Chapter 6

Question 1

Michael Porter

Answer 1

One of the most influential business school professors

Question 2

Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.

Answer 2

Strategic Positioning

Question 3

Three Key Principles Underlying Strategic Positioning:

Answer 3

(1) The creation of a unique and valuable position
(2) Requires trade offs in competing
(3) Involves creating a “fit” among activities

Question 4

Strategic Position emerges from three sources:

Answer 4

(1) Few needs, many customers
(2) Broad needs, few customers
(3) Broad needs, many customers

Question 5

A company has to choose not only what _______ to follow but also what ______ NOT to follow.

Answer 5

(1) Strategy

(2) Strategy

Question 6

Has to do with the way a company’s activities interact and reinforce one another

Answer 6

Fit

Question 7

Three Levels of Strategy

Answer 7

(1) Corporate Strategy
(2) Business Level Strategy
(3) Functional Level Strategy

Question 8

Focuses on the organization as a whole and executives at the most senior levels (C Suite) conduct this type of planning.

Answer 8

Corporate Level Strategy

Question 9

“What business are we in?” and “What products and services shall we offer?”

Answer 9

Corporate Level Strategy

Question 10

Focuses on individual business units or products/services lines. Issues under consideration flow from decisions made at the corporate level and involve considerations such as how much to spend on marketing, new product development, product expansion or contraction, facilities expansion or reduction and employee development.

Answer 10

Business Level Strategy

Question 11

Senior Level managers below the C suite typically are responsible for this level of strategy.

Answer 11

Business Level Strategy

Question 12

Aimed at growing revenue.

Answer 12

Business Level Strategy

Question 13

Applies to the key functional departments or units within the business units

Answer 13

Functional Level Strategy

Question 14

Focus on tactical issues that support business level strategies.

Answer 14

Functional Level Strategy

Question 15

True or False: Evidence reveals that the use of strategic management techniques and processes are associated with increased small business performance.

Answer 15

True

Question 16

Strategic planning require ___________.

Answer 16

Long term orientation

Question 17

When is a good time to begin the strategic management process?

Answer 17

Often when touched by some crisis

Question 18

Five Steps of Strategic Management Process:

Answer 18

(1) Establish the mission, vision and values statements
(2) Assess the current reality
(3) Formulate corporate, business and functional strategies
(4) Execute the strategy
(5) Maintain strategic control: The Feedback Loop

Question 19

Expresses organization’s purpose or reason for being

Answer 19

Mission Statement

Question 20

States what the organization wants to become

Answer 20

Vision Statement

Question 21

What the organization stands for, its core priorities, the values its employees embody and what its products contribute to the world.

Answer 21

Values Statement

Question 22

To look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization’s mission

Answer 22

Current Reality Assessment / Organizational Assessment

Question 23

Tools for assessing Current Reality:

Answer 23

(1) SWOT Analysis
(2) VRIO Analysis
(3) Forecasting
(4) Benchmarking

Question 24

Three Common Grand Strategies:

Answer 24

(1) Growth
(2) Stability
(3) Defensive

Question 25

Process of choosing among different strategies and altering them to best fit the organization's needs. Can be time consuming because it is important and because the strategy must be translated into more specific strategic plans.

Answer 25

Strategy Formulation

Question 26

Putting strategic plans into effect

Answer 26

Strategy Implementation

Question 27

Consists of monitoring the execution of strategy and making adjustments, if necessary.

Answer 27

Strategic Control

Question 28

Exists when other companies cannot duplicate the value delivered to customers

Answer 28

Sustainable Competitive Advantage

Question 29

A situational analysis in which a company assesses its strengths, weaknesses, opportunities, and threats. Results from this provide you with a realistic understanding of your organization in relation to its internal and external environments.

Answer 29

SWOT Analysis

Question 30

SWOT Analysis is divided into two parts:

Answer 30

(1) Inside Matters - analysis of internal strengths and weaknesses (2) Outside Matters - Analysis of external opportunities and threats

Question 31

The skills and capabilities that give the organization special competencies and competitive advantage in executing strategies in pursuit of a vision.

Answer 31

Organizational Strengths

Question 32

The drawbacks that hinder an organization in executing strategies in pursuit of its vision

Answer 32

Organizational Weaknesses

Question 33

Environmental Factors that the organization may exploit for competitive advantage

Answer 33

Organizational Opportunities

Question 34

Environmental factors that hinder an organization's achieving a competitive advantage.

Answer 34

Organizational Threats

Question 35

A framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its value, rarity, imitability and organization. A yes answer to each question means the resource or capability has a competitive advantage

Answer 35

VRIO

Question 36

Does the resource or capability allow your firm to exploit an opportunity or neutralize a threat?

Answer 36

Value

Question 37

Is the resource or capability currently controlled by only a few firms or no other firms?

Answer 37

Rarity

Question 38

Is the resource or capability costly for other firms to imitate?

Answer 38

Imitability

Question 39

Is the firm organized to exploit the resource or capability?

Answer 39

Organization

Question 40

A vision or projection of the future

Answer 40

Forecast

Question 41

A hypothetical extension of a past series of events into the future.

Answer 41

Trend Analysis

Question 42

Creation of alternative hypothetical but equally likely future conditions.

Answer 42

Contingency Planning / Scenarios Analysis

Question 43

A process by which a company compares its performance with that of high performing organizations.

Answer 43

Benchmarking

Question 44

Three Overall Types of Corporate Strategy:

Answer 44

(1) Growth Strategy (2) Stability Strategy (3) Defensive Strategy

Question 45

Grand strategy that involves expansion - as in sales revenue, market share, number of employees, or number of customers or clients served.

Answer 45

Growth Strategy

Question 46

Growing market share or profits by innovating improvements in products or services.

Answer 46

Innovation Strategy

Question 47

Is a grand strategy that involves little or no significant change

Answer 47

Stability Strategy

Question 48

Grand strategy that involves reduction in the organization's efforts.

Answer 48

Defensive Strategy / Retrenchment Strategy

Question 49

A management strategy by which companies evaluate their strategic business units on the basis (1) their business growth rates and (2) their share of the market.

Answer 49

BCG Matrix

Question 50

Describes how quickly the entire industry is growing

Answer 50

Business Growth

Question 51

Business unit's share of the market in relation to competitors

Answer 51

Market Share

Question 52

Purpose of BCG:

Answer 52

To identify the most effective way to direct the company's financial resources.

Question 53

Investing profits from one or more successful but slow growing unit

Answer 53

Cash Cows

Question 54

New products or services that have demonstrated strong potential in growing markets and should be appropriately funded.

Answer 54

Stars

Question 55

Risky units with potential that may or may not produce revenue in the future and should be closely monitored.

Answer 55

Question Marks

Question 56

Units that are no longer succeeding and should be shut down or sold.

Answer 56

Dogs

Question 57

Drawback of BCG Matrix:

Answer 57

Fairly easy for managers to mischaracterize their business units

Question 58

The strategy of moving into new lines of business, such as Amazon purchasing Whole Foods or CVS buying Aetna

Answer 58

Diversification

Question 59

Companies diversify to grow _____ or reduce _____.

Answer 59

(1) Revenue | (2) Risk

Question 60

When a company purchases a new business that is related to the company's existing business portfolio

Answer 60

Related Diversification

Question 61

When a company acquires another company in a completely unrelated business

Answer 61

Unrelated Diversification

Question 62

A firm expands into businesses that provide the supplies it needs to make its products or that distribute and sell its products.

Answer 62

Vertical Integration