W1 - LITERATURE

Question 1

What is a nonmarket strategy?

Answer 1

A nonmarket strategy allows a company to shape the environment in which it operates, creating opportunities.

Question 2

What types of risks do companies face in nonmarkets?

Answer 2

• Government regulations
• Social campaigns
• Political movements

Question 3

What significant legal battle has Novartis been involved in since 2002?

Answer 3

A public battle with the Indian government over the patent for Glivec.

Question 4

What does Novartis do to support needy Indian patients?

Answer 4

Offers Glivec at dramatically reduced prices as part of its corporate citizenship initiatives.

Question 5

What is the (ia)3-framework used for?

Answer 5

To design competitive nonmarket strategies by mapping a company’s specific nonmarket environment.

Question 6

What are the components of the (ia)3-framework?

Answer 6

• Issues
• Actors
• Interests
• Arenas
• Information
• Assets

Question 7

True or False: Nonmarket strategy only concerns economic factors.

Answer 7

False

Question 8

What is the primary focus of nonmarket strategy?

Answer 8

On issues that affect a company’s ability to create and appropriate value.

Question 9

What is the first step in developing a nonmarket strategy according to the (ia)3 framework?

Answer 9

Identify the issue that could significantly affect the company’s ability to create and/or appropriate value.

Question 10

What role do actors play in nonmarket strategy?

Answer 10

Actors are individuals or groups with an economic or ideological stake in a nonmarket issue.

Question 11

What is essential for a company to influence an issue in the public domain?

Answer 11

A company’s reputation and perceived trustworthiness.

Question 12

Fill in the blank: Nonmarket issues can play out in multiple settings, including _______.

Answer 12

[courtrooms, regulatory proceedings, parliamentary committee hearings, industry forums, news media, public domain, blogosphere]

Question 13

What did Shell fail to recognize in its battle over the Brent Spar oil rig?

Answer 13

That Greenpeace shifted the arena into the public domain.

Question 14

What did Toyota achieve through nonmarket strategy regarding the Prius?

Answer 14

Gained access to carpool lanes for low-emissions vehicles.

Question 15

How did Vodafone respond to the European Commission’s quest to lower roaming charges?

Answer 15

Created Vodafone Passport as an opt-in program and launched a lobbying campaign.

Question 16

What is the key to turning perceived non-business issues into strategic opportunities?

Answer 16

An integrated, coherent and strategic approach to both market and nonmarket environments.

Question 17

What is increasingly affecting a company’s bottom line?

Answer 17

Issues and actors beyond the market.

Question 18

What type of management does performing an (ia)3 analysis set the stage for?

Answer 18

Proactive nonmarket management.

Question 19

What is the importance of identifying the interests of actors in nonmarket strategy?

Answer 19

To draw up a strategic map that identifies potential allies and key adversaries.

Question 20

What does the success of Novartis, Toyota, and Vodafone illustrate about nonmarket strategy?

Answer 20

That effective nonmarket strategies can lead to sustainable competitive advantage.

Question 21

What was the initial response of Vodafone to the regulation challenge?

Answer 21

Vodafone used the program’s popularity as the basis for a targeted lobbying campaign arguing that binding regulation was unnecessary

The campaign proved futile as the European Parliament enacted binding rules two years later.

Question 22

Which companies are mentioned as managing beyond the market?

Answer 22

Novartis, Toyota, Vodafone

These companies employ nonmarket strategies to create business opportunities.

Question 23

What are the four factors driving the investment in nonmarket strategy?

Answer 23

• Multiple audiences
• Globalization of NGOs
• New regulatory hurdles
• Competitive edge

Question 24

What incident exemplified the conflict between local laws and corporate ethics?

Answer 24

Yahoo! Inc.’s passing on of e-mail files from a Chinese dissident to Chinese authorities in 2004

Question 25

How did Greenpeace International impact Royal Dutch Shell's plans?

Answer 25

Greenpeace’s multimedia coverage spoiled Shell’s plans to sink the Brent Spar oil storage buoy

Question 26

What paradox does globalization present for businesses?

Answer 26

While it creates more market opportunities, it also introduces new nonmarket challenges

Question 27

What did BP plc do to achieve a competitive advantage?

Answer 27

Launched the 'beyond petroleum' initiative acknowledging global warming and diversifying into renewable energy

Question 28

What is the primary currency in nonmarket environments?

Answer 28

Information ## Footnote In contrast to money as the currency in traditional markets.

Question 29

What is a key difference between market and nonmarket environments?

Answer 29

Markets are predictable with straightforward cause-and-effect relationships; nonmarkets are less uniform and predictable

Question 30

What is essential for nonmarket management to be effective?

Answer 30

Consistency and long-term commitment

Question 31

What does successful lobbying require in the nonmarket environment?

Answer 31

Superior information about policy alternatives and the preferences of key players

Question 32

True or False: In nonmarket strategies, flexibility is more important than consistency.

Answer 32

False

Question 33

What is the relationship between market value and nonmarket values?

Answer 33

Management beyond the market is ultimately about values, not just creating value

Question 34

What example illustrates integrated market and nonmarket strategy?

Answer 34

Accor Services’ collaboration with NGOs to fight hunger and promote healthful eating

Question 35

Fill in the blank: Corporations are _______ actors in the social and political environment.

Answer 35

social and political

Question 36

What significant shift is required in corporate strategy regarding nonmarket environments?

Answer 36

Deliberately shaping the nonmarket environment to create new market opportunities

Question 37

What impact can failing to engage in nonmarket strategies have on corporations?

Answer 37

They risk having new rules imposed on them by external actors like politicians and NGOs

Question 38

What did Accor Services aim to reconcile with its nonmarket strategy?

Answer 38

The right balance between professional and private life

Question 39

What role does public perception play in nonmarket strategy?

Answer 39

Public skepticism of intentions necessitates a focus on consistent behavior

Question 40

What did Toyota achieve with its hybrid vehicle strategy?

Answer 40

Successful lobbying for carpool access, aligned with its values and overall strategy

Question 41

What is the role of companies as economic agents?

Answer 41

Managing accordingly leaves the non-market environment to others.

Question 42

Who are the active participants in the non-market environment?

Answer 42

Politicians, regulators, nongovernmental organizations and activists.

Question 43

What happens if companies do not engage in the non-market environment?

Answer 43

New rules of the game may be imposed on the industry.

Question 44

What does the saying 'In politics, if you are not at the table, you are on the menu!' imply?

Answer 44

If companies do not participate in politics, they may be adversely affected.

Question 45

What are leading corporations starting to do regarding social and political issues?

Answer 45

Stretch the competitive playing field beyond the market.

Question 46

What is the purpose of the managerial framework provided in the article?

Answer 46

For effective nonmarket management.

Question 47

What strategic risk is deemed the number one facing companies according to a survey by Ernst & Young?

Answer 47

Regulation & compliance.

Question 48

What risk do executives consider the most significant according to Aon's survey?

Answer 48

Damage to the firm’s reputation.

Question 49

Fill in the blank: According to the article, _____ issues are turning from mere nuisance to strategic opportunity.

Answer 49

Social and political

Question 50

True or False: The article suggests that corporations should ignore the non-market environment.

Answer 50

False

Question 51

What are the two main environments of business?

Answer 51

Market environment and nonmarket environment ## Footnote The market environment consists of relationships mediated by markets, while the nonmarket environment includes relationships not mediated by markets.

Question 52

What does the market environment consist of?

Answer 52

Relationships between a firm and stakeholders mediated by markets, including: * Customers * Suppliers * Competitors ## Footnote These relationships are governed by the laws of supply and demand.

Question 53

What is the (ia)3-framework used for?

Answer 53

Analyzing a firm's nonmarket environment ## Footnote It focuses on issues, actors, interests, arenas, information, and assets.

Question 54

What are the six questions in the (ia)3-framework?

Answer 54

1. What is the issue? 2. Who are the actors that care about this issue? 3. What are the various actors' interests? 4. In which arena do the actors meet to settle the issue? 5. What information moves the issue in this arena? 6. What assets do the actors need to prevail in this arena? ## Footnote Each question leads to the next in understanding the nonmarket environment.

Question 55

What defines an 'issue' in the nonmarket environment?

Answer 55

A point in controversy on which interested parties take affirmative or negative positions ## Footnote Issues imply a degree of conflict or disagreement among actors.

Question 56

What is the 'issue life cycle'?

Answer 56

The process through which issues progress from identification to enforcement ## Footnote Stages include issue identification, interest group formation, legislation, administration, and enforcement.

Question 57

What factors determine the power of political actors?

Answer 57

Organization and degree of interest homogeneity ## Footnote Organized and homogeneous groups tend to have more political power.

Question 58

What types of arenas can nonmarket issues play out in?

Answer 58

Courtrooms, regulatory proceedings, parliamentary committee hearings, industry forums, news media, public domain, blogosphere ## Footnote The rules and dynamics vary significantly across these settings.

Question 59

True or False: The impact of an issue on a firm is greatest during the issue identification phase.

Answer 59

False ## Footnote Impact is close to nul during identification but grows substantially during enforcement.

Question 60

Fill in the blank: A firm should take a position on an issue if its resolution could significantly affect the firm's ability to _______.

Answer 60

create and/or appropriate value ## Footnote This includes both potential threats and opportunities.

Question 61

Who are typically the actors that care about a nonmarket issue?

Answer 61

Actors with an economic, political, or ideological stake in the issue ## Footnote Examples include businesses, interest groups, and community organizations.

Question 62

What is meant by 'interest homogeneity' among actors?

Answer 62

The degree to which members of a group share similar interests ## Footnote High homogeneity can enhance political power.

Question 63

What can significantly enhance a firm's ability to influence an issue?

Answer 63

Proactive engagement during the issue identification and interest group formation phases ## Footnote Engaging stakeholders early can shape future developments.

Question 64

What happens to issues that get 'stuck' in the issue life cycle?

Answer 64

They may not progress to the legislation phase ## Footnote Firms may deliberately strategize to prevent progression.

Question 65

Why must managers understand the arena in which an issue plays out?

Answer 65

To develop a strategy accordingly ## Footnote The effectiveness of lobbying efforts can depend significantly on the structure of the relevant arena.

Question 66

What is a challenge of managing nonmarket issues across borders?

Answer 66

Different rules and dispute resolution processes ## Footnote For example, firms cannot sue other firms through the WTO; only states have standing.

Question 67

What advantage do firms seek in the context of nonmarket issues?

Answer 67

To move an issue to a more favorable arena ## Footnote For instance, Endesa attempted to shift merger approval to the European Commission.

Question 68

What is the role of information in the nonmarket environment?

Answer 68

Information is the currency of the nonmarket environment ## Footnote Unlike money, information is context-specific and varies greatly across different arenas.

Question 69

How does public opinion data serve in lobbying efforts?

Answer 69

It is more effective in influencing congressional or parliamentary committees ## Footnote This is particularly true for members concerned about reelection.

Question 70

What is essential for a firm to influence an issue in the public domain?

Answer 70

A firm's reputation and perceived trustworthiness ## Footnote Knowledge of decision-making procedures and key members' concerns is also important.

Question 71

What can association with the wrong actors lead to?

Answer 71

A major nonmarket liability ## Footnote A firm's past conduct can significantly impact its ability to partner with others.

Question 72

What is a paradox regarding money as a nonmarket asset?

Answer 72

Money can be both an asset and a liability ## Footnote While it allows investment in nonmarket issues, it can also attract negative attention from activist groups.

Question 73

What does a rigorous industry analysis ensure?

Answer 73

It is essential for success in the market but does not guarantee it ## Footnote A strategic analysis of the nonmarket environment is crucial for proactive management.

Question 74

What does the (IA) analytic journey involve?

Answer 74

Identifying issues, actors, interests, arenas, information, and assets ## Footnote This framework helps firms shape the evolution of critical issues in favor of their business interests.