Management Chapter 6- Strategic Management

Why do many executives prefer visioning to execution?

Visioning is more exciting than execution.

Why does it exist? Who are they

key words for mission

Michael Porter defined ______ as an attempt to achieve sustainable competitive advantage by preserving what is distinct about a company.

strategic positioning

Firms exist because

they create unique value

Have low growth; low market share - should be gotten rid of

dog

Where are they going?

key words for vision

Strategic positioning attempts to achieve sustainable competitive advantage by ______

preserving what is distinctive about a company

Within a SWOT analysis, the letter "S" represents a company's ____

strengths

How we evaluate diversified companies. A means of evaluating strategic business units on the basis of 1) their business growth rates and 2) their share of the market o Example: General Electric - Highly diversified Unrelated, do not connect.

BCG matrix

- Focuses on the organization as a whole - Involves senior executives in planning - Answers questions such as "what business are we in?" and "what products and services shall we offer?"

Corporate-level strategy does which of the following?

1) Establish the mission and the vision 2) Assess the current reality 3) Formulate the grand strategy 4) Implement the strategy 5) Maintain strategic control - (or assess whether the strategy is working or not)

Five steps of strategic-management process

Which Porter's competitive strategies are appropriate when addressing a narrow market?

Focused-differentiation and Cost-focus

Focus = Narrow Market and Differentiation = adding value

focused-differentiation

To be successful, strategic planning requires a company to have a ______ orientation.

long term

When analyzing the "W" in SWOT analysis, Roberta, the manager might be assessing

High turnover of employees

Which of these situations provides an external opportunity that the company may exploit to gain competitive advantage?

Monica's rare book company has weak competition. (Hint: competition is EXTERNAL factor)

When considering SWOT analysis, what is an example of an organizational weakness?

Obsolete technology

- Cost-focus - Cost-leadership - Differentiation - Focused-differentiation

Porter's four competitive strategies

A ______ analysis is an assessment of the strengths, weaknesses, opportunities, and threats affecting the organization.

SWOT

a good way to understand what is going on in a company in a particular industry

SWOT analysis

environmental scanning and careful monitoring of an organizations internal and external environments to detect early signs of opportunities and threats that may influence the firms plans

SWOT analysis

1) Strategy is the creation of a unique & valuable position 2) Strategy requires trade-offs in competing 3) Strategy involves creating a "fit" among activities

Strategic planning and it's Principles

What does business growth rate refer to, as used in the BCG matrix?

The speed of industry growth

What are the goals of attending industry conferences before or while working in a certain industry?

To learn about the specific industry; To make industry contacts

is a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its Value, Rarity, Imitability and Organization.

VRIO

Samir owns a dental practice, but business has slowed down significantly over the last six months. Which analysis would you recommend to Samir to help him determine whether his dental practice has COMPETITIVE POTENTIAL?

VRIO framework

- Bargaining power of suppliers - Rivalry among competitors - Threat of substitute products or services - Threats of new entrants

Which of the following represent competitive forces used in Porter's model for industry analysis?

- Strategic thinkers are quick to recognize opportunities. - Strategic thinkers are globally-minded. - Strategic thinkers make for more informed employees.

Why do potential employers value the skill of strategic thinking in job candidates?

Pacific Specialty Bikes store gets customized parts for its high-end models from a local manufacturer, Premium Supply. When the manufacturer announced a price increase, the bike store tried to switch to other local manufacturers but learned they that they wouldn't be able to meet delivery schedules. As a result, Pacific Bike chose to pay the higher prices from Premium Supply. Which of Porter's competitive forces does this demonstrate?

bargaining power of suppliers

Companies pursuing a cost-leadership strategy keep costs/prices ______ those of competitors and target a ______ market

below; wide

The process by which a company compares its performance with that of other high-performing organizations is known as ____

bench marking

Crystal Coast is an all-inclusive beachside resort. It offers lodging, six restaurants, dancing, snorkeling, parasailing, and spa treatments. On the resort grounds, Crystal Coast also has a dive center, jet skis, and a water park. All of these amenities are only available to customers staying at Crystal Coast. Crystal Coast's strategic position emerges from

broad needs and few customers

Have slow growth but high market share - income finances stars and question marks.

cash cows

Strategic ______ involves monitoring the execution of strategy and taking corrective action when necessary.

control

Once implemented, managers need ________ to keep strategic plans on track.

control systems

something a company does well

core competencies

Which level of strategic management focuses on the organization as a whole?

corporate level

Computer maker Dell tries to have the lowest prices for its computers in order to attract a large consumer group. In Porter's four competitive strategies, this would be an example of the ______ strategy.

cost leadership

How does a company differentiate its products? How do they make it different? Based on quality and value

differentiation

Something a company does very well that sets them apart from the competition

distinctive competence

The strategy of moving into new lines of business is called ___

diversification

operating several businesses in order to spread the risk

diversification

Jordan plans to open a computer repair business this summer. As he plans, he writes down the long-term goals of the business so he can decide where he wants to go strategically. Which stage of the strategic management process is Jordan in?

establish the mission, vision, and value statements

Aligning people with goals, achieving promised results, and integrating strategy with reality are all part of the ______ process.

execution

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

false

Some large publishers have stopped publishing children's books because they are expensive to produce and distribute. This is an example of an offensive strategy

false

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

false

The executives of Great Lakes Medical Center are writing a statement that explains their organization's core purpose. Great Lakes Medical Center is at the strategic formulation step in strategic management

false

True or false: It is common practice today for most small business owners to engage in strategic planning

false

A real estate development company is considering a deal to develop 1,000 condominium units. This deal largely rests on a hat the city's population will grow by 23% over the next decade

forecast

Leonore's Luxury Leather Footwear Corp. conducts a SWOT analysis and determines that at least 57 percent of consumers demand high-end footwear, and, as a result, its sales should increase by 18 percent in the next year. This vision of what could happen is known as a _____

forecast

When corporate departments such as marketing, human resources, and information technology implement plans of action that support higher-level strategies, they are following a(n) ______ strategy

functional

A grand strategy that involves expansion of things like sales revenues, market share, or number of employees is known as a ______ strategy.

growth

Porter's five competitive forces form a model for ______ analysis.

industry

During a situational analysis of the ________ of her dog training service, Jaela determined that one of her strengths was that trained dogs retained their skills for at least three months after training, and that one of her weaknesses was that very few clients brought another dog to her for training.

internal environment

What does the BCG matrix evaluate?

market share; business growth rates

"External' OUTSIDE THE FIRM - Environmental factors that the organization may exploit for competitive advantage o Examples of Opportunities: Market Segment Analysis & Competition Analysis, impact of technology on organization, product analysis, government impacts and other external factors

opportunities

Environmental factors that an organization may exploit for competitive advantage are called organizational ___

opportunities

A system of shared beliefs and values that needs to be aligned with the goal of producing efficient, quality work is called ______ culture

organizational

Of the three core processes of business identified by Bossidy and Charan, which do they believe is the most important?

people

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

porter's five competitive forces

Snowcap Ice Cream produces over a dozen delicious ice cream flavors and a number of individually packaged frozen treats. Which of these strategies would represent vertical integration for Snowcap?

purchasing mountain dairy milk farm

What are functional strategies used to accomplish?

putting strategic plans into effect

Risky new ventures - some will become Stars and some will become Dogs

question mark

Maintain core competence and expand products related to a company's core competency and tapping into opportunities that make sense to them because they are good at what they do.

related diversification

The "feedback loop" in the strategic-management process involves _____

revising actions if necessary

o Company makes and sells only one product within its market o Benefit: FOCUS o Risk: Vulnerability

single product strategy

High Growth; High Market Share - definite keepers

star

In which step of the strategic-management process does an organization establish the mission and vision statements?

step one

Cornelius owns Grand Games, a high-end store that retails games and toys that are handcrafted and carefully selected. Cornelius targets customers who value artisanal work, such as backgammon sets made from reclaimed lumber by local crafters. There are several stores in the area that sell mass-made toys and games that are much cheaper. To compete, Cornelius 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% discount on their next purchase. Cornelius also takes custom orders for game pieces that his customers want, such as 12-sided dice or newly invented games. All of Cornelius's activities are aimed at giving Grand Games a sustainable competitive advantage through

strategic planning

The ABC car company has a superior reputation within the industry and among car buyers. When applying SWOT analysis, this company's reputation is an example of a(n) ____

strength

"internal" INSIDE THE FIRM - Skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit if its mission o Examples of strengths: work processes, organizational culture, Staff, product, Quality production, capacity, image, financial resources, service levels or other internal matters

strengths

What SWOT stands for

strengths, weaknesses, opportunities, threats

When a company is readily able to switch to another company in order to get the raw materials it needs to make products, Porter would say that the bargaining power of ______ goes down

suppliers

When other companies cannot duplicate the value provided by a competitor, then the competitor has established a(n) ______ competitive advantage.

sustainable

Luxury Linens Inc. produces the highest thread-count sheets available anywhere and does so at a price that none of its competitors can duplicate. It can be said that Luxury Linens has a(n) _____

sustainable competitive advantage

is they look at a "SWOT Analysis"

the first things that organizations do

1) Establish the Mission 2) Assess current reality 3) Formulate corporate, business and functional strategies 4) Execute the strategies 5) Maintain Strategic control

the steps in the strategic-management process

You own a small deli near campus and learn that the university is exploring whether it should open a Subway sandwich franchise in the student union. Which of Porter's competitive forces does this represent for you?

threat of new entrants

"External' OUTSIDE THE FIRM - Environmental factors that hinder an organization achieving a competitive advantage o Examples of threats: Could be some of the same items listed for opportunities, because both are based off of "External" or come from outside the firm

threats

A stability strategy is a grand strategy that involves little or no significant organizational change. For example, Two Become One is a jewelry store that sells only one type of item: engagement and wedding rings. The management of Two Become One 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

Flora's Fruit + Fresh is one of several local stores where customers can purchase locally grown fruits and vegetables. Each week, Flora also offers workshops in her store on topics such as canning, healthy eating, and growing a garden, which no other local store does. By offering these unique workshops, Flora is engaging in strategic positioning.

true

Higher-level corporate- and business-level strategies flow down to the process strategy

true

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

The owners of a computer repair shop want to better formulate strategies, so they should conduct a SWOT analysis to understand the strengths and weaknesses within their company and the opportunities and threats of the external environment

true

True or false: According to Bossidy and Charan, execution is the central part of any company's strategy.

true

Completely unrelated to a company's core competency. Company's do this because they see market opportunity in the profitability and so it's really a financial move its not a strategic one. o Example: Amazon purchasing Whole Foods

unrelated diversification

Carlos is doing a VRIO analysis for a product his company is thinking about producing. The first question he asks is, "Does this new capability allow us to minimize the threat from the main competitor gaining more market share?" He decides the answer to this question is "yes." Which aspect of the VRIO analysis does this question answer?

value

"internal" INSIDE THE FIRM - Drawbacks that hinder an organization in executing strategies in pursuit of its mission o Examples of weaknesses: Could be some of the same items listed for strengths, because both Strength and weaknesses are based off of "Internal" or come from inside the firm

weaknesses

- Keep it simple - Stay focused - Keep moving - Engage people

which of the following help a manager keep a strategic plan on track?