Chapter 6: Strategic Management Connect Quiz

Strategic position emerges from three sources: a) (1) low-profit margin, many customers; (2) no needs, many customers; and (3) broad needs, few customers. b) (1) few needs, many customers; (2) broad needs, few customers; and (3) broad needs, many customers. c) (1) no needs, many customers; (2) broad needs, few customers; (3) broad needs, many customers. d) (1) high profits, many customers; (2) low profits, few customers; and (3) broad needs, many customers. e) (1) high-profit margin, few customers; (2) few needs, many customers; and (3) broad needs, few customers.

(1) few needs, many customers; (2) broad needs, few customers; and (3) broad needs, many customers. Explanation: Strategic position emerges from three sources: (1) few needs, many customers; (2) broad needs, few customers; (3) broad needs, many customers.

_______ involves gathering information about your competitors' activities so that you can anticipate their moves and react appropriately. For example, you may attend a trade show to learn what types of new products and new iPhone apps your competitors are planning to launch in the next six months. a) Environmental exploration b)Benchmarking c) Scouting d) Competitive intelligence e) MBO

Competitive Intelligence Explanation: Practicing competitive intelligence means gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately.

An offensive strategy is a grand strategy that involves reduction in the organization's efforts. For example, some large publishers are no longer publishing children's books because they are too expensive to produce and distribute, and because the profit margins are too low to justify the investment. True or False

False Explanation A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts.

Strategic positioning involves performing the same activities as rivals in a similar way, but at a lower cost. True or False

False Explanation Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways.

Dave and his partner are studying the strengths and weaknesses of their construction business, Ajax Construction, as well as researching the opportunities and threats in the external environment. Dave and his partner are conducting a: a) strength statement. b) SWOT analysis. c) synergy plan. d) contingency plan. e) forecast.

SWOT analysis Explanation: SWOT analysis, also known as a situational analysis, is a search for the strengths, weaknesses, opportunities, and threats affecting the organization.

______________ focus(es) on developing a comprehensive program for long-term success. a) Mission and vision statements b) Tactical plans c) A focused sigma plan d) A synergy plan e) Strategic planning

Strategic planning Explanation Feedback: Strategic planning is concerned with developing a comprehensive program for long-term success.

A stability strategy is a grand strategy that involves little or no significant organizational change. For example, Love Forever is a jewelry store that sells only one type of item: engagement and wedding rings. The management of Love Forever does not plan to branch out into selling different types of jewelry; the company has a reputation for being the go-to store to purchase wedding rings, and it plans to maintain that strategy. True or False

True Explanation A stability strategy is a grand strategy that involves little or no significant change.

Johnson's Fruit Farm is one of several stores in the county where customers can purchase locally grown fruits and vegetables. However, Mrs. Johnson also offers weekly workshops in her store on topics such as canning, healthy eating, and how to grow a garden, which no other store in the county does. By offering these unique workshops, the Johnsons are engaging in strategic positioning. True or False

True Explanation Strategic positioning means performing different activities from rivals, or performing similar activities in different ways.

Francis, who is starting a painting business, plans to write down the purpose of his painting business and his company's reason for being. Francis is writing his: a) mission statement. b) code of ethics. c) vision statement. d) proprietorship pact. e) ownership belief statement.

mission statement Explanation: The mission statement is the organization's purpose or reason for being.

Jeff, the owner of The Toy Box (a toy store), has chosen his products carefully. They are all handmade of wood; none are cheap games made of cardboard and paper. He knows he will be selling his toys to both adults and children; for example, his expensive chess and backgammon sets are quite expensive because the board and pieces are all made of wood by local artists and craftsmen. He knows that his customer base will not include parents who are looking for an inexpensive toy for their children or to give as a birthday gift; there is another store in town that offers mass-produced games. As part of his marketing outreach, Jeff offers "game nights" where he sets up game boards and invites local teens and adults to take part in light-hearted competitions, where the winners receive a 10 percent discount to a game at the Toy Box. All of Jeff's activities are aimed at giving Jeff a sustainable competitive advantage through ______. a) defensive strategy. b) blue ocean strategy. c) diversified portfolio. d) vertical integration. e) strategic positioning.

strategic positioning. Explanation: Strategic positioning attempts to achieve a sustainable competitive advantage by preserving what is distinctive about a company. Three key principles underlie strategic positioning: the creation of a unique and valuable position, trade-offs in competing, and creating a "fit" among activities.

Many customers have visited Sally's Diner for decades because of the diner's friendly service. Most customers feel that Sally's is the friendliest placed around. In a SWOT analysis, the friendly service at Sally's is an example of a company a) vision. b) strength. c) weakness. d) opportunity. e) threat.

strength. Explanation: Strengths are inside or internal matters. They are the skills and capabilities that give the organization special competencies in executing strategies in pursuit of its vision. Strengths could be work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, and other internal matters.

An organization's vision statement states _____. For example, the Cleveland Clinic's vision statements says that it "strives to be the world's leader in patient experience, clinical outcomes, research, and education." a)the organization's purpose or reason for being b) its competition and external environment c) what the company wants to become, where it wants to go strategically d) the organization's purpose or reason for being e) the ethical and diversity standards of the organization

what the company wants to become, where it wants to go strategically Explanation: An organization's vision statement states what the organization wants to become, where it wants to go strategically.

Sue and Jane Smith are writing the mission statement for their new consignment shop, Then & Now. Because they want their employees and business to grow and reach goals, Then & Now's mission statement should be positive and inspiring, pushing their organization and the workers to achieve goals that they believe are beyond its reach. True of False

False Explanation A mission statement should be positive and inspiring, and it should stretch the organization and its employees to achieve a desired future state that appears beyond its reach.

Several studies found that strategic planning does not benefit smaller companies, as they very seldom see improvements in financial performance from this type of planning. True or False

False Explanation Smaller companies (under 500 employees) account for about half of private-sector employment and two-thirds of net new jobs in recent years. One analysis of several studies found that strategic planning was appropriate not just for large firms—indeed, companies with fewer than 100 employees could benefit as well, although the improvement in financial performance was small. Nevertheless, the researchers concluded that "it may be that the small improvement in performance is not worth the effort involved in strategic planning unless a firm is in a very competitive industry where small differences in performance may affect the firm's survival potential."

To achieve a sustainable competitive advantage, La Grand Parfumerie (a company that develops women's perfumes and men's colognes) must benchmark its competition so that La Grand Parfumerie can produce the same products as its competition but at a lower price. True or False

False Explanation Strategy requires trade-offs in competing. Thus, a company has to choose not only what strategy to follow but what strategy not to follow. La Grand Parfumerie will not develop a competitive advantage by simply copying its competitors' products.

The organizational-management process consists of seven steps: (1) doing research, (2) establishing the mission and vision, (3) assessing the current reality, (4) formulating the grand strategy, (4) implementing the strategy, (6) maintaining strategic control, and (7) maintaining the feedback loop. True or False

False Explanation The strategic-management process has five steps, plus a feedback loop (see Figure 6.1): (1) establishing the mission and the vision, (2) assessing the current reality, (3) formulating the grand strategy, (4) implementing the strategy, and (5) maintaining strategic control and the feedback loop.

The owners of a computer repair shop want to better formulate strategies, so they are doing a SWOT analysis to understand the strengths and weaknesses within their company and the opportunities and threats of the external environment. These are some of the benefits of doing a SWOT analysis. True or False

True Explanation SWOT analysis should provide a realistic understanding of the organization in relation to its internal and external environments so that you can better formulate strategy in pursuit of the firm's mission.

Strategy implementation is putting strategic plans into effect, which means dealing with roadblocks within the organization's structure and culture and seeing if the right people and control systems are available to execute the plans. True or False

True Explanation Strategy implementation is putting strategic plans into effect. This means dealing with roadblocks within the organization's structure and culture and seeing if the right people and control systems are available to execute the plans.

Leela's Home Decorators believes that the demand for its services will expand greatly, because a real-estate developer has just purchased 100 acres in town. The developer is planning to build 1,000 condominium units on the property. The managers of Leela's Home Decorators are making a projection for the future, also known as a a) past correction. b) trend. c) benchmark. d) forecast. e) final analysis.

forecast Explanation: A forecast is a vision or projection of the future.

Stars are _____, according to the BCG matrix. Stars have included Apple and the diamond company DeBeers. a) beyond reach, due to their high purchase price and profits b) highly overvalued, so are not wise purchases c) companies with slow growth and high market share d) risky new ventures e) organizations with high growth and high market share which are definite keepers

organizations with high growth and high market share which are definite keepers Explanation: In the BCG matrix, stars have high growth and high market share, and they are definite keepers.