Quiz 2: Chapter 4- Introduction to Strategy

Question 1

Strategy

Answer 1

pursuing a set of unique activities that provide value to customers’ making trade-offs about which businesses to pursue, what products to produce, and which customers to serve- a manager’s “game plan” -specifies how the firm will achieve their goals

Question 2

Competitive Advantage

Answer 2

when a firm creates more economic value than competitors by engaging in a strategy that is difficult or impossible for others to duplicate

Question 3

The notion of strategy was first described by…

Answer 3

Sun Tzu, in The Art of War (480-221 B.C.) a Chinese military book

Question 4

The study and application of business strategy emerged from…

Answer 4

Military foundations

Question 5

The rules of engagement, the manner in which organizations attempt to gain a competitive stronghold

Answer 5

• generating better info that their rivals
• analyzing that info to make strong, informed choices
• quickly selecting among choices
• converting strategic choices into decisive action

Question 6

Conglomeration

Answer 6

when businesses grow through unrelated diversification, essentially by acquiring companies in different industries

Question 7

Today most firms view strategy as a framework rather than a…

Answer 7

fixed plan

Question 8

Goal

Answer 8

an organizationally desired result, product, or end state

Question 9

Identifying Internal environment

Answer 9

Managers must analyze its goals, resources, and competencies to asses the firm’s capabilities and potential

Question 10

Identifying External environment

Answer 10

managers must emphasis the contextual forces,

Question 11

Core competenceis

Answer 11

a network of unique activities that strategically fit together and are difficult to replicate

Question 12

Vision

Answer 12

a concept or picture of what a firm wants to achieve and how it plans to accomplish it
-a vision is often what motivates individuals to join a firm and perform beyond expectations

Question 13

Mission

Answer 13

the activities a firm performs for its customers

Question 14

Mission statement

Answer 14

a statement that defines a firm’s reason for existence
-often states what activities the firm performs or what markets it is trying to serve and how it distinguishes itself from competitors

Question 15

Objectives

Answer 15

provide a series of quantifiable milestones or benchmarks by which the firm can assess its progress

Question 16

Strategy Formulation

Answer 16

the process of analyzing a firm’s external and internal environments as well as the firm’s vision and mission

Question 17

The development of strategy should be both a….

Answer 17

planned and emergent process

Question 18

Planned Component of Strategy

Answer 18

involves systematic assessment of the external and internal environments, the creation of plans to react to or impact environmental factors
-the establishment of objectives or benchmarks the firm hopes to achieve

Question 19

Emergent component of Strategy

Answer 19

it should be flexible and adaptable to changing environmental conditions

Question 20

Operational Effectiveness

Answer 20

performing certain activities that enable a firm to operate more effectively than its competitors do

Question 21

As a manager develops a strategy, they need to consider three key elements:

Answer 21

1) Manager must realize that competitive strategy is primarily about being different, not about operational efficiency
2) Manager must decided what NOT to do
3) Manager must create a solid fit among the activities so that the product or service being offered cannot be easily copied by competitors

Question 22

Strategic Positioning

Answer 22

a place in an industry that a firm occupies by way of the products or services it offers and the methods it chooses to deliver them

Question 23

Return of Equity (ROE)

Answer 23

a measure of the rate of return on the ownership interest (shareholders’ equity) of the common stock owners

Question 24

Managers should evaluate their strategy based on a number of key criteria:

Answer 24

• External fit
• internal fit
• Differentiation
• Implementable

Question 25

External fit

Answer 25

does the strategy fit with the environmental landscape?

Question 26

Internal fit

Answer 26

Does the strategy leverage the firm’s key resources?

Question 27

Differentiation

Answer 27

Does the strategy provide a distinct, differentiated, and sustainable position in the marketplace?

Question 28

Implementable

Answer 28

Can the firm effectively execute the strategy?

Question 29

Business-Level Strategy

Answer 29

the determination of how a company will compete in a given business and position itself among its competitors
-choosing among three general strategies; low cost, differentiation, focus

Question 30

Corporate-Level Strategy

Answer 30

the way a company seeks to create value through the and coordination of multi-market activities

Question 31

Multinational Strategies

Answer 31

strategies in which the parent company organizes local subsidiaries and gives them autonomy to develop products tailored to local tastes
-important to be responsive and sensitive to local needs and tastes

Question 32

Global Strategies

Answer 32

strategies that focus on developing overall scale economies and global efficiency instead of catering to local tastes

Question 33

International strategies

Answer 33

combine elements of multinational and global strategies by using foreign subsidiaries to produce and distribute products

Question 34

Transitional strategy

Answer 34

balance a firm’s international activities among efficiency, local responsiveness, and organizational learning

Question 35

Market Potential

Answer 35

the overall market size of a particular region and its growth prospects

Question 36

Two large aspects to market entry;

Answer 36

• deciding the extent to which a firm will export its goods or produce them locally
• deciding whether the firm will own all of the production assets or share ownership with another party

Question 37

Four Major forms or Market Entry

Answer 37

1) Exporting
2) Licensing and Franchising
3) Joint Ventures
4) Alliances

Question 38

Exporting

Answer 38

involves shipping a firm’s products from its domestic home base to global markets

Question 39

Licensing

Answer 39

a contractual arrangement “where by the licensor (selling firm) allows its technology, patents, trademarks, designs, processes, know-how, intellectual property, or other proprietary advantages to be used for a fee by the licensee (buying firm)

Question 40

Franchising

Answer 40

“where the franchisor (parent company/owner) of a service, trademarked product, or brand name allows the franchisee to use the name in return for a lump sum payment or royalty, while conforming to be required standards of quality and service

Question 41

Both Licensing & Franchising are….

Answer 41

low-cost means of market entry

Question 42

Joint Venture

Answer 42

two firms come together to form a new company in the market

-the overall success rate of joint ventures globally is about 50%

Question 43

Alliance

Answer 43

partners come together by contract to engage jointly in activities in a market
-involves firms sharing resources or capabilities with a counter-party for the mutual benefit of both

Question 44

Alliances are low cost but….

Answer 44

take time and effort to establish and cultivate

Question 45

Wholly Owned Subsidiary

Answer 45

when a firm sets up a fully operational, independent, entity in a foreign country to conduct business in that market
-an expensive and risky proposition