MG302 Chapter 5

When using a focus strategy, a company tries to create a product that will appeal to the broadest possible customer base.

False

________ goals and plans are the responsibility of middle managers, such as the heads of major divisions or functional units

Tactical

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.

A company that strictly controls expenses is likely to use a low-cost leadership strategy.

True

Typically set by frontline managers, _______ are the precise, measurable outcomes expected from departments, work groups, and individuals.

operational goals

The BCG matrix

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

Tactical plans are designed to

help execute the major strategic plans and to accomplish a specific part of the company's strategy.

SWOT analysis

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

Helena discusses how she might arrive at a budget for her website. If she decides to hire a consultant to make the website more mobile-friendly and integrate better across social media platforms, which of the following would be true?

This would be an operational plan.

The results expected from departments, work groups, and individuals are the

operational goals.

To think ____________ means to take the long-term view and see the big picture

strategically

The formal mission statement is a broadly stated definition of purpose that distinguishes the organization from others of a similar type.

a broadly stated definition of purpose that distinguishes the organization from others of a similar type.

The concept of planning usually incorporates

both ideas; it means determining the organization's goals and defining the means for achieving them.

Strategic goals, sometimes called official goals, are

broad statements describing where the organization wants to be in the future.

Differentiation strategies can reduce the bargaining power of large customers.

True

When determining ________ strategy, managers consider what proportion of the firm's portfolio of businesses should be in different industries.

corporate-level

At a company located in California, the management team engages in ___________ to develop detailed plans in case of a devastating earthquake.

crisis planning

Operational plans

specify the action steps toward achieving operational goals and support tactical activities

When conducting a SWOT analysis, budgets, ratios, and sales reports can be used to identify:

Company strengths and weaknesses

Considering all of the factors listed in the preceding SWOT analysis question, which of the following strategies would make the most sense for the Cubs in the upcoming season? Assume that as the players age, they will continue to produce at their current levels. Trade the Cubs' current pitchers to another team for minor-league prospects who aren't ready for the major league. Keep the Cubs intact and do not hire any new players because the team was good enough to win the World Series. Sign a free-agent outfielder to bolster the current roster and sign the current pitchers to long-term contracts.

D

__________ plans identify the specific procedures or processes needed at lower levels of the organization, such as individual departments and employees

Operational

A plan is

a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks, and other actions.

Two months from now, I will have 15 licensed electricians working for me.

goal

When formulating strategy, Mi Ola's managers scan the business environment for factors that will or could impact the company's competitive advantage. Which of the following would pose a threat to Mi Ola? Check all that apply. Unlike most clothing brands, Mi Ola contracts with U.S. factories to supply its fabric and manufacture the garments, incurring greater costs than competitors who source from overseas factories. Helena Fogarty hires a designer who produces a line of bikinis that customers hate and a prominent fashion blogger features as "Ugliest Swimsuits Ever." Several top professional women surfers state in interviews that they feel one-piece swimsuits are much sexier than bikinis, as well as more practical. Mi Ola continues to have limited funds available to invest in inventory, meaning that products are often out of stock.

A and C

As the Board of Governors of the American Red Cross considers planning, one option is to make strategic plans and then direct managers to align tactical and operational plans accordingly. Another option is to have planning specialists help managers across the organization make their own plans. Why might this organization's executives opt for the latter approach? Check all that apply. The environment is a dynamic one, and department and frontline managers can come up with more responsive plans than can central leadership. Resources will be better coordinated across the organization in support of the overall strategy. Senior leadership will have more control over the organization's direction. When managers come up with their own plans, they are likely to be more committed to following through on them.

A and D

Focus Strategy

A strategy where managers use either a differentiation or a cost leadership approach, but they concentrate on a specific regional market or buyer group.

Cost Leadership Strategy

A strategy with which managers aggressively seek efficient facilities, cut costs, and use tight cost controls to be more efficient than others in the industry.

Differentiation Strategy

A strategy with which managers seek to distinguish the organization's products and services from those of others in the industry.

As a manager, you have been asked to work with your employees to develop goals. What can you expect from this process? Check all that apply. A benefit of plans is that they lock the organization into a course of action it can stick to, even if the environment changes. One of the drawbacks of plans is that they can create a false sense of security. Planning can harm an organization because it distracts employees from important outcomes. A benefit of goals is that they help motivate employees.

B and D

Mi Ola designs swimsuits for women who are athletic in the water, and the swimsuits have design features that allow them to stay on during physical activity. This indicates that Mi Ola has a: Check all that apply. Cash cow strategy Focus strategy Cost leadership strategy Differentiation strategy

B and D

Which of the following is an example of a way in which Mi Ola uses core competence to achieve competitive advantage? Check all that apply. Mi Ola's website allows customers from all over the world to order products in 4 sizes, 12 colors, and a wide range of styles. Helena Fogarty has many years of experience in different aspects of the fashion industry. Mi Ola seeks funding from outside investors to achieve greater capitalization. An avid surfer, Helena Fogarty is personally aware of what Mi Ola's customers need in a swimsuit.

B and D

Which of the following factors should be classified as an opportunity for the team? Teams like the Texas Rangers and Cleveland Indians have a tough time finding players due to the extreme talent already on their teams. The Cubs' current right-fielder, while defensively sound, has struggled at the plate for the last two seasons. The Cubs' have an incredible depth to their bullpen, solid starters, reliable relievers, and one of the highest-ranked closers in all of baseball. There are a number of free-agent outfielders who are available for signing by the Cubs this year, many of whom have better statistics than the current team members.

D

In discussing inventory, Helena mentions that bikinis for sale on the website are not always in stock. Say customer feedback indicates that when a customer's bikini won't arrive within two weeks, that customer usually cancels their order. Furthermore, retail stores ordering restocks of items usually find another supplier if Mi Ola cannot ship within two weeks. What would be the best action for Helena to take first?

Decide that when online customers and retail stores order bikinis, they will never have to wait more than two weeks for the order to arrive.

In some years, weather patterns have caused there to be few fish in local lakes, and anglers have gone elsewhere. Also, invasive carp are threatening the lakes and may someday cause fish stocks to drop indefinitely. How should these facts impact Dave and Betsy's planning?

They should develop a contingency plan in case few anglers book rooms.

Helena mentions that she might "allocate one-third of the revenue that I get from e-commerce into the cost for e-commerce." Which of the following accurately describes this statement?

This is a tactical plan.

A goal is

a desired future circumstance or condition that the organization attempts to realize.

Key performance indicators (KPIs)

are measures that reflect how well lower-level goals are helping the organization progress toward attaining its strategic goal.

Stretch goals

are reasonable yet highly ambitious goals that are so clear, compelling, and imaginative that they fire up employees and engender excellence. Stretch goals are typically so far beyond the current levels that people have to be innovative to find ways to reach them.

Managers who are analyzing how best to compete within a given industry are concerned with__________ strategy.

business-level

When discussing how she pitches Mi Ola to investors, Helena says her goals and plans are based on a number of assumptions that might or might not be realistic. You might advise her to _________ to deal with this unpredictable business environment.

decentralize planning

Contingency plans

define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions. To develop contingency plans, managers identify important factors in the environment, such as possible economic downturns, declining markets, increases in cost of supplies, new technological developments, or safety accidents.

Strategic plans

define the action steps by which the company intends to attain strategic goals. The strategic plan is the blueprint that defines the organizational activities and resource allocations—in the form of cash, personnel, space, and facilities—required for meeting these targets.

The mission

describes the organization's values, aspirations, and reason for being. A well-defined mission is the basis for development of all subsequent goals and plans

In the video, Helena mentions that "your plans are always going to change from day to day" because the business environment changes. She should consider _______ to gain more stability in her planning process.

developing contingency plans

I'll recruit people in an International Brotherhood of Electrical Workers apprenticeship program, since they will be more likely to have the skills they need to get their license.

plan

Synergy

exists when the organization's parts interact to produce a joint effect that is greater than the sum of the parts acting alone.

By the time I start my next contract, 3 of my unlicensed electricians will be licensed.

goal

Scenario Building

involves looking at current trends and discontinuities and visualizing future possibilities

Crisis planning

involves the two major stages of prevention and preparation.

The crisis management plan (CMP)

is a detailed, written plan that specifies the steps to be taken, and by whom, if a crisis occurs.

Management-by-objectives (MBO)

is a method whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance. MBO includes the steps of setting goals, developing action plans, reviewing progress, and appraising performance.

A company's core competence

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

Strategy execution

is the stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes.

To develop effective lower-level goals, Michelle works with her management team to establish _______________ , which measure how well the organization is achieving its strategic goals.

key performance indicators

A recent approach that focuses people on the methods and processes used to attain results, rather than on the results themselves, is called

management by means (MBM)

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.

For nonprofit organizations, strategy is long-term thinking related to ______________

responding to the needs of stakeholders

Goals are _________________, which means they are defined by an individual or a group

socially constructed

Top managers are typically responsible for establishing __________ goals and plans that reflect a commitment to both organizational efficiency and effectiveness

strategic

Kaila, the owner of a costume shop, has a three-year strategic goal to serve 15 percent more customers and increase margins by 5 percent. To achieve this goal, she will lease the retail space next door. When she signs the lease and pays to remodel the space, this is an example of

strategy execution

When Paul O'Neill joined Alcoa as CEO, he set a ____________ , that there would be zero workplace accidents. A lot of people in the organization thought this was impossible given how dangerous some aluminum-manufacturing jobs are, but Alcoa's safety record improved tremendously.

stretch goal

After strategic goals are formulated, the next step is to define ___________, which are the results that major divisions and departments within the organization intend to achieve.

tactical goals

When referring to a SWOT analysis, the letter T stands for _______ , and it refers to factors that are ____________to the organization.

threats, external