Topic 2B Strategy (chapter 6)

Question 1

Benchmarking

Answer 1

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

Question 2

Business- level strategy

Answer 2

Focuses on individual business units or product/service lines

Question 3

Contingency Planning

Answer 3

Creation of alternative hypothetical but equally likely futures conditions

Also called scenario planning and scenario analysis

Question 4

Corporate- level strategy

Answer 4

Focuses on the organization as a whole

Question 5

Differentiation strategy

Answer 5

Offer products that are of unique and superior value compared to those of competitors and target a wide market.

Question 6

Diversification

Answer 6

Moving into and/ or operating new lines of business

Products may be related or unrelated

Question 7

Execution

Answer 7

Consists of using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised

Question 8

Focused- differentiation strategy

Answer 8

Offer products that are of unique and superior value compared to those of competitors and target a narrow market.

Question 9

Forecast

Answer 9

A vision or projection of the future

Question 10

Functional- level strategy

Answer 10

Plan of ­action by each functional area of the organization to support higher level strategie

Question 11

Market

Answer 11

can be thought of as a group of customers with similar needs or preferences

Question 12

Organizational opportunities

Answer 12

Environmental factors that the organization may exploit for competitive advantage

Question 13

Organizational strengths

Answer 13

The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission

Question 14

Organizational threats

Answer 14

Environmental factors that hinder an organization’s achieving a competitive advantage

Question 15

Organizational weaknesses

Answer 15

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

Question 16

Porter’s 4 competitive strategies

Answer 16

1. Cost- leadership strategy
2. Differentiation strategy
3. Cost- focus strategy
4. Focused- differentiation strategy

Question 17

Related diversification

Answer 17

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

Question 18

Scenario analysis

Answer 18

Also known as scenario planning and contingency planning; the creation of alternative hypothetical but equally likely future conditions

Question 19

Strategic control

Answer 19

Monitoring the execution of strategy and taking corrective action, if necessary

Question 20

Sustainable competitive advantage

Answer 20

Exists when other companies cannot duplicate the value delivered to customers

Question 21

SWOT analysis

Answer 21

A situational analysis in which a company assesses its strengths, weaknesses, opportunities, and threats

Question 22

Trend analysis

Answer 22

Hypothetical extension of a past series of events into the future

Question 23

Unrelated diversification

Answer 23

Occurs when a company acquires another company in a completely unrelated businesses

Question 24

Vertical integration

Answer 24

Firm expands into businesses or activities that provide the supplies (product inputs) it needs or that distribute and sell its products

Question 25

VRIO

Answer 25

A framework for analyzing a firm’s resource or capability to determine its competitive strength or power

Question 26

What is a strategy, or strategic plan?

Answer 26

Sets the long term goals and direction for the organization Consists of a company’s action plan for outperforming its competitors and achieving superior profitability

Question 27

What key 3 principles underlie strategic positioning?

Answer 27

1. Strategy is the creation of a unique and valuable position - serve a few needs, many customers - serve broad needs, few customers - serve broad needs, many customers 2. Strategy requires trade-offs in competing - “trade-offs” require focus; you can’t be “all things to all people” 3. Strategy involves creating a “fit” among the activities managed by a business Ex) supply chain management - manufacturing - marketing/ sales

Question 28

A company’s strategy needs to have what, to draw customers in?

Answer 28

Distinctive element

Question 29

What is the 1st step of the strategic management process?

Answer 29

1. Establish the mission, vision, and values statements

Question 30

What is the 2nd step of the strategic management process

Answer 30

2. Assess the current reality Assessment tools: - competitive intelligence - SWOT analysis - VRIO - forecasting - benchmarking

Question 31

What is the 3rd step of the strategic management process

Answer 31

3. Formulate corporate corporate, business, and functional strategies

Question 32

What is the 4th step in the strategic management process

Answer 32

4. Execute the strategies

Question 33

What is the 5th step in the strategic management process

Answer 33

5. Maintain strategic control

Question 34

VRIO: value meaning…

Answer 34

Is the resource or capability valuable?

Question 35

VRIO: Rarity meaning….

Answer 35

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

Question 36

VRIO: Imitability meaning…

Answer 36

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

Question 37

VRIO: Organization meaning…

Answer 37

Is the firm organized to exploit the resource or capability?

Question 38

Cost- leadership strategy

Answer 38

Keep the costs, and hence prices, of a product or service below those of competitors and target a wide market.

Question 39

Cost-focus strategy

Answer 39

Keep the costs of a product below those of competitors and target a narrow market

Question 40

Wide Markets

Answer 40

consists of a broad group of customers that purchase a range of different types of products EX) The market for all kinds of chocolate products

Question 41

Narrow Market

Answer 41

usually consists of a subset of customers (a “segment” or “niche”) within a broader market EX) The market for expensive, luxury chocolate suitable for gifts

Question 42

What are the 4 key steps of keeping a strategic plan on track:

Answer 42

1. engage people 2. keep it simple 3. stay focused 4. keep moving