Chapter 6

Question 1

Strategy Formulation

Answer 1

strategic planning or long-range planning, is concerned with developing a corporation’s mission, objectives, strategies, and policies

Question 2

SWOT

Answer 2

Strengths,Weaknesses,Opportunities,Threats

Question 3

Criticism of SWOT

Answer 3

■ It is simply the opinions of those filling out the boxes
■ Virtually everything that is a strength is also a weakness
■ Virtually everything that is an opportunity is also a threat
■ Adding layers of effort does not improve the validity of the list
■ It uses a single point in time approach
■ There is no tie to the view from the customer

Question 4

Propitious niche

Answer 4

an extremely favorable niche.

Question 5

strategic windows

Answer 5

unique market opportunity that is only available for a particular time.

Question 6

Business Strategy

Answer 6

focuses on improving the competitive position of a company’s or business unit’s products or services within the specific industry or market segment that the company or business unit serves

Question 7

Competitive Strategies

Answer 7

Raise the question of whether the business should compete on lower cost, or differentiation.

Question 8

Lower cost strategy

Answer 8

the ability of a company to design, produce, and market a comparable product more efficiently than its competitors

Question 9

Differentiation strategy

Answer 9

the ability of a company to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service.

Question 10

Competitive scope

Answer 10

the breadth of the company’s target market

Question 11

Cost Leadership

Answer 11

A lower-cost competitive strategy that aims at the broad mass market and requires “aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization

Question 12

Differentiation

Answer 12

aimed at the broad mass market and involves the creation of a product or service that is perceived throughout its industry as unique.

Question 13

cost focus

Answer 13

a low-cost competitive strategy that focuses on a particular buyer group or geographic market and attempts to serve only this niche, to the exclusion of others

Question 14

differentiation focus

Answer 14

concentrates on a particular buyer group, product line segment, or geographic market.

Question 15

Risks in competitive strategies

Answer 15

competitors imitate. Technology changes. Bases for differentiation become less important to buyers.

Question 16

8 dimensions of quality

Answer 16

performance, features, reliability, conformance, durability, serviceability, aesthetics, perceived quality

Question 17

fragmented industry

Answer 17

many small and medium sized local companies compete for relatively small shares of the total market.

Question 18

Consolidated Industry

Answer 18

dominated by a few large companies

Question 19

strategic rollup

Answer 19

developed as an efficient way to quickly consolidate a fragmented industry.

Question 20

Tactic

Answer 20

a specific operating plan that details how a strategy is to be implemented in terms of when and where it is to be put into action

Question 21

Timing tactic

Answer 21

deals with when a company implements a strategy

Question 22

first mover

Answer 22

the first company to manufacture and sell a new product or service

Question 23

late movers

Answer 23

may be able to imitate the technological advances of others, keep risks down, and take advantage of the first mover’s national inclination to ignore market segments

Question 24

Market Location Tactic

Answer 24

deals with where a company implements a strategy

Question 25

offensive tactic

Answer 25

usually takes place in an established competitor's market location

Question 26

Defensive tactic

Answer 26

takes place in the firm's own current market position as a defense against possible attack by a rival

Question 27

frontal assault

Answer 27

the attacking firm goes head to head with the competitor

Question 28

flanking maneuver

Answer 28

a firm may attack a part of the market where the competitor is weak

Question 29

Bypass attack

Answer 29

attempts to cut the market out from under the established defender by offering a new type of product that makes the competitor's product unnecessary.

Question 30

Encirclement

Answer 30

an attacking company or unit encircles the competitor's position in terms of product or markets or both

Question 31

guerrilla warfare

Answer 31

the use of small, intermittent assaults on different market segments held by the competitor.

Question 32

Defensive tactics

Answer 32

lower the probability of attack, divert attacks to less threatening avenues, or lessen the intensity of an attack

Question 33

raise structural barriers

Answer 33

entry barriers block a challenger's logical avenues of attack.

Question 34

Lower the inducement of attack

Answer 34

reduce a challenger's expectations of future profits in the industry

Question 35

cooperative strategies

Answer 35

gain competitive advantage within an industry by working with other firms

Question 36

collusion

Answer 36

the active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand.

Question 37

strategic alliances

Answer 37

a long-term cooperative arrangement between two or more independent firms that engage in business activities for mutual economic gain.

Question 38

Mutual service consortia

Answer 38

a partnership of similar companies in similar industries that pool their resources to gain a benefit that is too expensive to develop alone.

Question 39

Joint Venture

Answer 39

a cooperative business activity, formed by two or more organizations for strategic purposes, that creates and independent business entity and allocated ownership, operational responsibilities, and financial risks and rewards to each member, while preserving their separate identity/ autonomy.

Question 40

Licensing arrangement

Answer 40

an agreement in which the licensing firm grants rights to another firm in another country or market to produce and/or sell a product.

Question 41

Value-Chain partnership

Answer 41

a strong and close alliance in which one company or unit forms a long term arrangement with a key supplier or distributor for mutual advantage.