Final Exam

An attempt to serve customers in a new geographical area with our existing services is an example of a penetration strategy

False

During the growth stage of the product life cycle, prices increase in order to solidify the market position of specific brands

False

Following the completion of strategy formulation decision, program evaluation is used to measure the logic and fit of the strategies

False

In program priority setting the graphics are useful to differentiate between those programs that are important and those that are not important

False

Market development is a strategy aimed at developing new products and/or services and marketing them to established customers

False

Of the adaptive strategies (expansion, reduction, and maintenance of scope), only expansion of scope requires explicit strategic posture and positioning strategies

False

One of the reasons not-for-profit organizations use program evaluation is because it is relatively easy to consider the relationship between revenue and market share in the not-for-profit setting

False

Product life cycle analysis is useful in developing strategy alternatives by carefully using the interaction of opportunities and threats in the external environment

False

Prospectors remain essentially in their own competitive space and resist efforts to move into and out of new services and markets

False

Strategic decisions are relatively easy to understand because they provide a clear set of independent choices and only rarely represent a relational hierarchy

False

In SPACE analysis, which of the following would not be considered a competitive strategy

Harvesting

Acquisition

Market-entry strategy for expansion through the purchase of an existing organization, a unit of an organization, or product/service.

Considering the ends/means chain, the ends refer to

Mission, vision, values, and strategic goals.

Which of the following is NOT a factor in determining community need

Number of regulatory agencies.

Within the context of BCG portfolio analysis, how are cash cows identified

Products and services that appear in the low market growth and high market share quadrant.

The Q-sort method is one of the methodologies used in what process

Program priority setting.

Which of the following is not a market exit strategy

Status quo

Which of the following is a disadvantage of merger as market entry strategy

Takes a long time to merge cultures.

Which of the following is NOT true regarding a retrenchment strategy

The market is no longer considered viable.

The strategies selected by the organization should address external issues, draw on competitive advantages or fix competitive disadvantages, keep the organization within the parameters of the mission and values, move the organization toward the vision, and make progress toward achieving one or more of the organization's strategic goals

True

Vertical integration strategies involve decisions to grow along the channel of distribution or stages in the continuum of care

True

When a health care organization decides to "ride the decline" and allow the service to generate as much revenue as possible without additional investment it is an example of harvesting

True

When a health care organization grows along its channel of distribution toward the patient it is called backward vertical integration

True

Which of the following is NOT a method for evaluating adaptive strategies

Value chain analysis.

Joint venture

a contractual agreement between 2 or more organizations to work together and combine resources to accomplish a designated task or project.

Adaptive strategy

a corporate-level decision specifying the organization's scope with a focus on expanding, reducing, or maintaining operations.

Market exit strategy

a decision to leave all or part of the service area area relatively quickly (using divestiture, liquidation, or retrenchment) or to leave slowly (using harvesting). A harvesting decision entails leaving all or part of the service area relatively slowly, or completely leaving the market.

Strategic posture

a description of how organizations behave within their service area (or industry when the service area is large); includes defenders, prospectors, analyzers, and reactors.

Cost leadership

a generic positioning strategy designed to gain an advantage over competitors by producing a product/providing a service at a lower cost than competitors.

Differentiation

a generic positioning strategy to make the product/service unlike others, or appear to be unlike others; readily distinguishable or unique among competitors' products/services.

Benchmarking

a management process of comparing an organization against a set of its peers or top performers on critical metrics for success.

Maintenance of scope strategy

a plan for an organization where few changes are required in the target markets or the organization's products/services; includes enhancement and status quo strategies.

Market Entry strategy

a plan to carry out the adaptive strategy through purchase, cooperation, or internal development strategies.

Retrenchment

a plan to reduce the scope of operations, through redefining the target market, cutting geographic coverage, reducing the segments served, or reducing the product/service line; may be a preamble to other strategies.

Divestiture

a reduction of scope strategy in which an operating unit is sold off as a result of a decision to exit the market.

Liquidation

a reduction of scope strategy involving the termination of a unit through the sale of all its assets.

Harvesting

a reduction of scope strategy to continue operating in a declining business, repeating any remaining available profits without investing additional resources.

Development strategy

a specific plan to enter a new market using internal resources through internal development, internal ventures, or reconfiguring the value chain.

Market development

a strategy to enter new target or service segments or service areas with an organization's present products/services.

Vertical integration

a strategy to grow (add memberS) along the channel of distribution; may be backward or forward (toward suppliers or toward patients) or stages in the continuum of care.

Backward vertical integration

a strategy to grow (add members) along an organization's channel of distribution toward its suppliers or toward earlier stages on the continuum of care. (upstream, away from the consumer).

Forward vertical integration

a strategy to grow (add members) along the channel of distribution toward the consumer or toward later stages for the continuum of care (downstream).

Product development

a strategy to introduce new goods/services/ideas to an organization's present markets.

Conglomerate diversification

a strategy to move the organization outside of its core business into an area that is dissimilar to its present operations.

Concentric diversification

a strategy to move the organization outside of its core business into an area that is somewhat similar to its present operations with the intent to create a "circle" of related products/services.

Horizontal integration

a type of market development - a method of obtaining growth across markets by acquiring or affiliating with direct competitors rather than using internal operational or functional strategies to gain/grow market share.

Unrelated diversification

adding new products/services (businesses) that are unlike (dissimilar to) the organization's core business or current market.

Diversification

adding new related or unrelated products/services/businesses outside the organization's core business.

Related diversification

adding new, somewhat similar products/services (businesses) that are outside the organization's core business.

Alliance

an agreement between 2 or more organizations that is designed to achieve some long-term strategic purpose not possible by the organizations separately.

Licensing

an agreement for rights to a technology, product, trademark, franchise, or exclusiv geographic area (territory) developed by one organization and contracted for use by another for a fee.

Venture capital investment

an expansion of scope strategy that provides funding to an organization with a developing technology, product or market enabling the investing organization to participate in its growth.

Purchase strategy

an expansion of scope strategy that uses financial resources to enter a market quickly through acquisition, licensing, or venture capital investments.

Focus strategy

an organization that directs its efforts toward the particular needs of a smaller, well-defined market segment - a niche within the total market - using the generic strategies of cost leadership or differentiation.

Defender strategic posture

an organization that focuses on a narrow market with a limited number of products/services and aggressively attempts to protect its market segment against other competitors through pricing or differentiation strategies.

Prospector strategic posture

an organization that frequently searches for new market opportunities and regularly engages in experimentation and innovation.

Focused factory

an organization that provides comprehensive services across multiple markets (horizontal integration) for specific category; in health care a specific disease such as cancer, diabetes, renal disease, asthma, or cardiac disease.

Analyzer strategic posture

an organization that tries to balance stability and change by maintaining stable operations - typically in core businesses - but also searches for new opportunities to engage in market innovation in other areas.

Expansion of scope strategy

growing an organization through diversification, vertical integration, market development, product development, or penetration.

Internal development

method to expand the scope of an organization by creating a separate, relatively independent entity within the organization to develop new products/services or to enter new markets.

Internal venture

method to expand the scope of an organization by creating a separate, relatively independent entity within the organization to develop new products/services or to enter new markets.

Community need

one dimension for determining the strategy for not-for-profit organization's programs based on clear, agreed on requirements; considers the degree to which other institutions provide similar services to meet the shared purpose of meeting community health objectives.

Cooperation strategy

organizations agreeing to work together to achieve a common goal through mergers, alliances, or joint ventures.

Generic strategy

positioning strategies - cost leadership or differentiation; may be marketwide or focused on a particular market segment.

Marketwide strategy

product/service positioning in the service area to appeal to a broad audience using the generic strategies of cost leadership or differentiation.

Enhancement

seeking to improve operations within present product or service categories through quality programs, increasing flexibility, increasing efficiency, speed of delivery, and so on.

Implementation strategy

selected action plans directed toward adding value in service delivery and organizational support areas; all important concluding activities in the hierarchy to accomplish previously determined goals and objectives; sometimes overlooked.

Decisions concerning five categories of strategies - directional strategies, adaptive strategies, market entry/exit strategies, competitive strategies, and implementation strategies - should be addressed how

sequentially with each subsequent decision more specifically defining the activities of the organization.

Strategic position and action evaluation (SPACE) analysis suggests the appropriateness of strategic alternatives based on factors relating to four dimensions

service category strength, environmental stability, the organization's relative competitive advantage, and the organization's financial strength: True

Reduction of scope strategy

strategies to decrease the size and reach of operations through divestiture, liquidation, haresting, and retrenchment.

Franchise

the granting of the right for a prescribed period of time to use a business model and brand in an exclusive geographic area (territory) for a fee.

Strategy formulation

the process of developing strategic alternatives, evaluating alternatives, and making strategic choices that are competitively relevant.

Business model

the way value is delivered to the customer, the customer value proposition, an enduring approach to deliver value.

Reactor strategic posture

typically, the lack of a strategy or plan that results in inconsistent and unstable responses to external changes, markets, and competition; occasionally, a strategic choice to be a follower of a dominant industry leader.

Combination strategy

using a number of different strategies simultaneously to synergistically achieve goal/objectives for different products/services or service areas.

Strategy formulation involves managing dilemmas, dealing with paradoxes, tolerating ambiguity and coping with contradictions

True

Competitive strategy

2 types of strategies that determine an organization's strategic posture and position vis-a-vis other organizations within the market. These strategies are market-oriented and best articulate competitive advantage.

What is the characteristic of health care organizations that suggests using extended portfolio matrix analysis rather than BCG portfolio analysis

An underlying assumption of BCG portfolio analysis is that high market share means high profitability; however, for health care organization it is quite possible to have a high market share and no profit.

Which of the following is NOT a quadrant in the BCG Portfolio

Black hole.

Which of the following is NOT an underlying reason why organizations use a merger strategy

Block access to a broader market.

Strategic posture is the way organizations behave within their market segments or industry

True

By pursuing maintenance of scope strategies, management believes which of the following

The past strategy has been appropriate and few changes are required in the target markets or the organization's products/services.

Which of the following are important components of organizational capacity

The programs fit with regard to the mission and vision of the organization, funds necessary to support the program, all relevant resources and skills.

A canon of strategic management is the need to change strategies over time

True

An organization that uses internal resources for entering a new market is deploying a development strategy

True

Boston Consulting Group (BCG) portfolio analysis graphically portrays differences among the various products/services (stars, cash cows, problem children, and dogs) in terms of relative market share and market growth rate

True

Combination strategies are often used, especially in larger complex organizations, because no single strategy alone may be sufficient

True

Differentiation is a strategy to make the product or service different (or appear so in the mind of the buyer) from competitors' products or services

True

Divestiture is a reduction strategy in which an operating strategic service unit is sold off as a result of a decision to permanently and completely leave the market despite its current viability

True

Evaluation and understanding of the external environment are necessary to successfully implement a market entry strategy

True

Market entry/exit strategies are the means for accomplishing the ends of adaptive strategies

True

Positioning strategies must be selected based on resources, competencies, and capabilities (competitive relevant strengths), as well as environmental risks

True

Program priority setting is significant because community needs (both the need itself and the severity of the need) are constantly changing and organizational resources, in terms of funding and organization capacity, are almost always limited

True

Purchase market entry strategies allow an organization to use its financial resources to enter a market quickly, thereby initiating the adaptive strategy

True

Q-sort is a formal method of differentiating the importance of programs through a ranking procedure that forces choices along a continuum in situations where the difference between the choices may be quite small.

True

Strategic posture concerns the relationship between the organization and the market and describes the pattern of strategic behavior

True

Reconfigure the value chain

changes the activities or sequence of activities an organization performs to change the way value is delivered to the customer; changes the way the customer is served; a new business model.

Retrenchment strategy

costs are increasing as percent of revenue, profitability is declining, organization's services have wide acceptance.

Market exit strategy

divestiture, liquidation, harvesting.

BCG portfolio analysis

evaluation of an organization's products and services in terms of relative market share and market growth rate. The products and services may then be characterizes as stars, cash cows, problem children, or dogs and strategic alternatives generated; often depicted graphically in 4 quadrants.