Strategic Management Chapter 6 Testbank, Strategic management, Management Chapter 5 Test Bank, Ch. 4 Multiple Choice, Capstone Chap.5 Strategies in Action

Marketing consists of five basic activities:

(1) marketing research and target market analy-sis, (2) product planning, (3) pricing products, (4) promoting products, and (5) placing or distrib-uting products.

ix Ways Human Resource Management Can Provide a Competitive Advantage

1. Analyze turnover rates to determine where problems may lie. 2. Measure and monitor employee engagement and morale scores. 3. Track employee data to identify high and low performers. 4. Determine going market rates for talent and align compensation with company goals. 5. Design employee development and training pathways that take into account the strategic and long-term needs of the organization. 6. Provide guidance on legal issues related to all personnel matters.

Controlling consists of four basic steps:

1. Establishing performance standards 2. Measuring individual and organizational performance 3. Comparing actual performance to planned performance standards 4. Taking corrective actions

Planning enables a firm to:

1. Take into account relevant factors and focus on the critical ones 2. Ensure that the firm is prepared for all reasonable eventualities and can make timely changes and adapt as needed 3. Gather the resources needed and carry out tasks in the most efficient way possible 4. Conserve its own resources and avoid wasting natural resources 5. Assess whether the effort, costs, and implications associated with achieving desired objec-tives are warranted 6. Be proactive, anticipate, and influence the future

Organizational culture

A pattern of behavior developed by an organization over time as it learns to cope with its problem of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel in the firm.

empirical indicators

A resource can be considered valuable to the extent that it is (1) rare, (2) hard to imitate, or (3) not easily substitutable

Promotion

Advertising Personal selling Sales promotion Publicity

Marketing Audit Checklist of Questions

Are markets segmented effectively? 2. Is the organization positioned well among competitors? 3. Are present channels of distribution reliable and cost effective? 4. Is the firm conducting and using market research effectively? 5. Are product quality and customer service good? 6. Are the firm's products and services priced appropriately? 7. Does the firm have an effective promotional strategy? 8. Is the firm's Internet presence excellent as compared to rivals?

Place

Distribution channels Distribution coverage Outlet location Sales territories Inventory levels Transportation carriers

Price

Level Discounts Allowances Payment terms

Product

Quality Place Features and options Style and brands Packaging Product line Warranty and services

Collaborative machines

Robots used in manufacturing operations; these robots are flexible, capable of doing a variety of tasks.

Strategy Evaluation

Stage of Strategic-Management Process When ControllingMost Important

Strategy Implementation

Stage of Strategic-Management Process When Organizing & Motivating Most Important

Strategy Formulation

Stage of Strategic-Management Process When Planning Most Important

distinctive competencies.

Strengths that cannot be easily matched or imitated by competitors

Capacity utilization

The extent to which a manufacturing plant's output reaches its potential output; the higher the capacity uti-lization the better, because otherwise equipment may sit idle

Marketing research

The systematic gathering, recording, and analyzing of data about problems/practices/issues related to the marketing of goods and services.

an antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called

a poison pill

McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of

achieving economies of scope through related diversification

Individual investors are dependent upon the corporation's managers to

add value to their investments in a way that the stockholders could not accomplish on their own

The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. This is an example of

attaining the benefits of parenting through unrelated diversification.

The organizing function of management can be viewed as consisting of three sequential activities

breaking down tasks into jobs, combining jobs to form departments, and delegating authority. I

according to the text, corporate restructuring includes

capital restructuring, asset restructuring, and management restructuring

Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as

capitalizing on core competencies

Dividend decisions

concern issues such as the dollar amount per share to pay quarterly to stock-holders, the stability of dividends paid over time, and the repurchase or issuance of stock.

Planning

consists of all managerial activities related to preparing for the future, such as establishing objectives, devising strategies, and developing policies; Even though planning is considered the foundation of manage-ment, it is the task that managers most commonly neglect

production/operations

consists of all those activities that trans-form inputs (raw materials, labor, capital, machines, and facilities) into finished goods and ser-vices.

reflects the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services

core competencies

portfolio management matrices are applied to what level of strategy?

corporate level

The risks of vertical integration include

costs and expenses associated with increased overhead and capital expenditures, problems associated with unbalanced capacities along the value chain, additional admin costs associated with managing a more complex set of activities

e financing decision

determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital (for example, by issuing stock, increasing debt, selling assets, or using a combination of these approaches)

divesting business can accomplish many different objectives. this includes

enabling managers to focus their efforts to more directly on the firm's core businesses, providing the firm with more resources to spend on more attractive alternatives, raising cash to help fund existing businesses

guidelines for managing strategic alliances

establishing a clear understanding between partners, not shortchanging your partner, working hard to ensure a collaborative relationship between partners

limitations of the BCG

every business cannot be accurately measured and compared on 2 dimensions, views each business as a stand alone entity and ignores the potential for synergies, can lead to some troublesome and overly prescriptions

The downsides or limitations of mergers and acquisitions include

expensive premiums that are frequently paid to acquire a business, difficulties in integrating the activities and resources of the acquired firm, many cultural issues that can doom an otherwise promising acquistion

The two principle means by which firms achieve synergy through market power are pooled negotiating power and corporate parenting. true or false?

false

When firms diversify into unrelated businesses, the primary potential benefits are horizontal relationships, i.e. businesses sharing tangible and intangible resources. true or false?

false

Whenever an organization diversifies, it represents investing a stockholder's funds in a way in which the individual investor is unable. True or false?

false

a firm that incorporates more processes toward the original source of raw materials is an example of forward integration. true or false?

false

a newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence. true or false?

false

a publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification. true or false?

false

an advantage of a firm entering into a strategic alliance is that it does not have to share the wealth with is partners. true or false?

false

for strategic alliances to be effective, reliance on written contracts to delimit responsibilities and enforce compliance is vital. true or false?

false

market power refers to cost savings from leveraging core competencies or sharing activities among the businesses in a corporation. true or false?

false

market transactions do not involve transaction costs. true or false?

false

portfolio management should be considered as the primary basis for formulating corporate level strategies. true or false?

false

through joint ventures, firms can directly acquire the assets and competencies of other firms. true or false?

false

vertical integration should be undertaken when demand for the organization's products is very unstable. true or false?

false

an antitakeover called _____ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it

greenmail

antitakeover tactics include

greenmail, golden parachutes, poison pills

portfolio management frameworks share what characteristics?

grid dimensions are based on external environments and internal capabilities/market positions

Human resource management (HRM)

includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees, as well as managing union rela-tions.

Product planning

includes devising warranties; packaging; determining product options, features, brand style, and quality; deleting old products; and providing customer service

Channels of distribution

is a term that refers to the various intermediaries that take a product from a producer to an end customer. These intermediaries bear a variety of names such as whole-salers, retailers, brokers, facilitators, agents, vendors—or simply distributors

The investment decision, also called capital budgeting,

is the allocation and real-location of capital and resources to projects, products, assets, and divisions of an organization.

Financial ratio analysis

is the most widely used method for determining an organization's streng-ths and weaknesses in the investment, financing, and dividend areas.

Cooperative relationships such as this have the potential advantages such as entering new markets, reducing manufacturing costs in the value chain, and developing and diffusing new technologies

joint ventures and strategic alliances

a cash cow referred to in the BCG, refers to a business that has

low market growth and relatively high market share

It may be advantageous to vertically integrate when

lower transaction costs and improved coordination are vital and achievable through vertical integration

In the BCG matrix, the suggested strategy for stars is to

maintain position and after the market growth slows use the business to provide cash flow

according to michael porter there's a tremendous allure to ____. its the big play, the dramatic gesture. with one stroke of the pen you can add billions to size, get a front page store, and create excitement in markets.

mergers and acquisitions

the 3 primary means by which a firm can diversify are

mergers and acquisitions, joint ventures and strategic alliances, internal development

For a core competence to be a viable basis for the corporation strengthening a new business unit there are 3 requirements

must help the business gain strength relative to its competition, new business must be similar to existing business to benefit, collection of competencies should be unique so that they cannot be easily imitated

when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures

parenting

the term golden parachute refers to

pay given to executives fired because of a takeover

Management

planning, organizing, motivating, and controlling.

in the BCG matrix, a business that has a low market share in an industry characterized by a higg market growth is termed a

question mark

In managing a firm's portfolio, the BCG matrix would suggest that

question marks can represent future stars if their market share increased

when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change

restructuring

four Ps of marketing

s product, price, promotion, and place,

transaction costs include all of the following

search costs, negotiating costs, monitoring costs

when management uses common production facilities or purchasing procedures to distribute different but related products, they are

sharing activities

when using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as

star

a company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of

strategic alliance

a firm should consider vertical integration when

the firm's suppliers of raw materials are often unable to maintain quality standards

Marketing

the process of defining, anticipating, and fulfilling consum-ers' needs and wants. Marketing is about satisfying current and potential customers' needs.

Sharing core competencies is one of the primary potential advantages of diversification. in order for diversification to be most successful, it is important that

the similarity required for sharing core competencies must be in the value chain, not in the product.

vertical integration is attractive when

transaction costs are higher than internal admin costs

Diversification that results in strengthening the value chain and increasing competitive advantages is the best possible example of investing stockholders' funds in a way that individual investors cannot. true or false?

true

a golden parachute is prearranged contract with managers specifying that in the event of a hostile takeover, the target firm's managers will be a paid a significant severance package. true or false?

true

according to the text, the 2 main sources of synergy is unrelated diversification are parenting and financial synergies via portfolio management. true or false?

true

among the disadvantages of acquisitions are the expensive premiums that are frequently paid to acquire a business. true or false?

true

an advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures. true or false?

true

an advantage of mergers and acquisitions is that the can enable a firm to rapidly enter new product markets. true or false?

true

in recent years, many high tech firms such as priceline.com have suffered from the negative impact of uncontrolled growth. true or false?

true

one of the risks of vertical integration is that they may be problems associated with unbalanced capacities or unfilled demands along a firm's value chain. true or false?

true

portfolio management matrices generally costs of 2 axes that reflect industry or market growth and the market share of a business. true or false?

true

restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. true or false?

true

sharing activities across business units can provide two primary benefits cost savings and revenue enhancements. true or false?

true

sharing activities among business units can have a negative effect on a given business's differentiation. true or false?

true

similar businesses working together or the affiliation of a business with a strong parent can strengthen a firm's bargaining position relative to suppliers and customers. true or false?

true

the acquisition of 2 or more counter cyclical businesses is an example of using diversification to reduce risk. true or false?

true

the potential advantages of strategic alliances and joint ventures include entering new markets as will as developing and diffusing new technologies. true or false?

true

vertical integration is attractive when market transaction costs are higher than internal admin costs. true or false?

true

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

vertical integration

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with

vertical integration

Corporate level strategy addresses two related issues

what businesses to compete in; how these businesses can achieve synergy

test marketing

which allows an organiza-tion to examine alternative marketing plans, learn about potential problems with the product, uncover ways to better market the product, or forecast future sales of new products

target market analysis

—the examina-tion and evaluation of consumer needs and wants.