MGT 491 OL Ch. 2

Which of the following strategies best illustrates a generic business strategy?

A decision to niche market the jewelry sold by a company while the apparel division under the same company sells its products through mass marketing

Orange Synergy Inc. is a company that manufactures a variety of products that run on solar power. The company wants to ensure that solar technology replaces all forms of exhaustible energy sources in the near future. Which of the following statements will make an accurate vision for Orange Synergy?

All nations around the globe should have access to a sustainable energy source.

Which of the following statements is true of top-down strategic planning?

In this process, the formulation of strategy is separate from implementation.

Carrvour Inc. is a company that manufactures steel, cement, cars, and consumer electronics under a single brand. The top management at Carrvour has decided to enter the banking and insurance industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate?

Corporate Strategy

Which of the following statements is true of customer-oriented visions?

Customer-oriented vision statements are not the same as listening to your customer.

Which of the following functions do the general managers in strategic business units primarily perform?

Design generic business strategies based on guidelines received from corporate headquarters

A company's strategic business unit:

is responsible for its own profit and loss.

The production head at the canned juice unit of True Foods Inc. would frequently stay back after office hours and experiment with new fruit juice flavors though this was part of the new product development team's job. As a result of these experiments, he came up with two new flavors of fruit juices, cherry-melon and melon-mint. After rigorous test marketing, which proved that the market would accept the new drinks, the product variants were successfully launched. Which of the following strategies does this scenario best illustrate?

Emergent strategy

During an assessment of employees and leaders in a company, Ethan Browne was categorized as a Level-5 manager in the Level-5 leadership pyramid. Which of the following can be inferred from this information?

Ethan is a top management executive in the company.

Which of the following reasons justifies the view that functional managers should be allowed to initiate strategic initiatives based on autonomous actions?

Functional managers are much closer to the final products, services, and customers than corporate-or business-level managers.

The production department at Coral Cements that is a subsidiary of the large conglomerate Five East Corp. has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its cement bags. Which of the following strategies does this scenario best illustrate?

Functional strategy

Richard is a manager. His colleagues and subordinates look up to him as a man who always does the right things. Along with other skills, his ability to effectively organize and deploy resources like manpower, material, and money has been appreciated by his seniors. According to the Level-5 leadership pyramid, which of the following levels would be the immediate next step for Richard?

Level 4

Which of the following managers in the Level-5 leadership pyramid are most capable of leading their organizations into great success by guiding the organizations toward building a sustainable competitive advantage?

Level 5

The Chief Executive Officer (CEO) of PepsiCo, Indra Nooyi, subscribes to a triple-bottom-line approach to competitive advantage—considering not only economic, but also social and environmental performance. Identify the phrase that represents the vision of PepsiCo as described by Ms. Nooyi.

Performance with a Purpose

Which of the following is a top-down approach to the development of strategy that involves asking "what if" questions to anticipate plausible futures?

Scenario planning

Which of the following statements accurately brings out the difference between top-down strategic planning and scenario planning?

Scenario planning helps create strategic plans that are more flexible, and thus more effective, than those created through the more static strategic planning approach.

Which of the following statements is true of strategic initiatives?

Strategic initiatives can be the result of a response to external trends or come from internal sources.

In a large company, who is most responsible for devising the corporate strategy?

The CEO of the company

A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this?

The company's organizational structure and systems will be designed to support bottom-up strategic initiatives.

Which of the following best illustrates a strategic business unit (SBU)?

The consumer electronics division of a large company that also manufactures automobiles, apparel, and processed food

Which of the following methods of developing a strategy best illustrates scenario planning?

The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future.

Which of the following strategies best illustrates a functional strategy?

The production manager at the apparel division of Style Culture Co. has decided that the department will hire contract workers for three months to meet the temporary demand.

Which of the following statements about product-oriented visions is true?

They tend to force managers to take a myopic view of the landscape.

Which of the following is a customer-oriented vision?

To enable people throughout the globe to identify their capabilities

_____ is best described as a rational process in which executives at a company's headquarters take primary responsibility to program future success of the company they lead.

Top-down strategic planning

Molly Hue Apparels Inc. (MHA) had been outsourcing its production to less-developed countries in order to reduce its cost of production. With the emergence of its competitor, Hova Inc., MHA lost its competitive advantage. Hova had its production units in its home country that allowed the company to bring out the latest trends to the market earlier than MHA. Also, MHA frequently suffered due to political instability and lack of intellectual property laws in the outsourced countries. Thus, parts of MHA's strategies became obsolete and it had to relocate its production. What are such obsolete strategies referred to as in the planned emergence model?

Unrealized strategy

Which of the following best describes a Level-5 manager in the Level-5 leadership pyramid?

Walter is the CEO of Red Autos Inc.; he has helped his company in gaining and sustaining a competitive advantage through ethical decision making.

To be effective, firms need to:

back up their visions with strategic commitments that are costly and difficult to reverse.

Scenario planning typically begins with managers:

brainstorming to identify multiple plausible futures.

T & R Autos Inc. is a large conglomerate that operates in 12 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity. Based on this guideline received from the top management team, the product leader of the home appliances division has decided to adopt a cost leadership strategy in all his 12 units. Thus, the decision made by the product leader best illustrates a _____.

business strategy

The regional head for First Electronics Inc. in New Dalvia has decided to sell the company's products directly through company-owned stores because the distribution system in the market is primitive. In six other markets, however, the company will continue to operate through a franchise system. Thus, this decision made by the regional head at New Dalvia will be considered as a _____.

business strategy

White Leo Autos manufactures and markets four different cars, Leo Sport, Leo Prestige, Leo Spark, and Leo Ease. These four product variants are operated as individual business units. While the product leaders of Leo Sport, Leo Prestige, and Leo Spark have adopted a differentiation strategy to attract the niche market, the product leader of Leo Ease follows a cost-leadership strategy to suit the mass market. This decision of the product leader of Leo Ease can be ideally categorized as a _____.

business strategy

In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the _____.

chief executive officer

The pharmaceutical company Merck's new drug Vioxx was a blockbuster, generating revenues of $2.5 billion a year by 2002 and growing fast. When allegations began to appear in the medical community, Merck announced the voluntary withdrawal of Vioxx from the market. In this example, Merck provides an example of what can happen if a company deviates from its _____.

core values

Strategic leadership pertains to the use of power and influence by _____ to direct the activities of others when pursuing an organization's goals.

corporate executives

Due to political instability in the country of United Mapa, the strategic leaders at the headquarters of FT Supplies Inc. have decided to divest the company's business from the foreign market in United Mapa. This decision would be applicable to all the business units of FT Supplies Inc. operating in United Mapa. Thus, this is a _____.

corporate strategy

Any unplanned strategic initiative undertaken by mid-level employees of their own volition is a(n) _____.

emergent strategy

To support the rise of emergent strategies, an organization should:

empower lower-level employees to take up autonomous actions.

Strategies developed at the departmental level, such as the accounting human resource, production, and marketing departments, within a strategic business unit are referred to as _____.

functional strategies

As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to:

how to implement business strategy.

Strategic commitments are actions that are:

long-term oriented.

A positive relationship between vision statements and firm performance is more likely to exist when:

organizational structures are aligned with the firm's vision statement.

According to the Level-5 leadership pyramid, a manager at Level 3 has acquired the ability to:

organize resources effectively to accomplish predetermined goals.

Teddiez Inc. is a company that manufactures and sells stuffed toys. It sources its materials from another country to keep costs low. A sales personnel in one of its retail stores noticed that there was increasing concern regarding the potential toxicity of the materials in the dolls. In response, she found an economical, organic, and non-toxic cloth filling that the company could use. When her manager learned about this, he presented the prospect and got it approved from the top management team. This is an example of the:

planned emergence approach.

Strategic flexibility is achieved when managers:

respond to reality changes by activating alternate dominant plans or modifying the old plan.

The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well-prepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing _____ as the approach to the development of strategy.

scenario planning

Top-down strategic planning as an approach to the strategic management process will be most effective when the:

size of the firm is large.

A(n) _____ is best described as a standalone division of a larger conglomerate, with its own profit-and-loss responsibility.

strategic business unit

A _____ is best described as any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

strategic initiative

A traditional top-down strategic planning process typically begins with:

strategic leaders adjusting a company's vision and mission based on environmental analysis.

As the CEO of a conglomerate, Juana Mark exhibited her strong commitment toward the company's core value that customer's well-being is more important than profit when she decided to liquidate the company's tobacco subsidiary. The tobacco brand sold by her company was a major revenue earner in lesser-developed nations. However, Juana believed that her company had to be responsible toward the society. In this scenario, Juana has demonstrated _____.

strategic leadership

Strategic thinking is different from strategic planning in that:

strategic thinking includes all types of information sources while strategic planning does not.

Lower-level employees focus mainly on _____ when a firm is using top-down or scenario planning as an approach to the strategic management process.

strategy implementation

Unplanned strategic initiatives taken by the _____ within an organization will be referred to as an emergent strategy.

team leads of project teams in the organization

The critics of top-down strategic planning and scenario planning argue that:

these approaches do not allow for the necessary strategic thinking.

When parts of a firm's intended strategy fall by the wayside due to unpredictable events, it turns into a(n) _____.

unrealized strategy

The _____ is a conceptual framework that views organizational outcomes—strategic choices and performance levels—as reflections of the values of the members of the top management team, who interpret situations through the lens of their unique perspectives.

upper-echelons theory

As a part of strategy formulation, corporate strategy concerns questions relating to:

where to compete