Question

Webvan and Tesco were both in the online grocery business. Webvan failed largely because

Select one:

a. It was not solving a real problem for a large-enough customer segment

b. It targeted an attractive market but unattractive industry while adding fixed costs to a low-margin business model

c. The team was unable to execute on critical success factors

d. Defending its intellectual property rights proved too daunting and expensive

At the team domain level, connectedness up, down, and across the value chain is an important factor. Which one is NOT part of the "connectedness test" from the textbook?

Select one:

a. How well you know your suppliers, potential suppliers, and suppliers to industries that offer substitute products

b. How well your mission, aspirations, and propensity for risk are aligned

c. How well you know your customers and potential customers

d. How well you know your competitors and also providers of substitute products

Answer 1

Answer 1: Webvan failed largely because It targeted an attractive market but unattractive industry while adding fixed costs to a low-margin business model. The correct option is B.

Explanation: because the online grocery business is a low margin business model, meaning their business isn't efficiently converting it's revenue into profit, adding fixed costs worsened the performance.

Answer 2: The option that is NOT part of the "connectedness test" from the textbook is B ( How well your mission, aspirations, and propensity for risk are aligned.)

Explanation 2: Connectedness test are tests that helps to determine whether or not a financial institution can be classified as being more systemically important than another in a multivariate framework. It includes all other options except option B.