FOSM - Exam questions

Examples of the power of buyers

- Concentrated buyers - Low switching costs - Buyer competition threat

Name the 3 types of value-destroying activities:

- adding management costs - adding bureaucratic complexity - obscuring financial performance

Explain the use of scenarios:

- are carried out to allow for different possibilities and help prevent managers from closing their minds to alternatives - they build on PESTEL and key drivers for change, but do not offer a single forcast on how the enviroment will change

Examples of competitive rivalry

- competitor balance - industry growth rate - high exit barriers - low differentiation

What are the 3 key factors for successful focus strategies?

- distinct segment needs - distinct segment value chains - viable segment economics

Name the 5 types of value-adding activities:

- envisioning - facilitating synergies - coaching - providing central services and resources - intervening

What are the 4 value-creating drivers for diversification?

- exploiting economies of scope - stretching coporate management competences - exploiting superior internal processes - increasing market power

What are the 3 value-destroying drivers for diversification?

- responding to market decline - spreading risk - managerial ambition

What are the 3 constraints a market penetration strategy may face?

- retaliation from competitors (comp. fight back) - legal constraints - economic constraints

Examples of threat of substitutes

- the price/performance ratio - extra-industry effects (looking outside the industry for threats)

Sources of differentiation:

- the strategic customer - key competitors

What are the 3 contexutal factors to consider when choosing between innovating and imitating?

-Capacit for profit capture -Complementary assets -Fast-moving arenas

What are the first-mover advantages?

-Experience curve benefits -Scale benefits -Pre-emption (priority) of scarce resources -Reputation -Buyer switching costs

What the advantages for Late-movers?

-Free-riding -Learning

What are the 4 international strategies?

-Global strategy -Export strategy -Transnational strategy -Multi-domestic strategy

Which are categories on Faulkner and Bowman's strategy clock?

-Hybrid strategies -Differentiation strategies -Low-price strategies -Non-competitive strategies

What are the sources of cost leadership?

-Input costs -Economies of scale -Experience -Product/process design -Parity -Proximity

Which are the strategic directions identified in the Ansoff matrix?

-Market penetration -Market development -New products and services -Conglomerate diversification

Examples of barriers of entry

-Scale and experience -Access to supply or distribution channels -Expected retaliation -Legislation and government action -Differentiation

What should be included in the strategy statement?

-Vision -Missionnon -Objectives -Scope -Advantage

Which are appropriate questions for evaluating routines and rituals in cultural web analysis?

-What are the fundamental assumptions of the paradigm? -How yould you characterise the dominant culture? -How easy is this to change? -How and to what extent do aspects of the web interrelate and re-enforce each other?

It is possible to identify different levels of strategy in an organisation; these are:

-corporate -business (also called competitive strategy) -operational

What are the implications of the experience curve?

-entry timing -gain and hold market share -improvements continue over time

A UK company has chosen to develop internationally by concentrating all its activities in the UK and using a number of agents to market its products in a range of countries. What international strategy is it using?

Export strategy

What is the export strategy?

Export strategy has weaker pressure for global integration and local responsiveness. Focus is on leveraging home country capabilities to foreign countries.

Porter's 5 forces analyses the macroenvironment

FALSE. It also analyses the microenvironment!

Achieving sustainable competitive advantage is an overriding objective of strategy in the not-for-profit sector.

FALSE. Non-profit sectors are concerned about quality and success rather than money.

PESTEL and Porter's 5 forces analysis are not connected with each other

FALSE. They are connected since Porter also analyses the macroenvironment.

Which of the following describes a situation where the costs of moving products or services across borders relative to their final value are low?

Favourable logistics

Which approach is particularly useful when analysing an industry or sector?

Five Forces framework

What best describes the goal of an organisation?

General statement of aim or purpose

What is the global strategy?

Global strategy has strong pressure for global integration and weaker pressure for local responsiveness. Focus is on standardisation, scale economies, geographically dispersed value chain and control from headquarters.

Analysing the business environment can be used to:

audit macro-environmental influences; identify key competitive forces; identify the competitive position; and identify key opportunities and threats.

What is horizontal integration?

diversification

Operational strategy is concerned with:

how the components of an organisation deliver effectively the corporate- and business-level strategies in terms of resources, processes and people

What is the definition of vertical integration?

it describes entering activities where the organisation is its own supplier or customer

What is the Blue Oceans strategy?

it may reveal where companies can create new market spaces, or identify success factors which new entrants might attack which turn "blue oceans" into "red oceans"

Explain the portfolio manager:

it operates as an active investor in a way that shareholders in the stock market are either too dispersed or too inexpert to be able to do. The corporate office is small and main focus is: downward, investing and intervening.

What is the definition of backward integration?

it refers to development into activities concerned with the input into the company's current businesses. Ex acquisition of a supplier.

What is the definition of forward integration?

it refers to development into activities concerned with the output of a company's current businesses. Ex. a manufacturer goes into retail.

The view that innovation involves technologists creating new knowledge, which then forms the basis for new products for the rest of the organisation to produce and market, is known as:

technology push

The purpose of a SWOT analysis is to analyse:

the business environment and the strategic capability of an organisation relative to its competitors

What are threshold capabilities?

the capabilities needed for an organisation to meet the necessary requirements to compete in a given market and achieve parity with competitors in that market.

The fundamental requirement for a successful price-led strategy is:

the lowest cost base of competing organisations

The five forces that affect the level of competition in an industry are:

the threat of entrants; the power of buyers; the power of suppliers; the threat of substitutes; and competitive rivalry.

In the Five Forces framework, the term 'threat of entrants' means:

there is the possibility of a new competitor coming into the market and getting established

A key characteristic of strategic decisions is that:

they are likely to be concerned with, or affect, the long-term direction of an organisation

Which strategyis NOT destined for ultimate failure according to Faulkner and not Bowman's strategy clock?

Low price

Which are the main types of reason for pursuing a strategy of internationalisation?

Market based reasons, leveraging strategic capabilities and economic benefits

What is the multi-domestic strategy?

Multi-domestic strategy has weaker pressure for global integration and strong pressure for local responsiveness. Focus is on adapting to the local market.

Corporate level strategy is concerned with:

The scope of an organisation and how value is added (or destroyed) at corporate level

What does SBU stand for?

Strategic business unit

What term is used for the underlying principles that guide an organisation's strategy?

Core values

How do you best defines a barrier to entry?

A barrier to entry is anything that stops a firm not currently operating in an industry from joining that industry

What best defines a barrier to entry?

A barrier to entry is anything that stops a firm not currently operating in an industry from joining that industry

What is the difference between a mission and a vision?

A mission specifies why the organisation exists, while the vision expresses what theorganisation is trying to achieve in the foreseeable future

What is meant by a hybrid strategy in the context of the strategy clock?

A strategy that combines differentiation and cost control

What is the term in the Ansoff matrix described for developing new products for new markets?

Conglomerate diversification

What best defines dynamic capabilities?

An organisation's ability to develop and change competences to meet the needs of rapidlychanging environments

What are dynamic capabilities?

An organisation's ability to renew and recreate its strategic capabilities (resources and competences) to meet the needs of changing environments. There are 3 types: - Sensing - Seizing - Reconfiguring

Why is it important to undertake macro environmental analysis when the micro-environment has more impact on day-to-day operations?

Because understanding trends in PESTEL factors enables an organisation to anticipate changes, threats and opportunities arising in the operating environment

What term is used for the levels of management above that of the business unit, which have no direct interaction with buyers and competitors?

Corporate parent

Which strategy focuses on the overall scope of an organisation?

Corporate-level strategy

Which are Porter's generic strategies?

Cost-Leadership, Differentiation, Focus.

What term is used for the process by which innovations spread amongst users?

Diffusion

Which of the following terms in the Ansoff matrix is used for developing new products for new markets?

Diversification

What term is used for an organisation's abilities to renew and recreate its strategic capabilities to meet the needs of a changing environment?

Dynamic capabilities

What is the key outcome from PESTEL analysis?

Identification of the key drivers for change

What is the industry life cycle?

It depends on the market size and stage of the industry cycle. Porter's 5 forces vary with the stages of the industry life cycle. 1. Development 2. Growth 3. Shake-out 4. Maturity 5. Decline

What do you understand by the term 'cultural web'?

It is a diagnostic tool that examines the taken-for-granted assumptions of an organisation andthe physical manifestations of organisational culture.

What does the "Stakeholder model" recognise?

It recognises the wider set of interests that have a stake in an organisation's success such as employees, local communities, local governments, major suppliers and customers and banks

What is the difference between resources and competences?

Resources are what we have and competences are what we do well.

What are the four elements of the BCG matrix?

Stars, question marks, cash cows and dogs

Busienss-level strategy is about how to compete successfully in particular markets

TRUE

Government drivers can both facilitate and inhibit internationalisation

TRUE

Strategic management is important in the public sector because the public sector is also concerned with creating competitive advantage.

TRUE

What accurately categorises the machines an organisation uses?

Tangible, physical resources

A company has developed a new component for a mobile phone and is confident that a market can be found for the new product. What is this an example of?

Technology push

What is the key take-away about cooperative strategies?

That cooperation between companies within the 5 forces that Porter describes can improve competitiveness against competitors

What is meant by an organisation's strategic capability?

The adequacy and suitability of the resources and competences of an organisation for it tosurvive and prosper

What does Porter's 5 forces aim to identify/analyse?

The attractiveness of an industry in terms of 5 competitive forces

What is the key take-away about interactive strategies?

The companies must interact to set quality and prices in relation to each to not be "stuck in the middle". If one has lower quality then it should also have lower price.

Which statement best defines an organisation's vision?

The desired future state of the organisation

What is the definition of scope?

The scope is concerned with how far an organisation should be diversified in terms of products and markets

At what level should the PESTEL framework be applied when analysing a given environment?

The society level

What does the "Exploring Strategy Model" consists of?

Three areas. 1. Strategic position (environment, capabilities, purpose, culture) 2. Strategic choices (business, corporate, international, acquisition/alliances, innovation) 3. Strategy in Action (processes, evaluating, organising, practice, changing)

What point identifies the time at which demand for a new product or service starts to show arapid increase?

Tipping point

What is the purpose of a VRIO analysis?

To assess capabilities in 4 key criteria in terms their providing a basis for achieving such competitive advantage: value, rarity, inimitability and organisational support.

What is the primary aim of market penetration?

To gain market share

What is the purpose of stakeholder mapping?

To identify stakeholder interest and power: - miminal effort - keep informed - keep satisfied - key players

Which international strategy claims the advantage of supporting efficiency and effectiveness but also serving local needs and leveraging learning across units?

Transnational

What is the transnational strategy?

Transnational strategy has strong pressure for global integration and local responsiveness. It is the most complex strategy with focus on adaptation, capability exchange between units.

What point identifies the time at which demand for a new product or service suddenly collapses?

Tripping point

SWOT should be:

a basis for pulling together insights from analyses of environment and strategic capabilities

A mission statement is:

a statement of the overriding direction and purpose of the organisation

A successful hybrid strategy is:

a strategy that involves lower prices than differentiation strategies and higher benefits than low-price strategies

A vision statement is:

concerned with the future the organisation seeks to create.

A strategic business unit (SBU) is:

part of an organisation for which there is a distinct external market for goods or services

Stakeholders are the individuals or groups who:

rely on the organisation to fulfil their own goals and on whom the organisation depends

When should a company outsource instead of integrate?

when the vertically integrated operations is not adding any value to the overall business