MGT 300: Chapter 6
Jordan plans to open a computer repair business this summer. As he plans, he writes down the long-term goals of the business so he can decide where he wants to go strategically. Which stage of the strategic management process is Jordan in?
Establish the mission, vision, and values statements
Which of Porter's four competitive strategies offers products or services that are of unique and superior value compared to those of competitors and targets only a narrow market?
Focused-differentiation strategy
Which quadrant in the BCG matrix represents business units that are definite keepers?
Stars
Companies pursuing a cost-leadership strategy keep costs/prices _____ those of competitors and target a _____ market.
below; wide
The three sources from which strategic position emerges are having:
broad needs and many customers, broad needs and few customers and few needs and many customers
What are the four activities for developing strategic thinking identified in the text?
broaden task and functional knowledge, set aside time to reflect, engage in lateral thinking and understand the business
The _____ strategy of a company is concerned with the individual business units or production and service lines of the business.
business-level
Strategic _____ involves monitoring the execution of strategy and taking corrective action when necessary.
control
The strategy of moving into new lines of business is called _____.
diversification
What strategy is American Tile Corp. using when it acquires a company that makes industrial cleaning products which American Tile doesn't currently offer?
diversification
Stars
High growth and high market share
What is an example of an organizational weakness based on a SWOT analysis?
Inferior product quality
What effect has the Internet had on Porter's fifth competitive force, rivalry among competitors?
It has intensified rivalries among organizations.
Specialty manufacturers with high-end products such as Tesla automobiles offer products that are of unique and superior value compared to those of competitors. These companies target a very narrow market and are using the ______-differentiation strategy, one of Porter's competitive strategies.
focused
Jerome asked each of his employees to come to the meeting ready to explore new ideas for the product line. Which of the Six Thinking Hats does Jerome want his employees to wear?
green
Putting strategic plans into effect is referred to as _____.
strategy implementation
The skills and capabilities that give an organization special competencies and competitive advantages in executing strategies in pursuit of its mission are called organizational ______.
strengths
Within a SWOT analysis, the letter "S" represents a company's _____.
strengths
When a company is readily able to switch to another company in order to get the raw materials it needs to make products, Porter would say that the bargaining power of ______ goes down.
suppliers
When other companies cannot duplicate the value provided by a competitor, then the competitor has established a(n) _____ competitive advantage.
sustainable
Luxury Linens Inc. produces the highest thread-count sheets available anywhere and does so at a price that none of its competitors can duplicate. It can be said that Luxury Linens has a(n) _____.
sustainable competitive advantage
A growth strategy that focuses on increasing market share or profits by creating improvements in products or services is called a(n) _____ strategy.
innovation
Hair Today/Gown Tomorrow is an organization that provides low-cost prom dresses and styling services in underprivileged communities. It recently found a way to reach more communities by partnering with food pantries in different areas around the Midwest. Hair Today/Gown Tomorrow increased its market share by using a(n) _____ strategy.
innovation
Marketing, production, and sales are all involved in the the core business process known as _____.
operations
Within the core business process of _____, an organization provides a path for the company to follow and defines short-term objectives for the major activities in which the organization will engage.
operations
One way Chip's Coffee House retains staff is by offering two-weeks paid vacation and health insurance benefits for part-time employees. Which of Bossidy and Charan's core processes is this business focusing on?
people
What are the three core processes of business identified by Bossidy and Charan?
people, strategy and operations
Strategic positioning attempts to achieve sustainable competitive advantage by:
preserving what is distinctive about a company
When conducting a VRIO analysis, one question that must be answered is, "Is the resource or capability currently controlled by only a few firms or no other firms? This would determine the _____ associated with the resource.
rarity
Contingency planning is also referred to as _____ analysis.
scenario
Cash cows
Slow growth but high market share
According to Bossidy and Charan, the first core process of business is _____.
people
Of the three core processes of business identified by Bossidy and Charan, which do they believe is the most important?
people
The Internet has enabled consumers to "price shop" several retailers in order to find the best price for items such as appliances, electronics, and even cars. This has increased the consumer's ability to better negotiate favorable prices with retailers, demonstrating which of Porter's five competitive forces?
Bargaining power of buyers
Which of Porter's four competitive strategies keeps the costs, and hence prices, of a product or service below those of competitors but targets only a narrow market?
Cost-focus strategy
Which of Porter's four competitive strategies offers products or services that are of unique or superior value compared to those of competitors and that target a wide market?
Differentiation strategy
Dogs
Low growth and low market share
Corporate-level strategy: (select all that apply)
answers questions such as "what business are we in?" and "what products and services shall we offer?", focuses on the organization as a whole, and involves senior executives in planning
Before introducing the new software, Star Software Inc., conducted benchmark activities to assess how popular the product would be in the marketplace. Which stage of the strategic management process is being used in this situation?
assess the current reality
The second step of the strategic management process involves
assessing the current reality
Bethany wants to buy a pair of designer boots. To find the best price, she searches the Internet and compares prices among the eight sites that sell the boots. Which of Porter's five competitive forces is demonstrated in this scenario?
bargaining power of buyers
The creation of alternative hypothetical but equally likely future conditions is known as _____ planning.
contingency
To be successful, strategic planning requires a company to have a _____ orientation.
long-term
In which step of the strategic-management process does the organization monitor progress and take corrective action, such as rethinking policies, and revising budgets or personnel arrangements?
maintain strategic control
What two things does the BCG matrix evaluate?
market share and business growth rates
When pursuing a cost-focus strategy, a company would target a _____ market.
narrow
When considering SWOT analysis, what is an example of an organizational weakness?
obsolete technology
Environmental factors that an organization may exploit for competitive advantage are called organizational ______.
opportunities
Michael Porter promoted the idea that a company's strategy must also create a "fit" with the way's a company's activities _____ one another towards a common goal.
reinforce
A(n) ______ strategy requires little or no change to a company's product or service.
stability
When Johnson & Johnson promoted its baby shampoo as a gentle cleanser suitable for adults, it did this without changing the formulation of the product. Which type of corporate strategy does this exemplify?
stability
Having (1) few needs and many customers, (2) broad needs and few customers, and (3) broad needs and many customers are the three sources from which _____ emerges
strategic position
Michael Porter defined _____ as an attempt to achieve sustainable competitive advantage by preserving what is distinct about a company.
strategic positioning
Using statistical analysis of historical data to predict future events is called _____.
trend analysis
Wisconsin Dairy Farms wants to grow revenue and feels the best way to do this is by purchasing a business that is not in the dairy industry. After a lengthy analysis, it purchases Hydro Generator Corp. which supplies energy along the Pacific coast. What type of strategy is the company using?
unrelated diversification
Refer to Figure 6.2. Place the steps in the strategic-management process in the correct order, with the first step listed at the top.
Establish the mission, vision, and values statements, Assess the current reality, Formulate corporate, business, and functional strategies, Execute the strategies, Maintain strategic control
When conducting VRIO analysis, what question should you ask when considering the organization and its affect on a potential resource or capability?
Is the firm organized to exploit the resource or capability?
What are two characteristics of strategy formulation? Choose all that apply.
It is a time-consuming process. and It is the basis for determining long-term goals.
Refer to Table 6.2. What are two things a company might do when using a defensive strategy?
Phase out product lines or services and Declare bankruptcy
Question marks
Risky new ventures
When a company freezes hiring and tightens expenses due to decreased demand for its products or services, it is involved in a(n) _____ strategy.
defensive
A _____ is a vision or projection of the future that is made following a SWOT analysis.
forecast
Strategy _______ is the process of choosing among different strategies and altering them to best fit the organization's needs.
formulation
A business that wants to reach more customers and hires more employees to get this done is focusing on a _____ strategy.
growth
Porter's five competitive forces form a model for _____ analysis.
industry
Luis owns an online clothing store. Customers receive a brief survey after ordering from the store and Luis uses the feedback from these surveys to improve his systems. Which step in the strategic management process does this represent?
maintain strategic control
____-level strategy applies to the key functional departments or units within the business units.
Functional
Within a SWOT analysis, an organizational threat will come from _____ the company.
outside
What four characteristics are being addressed in a VRIO analysis?
value, rarity, organization and imitability
Which of the Six Thinking Hats focuses on positivity and optimism?
yellow
True or false: According to Bossidy and Charan, execution is the central part of any company's strategy.
True
Newly-implemented government regulations have reduced the availability of raw materials for Blair Woodworking Corp. This would be considered an external organizational ______ in a SWOT analysis.
threat
Pacific Specialty Bikes store gets customized parts for its high-end models from a local manufacturer, Premium Supply. When the manufacturer announced a price increase, the bike store tried to switch to other local manufacturers but learned they that they wouldn't be able to meet delivery schedules. As a result, Pacific Bike chose to pay the higher prices from Premium Supply. Which of Porter's competitive forces does this demonstrate?
Bargaining power of suppliers
What are Porter's four competitive strategies?
Differentiation, Cost-leadership, Cost-focus and Focused-differentiation
_____ is the process that helps align the last two phases of the strategic-management process: strategic implementation and strategic control.
Execution
True or false: Ferrari and Lamborghini automobiles are marketed based on the cost-focus strategy.
False
True or false: It is common practice today for most small business owners to engage in strategic planning.
False
According to Bryan Barry, which of these are things a manager can do to keep a strategic plan on track? (select all that apply)
Stay focused, Engage people, Keep it simple and Keep moving
In which step of the strategic-management process does an organization establish the mission and vision statements?
Step One
In which core process of business developed by Bossidy and Charan would a company ask "Who is my competition?" and "How will my business make money on a sustainable basis?"
Strategy
Which core process of business involves analyzing and understanding how success will be accomplished?
Strategy
True or false: According to the text, setting aside time to reflect is one way to develop strategic thinking.
True
True or false: The prediction of a business cycle based upon historical data is an example of using trend analysis in business.
True
Within a SWOT analysis, the letter "T" represents a company's _____.
threats
According to Michael Porter, the _____ of a company's strategy refers to the way a company's activities interact and reinforce one another.
"fit"
True or false: Since most strategic positions will fit with any company's products, a company doesn't need to be concerned about selecting the right strategy.
False
Apple's iPhone competes with offerings such as Google's Android and each company continually attempts to leapfrog the others' technology. This demonstrates which of Porter's competitive forces?
Rivalry among competitors
You own a small deli near campus and learn that the university is exploring whether it should open a Subway sandwich franchise in the Student Union. Which of Porter's competitive forces does this represent for you?
Threat of new entrants
The growing popularity of reading news online has significantly reduced the sales of print copies of US newspapers. Which of Porter's five competitive forces does this demonstrate?
Threats of substitute products or services
Juanita feels it is important for her taxi company to continually measure itself against its best competition. She keeps track of the number of rides per hour and turnaround times for all her drivers and compares it to that of other high-performing taxi companies in the area. Juanita is using the process of _____ to compare her company with another.
benchmarking
The process by which a company compares its performance with that of other high-performing organizations is known as _______.
benchmarking
As the senior vice president of marketing, Andrew is responsible for determining how much of the budget to spend on marketing and how much to spend on product development. Which level of strategic management is Andrew responsible for?
business-level
Select all of the true statements regarding unrelated diversification:
companies may use it in an attempt to reduce risk and it occurs when a company acquires another company in a completely unrelated business
Select all of the true statements regarding the trade-offs required in competing:
companies must choose what strategy to follow, companies must choose what strategy not to follow and some strategies are incompatible
The president, chief financial officer, and chief operating officer of Jensen Mfg. meet annually to discuss the direction of the company including what products they will continue to offer and what new products they will introduce. Which level of strategic management does this represent?
corporate-level
Which two of Porter's competitive strategies are appropriate when addressing a narrow market? Choose all that apply.
cost-focus and focused-differentiation
Computer maker Dell tries to have the lowest prices for its computers in order to attract a large consumer group. In Porter's four competitive strategies, this would be an example of the _____ strategy.
cost-leadership
Smartwater is a brand of bottled water that promotes health benefits and features a tall, smooth, clear bottle not found in competitor brands. Based on this, which of Porter's competitive strategies is the company using?
differentiation
Business growth rate, as used in the BCG matrix, is concerned with how fast the _____ is(are) growing.
entire industry
According to the BCG matrix, a company will do better in a _____ market in which it has a high market share.
fast-growing
Leonore's Luxury Leather Footwear Corp. conducted a SWOT analysis and determined that at least 57% of consumers would demand high-end footwear and their sales should increase by 18% in the next year. This vision of what could happen is known as a _____.
forecast
Ace Appliance is introducing a new line of kitchen appliances designed for smaller spaces. During the planning meeting, the marketing manager discussed how they would promote the new line to consumers through television and print advertisements while the production manager talked about the new equipment being installed to manufacture the products. Which level of strategic management is taking place during the meeting?
functional-level
At Superior Home Sales Inc., there is a manager for each of the three business units: marketing, finance, and sales. These three managers make decisions within each of their units. That makes these managers responsible for the _____ strategy of the company.
functional-level
A grand strategy that involves expansion of things like sales revenues, market share, or number of employees is known as a(n) _____ strategy.
growth
One question within a VRIO analysis is, "Is the resource or capability costly for other companies to produce in the same manner?" Which aspect of the VRIO analysis does this represent?
imitability
Sanjay knew it would be costly for other companies to match the quality of table linens his company made which provided him with a competitive advantage. Which part of a VRIO analysis is Sanjay basing his opinion on?
imitability
After completing his competitor analysis, Justin realized his company was the only one with all-natural ingredients in their pizza crust and could use this to get the pizza into more health food grocery stores. What aspect of a SWOT analysis has Justin uncovered?
opportunity
Skate/24 had only one competitor in the local market and that competitor just went out of business. Within a SWOT analysis, this is an example of an organizational _________ for Skate/24.
opportunity
Miles is a managing partner at Winslow Financial Services and is analyzing a new investment product the company would like to offer. He isn't sure the company has the right software systems in place to offer the product. What aspect of the VRIO analysis is Miles considering to make his decision?
organization
At first Rohan thought it was a good idea to offer a car repair pick-up service at his auto repair shop, but then he realized that most customers called Tow-It-Now Inc. and it would be difficult to match that company's service. Which part of a VRIO analysis helped Rohan evaluate this idea?
rarity
A company that grows its business by purchasing a business that is related to its existing portfolio is engaging in _____.
related diversification
Refer to Figure 6.2. The "feedback loop" in the strategic-management process involves
revising actions if necessary.
The BMW car company has a superior reputation within the industry and among car buyers. When applying SWOT analysis, this company's reputation is an example of a(n) ______.
strength
Precise work processes and high-ranking customer service are examples of organizational ______ in a SWOT analysis.
strengths
Which of the following are accurate regarding Step 4 (Execute the Strategy) in the strategic management process? (select all that apply)
this step poses the greatest challenge for managers and top managers must check on possible roadblocks and see if it will be possible to execute the plans
In terms of a SWOT analysis, organizational _______ are environmental factors that hinder an organization from achieving a competitive advantage.
threats
Sasha has run a small diner near the train station for the past ten years. Six months ago, a chain restaurant serving gourmet burgers and sandwiches opened up near him and he has had to re-think his menu. He added some specialty sandwiches and free fries with every burger in order to retain his customers. Which of Porter's five competitive forces has affected Sasha's business?
threats of new entrants
Which of the following represent competitive forces used in Porter's model for industry analysis?
threats of new entrants, rivalry among competitors, bargaining power of suppliers, bargaining power of buyers and threat of substitute products or services
Joan runs a drop-in play center and until recently she was the only business in town where families could find reasonably-priced entertainment for their children. Joan learned that two fast-food restaurants with play areas are being built nearby so she is coming up with ways to convince her customers that her center is preferable. Which of Porter's five competitive forces is Joan specifically worried about?
threats of substitute products or services
Carlos is doing a VRIO analysis for a product his company is thinking about producing. The first question he asks is, "Does this new capability allow us to minimize the threat of the main competitor gaining more market share?" He decides the answer to this question is "yes." Which aspect of the VRIO analysis does this question answer?
value
In the large city where Cassandra lives, many people are asking for her restaurant to deliver food to their offices. Her restaurant has never delivered food before but since so many people have requested this service Cassandra decides it's a good idea to do it. In a VRIO analysis, Cassandra has determined the ____ of this capability.
value
Netflix began as a video rental business but has expanded into producing and distributing its own programming. What type of diversification strategy is Netflix using?
vertical
Which strategy is a company pursuing when it expands into businesses that provide the supplies it needs to make its products or that distribute and sell its products?
vertical integration
Peterson Electric Inc. has outdated manufacturing facilities. Within a SWOT analysis, this would be an example of an organizational ______ of the company.
weakness
When would a company use a VRIO analysis?
when deciding whether or not a new product might work in the marketplace
