Chapter 7

Question 1

The term “strategy” comes from the Greek word “______” which refers to the art of a troop leader or a general.

Answer 1

strategia

Question 2

______ defines strategy as the analysis, decision, and action that enables a company to succeed.

Answer 2

Dess et al. (2012)

Question 3

______ define it as the comprehensive plan that states how a company will achieve its mission and objectives.

Answer 3

Wheelen and Hunger (2010)

Question 4

These are businesses with few product lines, and they intend to defend them from new products entering the market. Their foremost concern is how to improve their operating activities in terms of cost reduction.

Answer 4

Defenders:

Question 5

These are companies with broad lines of products, product development, innovation, and a new market are the essence of their strategy orientation. Creativity for them is more important than efficiency in operations.

Answer 5

Prospectors

Question 6

These are multidivisional companies that compete in at least two types of industries, one stable and one variable, while maintaining stability and flexibility.

Answer 6

Analyzers:

Question 7

These are businesses that do not have firm or consistent strategic orientations. They adopt piecemeal or quick response strategies which are oftentimes

Answer 7

Reactors:

Question 8

Types of strategies according to hierarchy:

Answer 8

Corporate Strategy
Business Strategy
Functional Strategy

Question 9

Usually formulated by the top level management. It is a comprehensive master plan that describes the overall direction of a company.

Answer 9

Corporate strategy:

Question 10

Occurs at the business or product unit and describes how a company improves its competitive position in a specific industry

Answer 10

Business strategy:

Question 11

A plan taken by functional areas that is intended to maximize the productivity of a resource to achieve competitive advantage.

Answer 11

Functional strategy:

Question 12

The process of developing a comprehensive plan to effectively manage the external environmental strategic forces.

Answer 12

STRATEGY FORMULATION -

Question 13

a corporate strategy that a company may adopt if it aims to expand its present operating activities.

Answer 13

GROWTH STRATEGY:

Question 14

when a company expands its operation domestically or globally

Answer 14

Internal growth -

Question 15

when a company enters into mergers, acquisitions or strategic alliances.

Answer 15

External growth -

Question 16

appropriate to adopt when a company can reasonably determine that its current product lines have real growth potentials.

Answer 16

CONCENTRATION STRATEGY -

Question 17

a business expands its operations by entering into other geographic locations and by increasing the range of product lines for the current market.

Answer 17

Horizontal Growth Strategy -

Question 18

A company ships goods to other foreign countries.

Answer 18

Exporting -

Question 19

A company enters into an agreement with another company from another country to produce or sell the product/s of the former.

Answer 19

Licensing -

Question 20

A company enters into an agreement with a franchiser to use the name and system of the latter.

Answer 20

Franchising -

Question 21

A company combines its resources with other companies from foreign countries to produce new products.

Answer 21

Joint venture -

Question 22

A company purchases a foreign company.

Answer 22

Acquisition -

Question 23

A company constructs its own plant and invests with other assets in a foreign country.

Answer 23

Green-field development -

Question 24

A company constructs operating facilities and transfers the same to the host country when
completed.

Answer 24

Turnkey operations -

Question 25

A company constructs facilities, operates them when completed, and turns them over to the host country.

Answer 25

BOT (build, operate, transfer) scheme -

Question 26

A company takes over the functions of a supplier and a distributor

Answer 26

.Vertical Growth Strategy -

Question 27

A company takes 100% control of the value chain.

Answer 27

Full integration -

Question 28

A company acquires not more than 50% of its requirements from outsiders.

Answer 28

Taper integration (backward integration) -

Question 29

A company purchases most of its requirements from outsiders.

Answer 29

Quasi-integration (forward integration) -

Question 30

A company enters into an agreement with other companies to provide goods to each other over a specified period of time.

Answer 30

Long-term contracts

Question 31

appropriate growth strategy when the original industry appears to have matured, plateaued, and consolidated already.

Answer 31

DIVERSIFICATION STRATEGY -

Question 32

more appropriate in a less attractive industry and for a company with a strong competitive position.

Answer 32

Concentric Diversification Strategy -

Question 33

a company may consider this strategy as its growth strategy when its present industry is no longer attractive

Answer 33

Conglomerate Diversification Strategy -

Question 34

a company plans to continue its current activities without substantial change in its direction. It is effective for short-term planning but may be detrimental if used for long-term planning.

Answer 34

STABILITY STRATEGY:

Question 35

A company takes a temporary timeout from its major activities while observing changes in its external environment.

Answer 35

PAUSE OR PROCEED WITH-CAUTION STRATEGY -

Question 36

Indicates that the company, which has a dominant position in the market, will not take anything new; rather, it will continue implementing its current activities in the near future.

Answer 36

NO-CHANGE STRATEGY -

Question 37

Is a temporary plan to a company in its desire to increase is profits when revenues are declining. It is a cost-cutting mechanism to address a decline in profit because of a decrease in sales.

Answer 37

PROFIT STRATEGY -

Question 38

a strategy to be adopted when a company experiences poor competitive position and operating performance and competitive disadvantage

Answer 38

RETRENCHMENT STRATEGY:

Question 39

Adopted when a company is not yet critically bleeding financially. A company intends to improve its operational efficiency by adopting drastic actions for a leaner organization.

Answer 39

TURNAROUND STRATEGY -

Question 40

Adopted by a company that has a weak competitive position in an industry and does not have the capability to implement a complete turnaround strategy.

Answer 40

CAPTIVE COMPANY STRATEGY -

Question 41

Adopted when a company has a weak competitive position in an industry and is not able to look for a strong partner to whom its business unit can be a captive.

Answer 41

SELL-OUT OR DIVESTMENT STRATEGY -

Question 42

Adopted when a company that is suffering heavy losses terminates its operations.

Answer 42

BANKRUPTCY OR LIQUIDATION STRATEGY -