Strategic Management

Question 1

Define “cost leadership strategy”.

Answer 1

Competitive strategy in which the organization seeks to gain an advantage by selling a high volume of low cost products.

Question 2

Define “market segmentation”.

Answer 2

Customizing the market to meet the demands of a specific customer group; AKA niche marketing or focus strategy.

Question 3

What does the acronym SWOT stand for?

Answer 3

Strengths, weaknesses, opportunities, and threats.

Question 4

Define “product differentiation strategy”.

Answer 4

Competitive strategy in which the organization strives to produce a product that is perceived to offer unique features or benefits to the customer and which therefore commands a higher price.

Question 5

Define “environmental scanning”.

Answer 5

A process in which the organization continuously gathers and evaluates information that could impact its ability to compete using its current organizational strategies.

Question 6

List the five forces outlined in Michael Porter’s framework for industry analysis and business strategy development.

Answer 6

1. Bargaining power of customers
2. Bargaining power of suppliers
3. Threat of new entrants
4. Threat of substitute products
5. Intensity of competition

Question 7

What is the key to revenue maximization under constrained resources?

Answer 7

Produce the product that offers the highest contribution margin per unit of the constrained resource (e.g., if production in a bakery is constrained by the amount of oven time available, produce the product that maximizes the contribution margin per hour of oven time).