Concordia University – Spring 2008
BA 458: Policy & Strategy
Professor: Zehr
Final Exam
Student: ________________________
Case-Based Essay Questions [50 points each]. Please provide a short analysis for each part of the question
below. The point total is for the entire question (e.g. 1a through 1d is 50 points). Provide a concise path
of reasoning to your conclusion and include exhibits/models as required. But, be concise, do not include
any information that is not required to answer the question or support your response. Remember to
number your responses (e.g. 1(a), 1(b), …) to avoid any confusion. Points will be deducted for exams that
do not have a name and are not single-spaced with numbered responses. This final exam is due either by
hand delivery or email no later than Thursday, May 1, 2008 at midnight. Late exams will not be accepted.
(1) Based on “The Mozilla Foundation: Launching Firefox 1.0 (A)” case study. In the “Browser Wars”
Microsoft took the browser market away from Netscape by giving the browser away for free. (a) How do
they justify this behavior as a profit-making enterprise? (b) How do they expect to produce a return on
this investment? (c) Explain the implications for firms that need to develop software that is compatible
with browser software. (d) How did this impact the strategy of Mozilla when they released Firefox?
(2) Based on the “Skype” case study. (a) What was the initial investment made in Skype by Draper
Fisher Jurvetson, Bessemer, and others? (b) What was the sales price for the company (you can ignore the
earn-out portion)? (c) Assume that the company had an initial pre-money valuation of $10 million. What
was the return to investors? How much did non-investor insiders get from the transaction? (d) Now
assume that the company did a second round of $30 million with a new investor prior to the acquisition
at a pre-money valuation of $30 million. How would this change the outcome (show your work)?
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(3) Based on the “XM Satellite Radio” case study. We discussed the efforts by XM to drive market
penetration and reach profitability. (a) On the path they are now, with a similar cost structure, how many
users will they need to add before they reach profitability? (b) What are the immediate results of an
acquisition of Sirius Satellite Radio in terms of revenues, earnings, and user base? (c) Prepare a SWOT
analysis for Sirius (top three items in each quadrant) and rank each of the items. What is the most
important item for management to focus on and why? (d) We discussed a strategy in class of making
sure that every new car has an XM compatible receiver because the adoption rate is ~60%. Please build a
model (Excel or table) that shows how adoption would take place and the user base would grow over a
10 year period, assuming 10,000,000 new cars are sold a year; the average life of a new car is 3 years; after
three years cars are resold as used cars with a similar adoption rate. What implications will this have for
your approach to marketing the service? (e) Which potential competitor do you feel is the largest threat
to XM and why?
(4) Based on the “United States Postal Service (USPS)” case. (a) The USPS is a “self-supporting”
independent federal agency, yet they describe the need to compete. Do they really need to “compete” in
the letter delivery marketplace? Do they really need to “compete” in the market for other services such as
parcel delivery? If the USPS was wildly successful, and generated massive returns in excess of their costs,
what should they do with these returns? (b) The USPS spent over $30 million to develop and market
Netpost Mailing Online – a service that never generated positive returns. Yet, there are already a number
of other commercial services online that provide a similar service. When the USPS decides to compete in
a market like this how do they finance these projects? (c) Why does direct mail continue to grow? What
would cause it to stop growing? (d) In class we talked about the proper form for vision and mission
statements. Vision and mission statements for the USPS are provided on page 342 in the text. What are
the problems with the ones provided? How would you change them? What would you suggest as a
Vision? (e) What two core competencies/assets does the USPS have that do not exist in any other firm in
the world? List one new service they could launch to leverage these competencies/assets.
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