MGMT Chapter 6
Strategic position emerges from three sources: _____.
few needs, many customers; broad needs, few customers; broad needs, many customers
When Henry Ford implemented the assembly-line process to dramatically decrease the time and resources needed to make automobiles, he was pursuing a ________ strategy.
cost-leadership
A SWOT analysis provides organizational strategists with key information and a realistic assessment and understanding of both the internal and external environments. This activity is important because A SWOT analysis is a useful tool in gathering information about the competitive environment to establish a grand strategy. The goal of this activity is to challenge your knowledge of SWOT analysis. Select the most appropriate area of the SWOT analysis for each item.
1. The R&D program at the company produces world-class products. Strengths 2. Our product is targeted to young professionals under 35 years of age. That group is growing. Opportunities 3. The equipment the company owns is last generation and does not have the latest technology. Weaknesses 4. There have been several up and coming companies that are beginning to enter our market space. Threats 5. Word is that a new highway is being built in the next couple of years, making it easier to transport our products from the factory. Opportunities 6. The employees who work for us are highly skilled and leaders in their field. Strengths 7. Management does not provide a big budget to support the world-class staff that work for the company. Weaknesses 8. The company uses a fair amount of short-term debt financed through the bank. Economic projections indicate that interest rates may rise in the future and credit will be more difficult to obtain. Threats
Organizations assess the reality in which they currently exist and compete, and they use this information to formulate a corporate strategy. This activity is important because it is critical for managers to know which type of grand strategy fits best with their organization's current realities. The goal of this activity is to challenge your knowledge of the three common grand strategies. For each statement, select the type of corporate strategy that it best represents.
1. The research and development department and the marketing department make some alterations to a current product with the intention of attracting new customers. Growth Strategy 2. After the recent recession, the company sold off vacant buildings. Defensive Strategy 3. The research and development department and the production department do a great job when we ramp up production, but the customer service department takes time to catch up. Stability Strategy 4. The recent expansion has been successful, but we don't want to spread ourselves too thin. Defensive Strategy 5. After recent expansion, the company wants to avoid growing too quickly. Stability Strategy 6. The top managers are considering a merger. Growth Strategy
An organization's strategy is its plan for positioning itself in the market in unique and valuable ways. This activity is important because strategic management takes place at three different levels in an organization, and it is important to understand how each of these levels of strategy supports the others. The goal of this activity is to challenge your knowledge of the three levels of strategy. Read the questions. Then, select the level of strategy that each question best exemplifies.
1. What business are we in? Corporate-level Strategy 2. What amount should we invest in employee development? Business-level Strategy 3. What products and services shall we offer? Corporate-level Strategy 4. What's the best way to integrate our department's latest innovation with older versions of the product? Functional-level Strategy 5. How should our division market our new program? Functional-level Strategy 6. What sum will we allocate toward facilities expansion? Business-level Strategy
The company's CEO puts pressure on the firm's R&D managers to develop products that can be created cheaply. The firm would be following a ________ strategy:
Cost leadership
John owns a piano sales and tuning store. He wants to be the biggest retailer in the Midlands. Adding salespeople would be part of his strategic __________.
Execution
Strategic positioning involves performing the same activities as rivals in a similar way, but at a lower cost.
False
When analyzing the "W" in SWOT analysis, Roberta, the manager might be assessing:
High turnover of employees
In order for a managerial team to develop an effective strategy, they first need to assess the conditions under which the organization is operating. This activity is important because in order to successfully formulate business-level strategy and be competitive, companies need to have an extensive understanding of their industries. Porter's Five Forces Model is one tool for accomplishing this task. The goal of this activity is to test your knowledge of Porter's Five Competitive Forces.
Rivalry Among Competitors - On Amazon, the average product's cost changes every ten minutes based on data the company collects including rivals' prices. Bargaining Power of Suppliers - Walmart demanded that all its vendors cut their prices by 15 percent. Threat of New Entrants - Apple introduced its Homepod to the home sound system market that had been previously dominated by Sonos. Threat of Substitute Products or Services - Consumers are drinking less diet soda in favor of things like flavored zero calorie water and fresh juices. Bargaining Power of Buyers - If you don't like the price of something at your local store, you can probably find it online with two-day shipping at a lower price.
The Boston Consulting Group developed the BCG matrix to help companies evaluate their strategic business units on the basis of (1) business growth rates and (2) market share. The matrix suggests an organization will do better in fast-growing markets where it has high market share, rather than in slow-growing markets where it has low market share. This activity is important because the BCG matrix is a tool you can use to identify the most effective way to direct your company's financial resources. The goal of this activity is to challenge your knowledge of the BCG matrix. Match each description to the correct category of the BCG Matrix.
Stars - High growth rate, high market share—a definite keeper Question Marks - Risky new ventures of which some will take off, others will not Cash Cows - Have good market share, but slow growth; income can be used for other winners or potential winners Dogs - Slow growth, not much market share—should get rid of these
The strategic management process has five steps: establish the mission and vision, establish the grand strategy, formulate the strategic plans, carry out the strategic plans, and maintain strategic control. Feedback may occur at all times to revise these actions. This activity is important because proper use of strategic management techniques is associated with increased business performance. The goal of this activity is to challenge your understanding of the strategic management process. Read the case below and complete the activity as directed. Founded by entrepreneurs Bill and Vance Gordon, Enjuba is a textured goods manufacturer that sells handiworks produced in the African country of Kenya. As Enjuba is their first startup company, Bill and Vance are unsure of how they should proceed. They know that they need to have a statement that explains their company's reason for being and have decided on "Enjuba exists to better represent the quality and handiwork of the African people through fair trade that benefits the producers, customers, and society at large." After completing an assessment of the market, Bill and Vance must decide on three main strategies: growth, stability, and defensive. Upon careful review, they decide on a growth strategy to capitalize on its new products and services. With this immediate strategy established, Bill and Vance also need to develop a one- to five-year strategy that communicates Enjuba's general goals as well as how the goals will be achieved. After completing an analysis, the most appropriate strategy would be a differentiation strategy that offers unique and superior products when compared to current market offerings. Within the next one to five years, Bill and Vance intend to put their plan into place and implement it by overcoming any market resistance. Additionally, they will consistently review the market offering against their original plan to ensure that their product is unique and being produced and marketed effectively. Match each of the statements related to Enjuba to the correct step of the strategic management process.
Step 2: Assess the current reality Bill and Vance complete an assessment of the market. Step 5: Maintain strategic control Bill and Vance must consistently review the market offering against their original plan to ensure that their product is unique and being produced and marketed effectively. Step 4: Strategic implementation Bill and Vance intend to put their plan into place and implement it by overcoming any market resistance. Step 3: Formulate corporate, business, and functional strategies Bill and Vance need to develop a one- to five-year strategy that communicates Enjuba's general goals as well as how the goals will be achieved. Step 1: Establish the mission, vision, and values statements "Enjuba exists to better represent the quality and handiwork of the African people through fair trade that benefits the producers, customers, and society at large."
A SWOT analysis is:
looking for the strengths, weaknesses, opportunities, and threats influencing an organization's competition
In the third step of the strategic management process, managers should------------------.
translate the broad mission and vision into a corporate strategy.
