Assignment
I. Innovation and Value Creation
(a) Define innovation and further describe the difference between invention and innovation.
(b) Draw upon the case of Apple Inc. in 2015 to explain how the value created through innovation is distributed among customers, innovators, imitators, and suppliers.
II. Zara's Cost Leadership and Differentiation along Value Chain
(a) Describe Zara's value chain and list the primary activities along each segment of value chain.
(b) Analyze the above primary activities in Zara's value chain and identify those that are seeking cost leadership as their goals.
(c) Also analyze the above primary activities in Zara's value chain and identify those that are seeking differentiation as their goals.
II. Vertical Integration
(a) Explain how Carts of Colorado and California Pizza Kitchen present two different opportunities to expand PepsiCo's restaurant businesses in terms of backward and forward vertical integration along an industry value chain.
(b) What are the three different types of PepsiCo's business? Should PepsiCo remain in restaurant business as it possessed the highest sales ratio but the smallest operating profit margin?
IV. Global Strategy and Structure
(a) Provide a 2X2 to illustrate the four strategic alternatives that a multinational enterprise can choose based on the integration-responsiveness framework. Be sure to label the x-axis and the y-axis.
(b) Given that Haier required high economies of scale in their parts, and to customize their appliances in different countries, what was Haier's best strategy within this integration-responsiveness framework?
(c) As Haier expanded its business globally over multiple product lines, what kind of organizational structure would you be recommending to Haier's CEO?
Assume that it costs $32,000 to build a widget factory and that the current cost of capital is 10%. In addition, we sell only one widget per year, with the first sale occurring in the year in which you build the factory. The current cash flow of a widget is $4,000. While we know the current cash flow for widgets, we are uncertain about the future cash flows. Marketing reports indicate that there is a 50% chance that cash flows will go up to $6,000 next period (and remain there forever), however, there is also a 50% chance that cash flows will go down to $2,000 (and remain there forever).
(a) If you build the factory now, evaluate the project with discounted cash flow analysis, and provide the net present value (NPV) of this investment.
(b) Now suppose that you have the option of waiting one year in order to find out whether the cash flow goes up or down. Two different scenarios can occur. The first possibility with a chance of 50% is that one year from now you are informed that the cash flow goes up $6,000 (and remains there forever). The second possibility with a chance of 50% is that one year from now you are informed that the cash flow goes down to $2,000 (and remains there forever). Calculate the expected NPV of the two scenarios combined.
(c) Should the manager commit or wait? Quantitatively, what is the difference?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.