Chapter 8

Question 1

Nature of Strategic Managment

Answer 1

Strategy
Strategic Management
Effective Strategies

Question 2

Strategy

Answer 2

Plan for accomplishing organizations goals.

Question 3

Strategic Management

Answer 3

A comprehensive and ongoing managemnet process aimed at formulating and implementing effective strategies which align the organization with its environment to achieve major organizational goals

Question 4

Effective Strategies

Answer 4

Strategies that promote a superior alignment between the organization and its environment and the achievement of its goals.

Question 5

Components of Strategy

Answer 5

Distinctive Competence
Scope
Resource Deployment

Question 6

Distinctive Competence

Answer 6

Something an organization does exceptionally well

Question 7

Scope

Answer 7

Range of markets in which an organization will compete

Question 8

Resource Deployment

Answer 8

How an organization will distribute its resources across the areas in which it competes

Question 9

Types of Strategic Alternatives

Answer 9

Business-level Strategy

Corporate-level Strategy

Question 10

Business-level Strategy

Answer 10

The set of strategic alternatives that an organization chooses from as it conducts business in a particular industry or a particular market.

Question 11

Corporate-level Strategy

Answer 11

The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets.

Question 12

Strategy Formulation and Implementation

Answer 12

Strategy Formulation
Strategy Implementation
Deliberate Strategy
Emergent Strategy

Question 13

Strategy Formulation

Answer 13

The set of processes involved in creating or determining the organization’s strategies

Question 14

Strategy Implementation

Answer 14

The methods by which strategies are operationalized or executed within the organization

Question 15

Deliberate Strategy

Answer 15

A plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation.

Question 16

Emergent Strategy

Answer 16

A pattern of action that develops over time, in the absence of goals or missions, or despite goals and missions

Question 17

Using SWOT Analysis to Formulate Strategy

Answer 17

Evaluating Organizational Strengths
Evaluating Organizational Weaknesses
Evaluating an Organization’s Opportunities and Threats

Question 18

Evaluating Organizational Strengths

Answer 18

Organizational Skills
Common organizational strengths
Distinctive competencies
Imitation of distinctive competencies
Sustained competitive advantage
Strategic limitation is difficult

Question 19

Evaluating Organizational Weaknesses

Answer 19

Organizational weaknesses are skills and capabilities that do not enable an organization to choose and implement strategies that support its mission.
Weaknesses can be overcome by:…
Competitive disadvantage is a situation in which an organization fails to implement strategies being implemented by competitors.

Question 20

Evaluating an Organization’s Opportunities and Threats

Answer 20

Organizational opportunities are areas in the organization’s environment that may generate high performance.
Organizational threats are areas in the organization’s environment that make it difficult for the organization to achieve high performance.

Question 21

Types of Business-level Strategies

Answer 21

Porter’s Generic Strategies
Miles and Snow’s Strategy Types
Product Life Cycle

Question 22

Porter’s Generic Strategies

Answer 22

Differentiation strategy
Overall cost leadership strategy
Focus strategy

Question 23

Differentiation strategy

Answer 23

An organization seeks to distinguish itself from competitors through that quality of its products or services

Question 24

Overall cost leadership strategy

Answer 24

An organizations attempts to gain competitive advantage by reducing costs below costs of competing firms.

Question 25

Focus Strategy

Answer 25

An organization concentrates on a specific regional market, product line. or group of buyers

Question 26

Implementing Porter's Generic Strategies: Differentiation Strategy

Answer 26

Marketing and sales emphasize, high quality, high value image of the organizations products or services

Question 27

Implementing Porter's Generic Strategies: Overall Cost Leadership Strategy

Answer 27

To support cost leadership, marketing and sales are likely to focus on simple product attributes and how these product attributes meet customer needs in a low-cost and effective manner.

Question 28

Implementing Porter's Generic Strategies: Focus Strategy

Answer 28

This strategy is implemented via the same approaches used for differentiation and cost leadership, depending on which one is the proper basis for competing in or for a specific market segment, product category, or group buyers.

Question 29

Miles and Snow's Strategy Types

Answer 29

Prospector Defender Analyzer Reactor

Question 30

Prospector

Answer 30

Encourages creativity to seek out new market opportunities and to take risks. Develops the flexibility to meet changing market conditions by decentralizing its organizational structure.

Question 31

Defender

Answer 31

Focuses on defending its current markets by lowering its costs and/or improving the performance of its current products.

Question 32

Analyzer

Answer 32

Incorporates elements of both the prospector and the defender strategies to maintain business and to be somewhat innovative.

Question 33

Reactor

Answer 33

Has no clear strategy, reacts to changes and events

Question 34

Implementing Miles and Snow's Strategies

Answer 34

Prospector Strategy Defender Strategy Analyzer Strategy

Question 35

Product Life Cycle

Answer 35

Introduction Stage Growth Stage Mature Stage Decline Stage

Question 35

Formulating Corporate-Level Strategies

Answer 35

Strategic Business Units Diverisification Single Product Strategy

Question 35

Strategic Business Units

Answer 35

Each business or group of businesses within an organization engaged in serving the same markets, customers, or products

Question 35

Diversification

Answer 35

The number of businesses an organization is engaged in and the extent to which these businesses are related to one another.

Question 36

Single Product Strategy

Answer 36

Organizations manufactures one product or service and sells it in a single geographical market.

Question 37

Corporate Strategic Choices

Answer 37

``` Single product strategy (simplicity) Related diversification (synergy) Unrelated diversification (risk/return) ```

Question 38

Related Diversification

Answer 38

A strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked. Avoids the disadvantages and risks of a single product strategy.

Question 39

Basis of Relatedness in implementing Related Diversification:

Answer 39

Similar Technology Common distribution and marketing skills Common name brand and reputation Common customers

Question 40

Advantages of Related Diversification

Answer 40

Rudices organization's dependence on any one of its business activities and thus reduces economic risk. Reduces overhead costs associated with managing any one business through economies of scale and economics of scope. Allows an organization to exploit its strengths and capabilities in more than one business. Synergy exists among a set of businesses.

Question 41

Unrelated Diversification

Answer 41

A strategy in which an organization operates multiple businesses that are not logically associated with one another.

Question 42

Advantages of Unrelated Diversification

Answer 42

Stable corporate-level performance over time due to business cycle differences among the multiple businesses. Allocation of resources to area with the highest return potentials to maximize corporate performance.

Question 43

Disadvantages of Unrelated Diversification

Answer 43

Firms with unrelated strategies fall to exploit important synergies, putting them at a competitive disadvantage to firms with related diversification strategies. Poor performance due to the complexity of managing a diversity of business.

Question 44

Becoming a Diversified Firm

Answer 44

Internal Development of New Products Replacement of Suppliers and Customers Merger and Acquisitions

Question 45

Two types of Replacement of Suppliers and Customers

Answer 45

Backward Vertical Integration | Forward Vertical Integration

Question 46

Purpose of Mergers and Acquisistions

Answer 46

To acquire complementary products or services linked by a common technology and common customers. To create or exploit synergies that reduce the combined organizations' costs of doing business to increase revenues. To diversify through vertical integration.

Question 47

Two important portfolio management techniques

Answer 47

BCG Matrix | GE Business Screen

Question 48

BCG Matrix

Answer 48

``` A method of evaluating businesses relative to the growth rate of their market and the organization's share of the market. Types of Business: -Dogs -Cash Cows -Question Marks -Stars ```

Question 49

GE Business Screen

Answer 49

A method of evaluating business in a diversified portfolio along two dimensions, each of which contains multiple factors. In general, the more attractive the industry and the more competitive a business is, the more resources an organization should invest in that business.

Question 50

Developing International and Global Strategies

Answer 50

Global Efficiencies Multimarket flexibility Worldwide learning

Question 51

Global Efficiencies

Answer 51

Location efficiencies-seeking lower input cost locations. Economies of Scale-larger facilities result in lower cost. Economies of scope-broadening product lines.

Question 52

Multimarket Flexibility

Answer 52

International businesses may respond to a change in one country by implementing a change in another country

Question 53

Worldwide learning

Answer 53

The diverse operating environments of multinational corporations contribute to organizational learning that can be transferred to other operating environments.

Question 54

Strategic Alternatives for International Business

Answer 54

Home Replication Strategy Multidomestic Strategy Global Strategy Transnational Strategy

Question 55

Home Replication Strategy

Answer 55

Apply the distinctive competences they developed in their home market to the foreign that they enter. Works best when the firms competences are valuable in many different types of markets.

Question 56

Multidomestic Strategy

Answer 56

Used by firms that manage a portfolio of international business as relatively autonomous and independent units. Works best when national demands for customization are high.

Question 57

Global Strategy

Answer 57

Companies doing exactly the opposite of those using a multidomestic strategy. Works best for a commodity-line product or in an industry that demands high efficiency.

Question 58

Transnational Strategy

Answer 58

Pursue both centralization and decentralization at the same time, using whichever approach makes more sense in the particular circumstance. Works best for complex industries and for companies with highly-skilled international managers.