Which approach to strategy formulation is more likely to generate economic profits

1. Which approach to strategy formulation is more likely to generate economic profits: (a) evaluating external opportunities and threats and then developing resources and capabilities to exploit these opportunities and neutralize these threats or (b) evaluating internal resources and capabilities and then searching for industries where they can be exploited? Why? 2. When should a corporation or business unit outsource a function or activity? Discuss with examples. 3. One way of thinking about organizing to implement cost leadership strategies is that firms that pursue this strategy should be highly centralized, have high levels of direct supervision, and keep employee wages to an absolute minimum. Another approach is to decentralize decision-making authority—to ensure that individuals who know the most about reducing cost make decisions about how to reduce costs. This, in turn, would imply less direct supervision and somewhat higher levels of employee wages (why?). Which of these two approaches seems more reasonable? Under what conditions would these different approaches make more or less sense? 4. Consider the joint venture between General Motors and Toyota. GM has been interested in learning how to profitably manufacture high-quality small cars from its alliance with Toyota. Toyota has been interested in gaining access to GM’s U.S. distribution network and in reducing the political liability associated with local content laws. Which of these firms do you think is more likely to accomplish its objectives, and why? What implications, if any, does your answer have for a “learning race” in this alliance? 5. Why would firms use acquisitions rather than create a new business internally? Why do firms enter into alliances? 6. Find an example from the business environment for each of the strategies presented below and explain briefly: ? Forward integration ? Horizontal integration ? Market penetration ? Related diversification?