Case Scenario 3: Bunnywac

question 124

Essay

Case Scenario 3: Bunnywac.
Bunnywac is a global producer and seller of batteries for consumer electronics products (radios, flashlights, toys, etc.), and competes primarily with its larger rivals by providing battery products equal in performance at a lower price. The worldwide battery industry suffers from issues of overcapacity and commoditization, brand segmentation and proliferation, the growing strength of global retailers, and the low-cost threat of new entrants from Asia. Thus, the ability to provide dependable batteries at a very low cost is essential to survival in this industry. Bunnywac has grown quickly into one of the leading players in the battery industry primary through horizontal acquisitions financed by a recent successful IPO, and is now counted among the top four companies in North and Latin America. Its presence in Europe and Latin America is negligible. While its market presence and brand is generally strong and market share is growing, Bunnywac has entered into an alliance to obtain the core technologies of its batteries. Bunnywac does not actually own the technology that makes its batteries work. This approach has provided Bunnywac a cost advantage since it has not had to invest in basic R&D and has very little R&D infrastructure. This technology is licensed from Mats (which has 200 engineers dedicated to moving the technology forward), one of Japan's largest technology-based holding companies (like Sharp or Canon). Mats also sells batteries under the Pandemonium brand and commands over 50% of the market share of Asian countries. Mats' market share in other global markets is negligible and its efforts at growing its branded battery share in the North America, Latin America, and Europe has been severely frustrated in recent years. While Mats is very large compared to Bunnywac, the battery technology and battery business are relatively tiny relative to Mats' other technology-based businesses. Bunnywac's decade-long licensing agreement with Mats for the essential battery technology expires in one year; there are no obvious substitute providers of this technology.
-(Refer to Case Scenario 3) What type of business-level cooperative strategy is primarily exemplified by Bunnywac's technology licensing arrangement with Mats?a. vertical business-level complementary strategic alliance
b. horizontal business-level complementary strategic alliance
c. competition reducing business-level strategic alliance
d. competition response business-level strategic alliance

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Definitions:

Ending Work in Process

This refers to the goods that are still in the production process at the end of an accounting period but have not yet been completed.

Total Units

The aggregate quantity of units produced, held in inventory, or sold by a business.

Transferred Out

In cost accounting, refers to the cost of goods or inventory items that have been moved from one production process or department to another.

Units Transferred Out

In process costing, the term refers to the number of units moved from one production department to the next, or to the completed goods inventory.