MGM102 Test #1 Short Answer Questions – Winter 2016

Based on the information presented in the article ‘Sustainable Investing’ Goes Mainstream, describe
one reason why there has been an increase in interest towards sustainable investments in 2015. What is
one of the primary challenges still facing this segment of the industry? (2 marks)

1 mark for providing an appropriate reason for the growth of sustainable investing. 1 mark for
identifying a challenge still facing this segment of the industry.
Reason for growth – Results show sustainable investments (mutual funds) have performed just as well
or even better than non-sustainable ones, large financial firms are now introducing sustainable (ESG)
investment products at an accelerated rate, more demand for sustainable options, more data and
information available to investors, etc…
Challenges – Primary challenge is that there is no clear standard or definition of what makes an
investment sustainable

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In response to the growing environmental degradation, firms pursue strategic integration. Explain what

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is meant by strategic integration and describe three long-term benefits of strategic integration. (4

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Marks)

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1 mark for proper explanation of strategic integration in this context. 1 mark for each benefit of

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strategic integration properly described.
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Strategic integration implies that businesses view environmental sustainability as an important
component of value creation and integrate these priories into their business strategies.
Long-term benefits could include (pg. 30): Pricing Power, enhanced efficiencies, customer retention,
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stronger employee base, lower risk exposure, new business options

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The Global Fund's ‘Project Last Mile” is an example of a process innovation. Describe the purpose of
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this innovation, and provide an example of one of its new activities. Explain if Project Last Mile is an
example of a disruptive technology. (3 Marks)
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1 mark for describing the purpose of Project Last Mile. 1 mark for providing an example of one of its
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new activities. 1 mark for explaining if Project Last Mile is a disruptive technology.
Purpose – To gets life-saving medicines to remote communities in Africa by utilizing Coca-Cola’s
supply chain, distribution, logistics and marketing expertise.
Activity – Some activities include improved forecasting accuracy leading to fewer stock outages of
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medicine and medical supplies in Tanzania, Coca-Cola's experience in refrigeration repair has been
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tapped to improve maintenance systems for medicine storage in Ghana, improved efficiency and
reliability of medicine delivery from provincial warehouses to health facilities in Mozambique
Disruptive Technology – Not likely, it will improve service access and care, but is not likely to cause a
paradigm shift.

Describe why innovation is an important source of competitive advantage for firms. Discuss three steps
that managers can take to promote innovation and to increase the likelihood of success. (4 Marks)

1 mark for proper description of why innovation is an important source of competitive advantage. 1
mark for each step properly identified and reasonably explained.
Innovation can provide competitive advantage by creating superior value for consumers, differentiate
an organization, help to initiate a paradigm shift in an industry, help an organization to survive an
industry shift, can improve efficiencies, increase revenues, etc…

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 Steps could include (pg. 54):
 Building skills in basic and applied scientific research – fosters and environment of creativity
 Develop a good process for process and project selection and project management – improves
speed to market, identifies ideas with most potential, etc…
 Use cross-functional integration – innovations are customer focused, designed for manufacture,
costs are controlled, minimize speed to market
 Create product development teams – utilize resources from several functional areas and is led
by a manager with high status
 Implementing partly parallel development processes – concurrent design and implementation of
activities instead of sequential
 Putting radical new technologies into autonomous units – helps to diminish organizational
inertia

Explain what is meant by Contextual Intelligence and how it helps managers make better decisions?
Discuss two primary reasons that managers make sub-optimal decisions. (4 Marks)

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1 mark for describing contextual intelligence and 1 mark for explaining how it improves management

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decision making. 1 mark for each appropriate reason explaining why managers make sub-optimal

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decisions.

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Contextual Intelligence refers to managers’ ability to analyze and use information about the context
affecting their situation.
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Decision making is improved because the appropriateness of the recommended decision and its
likelihood of success are improved because the solution is more suited for the situation
Reasons for sub-optimal decisions may include – bounded rationality, incomplete information,
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uncertainty, ambiguous information, satisficing, systemic errors due to use of heuristics, prior
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hypothesis bias, representative bias, illusion of control, escalating commitment

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Based on examples from our in-class discussion, identify and explain two lessons that can be learned
from the events in the Mount Everest Case that can be applied in a business context? (3 Marks)
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1.5 mark for each lesson appropriately identified and explained.

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Lessons – Effective planning is critical to helping avoid problems, tough decisions need to be made for
the greater good, objectives/goals need to be clear, dangerous decisions can be made when
money/profit becomes an influencing factor, must plan for contingencies, must develop an exit plan,
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many variables are uncontrollable so must be prepared to react appropriately and be flexible, stick to
critical deadlines, decision making can be done more clearly and effectively when not in a crises,
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employees should be encouraged to speak up when the perceive that a bad/dangerous decision is being
made, teamwork is critical, different people in an organization need to take on different roles, commit
appropriate resources to promote project success, etc…

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