Ch6 Strategic Process - Big Picture

Question 1

Three generic strategies

Answer 1

.1. low cost - operational excellence
- cost management
- efficient operations

2. Differentiation
   - Product leadership
   
   • R&D
   • Continuous innovation

• Customer intimacy
  
  • Customer relationship mgmt
  • customer services

Question 2

CPA Performance Measurement Tools

Answer 2

1. Budgets
2. Variance analysis
3. Return on investment (ROI)
4. Residual income (RI)
5. Economic value added (EVA)
6. Balanced scorecard (BSC)

Question 3

Corporate-level strategies

Answer 3

1. Integration
   - vertical integration ( make or buy decisions)
   - forward integration: add a sales biz unit versus using external wholesaler
   - backward integration: manufacture raw materials versus purchase from suppliers

• Horizontal integration
  
  • expand current department

2. Diversification
   - concentric diversification: using same skill / expertise : booksellers selling cards
   - horizontal diversification: targeting same customer with different products: indigo sells baking products
   - conglomerate diversification: expanding: amazon acquiring groceries chains
3. Defensive
   - devestiture
   - retrenchment: reorganizing
4. Intensive
   - market penetration
   - market development
   - product development

Question 4

Three common approaches to build CAPABILITIES during strategy implementation process

Answer 4

1. internal development
2. through merger and acquisition
3. through partnership
   - outsourcing
   - joint venture
   - collaborative partnership

Question 5

Types of organization structures

Answer 5

1. simple structure: small owner
2. functional structure/ departmental structure
3. divisional structure
4. matrix structure: functional + divisional