MGMT-310 Ch. 4 Review Questions

Which of the following statements about strategy development is false?

The inputs to the emergent aspects of strategy development are top-down.

General Electric is a company that used _______ to acquire and hold companies in the aerospace, consumer appliances, entertainment, financial services, health care, media, power generation, sensors, transportation, and water technology industries.

Conglomeration

The manufacturers of Chobani Greek Yogurt decided to open a flagship store in the SoHo neighborhood of New York, where customers can order special yogurt creations like "fig + walnut" or "mango + olive oil." In the business of manufacturing yogurt for 7 years, the company had never tried to run a restaurant before.

Corporate-level strategy

Plantronics engineers know how to design headsets, but the exact body of the headset will have to be different, depending on the people who wear it. Economies of scale are less important than getting the right technical design and the best headset body for clients.

International

In a(n) _____, two firms come together to form a new company in a market.

Joint venture

A ____________entails how a company will position itself among competitors.

A business-level strategy

When a business grows through unrelated diversification, acquiring companies in different industries, it is called __________.

A conglomeration

The mission of a firm provides:

A description of the activities that a firm performs for its customers.

When Apple's marketing department developed a billboard that could be used to advertise the iPod throughout the world, it was engaged in _______ strategy.

A global

_______ like "To give people the power to share and make the world more open and connected" is a good place to look if you want to know why a company is in business.

A mission statement

Nestlé Foods makes more than 200 different brands of Nescafé, its instant coffee. Each geographic region drinks a slightly different version of coffee, necessitating the use of _______ strategy for coffee sales.

A multinational

During the last two decades, Starbucks has partnered with a number of companies. In 1993, it set up a relationship with Barnes & Noble to establish coffee shops in bookstores. In 1996, it partnered with PepsiCo to bottle, distribute, and sell Frappuccino coffee drinks. And in 2006, Starbucks started working with the National Association for the Advancement of Colored People (NAACP) to promote that organization's goals. These _______ helped Starbucks to sell more coffee and each of the affiliated organizations to promote its products and services.

Alliances

A manager who says, "I want to increase our department's earnings by 4% next quarter," is stating _______.

An objective

Seattle-based Theo Chocolate makes organic and fair-trade chocolate bars. Its management team includes Joe Whinney, the company's founder and CEO, and Debra Music, vice president of sales and marketing. Suppose that Joe and Debra were deciding on a pricing strategy just for their company's chocolate bars. This would be a _______ strategic decision.

Business-level

An audio equipment company's managers ask, "Should we increase the size of our Bluetooth wireless speaker and sell it at a higher price?"

Business-level strategy

David is developing a strategy for his company that sells tour packages. He discovers that if his tours include rooms in no-frills hotels and provide only limited time with a guide at the destination, instead giving tour members brochures that suggest self-guided walking tours and popular tourist destinations they can find on their own, he can sell his packages for up to 25% less than his major competitors do. He plans to market his tours with inexpensive late-night infomercials.

Choosing a set of activities

Joclyn, a successful writer, decides to write a series of mysteries set in New England. Each fall, she will travel throughout New England to sign books in bookstores, meet with book clubs that are reading one of her mysteries, and give talks to students in creative writing programs at universities.

Choosing a set of activities

In order to evaluate the external fit of a strategy, a firm must ask which of the following questions?

Does the strategy fit with the environmental landscape?

When Bhatavia Jedda made shirts in her native country of Saudi Arabia and sold them in Jordan, she was involved in the process of _______.

Exporting

Imagine that General Mills' senior managers meet to discuss the company's U.S. retail food strategy. The managers consider the question, "With the acquisition of Annie's and investment in our natural food brands, how well does our product portfolio match consumers' tastes?" Which criterion are they using to evaluate the company's strategy?

External fit

A(n) _____ strategy attempts to provide a standardized product to all markets without taking into consideration the local tastes and responsiveness of the regions in which the product is being sold.

Global

Plantronics managers believe that most people around the world can wear the same type of headset. The goal is to manufacture all of the headsets in one location so that true economies of scale can be achieved in production costs.

Global

Imagine that General Mills' senior managers meet to discuss the company's U.S. retail food strategy. Suppose a consultant tells the management team, "General Mills needs to identify more successful smaller companies like Annie's and buy them." One of the managers responds, "The purchase of Annie's cost $820 million. Since we need to invest in our snack foods, which are doing well, there's a limit on how many companies we can afford to acquire." Which criterion is this manager using to evaluate the proposed strategy?

Implementability

Imagine that General Mills' senior managers meet to discuss the company's U.S. retail food strategy. If the managers discuss whether General Mills should venture into fresh foods when its marketing and manufacturing expertise are in packaged foods, which criterion would the managers be using to evaluate the proposed strategy?

Internal fit

A contractual arrangement whereby a firm allows another firm to use its technology without permitting the use of a common brand name is known as:

Licensing

According to the economist Milton Friedman, the goal of a business is to:

Make profits

Dreyfus manages a hair and beauty salon. To best position the salon to serve its neighborhood, he decides to hire only stylists trained in the care of African American hair and skin and stock only products aimed at African Americans.

Managing trade-offs

Jed and his management team feel that there are many different markets for Bluetooth headsets and that the headsets must match people's preferences in the regions where they are sold. Managers are willing to allow subsidiaries to perform all corporate functions at all levels.

Multinational

A company's _______ serves as an organizational game plan, outlining how the company will create a competitive advantage.

Strategy

When the CEO and senior management of a books, music, and games distributor systematically evaluate the company's internal and external environment to evaluate the vision and mission and develop objectives, which aspect of strategy formulation are they engaged in?

The planned component of strategy development

Plantronics managers have been working all over the world for a long time. They know that they always have to balance organizational learning with efficiency and local responsiveness. For that reason, they are planning to adopt different headset design and manufacturing approaches for different markets. High-end models will be centrally designed and manufactured, while lower-end models will be designed, manufactured, and distributed by subsidiaries.

Transnational

A company's _______ often motivates people to join the company and perform at very high levels.

Vision

To make this decision, Joe and Debra would have to take which of the following actions? Check all that apply.

-Identify the profitability profile for different types of products. -Determine what kinds of industries Theo Chocolate should be in. -Evaluate the resources the company has available to allocate between the chocolate industry and the baked goods industry.

Which of the following are disadvantages of a global system? Check all that apply.

-Clients in different locations may have different tastes in products. -Production scale economies may be too low to make the product profitably.

To make this decision, Joe and Debra would have to take which of the following actions? Check all that apply.

-Evaluate the intensity of competition and competitors' pricing of candies. -Choose one of three approaches for selling chocolate bars: low-cost, differentiation, or focus. -Evaluate what resources the company has to devote to manufacturing and selling chocolate bars.

Which of the following are examples of a company using strategy to seek a competitive advantage? Check all that apply.

-In the 1970s, the Sumitomo Bank of Japan bailed out two major corporate customers at a cost of over $1 billion, greatly hurting its profitability. However, its loyalty to its customers enhanced its reputation, and by 1981 it was Japan's most profitable financial institution. -In the 17th century, the Dutch East India Company allied with a powerful leader in Indonesia to gain exclusive access to spices, and during the company's existence, it carried about five times the shipping tonnage of its nearest competitor, an English company. -The Finnish company Stora Enso appeals to the world's desire to use renewable resources by developing new packaging, paper, textile, and other products based on sustainably grown wood. Quarterly profit recently rose 38% year over year, and the company has garnered much recognition from environmental groups.

Which of the following describe strategies used by the Roman Empire to achieve a competitive advantage against other countries? Check all that apply.

-It chose military engagements carefully, fighting at times and places where victory seemed likely. -It backed up vigorous diplomatic activity with a credible threat of military force to achieve political goals. -It gathered and allocated resources to maintain an unmatched standing army that could exert the force necessary to achieve its political goals.

Which of the following are disadvantages of a transnational system? Check all that apply.

-It may be difficult to choose which strategy to adopt for which environment. -The company can spend large amounts of money implementing many diverse strategies.

Kim Ping should manufacture her ducks in multiple local facilities when which of the following circumstances are present? Check all that apply.

-It would cost her a great deal of money to ship and pay tariffs on her ducks. -Clients have strong regional preferences about how ducks should look or sound. -The local market for her ducks is larger than her minimum efficient scale of production at local manufacturing sites.

When a company uses foreign subsidiaries to produce and distribute its products overseas, but also performs research and development in the company's home offices, it is most likely to be using _______ strategy.

An international

Imagine that after Annie's, a company that makes organic foods, had a very successful IPO, its managers met to consider the best way for the company to position its products and decided on a focus strategy, targeting sales at people who prefer to consume food with certified organic ingredients.

Business-level strategy

Imagine that managers at Apple ask, "Should our next iPad product be innovative and new, so we can charge a higher price for it, or should we consider offering a product with only basic features, so people with less money can purchase an iPad?"

Business-level strategy

Imagine that senior managers in the Post-it Note division at 3M determine that regardless of how 3M positions its other products, Post-it Notes will continue to be sold at a premium price. The company will also continue to develop new Post-it products to attract new buyers.

Business-level strategy

Managers for IBM's SPSS statistics software decide to market the product by showing potential clients how effective SPSS is at analyzing extremely large data sets and how the "Direct Marketing" part of the program helps identify which customers will respond to advertisements.

Business-level strategy

Honda's _______ is developing precision engines and power trains. Its products are market leaders in reliability and technological know-how.

Competitive advantage

Ryan is the manager of Home Repairs Inc., a company that provides a wide range of repair and maintenance services. He claims that Home Repairs is the only company that sends technicians to a client's place for repair work within an hour of the client's call to the company. His company offers its services at very affordable prices. Home Repairs distinguishes itself from other companies by providing discounts for people who sign up for memberships. This scenario describes the company's:

Core competencies

A company's managers ask, "Does it make sense for our vacuum cleaner company to buy a company that manufactures space heaters?"

Corporate-level strategy

A cloud data storage company develops a proprietary system of hardware and software, trains its systems analysts on the technology, and develops redundant backup and monitoring processes to ensure the integrity of customer data.

Creating fit

An accounting firm has hired consultants to write proprietary financial management software that it uses to service its clients. It also uses unique accounting methodologies and has established a team-based structure that best leverages various employees' talents while maximizing accountability.

Creating fit

At Theo Chocolate, managers want to be sure that their products will be competitive given the culture of the company, the company's efforts to treat chocolate producers fairly, and the goal of educating the public about fair-trade chocolate. Considering all of these factors relates to the _______ component of the strategic planning process.

Creating fit among activities

Joe and Debra agonized over what flavors of chocolate to sell. As Debra says, "We had people coming into our store all the time saying, 'Well, can't you just do chocolate with mint?' . . . We weren't especially excited about doing chocolate with mint, but we realized: Why wouldn't we do that if our customers were asking for it?" This decision is a good example of _______ in the strategic planning process.

Managing trade-offs

Marjorie owns a craft store and decides to reduce her purchases of in-store inventory so that she can invest more in website functionality for customers who order products online.

Managing trade-offs

Which of the following is a disadvantage of franchising?

The franchisor may lack the ability to enforce a guideline.

Which of the following are examples of military tactics? Check all that apply.

-Napoleon Bonaparte often spread out units of his army to surround the enemy or force the enemy to move. -In World War I, soldiers often dug trenches to gain protection from machine gun fire and wore gas masks for protection against chemical weapons. -In World War II, German troops attacked using blitzkrieg (lightning war), using mobile forces and locally concentrated firepower to quickly overwhelm the opposing force.

What advantages can Kim Ping expect if she decides to export her ducks to Morocco? Check all that apply.

-The market for Kim Ping's toys will expand, making her less dependent on her home market. -Kim Ping will have better control over how her products are made than she would have with other forms of globalization.

When managers create a firm's strategy, they must consider which of the following elements? Check all that apply.

-The position their firm will take in the marketplace -How they will determine if they have been successful -The company's organizational structure

Which of the following are disadvantages of an international system? Check all that apply.

-This strategy makes it difficult to adapt products to local preferences. -This strategy makes it difficult to achieve economies of scale.

PepsiCo makes and sells large numbers of products, from Pepsi Cola to Lay's potato chips to Cap'n Crunch cereal. One of the company's brands is Near East, a line of Mediterranean-inspired packaged foods. PepsiCo decided to extend this brand by launching a line of snack chips.

Business-level strategy

The CEO of a rapidly growing machine shop, Ramon decides to invest in state-of-the-art equipment that can manufacture high-precision parts with unique tolerances. He recruits managers from the air-and-space and other high-tech industries, invests in advanced computer technology and trains his machinists on cutting-edge techniques, and develops marketing materials that emphasize the firm's ability to meet any customer's most challenging specifications.

Choosing a set of activities

Seattle-based Theo Chocolate makes organic and fair-trade chocolate bars. Its management team includes Joe Whinney, the company's founder and CEO, and Debra Music, vice president of sales and marketing. Suppose that Joe and Debra were considering whether Theo Chocolate should start selling other items, such as locally made baked goods, along with their chocolates. This would be a _______ strategic decision.

Corporate-level

After first denying that a split was being contemplated, eBay announced that it would spin off its very successful PayPal division, which has now become a separate company. The motivation for the spinoff was for PayPal to fulfill its potential in the booming online payment industry while eBay continues to focus on the online auction business.

Corporate-level strategy

Google acquired YouTube in 2006. Imagine that Google managers ask, "Should we sell off YouTube to refocus our product portfolio?"

Corporate-level strategy

Managers at the British company Tesco sold the Fresh & Easy U.S. grocery store chain after comparing returns from that division to those from Tesco's other divisions around the world and determining that the U.S. retail food market could not deliver acceptable returns for the company.

Corporate-level strategy

Never previously known as a computer hardware company, Microsoft decided to enter the tablet-manufacturing business, producing the Microsoft Surface.

Corporate-level strategy