Chapter 8

SWOT analysis

- strengths, weaknesses, opportunities, threats - includes a careful assessment of strengths, weaknesses, opportunities, and threats that affect organizational performance.

Five Forces Affecting Industry Competition

1. Potential new entrants 2. Bargaining power of buyers 3. Bargaining power if suppliers 4. Threat of substitute products 5. Rivalry among competitors

Tools for Putting Strategy into Action

1.Visible leadership 2.Candid communication 3. Appropriate HR practices

The BCG matrix organizes along which of the following dimensions? a. Business growth rate and market share b. Sales and profits c. Sales and market share d. Business growth rate and profit e. Market share and profit

Business growth rate and market share

Which of the following is a business activity that an organization does especially well relative to its competition? a. Strategy b. Core competence c. Multidomestic d. Cash cow e. Synergy

Core competence

The human resource department at Paula's Powerwheels is implementing a number of functional level strategies. These strategies include focusing on ways to retain and develop a stable work force and ways to improve efficiency in the organization. These functional-level strategies are consistent with which of the following strategies? a. Cost leadership b. Differentiation c. Divestiture d. New market development e. New product development

Cost leadership

Which strategy can be profitable for an organization when customers are loyal and willing to pay high prices? a. Liquidation b. Differentiation c. Overall cost leadership d. Focus e. Globalization

Differentiation

Differentiation Strategy

Distinguishing an organization's products or services from others in the industry -can reduce rivalry with competition and fight off the threat of substitute products because customers are loyal to the company's brand

Which of the following lists the strategic management process in proper order?

Evaluate current mission/goals; Perform SWOT analysis; Define new mission/goals; Formulate strategy; Execute strategy.

General Products Inc. is a small clothing designer and manufacturer located in the United States. A vast majority of the company's revenues comes from U.S. sales, although about ten percent of the company's revenue come from sales to Canada. General Products Inc. can best be described as using which global corporate strategy? a. Domestic strategy b. Export strategy c. Globalization strategy d. Transnational strategy e. Multidomestic strategy

Export strategy

Which of these is true about the cash cow? a. It has a small market share in a slow growth industry. b. It has a large market share in a slow growth industry. c. It generates tremendous profits in a rapidly growing industry. d. It is generally a dead business that should be divested. e. It has a small market share in a rapidly growing industry.

It has a large market share in a slow growth industry

Persuasion, motivation, and changes in cultures and values are examples of which of the dimensions used to implement strategy? a. Structural design b. Compensation c. Information and control systems d. Human resources e. Leadership

Leadership

_____ refers to the modification of product design and advertising strategies to suit the specific needs of individual countries. a. Multidomestic strategy b. Domestic strategy c. Global strategy d. Market design strategy e. Transnational strategy

Multidomestic strategy

Corporate-level Strategy

Pertains to the organization as a whole and the combination of business units and products lines that make up the corporate entity. - what business are we in?

Where does the information about opportunities and threats comes from? a. Scanning the external environments b. An analysis of the organization's internal environment c. A department by department study of the organization d. Employee grievances e. Financial ratios of the organization

Scanning the external environments

After Sunshine Systems merged with RTD Enterprises, company executives noticed that due to increased employee collaboration between the two units, costs were down and revenues increased within both areas. This is an example of what business phenomenon? a. Portfolio strategy b. Delivering value c. Strategy execution d. Synergy e. Core competency

Synergy

Which of the following refers to a strategy that combines global coordination to attain efficiency with flexibility to meet specific needs in various countries? a. Global strategy b. Transnational strategy c. Region design strategy d. Multidomestic strategy e. Domestic strategy

Transnational strategy

Dog

a poor performer. It has only a small share of a slow growth market.

Opportunities

characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals

Threats

characteristics of the external environment that may prevent the organization from achieving its strategic goals

Value

combination of benefits received and costs paid

Sears' decision to sell off much of its financial services division is an example of a: a. stability strategy. b. business-level strategy. c. functional-level strategy. d. corporate-level strategy. e. growth strategy.

corporate-level strategy

To remain competitive, companies should develop strategies that focus on core competencies, providing synergy, and creating value for _____. a. stockholders b. board members c. customers d. suppliers e. employees

customers

Market Share

defines whether a business unit has a larger or smaller share than competitors

Cash Cow

exists in a mature, slow-growth industry but is a dominant business in the industry, with a large market share

Question Mark

exists in a new, rapidly growing industry, but has only a small market share

Paramount, Inc. is particularly concerned about pending legislation in Congress that would further regulate their organization. This legislation would be classified as a(n) _____. a. external weakness b. external threat c. congressional chaos d. external opportunity e. internal strength

external threat

Star

has a large market share in a rapidly growing industry

Strategic Business Unit (SBU)

has a unique business mission, product line, competitors, and markets relative to other SBUs in the corporation.

The _____ function recruits selects, trains, transfers, promotes, and lays off employees to achieve strategic goals. a. leadership b. information and control systems c. production d. structural design e. human resource

human resource

The _____ function recruits selects, trains, transfers, promotes, and lays off employees to achieve strategic goals. a. leadership b. production c. information and control systems d. structural design e. human resource

human resource

Strategy Formulation

includes assessing the external environment and internal problems to identify strategic issues, then integrating the results into goals and strategy

Vertical Integration

means that the company expands into businesses that either produce the supplies needed to make products and services or that distribute and sell those products and services to customers

Unrelated Diversification

occurs when an organization expands into a totally new line of business

BCG Matrix

organizes business along two dimensions—business growth rate and market share

Business-level Strategy

pertains to each business unit or product line - how do we compete?

Business Growth rate

pertains to how rapidly the entire industry is increasing

Functional-level Strategy

pertains to the major functional departments within each business unit (strategies involve all of the major functions, including finance, manufacturing, marketing, and research and development) - how do we support the business-level strategy

Portfolio Strategy

pertains to the mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage for the corporation

Strength

positive internal characteristics that the organization can exploit to achieve its strategic performance goals

Globalization Strategy

product design and advertising are standardized throughout the world - seeks to achieve both global standardization and national responsiveness

Gillette operates numerous strategic business units. Most of its units in the personal care division have low market share but high business growth. These units are classified as _____. a. dogs b. question marks c. stars d. cash cows e. none of these

question marks

Strategic Management

refers to the set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals

Competitive Advantage

refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer or client needs in the marketplace - target customers - achieve synergy - create value - exploit core competence

Core Competence

something that the organization does especially well in comparison to its competitors

Gatekeep Utilities is a subsidiary of GW Enterprises. Gatekeep has a mission and product line that is unique from GW. Gatekeep's competitors are also very different from those of its parent, and the subsidiary markets to a very different group of customers. As such, Gatekeep can be described as a(n) _____. a. functional unit b. boston consulting group unit c. strategic business unit d. operational unit e. product unit

strategic business unit

Diversification

strategy of moving into new lines of business - purpose is to expand the firm's business operations to produce new kinds of valuable products and services.

When properly managed, _____ can create additional value with existing resources, providing a big boost to the bottom line. a. competitors b. synergy c. government contacts d. cooperation among customers e. command structure

synergy

Cost Leadership Strategy

the organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors

Focus Strategy

the organization concentrates on a specific regional market or buyer group

Strategy

the plan of action that describes resource allocation and activities for dealing with the environment, achieving a competitive advantage, and attaining the organization's goals

Strategy Execution

the use of managerial and organizational tools to direct resources toward accomplishing strategic results

Embeddedness

there is a deep understanding and acceptance of organizational direction and purpose throughout the organization

Synergy

when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone

Related Diversification

when the new business is related to the company's existing business activities