Management 6: Strategic Management

Probe for weaknesses in the substance and details.

Bossidy and Charan believe that to excel at execution, a leader should be hands-off once the strategy is set. micromanage the tactics. empower employees to take over the execution. probe for weaknesses in the substance and details. let the plan run its course before attempting to revise it.

Environmental Scanning

Careful monitoring of an organization's internal and external environments to detect early signs of opportunities and threats that may influence the firms plans.

Broad needs and many

Consumers can use a national company called Service Magic to receive bids from quality providers of a variety of services, including home remodel, landscaping, plumbing and housecleaning. Which of the following is the source of Service Magic's strategic position? Low profit margin and many customers Broad needs and few customers Broad needs and many customers High profit margin and many customers High profit margin and few customers

...

Creation of alternative hypothetical but equally likely future conditions is called Correct Response contingency planning. trend analysis. balancing the scorecard. strategy formulation. forecasting.

Business Plan

Document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success.

managers from all parts of the organization.

Effective strategic management involves only top management. only top and middle management. only middle and lower management levels. only lower management level. managers from all parts of the organization.

Competitive intelligence.

Gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately is called SWOT analysis. forecasting model. contingency plan. trend analysis. competitive intelligence.

Growth

In 2009, PepsiCo acquired its two largest bottlers to integrate the non-alcoholic beverage part of its business. This is an example of what type of grand strategy? growth stability intensification defensive retrenchment

Stability

Jabra has been running a commercial real estate business for nearly thirty years. As he approaches retirement, he is content to simply lease the commercial space he currently has, rather than make new deals to develop additional properties. Jabra is using which grand strategy? Stability Retrenchment Inducement Defensive Growth

...

Lane Office Products phased out its line of typewriters several years ago as part of its ______ strategy. growth stability Correct Response defensive reorganization reactor

Porter's Model for Industry Analysis

Model proposed by Michael Porter for determining competitiveness within a particular industry. Suggests that business-level strategies originate in five primary competitive forces in a firms environment. 1) Threats of new entrants 2) Bargaining power of suppers 3) Bargaining power of buyers 4) Threats of substitute products or services 5) Rivalry among competitors

Strategic Control

Monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed.

...

Oil companies must be aware of other firms' development of ethanol products since this is an example of which one force in Porter's model for industry analysis? Bargaining power of buyers Rivalry among competitors Bargaining power of suppliers Threats of new entrants Correct Response Threats of substitute products and services

Cost-Leadership Strategy

One of Porter's four competitive strategies Keeping the costs , and hence prices, of a product or service below those of competitors and targeting the wider market.

Differentiation Strategy

One of Porter's four competitive strategies Offer products or services that are of a unique and superior value compared to those of competitors and to targes a wide market.

Cost-Focus Strategy

One of Porter's four competitive strategies To keep the costs, and hence prices, of a product or service below those of competitors and to target a narrow market.

Growth Strategy

One of the three grand strategies. Involves expansion as in sales revenues, market share, number of employees, or number of customers (for nonprofits) or clients served.

Stability Strategy

One of three grand strategies. Involves little or no significant change.

Unrelated Diversification

Operating several businesses that are not related to one another under one ownership.

Focused-Differentiation Strategy

Performance review systems whereby all employees within a business unit are ranked against one another, and grades are distributed along some sort of bell curve, like students being graded in a college course.

Execution

Proposed by Larry Bossidy and Ram Charan. Not simply tactics. The central part of any company's strategy. Consists of using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised.

Grand Strategy

Second step of the strategic-management process. Explains of the organization's mission is to be accomplished. The three strategies are growth, stability, and defense.

Synergy

Situation in which the economic value of separate, related businesses under on ownership and management is greater than the businesses are worth separately.

Single-Product Strategy

Strategy by which a company makes and sells only one product within its market.

Diversification

Strategy by which a company operates several businesses in order to spread the risk.

Related Diversification

Strategy by which an organization under one ownership operates separate businesses that are related to one another.

Strategic Positioning

Strategy that, according to Michael Porter, attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.

...

Techno Tools is selling off land, buildings and some of its product inventory. This is a variation of which of these grand strategies? Right-size Growth Stability Correct Response Defensive Reorganization

Competitive Intelligence

The ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them.

...

The benefit of the single-product company is synergy. Correct Response focus. isolated systems. differentiation. lower costs.

Organizational Weaknesses

The drawbacks that hinder an organization in executing strategies in pursuit of its mission.

Organizational Threats

The environmental factors that hinder an organization's achieving a competitive advantage.

Organizational Opportunities

The environmental factors that the organization may exploit for competitive advantage.

Strategy Implementation

The execution of strategic plans.

Strategy formulation.

The process of choosing among different strategies and altering them to best fit the organization is called strategy formulation. contingency planning. strategic control. strategy implementation. trend analysis.

Strategy Formulation

The process of choosing among different strategies and altering them to best fit the organization's needs.

SWOT Analysis

The search for the: 1. STRENGTHS 2. WEAKNESSES 3. OPPORTUNITIES 4. THREATS : That affect an organization.

Organizational strengths.

The skills and capabilities that give the organization advantages in executing strategies in pursuit of its mission are known as organizational strengths. organizational opportunities. organizational threats. organizational weaknesses. competitive strategies.

Organizational Strengths

The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission.

cost leadership

Timex Watch makes inexpensive but reliable watches sold throughout the U.S. and is an example of an organization pursuing a _________ strategy. cost leadership differentiation cost focus focused-differentiation retrenchment

...

When analyzing the "S" in a SWOT analysis, a manager might take note of a decrease in the size of the market. competitors' actions. high turnover of employees. Correct Response strong financial resources of the firm. governmental actions.

...

When analyzing the "W" in SWOT analysis, a manager might take note of a decrease in the size of the market. competitors' actions. Correct Response high turnover of employees. good financial resources of the firm. governmental actions.

...

Which of the following carmakers pursues a focused-differentiation strategy? Correct Response Ferrari Ford Volkswagen Honda Kia

How will the company handle their social responsibility?

Which of the following is NOT a question that Bossidy and Charan believe a strong strategic plan must address? How will the company handle their social responsibility? What is the assessment of the external environment? Who is the competition? Can the business execute the strategy? Are the short term and long term balanced?

Inadequate planning budgets

Which of the following is NOT a typical cause of bad planning? Information overload Inadequate planning budgets Ineffective group dynamics Poor assessment of an organization's capabilities Faulty assumptions about the future

Don't second guess.

Which of the following is NOT one of Bryan Barry's recommendations to keep a strategic plan on track? Keep moving. Engage people. Don't second guess. Keep it simple. Stay focused.

A grocery store

Which of the following is most likely to use a diversification strategy? A tax preparation business A flower shop A lawn service A grocery store A shoe store

Maintain strategic control

Which of the following steps of the strategic-management process is the source of its feedback loop? Carry out the strategic plan Maintain strategic control Establish the grand strategy Establish the mission and vision Formulate the strategic plans

how many competitors he has.

Zach manages a small bike repair store. In order to determine if strategic planning will be likely to help his business, Zach should primarily assess how many competitors he has. foot traffic by his location. his profitability in the prior six months. industry trends. how much he intends to grow in the next five years.

Key Terms

.

Porter's Four Competitive Strategies

1) Cost-Leadership 2) Differentiation 3) Cost-Focus 4) Focus Differentiation * The first two focus on WIDE markets. * The second two focus on NARROW markets.

Trend analysis

A ______ is a hypothetical extension of a past series of events into the future. best-fit forecast trend analysis contingency plan scenario analysis linear prediction

Strategic Management

A five-step process that involves managers from all parts of the organization in the formulation and implementation of strategies and strategic goals.

Trend Analysis

A hypothetical extension of a past series of events. "into the future"

Strategy

A large-scale action plan that sets the direction for an organization.

BCG Matrix

A means of evaluating strategic business units on the basis of their business growth rates and their share of the market.

Forecast

A projection of the future.

...

A recent survey found that the top concern among CEOs worldwide is profit growth. customer loyalty. Correct Response excellence in execution. stimulating innovation. finding qualified employees.

retrenchment

A strategy that involves reduction in the organization's efforts is the ______ strategy. retrenchment reorganization downsize growth stability

Trend analysis

A time series forecast, which is used to predict long-term trends, cyclic patterns and seasonal variations, is one type of organizational strength. contingency planning. trend analysis. balancing the scorecard. strategy formulation.

People

According to Bossidy and Charan, which business process is most important for effective execution? Strategy People Alignment Operations Research

Defensive Strategy

Also called retrenchment strategy One of three grand strategies Involves reduction in the organization's efforts.

Contingency Planning

Also known as scenario planning and scenario analysis. The creation of alternative hypothetical but equally likely future conditions.

cost leadership

An organization is developing a low cost line of environmentally friendly cleaning products that it intends to distribute internationally. Here, the organization is following a ______ strategy. cost leadership differentiation cost focus retrenchment focused-differentiation

...

An organization that is offering unique, superior products or services to a wide market is pursuing a strategy of cost leadership. Correct Response differentiation. cost focus. diversification. focused-differentiation.