
Mark Market et seg segme ment ntat atio ion n and its its coun counte terp rpar art, t, targ target et mark market etin ing, g, rank rank as mar marke keti ting ng’s ’s most most important contribution to strategic management. Ans: F
8.
The mos The mostt imp impor orta tant nt mar marke keti ting ng con conce cept ptss that that affe affect ct the the suc succe cess ss of str strat ateg egy y implementation efforts are market segmentation and product positioning. Ans: T
9.
Page: 278
With With mark market et segmen segmentat tation ion,, a firm firm can can oper operate ate with with lim limite ited d resou resource rces. s. Ans: T
15.
Page: 278
The market marketing ing mix compon component ent factor factorss are are prod product uct,, place place,, promo promoti tion, on, price price and and people. Ans: F
14.
Page: 278
Segm Segmen enta tati tion on is the the key key to matc matchi hing ng suppl supply y and and dema demand nd.. Ans: T
13.
Page: 278
The most most commo common n bases bases for segmen segmenti ting ng mark markets ets are geogra geographi phicc and demogr demograph aphic. ic. Ans: T
12.
Page: 278
Market Market segmen segmentat tation ion is is most most wide widely ly used used in impl impleme ementi nting ng strat strategi egies es for for larg large, e, multinational companies. Ans: F
11.
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The subd The subdiv ivid idin ing g of a mark market et int into o dist distin inct ct sub subse sets ts of cus custo tome mers rs acc accor ordi ding ng to to thei their r needs and the way they buy and use a product or service is the definition of market segmentation. Ans: T
10.
Page: 277
Page: 278
Promot Promotion ion incl include udess advert advertis ising ing,, person personal al sell selling ing,, sales sales promo promoti tion, on, publi publicit city y and financing. Ans: F
Page: 278
170
16.
Segmenting industrial markets is generally simpler and easier than segmenting consumer markets. Ans: F
17.
Matching supply and demand minimizes the number and severity of stock-outs. Ans: T
18.
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A firm can usually serve two or more market segments with the same strategy. Ans: F
25.
Page: 281
A computer is not needed for multidimensional scaling to be performed. Ans: F
24.
Page: 281
Multidimensional scaling involves examining three or more criteria simultaneously in a product-positioning analysis. Ans: T
23.
Page: 281
The next step after segmenting markets so the firm can target particular customer groups is to find out what customer groups want and expect. Ans: T
22.
Page: 281
Market segmentation is followed by market diversification strategy. Ans: F
21.
Page: 281
Product segmentation involves developing schematic representations that reflect how competitors’ products or services compare to your firm’s. Ans: F
20.
Page: 279
A marketing issue of increasing concern to consumers today is the extent to which companies can track individuals’ movement on the Internet. Ans: T
19.
Page: 278
Page: 282
“Look for the hole or vacant niche. The best strategic opportunity might be an unserved segment.” This rule of thumb is recommended for using product positioning as a strategy implementation tool. Ans: T
Page: 282
171
26.
It is okay for firms to create expectations that exceed the service the firm can or will offer if it will attract customers. Ans: F
Page: 283
Finance/Accounting Issues
27.
By applying debt to products and projects earning more than the cost of the debt, theoretically, an enterprise should have enough debt in its capital structure to boost its return on investment. Ans: T
28.
The most widely used technique for determining whether debt, stock, or a combination of debt and stock is the best alternative for raising capital to implement strategies is an EPS/EBIT analysis. Ans: T
29.
Page: 283
EPS/EBIT analysis assumes or forecasts a specific range of figures for EBIT for the coming year, and these figures are used for all financing scenarios. Ans: T
34.
Page: 283
Generally, stock is better than debt as a way to raise capital. Ans: F
33.
Page: 283
When a company raises too much of its capital through debt during low periods, it can endanger stockholders’ return and jeopardize the company’s survival. Ans: T
32.
Page: 283
Additional capital is often required for successful strategy implementation. Ans: T
31.
Page: 283
The two basic sources of funds for an ongoing enterprise are debt and equity. Ans: T
30.
Page: 283
Page: 283-284
Flexibility is one consideration when using EPS/EBIT analysis. Ans: T
Page: 284
172
35.
Some reasons for concern over the dilution of company stock are hostile takeovers, mergers and acquisitions. Ans: T
36.
Ownership and control of the enterprise are diluted when additional debt is used to finance strategy implementation. Ans: F
37.
Page: 287
For computing the cost of goods sold and the expense items in pro forma income statements, the percent-of-sales method should be used. Ans: T
43.
Page: 287
The balance sheet should be prepared before the income statement in performing pro forma financial analyses. Ans: F
42.
Page: 285
A method for specifying what must be done to get the strategy implementation job completed successfully is fundamentally the control measures. Ans: F
41.
Page: 285
A pro forma financial analysis can be used to forecast the impact of various implementation decisions. Ans: T
40.
Page: 284-285
In times of depressed stock prices, stock issuances often prove to be the most suitable alternative for obtaining capital. Ans: F
39.
Page: 284-285
When additional stock is issued to finance implementation of strategy, ownership and control of the enterprise are diluted. Ans: T
38.
Page: 284-285
Page: 287
Cash account is used as a plug figure in pro forma balance sheets. Ans: T
Page: 287
173
44.
A financial budget is a document that details how funds will be obtained and spent for a specified period of time. Ans: T
45.
Limiting an organization’s expenditures is the primary purpose of financial budgets. Ans: F
46.
Page: 289
To determine the price-earnings ratio, divide the market price of the firm’s common stock by the annual earnings per share and multiply this number by the firm’s average net income for the past 10 years. Ans: F
52.
Page: 288-289
A conservative rule of thumb in measuring the value of a firm is to establish a business’ worth to be 10 times the firm’s most current annual profit. Ans: F
51.
Page: 288
All the methods for determining a business’ worth can be grouped into three basic approaches: what a firm owns, what a firm earns and what a firm spends. Ans: F
50.
Page: 288
A limitation of financial budgets is that they can hide inefficiencies if based solely on precedent rather than on periodic evaluation of circumstances and standards. Ans: T
49.
Page: 287
Thousands of transactions occur each year in which businesses are bought or sold in the United States. Ans: T
48.
Page: 287
The most common type of financial budget is the capital budget. Ans: F
47.
Page: 287
Page: 289
For companies with less than $10 million in sales, going public is not recommended. Ans: T
Page: 289
174
53.
A recommended approach for determining a firm’s worth is to base the analysis on the selling price of a similar company. Ans: T
54.
Page: 289
Buying off the outstanding shares of your company from the open market to make the company private is what going public means. Ans: F
Page: 289
Research and Development (R&D) Issues
55.
Strategy-implementation efforts to emphasize product or process improvements are enhanced by R&D policies. Ans: T
56.
The R&D function is generally more important in service industries than in manufacturing industries. Ans: F
57.
Page: 291
A major effort in R&D may be very risky if technology is changing rapidly and the market is growing slowly. Ans: T
61.
Page: 291
R&D policies can enhance strategy implementation efforts to be leaders or followers in R&D. Ans: T
60.
Page: 291
According to research, the most successful new product companies use a research and development strategy that ties internal strengths to external opportunities and is linked with corporate objectives. Ans: T
59.
Page: 291
If the rate of market growth and technical progress is fast and there are few barriers to possible new entrants, then in-house R&D is the preferred solution. Ans: F
58.
Page: 290
Page: 292
One R&D strategy is to be an innovative imitator of successful products. Ans: T
Page: 292
175
Management Information Systems (MIS) Issues
62.
The process of strategic management is facilitated immensely in firms that have an effective information system. Ans: T
63.
Increased costs are a downfall of a good information system. Ans: F
64.
Page: 293
Page: 293
Information technology is doing away with the workplace and allowing employees to work at home or anywhere, anytime. Ans: T
Page: 294
Multiple Choice The Nature of Strategy Implementation
65.
What a. b. c. d. e.
percent of strategies formulated are successfully implemented? Between 40 to 60 percent Approximately two-thirds About 30 percent More than 80 percent Less than 10 percent
Ans: e 66.
Page: 276
The lives of _______________are directly affected by strategy implementation. a. plant managers b. sales managers c. project managers d. division managers e. all of these Ans: e
Page: 276
176
Marketing Issues
67.
All of the following are examples of marketing decisions that require policies except a. to be a market leader or follower. b. to advertise online or not. c. to offer a complete or limited warranty. d. to use heavy, light, or no TV advertising. e. to use exclusive dealerships or multiple channels of distribution. Ans: a
68.
Two variables are of central importance to strategy implementation: a. diversification and budgeting. b. marketing penetration and competition. c. competition and collaboration. d. product development and market development. e. market segmentation and product positioning. Ans: e
69.
Page: 277
Subdividing a market into distinct subsets of customers according to their needs and the way they buy and use a product or service is a. market penetration. b. product diversification. c. market segregation. d. market segmentation. e. positioning. Ans: d
70.
Page: 276
Page: 278
Market segmentation is an important variable in strategy implementation because a. all company strategies require increased sales through new markets and products. b. it allows a firm to operate with limited resources. c. mass production, mass distribution and mass advertising are not always required d. all of the above. Ans: d
Page: 278
177
71.
Perhaps the most dramatic new market segmentation strategy is the a. targeting of regional tastes. b. focusing on universal product. c. preference of international over domestic sales. d. treatment of industrial markets. e. none of these Ans: a
72.
Web advertising dollars spent by businesses increased to what percent of total advertising expenditures in 2002? a. 17 b. 27 c. 37 d. 47 e. 57 Ans: b
73.
Page: 278
Market segmentation is an important variable in the strategy-implementation process because a. company strategies do not require increased sales through new markets and products. b. it allows a firm to operate with no resources. c. it directly affects marketing mix variables. d. all of the above Ans: c
75.
Page: 278
Variables such as_______________ are directly affected by market segmentation. a. product and place b. promotion and price c. both a and b d. none of the above Ans: c
74.
Page: 278
Page: 278
Matching ______________ allows factories to produce desirable levels without extra shifts, overtime and subcontracting. a. markets and competitors b. competition and positioning c. customer behavior and positioning d. supply and demand e. segments and demand Ans: d
Page: 279
178
76.
What entails developing schematic representations that reflect how your products or services compare to competitors’ on dimensions most important to success in the industry? a. Positioning b. Segmentation c. Penetration d. Diversification e. Budgeting Ans: a
77.
Which of these is not a correct step in product positioning? a. Select key criteria that effectively differentiate products or services in the industry. b. Diagram a four-dimensional products positioning map with specified criteria on four axes. c. Plot major competitors’ products or services in the resultant matrix. d. Identify areas in the positioning map where the company’s products or services could be most competitive in the given target market. e. All of these are correct steps in product positioning. Ans: b
78.
Page: 281
Multidimensional scaling is used to determine a. the size of a new building. b. the size of a new department. c. the amount of high-tech equipment a firm needs. d. product positioning. Ans: d
80.
Page: 281
Looking for a vacant niche helps a company determine a. its advertising budget. b. the size of the marketing department. c. the best place to position a product. d. the best place to locate a new facility. Ans: c
79.
Page: 281
Page: 281
Which of the following is (are) true about two different market segments? a. They can usually be served with the same marketing strategy. b. They usually require different marketing strategies. c. They are always in different geographic locations. d. They are usually incompatible. Ans: b
Page: 282
179
81.
Which of these is not a rule of thumb when using product positioning as a strategyimplementation tool? a. “Don’t squat between segments” b. “Look for the hole or vacant niche” c. “Try to serve more than one segment with the same strategy” d. “Don’t position yourself in the middle of the map” Ans: c
Page: 282-283
Finance/Accounting Issues
82.
Which of the following is not an example of a decision that may require finance/accounting policies? a. To extend the time of accounts receivable b. To establish a certain percentage discount on accounts within a specified period of time c. To lease or buy fixed assets d. To use LIFO, FIFO, or a market-value accounting approach e. To determine the amount of product diversification Ans: e
83.
In the low earnings period, too much __________ in the capital structure of an organization can endanger stockholders’ return and jeopardize company survival. a. debt b. liquid assets c. equity d. cash Ans: a
84.
Page: 283
Page: 283
Which of these obligations generally must be met, regardless of circumstances? a. Moral b. Employee c. Fixed debt d. Equity e. All of these Ans: c
Page: 283
180
85.
What is the most widely used technique for determining the best combination of debt and stock? a. Debt-to-stock ratio b. Earnings per share/earnings before interest and tax analysis c. Gross profit analysis d. Capital asset pricing model e. Present value analysis Ans: b
86.
If the debt line is above the stock line throughout the range of EBIT on the graph, what conclusions would you make after completing an EPS/EBIT analysis? a. Debt would be the best financing alternative. b. Stock would be the best financing alternative. c. A combination of debt and stock would be the best financing alternative. d. Other factors must be considered before conclusions can be made. Ans: a
87.
Page: 284-285
When cost of capital is high, __________ becomes a more attractive financing technique. a. stock issuance b. debt c. cost cutting d. borrowing Ans: a
89.
Page: 284-285
After completing an EPS/EBIT analysis, what conclusions would you make if the debt line is above the stock line throughout the range of EBIT on the graph? a. Debt appears to be the best financing alternative. b. Stock would be the best financing alternative. c. A combination of debt and stock is probably the best financial alternative. d. Dividends must be considered before conclusions can be made. Ans: a
88.
Page: 283
Page: 285
What is a drawback of using only equity to raise capital? a. The cost b. Fluctuations in the stock market c. Dilution of the control of the company d. That it will cause EPS to roller coaster Ans: c
Page: 285
181
90.
A benefit of using pro forma balance sheets and income statements is that a. an organization can compute projected financial ratios under various scenarios. b. money can be put aside to pay future income taxes. c. insurance needs can be computed. d. all of the above. Ans: a
91.
Pro forma financial analysis is an important strategy-implementation technique because a. it is an exact measurement of financial costs in the future. b. it is an exact measurement of future company profits. c. it allows an organization to examine the expected results of various actions and approaches. d. none of the above Ans: c
92.
Page: 285
The first step in preparing pro forma statements is to a. prepare the balance sheet. b. take an inventory of goods. c. estimate increases in debt. d. prepare the income statement. Ans: d
94.
Page: 285
_____________ is a central strategy-implementation technique because it allows an organization to examine the expected results of various actions and approaches. a. EPS/EBIT b. Financial budgeting c. TOWS analysis d. Pro forma financial statement analysis e. External analysis Ans: d
93.
Page: 285
Page: 287
In preparing pro forma statements, to project cost of goods sold and the expense items in the income statement, which of these methods is recommended? a. Determining the net worth method b. What a firm earns method c. Percentage-of-sales method d. Price-earnings ratio met e. Outstanding shares method Ans: c
Page: 287
182
95.
__________ in the pro forma income statement cannot be forecasted using the percentage-of-sales method. a. Cost of goods sold b. Selling expense c. Administrative expense d. Interest expense e. All of these items are forecasted using the percentage-of-sales method. Ans: d
96.
Retained earnings is obtained by subtracting a. any dividends from net income. b. net income from EBIT. c. taxes from EBIT. d. interest expense from EBT. e. EBIT from CGS. Ans: a
97.
Page: 287
Which of these is the most common type of budgeting time frame? a. Daily b. Quarterly c. Annual d. Every decade e. Monthly Ans: c
99.
Page: 287
In pro forma financial statements, the ___________ account is used as a plug figure. a. retained earnings b. fixed assets c. cash d. long-term liabilities e. stockholders’ equity Ans: c
98.
Page: 287
Page: 287
The most common type of financial budget is the __________ budget. a. cash b. sales c. profits d. factory c. flexible Ans: a
Page: 287
183
100.
Who has mandated that every publicly held company in the United States must issue an annual cash-flow statement in addition to the usual financial reports? a. SEC b. Congress c. FCC d. FASB e. OPEC Ans: d
101.
Page: 287
________________, an accounting item, ties together the income statement and
balance sheet when performing a pro forma financial analysis. a. The cash account b. The retained earnings account c. The net profits account d. The equity account e. The goodwill account Ans: b 102.
How should financial budgets be thought of? a. A tool for limiting expenditures b. A method for obtaining the most productive and profitable use of an organization’s resources c. A method for rationing the profits from the past year d. A method for determining who should receive the largest pay raise Ans: b
103.
Page: 287
__________ is/are the common type(s) of budget(s). a. Cash budgets b. Operating budgets c. Sales budgets d. All of the above e. Only a & c Ans: d
104.
Page: 287
Page: 287
What is a limitation of using financial budgets? a. They can be so detailed that they are cumbersome and expensive b. They can become a substitute for objectives c. They can hide inefficiencies if done only on precedent d. All of the above Ans: d
Page: 288
184
105.
__________ of transactions occur each year in which businesses are bought or sold in the United States. a. Few b. Hundreds c. Thousands d. Millions e. Billions Ans: c
106.
Which of the following methods is not accepted for determining a business’ worth? a. What the firm owns b. What the firm earns c. What the firm’s return on investment has been d. What the firm will bring in the market Ans: c
107.
Page: 288-289
__________ is/are not included in net worth. a. Fixed assets b. Common stock c. Additional paid-in-capital d. Retained earnings e. All of these are included in net worth Ans: a
109.
Page: 288-289
The three main approaches for determining a firm’s worth are a. what a firm owns, what a firm earns and what a firm will bring in the market. b. number of employees, number of stockholders and value of assets. c. amount of annual sales, number of products on the market and number of stockholders. d. amount of debt the firm has, past sales and what a firm owns. Ans: a
108.
Page: 288
Page: 289
Net worth is also referred to as a. total assets. b. stockholders’ equity. c. fixed assets. d. long-term liabilities. e. liquid assets. Ans: b
Page: 289
185
110.
The average total cost paid to lawyers, accountants and underwriters is __________ when an initial stock issuance is under $1 million. a. 1 dollar in 20 b. 1 dollar in 10 c. 25 percent d. 5 percent e. 40 percent Ans: c
111.
Which method of determining a firm’s net worth is where you divide the market price of the firm’s stock by the annual earnings per share and multiply this number by the firm’s average net income for the past five years? a. debt/equity method b. current ratio method c. price-earnings ratio method d. long-term asset method Ans: c
112.
Page: 289
One important reason for knowing the worth of a firm is that a. divestiture may result in the firm being sold. b. the SEC requires an annual evaluation of worth in the annual report. c. stockholders often ask for this information. d. it is important to know for tax purposes. Ans: a
113.
Page: 289
Page: 289
Which of these describes the worth of a company? a. An exact science b. An educated guess c. Indeterminable d. Known only to the firm’s accountants Ans: b
Page: 289
Research and Development (R&D) Issues
114.
R&D employees and managers perform all of the following tasks except a. transferring complex technology. b. alternating products to particular tastes and specifications. c. researching resource availability. d. adapting processes to local markets. e. adjusting process to local raw materials. Ans: c
Page: 291
186
115.
In-house R&D is a preferred solution in all of these situations except which one? a. If the rate of technical progress is slow b. If the rate of market growth is moderate c. If there are significant barriers to possible new entrants d. If technology is changing rapidly and the market is growing fast c. In-house R&D is a preferred solution in all of these. Ans: d
116.
Which of the following is not a major approach to R&D? a. To be a pioneer b. To be an innovative imitator c. To be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced d. To be a liquidator Ans: d
117.
Page: 291-292
Page: 292
The attitude of U.S. firms toward research and development is best described by a. the veil of secrecy is being lifted, resulting in more collaboration. b. firms are more cutthroat than ever and less cooperative with each other. c. firms are less interested in working with universities. d. firms are spending less in total research and development expenditures. Ans: a
Page: 292
Management Information Systems (MIS) Issues
118.
____________ is the basis for understanding in a firm. a. Technology b. Information c. R&D d. Budgeting e. Financing Ans: b
119.
Page: 292
A good information system can allow a firm to a. gain competitive advantage b. reduce costs c. increase productivity d. increase customers e. reduce turnover Ans: b
Page: 293
187
Essay Questions 120.
Although there are many marketing variables that impact the success or failure of strategy-implementation efforts, two variables are central to the process. What are these variables? Discuss why they are so important. Two variables of central importance to strategy implementation are market segmentation and product positioning. Segmentation is important because it is a key to matching supply and demand, which is one of the thorniest problems in customer service. Segmentation often reveals that large, random fluctuations in demand actually consist of several small, predictable and manageable patterns. Product positioning is important because it is a severe mistake to assume the firm knows what customers want and expect. Many firms have become successful by filling the gap between what customers and producers see as good service. What the customer believes is good service is paramount, not what the producer believes service should be. Positioning entails developing schematic representations that reflect how a firm’s products or services compare to competitors’ on dimensions most important to success in the industry. Page: 277-281
121.
What are the marketing-mix component factors? Give some examples of each. The marketing-mix component factors consist of product, place, promotion and price. Please refer to Table 8-1 on page 278 for examples of each factor. Page: 278
122.
Psychographics and behavioral approaches to market segmentation are sometimes, but not commonly, used. Give examples and the typical breakdowns of the examples. Examples of psychographic variables include social class and personality. Behavioral variables include use occasion, benefits sought, user status, usage rate, loyalty status, readiness stage and attitude toward product. Please refer to Table 8-2 on page 279 for the typical breakdowns of the examples. Page: 279
188
123.
What are the five steps required for effective product positioning? Give an example of a product-positioning matrix for an organization of your choice. There are five steps required for effective product positioning. These five steps are as follows: (1) select key criteria that effectively differentiate products or services in the industry, (2) diagram a two-dimensional product-positioning map with specified criteria on each axis, (3) plot major competitors’ products or services in the resultant four-quadrant matrix, (4) identify areas in the positioning map where the company’s products or services could be most competitive in the given target market and look for niches and (5) develop a marketing plan to position the company’s products or services appropriately. Student examples of product-positioning matrices will vary. Page: 281
124.
Describe the considerations of EPS/EBIT analysis. There are four considerations of EPS/EBIT analysis: 1) profit levels may be higher for stock or debt alternatives when EPS levels are lower, 2) flexibility, 3) dilution of ownership can be an overriding concern in closely held corporations in which stock issuances affect the decision-making power of majority stockholders and 4) timing in relation to movements of stock prices, interest rates and bond prices becomes important. Page: 284-285
125.
Explain how to perform a pro forma financial analysis. The steps to performing a pro forma financial analysis are as follows: (1) prepare the pro forma income statement before the balance sheet and start by forecasting sales as accurately as possible, (2) use the percentage-of-sales method to project CGS and the expense items in the income statement, (3) calculate the projected net income, (4) subtract from the net income any dividends to be paid and add the remaining net income to Retained Earnings, (5) project the balance sheet items, beginning with retained earnings and then forecasting stockholders’ equity, long-term liabilities, total liabilities, total assets, fixed assets and current assets—in that order and (6) list comments on the projected statements. Page: 287
189
126.
In preparing projected financial statements, what must be done if at the end of your pro forma analysis you discover the cash figure needed to balance the assets with liabilities and net worth is way too low to carry on normal operations of the firm? If the cash needed to balance the statements is too small, make appropriate changes to borrow more money than planned. Page: 287
127.
Identify and describe three approaches for determining a business’ worth. The three approaches for determining a business’ worth are what a firm owns, what a firm earns and what a firm will bring in the market. Please see the discussion on page 289 under Evaluating the Worth of a Business for descriptions of each approach. Page: 288-289
128.
Explain the important issues involved in deciding whether to go public, i.e., a private firm considering becoming a public firm. Include cost estimates, advantages and disadvantages. Please refer to the entire discussion on pages 289-290 under Deciding Whether to Go Public for this answer. Page: 289-290
129.
List and describe the three major R&D approaches for implementing strategies. The three major R&D approaches for implementing strategies are: (1) to be the first firm to market new technological products, (2) to be an innovative imitator of successful products, thus minimizing the risks and costs of start-up and (3) to be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced. See page 292 under R&D Issues for descriptions of each approach. Page: 292
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