BUSN 3200 CH.6
True or false: Divisional managers create business-level plans to establish goals for their divisions.
True
Henri Fayol believed that, if the situation changes, plans can be ______.
altered and changed
Distinguishing an organization's products from the products of competitors on dimensions such as product design, quality, or after-sales service is an example of a ______ strategy.
differentiation
Managers use a ______ strategy to distinguish their products from those of their competitors by focusing on characteristics such as design, quality, and after-sale service.
differentiation
When a company expands its business operations into a new industry in order to produce new kinds of goods or services, this is referred to as.........
diversification
The model that helps managers focus on the most important competitive forces in the external environment is the ______.
five forces model
In licensing, a company allows foreign organizations to take charge of both manufacturing and distribution, but in ______, a company sells rights to use brand names that are trademarked.
franchising
Michael Porter suggests that when managers choose a business-level strategy, their organization should ______ in a particular market.
gain a competitive advantage
With the continuing threat of Internet hacking, cybersecurity has become an enormous industry, with companies vying to convince the large, global companies that they can provide the best strategies for protection. This industry is characterized by permanent ongoing intense rivalry that has resulted from advanced technology. These conditions indicate..............in this industry.
hypercompetition
A...............-cost strategy allows a company to sell a product for less than its competitors and still make a good profit.
low
When managers make the decision to price their products below that of their competitors, they are using a ______ strategy.
low-cost
A............strategy allows a company to customize product offerings and marketing approaches to local conditions, whereby managers are able to gain market share or charge higher prices for their products.
multidomestic
When a company customizes its products and marketing to fit specific national conditions, it is following a ______ strategy.
multidomestic
Using valuable skills among cooperating divisions to add value results from ______ diversification; using current strengths to turn around poorly performing companies in other industries can result from ______ diversification.
related; unrelated
A company chooses a global strategy when it wants to sell ______ products while maintaining the same basic marketing approach in all competitive markets.
standardized
When the CEO and other top managers communicate their vision for the company to the rest of the managerial staff, this is referred to as ______.
strategic leadership
The belief that, at any time, only one central, guiding plan is put into operation to achieve an organizational goal is ______.
unity
Production operations established in a foreign country independent of any local direct involvement is a ______.
wholly owned foreign subsidiary
True or false: The low-cost strategy drives down an organization's costs below those of its competitors. This strategy is aimed at serving a broad market.
True Reason: The low-cost strategy drives down the organization's costs below that of its rivals. Unlike the focused low-cost strategy, which serves only one segment, the low-cost strategy is aimed at serving many or most segments of a particular market.
MATCH
Unity→ have only one guiding plan have only one guiding plan Continuity→ build and refine previous plans on an ongoing basis Accuracy→collect and use all available information Flexibility→alter or change plans when necessary
One way to overcome the loss of control problems associated with exporting, licensing, and franchising is to expand by means of ______.
a strategic alliance
Almost all managers participate in some form of planning in order to
- predict future threats. - predict future opportunities.
While defining a business and answering questions about their company's products, managers can identify:
- present customer needs. - who their true competitors are. - future customer needs.
Planning is a(n) ______ process.
- strategy-making - goal-making
The factors that Michael Porter identified include:
- the level of rivalry among organizations in an industry. - the potential for entry into an industry. - the power of large customers.
What is it called when top management decides the industries and national markets in which their organization plans to compete?
A corporate-level strategy
A fine food chain based in the U.S. reached out to a world-renowned chef and a popular French winery, and suggested that they go into business together in the U.S., France, and Belgium. What kind of agreement was the food chain suggesting?
A joint venture
What should be the first critical component that the manager must define when determining an organization's mission?
Business
How do managers typically distinguish time horizons?
Long-term plans, intermediate-term plans, and short-term plans
What type of strategy allows a company to sell a product for less than their competitors and still make a profit?
Low-cost
A time horizon is the intended ______ of a plan
duration
Mission statements accomplish
- Differentiates the company from its competitors - States the broad purpose of the organization - Identifies a company's products and customers
the following are steps in the planning process of an organization
- Formulating strategies to achieve the goals - Determining the organization's mission and goals - Selecting the most effective way to implement organizational strategy
Mission statements accomplish
- Identifies a company's products and customers - States the broad purpose of the organization - Differentiates the company from its competitors
In large organizations, planning usually takes place at three levels of management. They are _____, ______, and ______.
- business - corporate - functional
Accuracy means that, in the planning process, managers need to make every attempt to:
- collect all available information. - use all available information.
The mission statement ______ its competitors.
- distinguishes an organization from - differentiates an organization from
A corporate-level strategy is a plan of action that involves choosing in which industries and countries a company should invest its resources to achieve its:
- goals. - mission.
The risks associated with licensing is that the company granting the license:
- has to give access to its technological know-how. - risks losing control of its secrets.
Successful business-level strategies are designed to result in:
- increased brand loyalty. - increased profits.
The term hypercompetition applies to industries that are characterized by ______ competition.
- intense - ongoing - permanent
Principal Corporate-level Strategies include:
- international expansion. - vertical integration. - concentration on a single industry. - diversification.
Types of standing plans include:
- policies. - rules. - standard operating procedures (SOPs).
Michael Porter's Five Forces Model is important as it focuses on major ______ an organization will encounter.
- potential threats - challenges - competitive forces
Accuracy means that, in the planning process, managers need to make every attempt to:
- use all available information. - collect all available information.
Why might managers decide to pursue unrelated diversification?
Because they believe they can purchase a failing company and use their skills to turn it around so it performs better and adds value
True or false: The international expansion strategy requiring the least foreign involvement, foreign investment, and risk comes from joint ventures.
False Reason: The least risky strategy is import/export.
True or false: Managers only need to identify their customers when defining a business.
False Reason: To define a business, managers must identify their customers, identify those customers' needs, and determine if those needs are being satisfied.
MATCH
Forward vertical integration → Entering into a new industry that uses, distributes, and sells company products Backward vertical integration → Entering into a new industry that produces raw materials for the company's products.
______ argued that the five forces are the major threats that an organization will encounter.
Porter
If managers decide to pursue a global strategy for selling products in the national market, how does that impact how products are produced and marketed?
Products will be standardized and there will be one basic marketing approach.
From a managerial perspective, what is the purpose of formulating a set of corporate strategies?
To help them achieve the corporation's mission
Managers need to decide to what extent the organization should customize its products for different national conditions. The product can be standardized in all markets in which the organization competes; this is called a ______ strategy. If the company customizes its products and marketing tactics to different national conditions, it is called a ______ strategy.
global; multidomestic
The five forces model identifies the factors as major threats because they affect ______.
how much profit competitors within the same industry can expect to earn Reason: In a competitive environment, Porter's Five Forces model is a method for managers to use in order to determine the major threats to profitability.
A company engaged in ______ sells products at home that are made abroad.
importing
When two or more companies form a strategic alliance to to jointly establish and share the ownership of a new business, it is a(n) ______.
joint venture
Allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee is ______.
licensing
The business-level plan details both ______.
long-term divisional goals and division-level strategy
The overriding purpose of an organization is specified by its ______.
mission
A broad declaration of an organization's purpose that identifies the organization's products and customers and distinguishes the organization from its competitors is known as a ______.
mission statement
A strategy that is customized and marketed to accommodate particular national conditions is a............strategy.
multidomestic
Vertical integration is an organization's response to ______.
new opportunities
The absence of a(n) ______ can result in hesitation, false steps, and changes of direction that can hurt an organization.
plan
The process of..............is used to identify and select appropriate goals and courses of action for an organization.
planning
One characteristic of a joint venture is that risk is ______.
reduced
Henri Fayol defined the quality of continuity during planning to mean that the company should focus on ______.
refining previous plans and continually modifying plans at all levels so they fit together
The strategy of entering of entering a new industry to create competitive advantage in one or more of the company's existing divisions is known as............diversification.
related
When a company decides to enter a new industry to gain a competitive advantage within one or more of the company's existing divisions, this is called ______.
related diversification
When an organization enters into a strategic alliance with a foreign company, they share ______.
risks and rewards
Jeremy forecasts what might happen if his company were to launch their new product into the market according to different schedules, prices, and features. He's thinking of making decisions to customize based on what he knows of his competitors' schedules and features. Jeremy is engaging in ______ planning.
scenario
The generation of multiple forecasts of future conditions followed by an analysis of how to respond effectively to each of those conditions is ______.
scenario planning
When the same situation occurs repeatedly, ______ plans are used.
standing
Henri Fayol emphasized that managers must not be bound to a ______ plan.
static
An agreement in which managers share their organization's resources knowledge, and skills with a foreign company is a(n) ______.
strategic alliance
The CEO and top managers use ______ to communicate to their managers and other employees a compelling vision of what they want the organization to accomplish.
strategic leadership
To achieve organizational goals, managers use ______ to launch courses of action that will move them towards their goals.
strategies
A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals is a(n) ______.
strategy
The development of a set of corporate, business, and functional strategies that allow an organization to accomplish its mission and achieve its goals is known as ______.
strategy formulation
The advantage to franchising is ______.
that the franchiser does not have to bear the development costs
An advantage of a strategic alliance for a U.S.company over a license or franchise is ______.
the company has more control over what is being produced and sold
When well executed by all functional areas, a functional-level plan allows ______ to achieve its corporate goals.
the entire company
The advantage of a strategic alliance is that ______.
the level of the company's involvement abroad increases
The advantage of licensing associated with opening up in a foreign country is that ______.
the licenser does not have to bear the development costs
The SWOT analysis components that are used to anticipate potential problems or opportunities for business growth outside an organization are ______, and for internal problems or assets of an organization are ______.
threats and opportunities; weaknesses and strengths
In large organizations, planning usually takes place at ______ level(s) of management
three
Managers of any organization that needs to sell its products abroad should ask ______.
to what extent should the organization customize its products to different national conditions?
In order to ensure that all information is accurate in the planning process, managers must recognize that ______.
uncertainty exists
At any one time only one central, guiding plan is put into operation to achieve an organizational goal. This is known as..............
unity
Fayol stated that effective plans should have four essential qualities, including ______.
unity, continuity, accuracy, and flexibility
When organizations move into a new industry that is not related to their current businesses, this is ______ diversification.
unrelated
The corporate-level strategy that is used when a company enters an industry that either supplies products to the company or purchases the company's products is ______.
vertical integration
When a soda pop company decides to expand by buying a bottling company, this is an example of forward ______.
vertical integration
There are two important goals of a mission statement; they are to describe their products for employees by pointing out ______ and ______.
what is unique or important about its products; what differentiate its products from its competitors
A manager of a medical durable equipment company decides to establish an operation in a foreign country independent of any local direct involvement. This manager is creating a ______.
wholly owned foreign subsidiary
When companies decide to expand into a new industry in order to provide a good and/or service that is different from and, in addition to, what they are already providing, this is referred to as ________.
diversification
The corporate-level strategy of related diversification means companies enter an industry that creates a competitive advantage for an organization's ______.
existing division or business
With exporting, there are ______ risks involved compared to opening a manufacturing plant abroad.
few
Companies that try to specialize in one segment of the market and undercut the prices of the other sellers in the market are using a ______ strategy.
focused low-cost
Managers pursuing a ______ strategy serve one or a few segments of the overall market and aim to make their organization the lowest-cost company serving that segment.
focused low-cost
The strategy of expanding into a new industry that uses, distributes, or sells the company's products is ______ vertical integration.
forward
Licensing allows a foreign organization to take charge of both manufacturing and distribution, whereas ______ sells rights to foreign organizations to use a brand name.
franchising
Selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits is called ______.
franchising
When a corporation sells the rights to use its name and expertise to a foreign company in exchange for a lump sum of money, it is called...........
franchising
The downside of using the franchise strategy is that franchisers risk losing ______ over the way the franchisee operates the franchise.
control
A plan that indicates in which industries and national markets an organization intends to compete is a ______ strategy.
corporate-level
The type of plan that defines an organization's mission and goals, overall strategy, and structure is the ______.
corporate-level plan
Top management is responsible for creating the ______, which takes into account decisions involving the corporation's overall structure, strategy, goals, and mission
corporate-level plan
Top management is responsible for creating the ______, which takes into account decisions involving the corporation's overall structure, strategy, goals, and mission.
corporate-level plan
An advantage of a multidomestic strategy is ______.
customization of product offerings and marketing approaches
When managers plan, they must forecast what may happen in the future to ______.
decide what to do in the present
Expanding a company's operations into an industry that produces inputs for its products is ______ vertical integration
backward
If a brewery decides to expand by buying the farms that produce the ingredients, this is an example of ______ integration.
backward vertical
The advantage of licensing is that the licenser does not have to ______ in a foreign country.
bear the development costs associated with opening up
A differentiation strategy makes entry difficult for new competitors because the competitors have no identifiable ______ to attract current customers.
brand name
Top managers at an expanding digital provider outlines a method for how adding popular programming with top stars to their streaming video programming will help them outperform their competitors. These managers are working on a(n)..............-level strategy.
business
A plan to gain a competitive advantage in a particular market or industry is a ______ strategy.
business-level
Organizations that successfully pursue a differentiation strategy may be able to ______.
charge a higher price
The third step in the planning process is ______.
choosing the most effective way to put strategies into action
One reason that few risks are associated with exporting is that ______.
companies do not have to build manufacturing companies abroad
People would come from all over the greater city lines for Sami's Sushi until the owner of Sami's decided to expand to some of the well-populated suburbs. This decision was a corporate-level strategy referred to as ______.
concentration on a single industry
When a company reinvests its profits to strengthen its competitive position in its current industry, it is utilizing a(n) ______ strategy.
concentration on a single industry
Managers build and refine their previous plans at the corporate, business and functional levels to put together a broad framework. This ongoing planning process is referred to as ______.
continuity
The following represents the steps in a forward vertical value chain
Raw materials, intermediate manufacturing, assembly, distribution
Strengths, weaknesses, opportunities, and threats are components of a ______.
SWOT analysis
True or false. A functional-level plan requires managers to evaluate how each employee functions in his or her job and then use this information to create a business-level plan.
False Reason: The functional-level plan is the framework that managers use to set goals for each function (various departments). This ensures that the goals of the business-level plan are met.