MGT 300-Chapter 4

___ is a diversification strategy that emphasizes adding businesses that have *little* in common but may be undervalued relative to the purchase price

Unrelated diversification

____ is growth by acquiring companies in industries that have *nothing* in common

Unrelated diversification

___ is the strategy of extending a business's scope by including an activity backward toward suppliers or forward toward the end user

Vertical integration

____ is a strategy of extending a business scope by taking an activity or function backward toward sources of supply or forward toward the end user

Vertical integration

Forward looking, graphic, inspirational but feasible idea of the course and direction of the organization

Vision

What is a good example of a *cost leadership* company?

Walmart

Resources or capabilities a firm lacks or does worse than their competitors

Weaknesses

What question does a *mission* answer?

What are we about?

What question does a *vision* answer?

Where are we going?

What is the *third* step in the strategic planning model?

crafting a strategy to achieve the objectives and move the company along the intended path

What company is an example of *concentration*?

Mcdonalds

Generic strategy: ____ seeks to gain competitive advantage by producing goods or services more cheaply than competition while still providing the customer with basic wants and needs

Cost leadership

What are the 4 *generic strategy* types?

Cost leadership, focus cost leadership, differentiation, focus differentiation

"Strategy is about choices" He is known as the guru of strategy

Michael Porter

States the purpose of an organization, the reason for its existence and often includes values and beliefs

Mission

Each division or department is responsible for planning its own operations with guidance from central planning group

Decentralized

What is the *first* step in the strategic planning model?

Developing a strategic vision, mission, and values

Generic Strategy: ___ seeks its competitive advantage by targeting some unique product or service attributes that consumers see as advantageous over the attributes of competing products

Differentiation

____ strategy seeks its competitive advantage by targeting some unique product or service attributes that consumers see as advantageous over the attributes of competing products

Differentiation

___ is the strategy of entering a business that is in a different industry than the current business

Diversification

What company is a good example of a *focus cost leadership strategy*?

Dollar General

What is a good example of a *focus-cost leadership* company?

Dollar general or Sams Club

T/F: A SWOT analysis concentrates only on the internal aspects of a firm.

False

___ is a growth strategy by acquiring another firm in the same industry whose products or services are similar

Horizontal integration

What is an example of *forward vertical integration*?

If Disney opened their own store instead of selling their stuff to other companies

What is an example of *backward vertical integration*?

If Starbucks had to buy or own their own coffee farms

What is an example of *horizontal integration*?

If whole foods were to buy the fresh market (or vise versa)

___ organizations are usually decentralized or a combination of both

Large

____ is growth by acquiring companies in industries that are somewhat *similar*

Related diversification

___ involves making decisions about how best to present your company in order to achieve the vision and objectives you set forth

Strategy

What does SWOT analysis stand for?

Strength, Weakness, Opportunities, Threats

Resources or capabilities that give you the upper hand over competition

Strengths

____ are usually more motivated when involved in the objective setting

Subordinates

What is the *fourth* step in the strategic planning model?

executing the strategy (very important!)

Opportunities and threats are ___ to the organization

external

What is a good example of a *focus-differentiation* company?

fresh market or whole foods

Porter said that there are only *2 ways to achieve competitive advantage*:

have lower costs than rivals, have different product and be rewarded for it

What is the *second* step in the *planning* process?

identifying and assessing conditions relating to the objective

Strengths and weaknesses are ___ to the organization

internal

Each SBU has its own ___ and ___ environment that must be assessed

internal; external

Most ___ corporations have a number of products in one or more industries

large

Strategic planning: -Significant ___ term impact -Related to the ____ environment -Deals with issues that are ___ oriented

long; external; future

What is a good example of a *differentiation* company?

mom and pop shops or speciality stores

What is the *fifth* step in the strategic planning model?

monitoring developments, evaluating performance, and initiating corrective adjustments

What should you NOT do when objective setting?

move the goalposts, have too many objectives, use words that end in "ize"

Strategic Planning process includes activities that involve: -Vision/mission -Setting ___ -Developing ____ to achieve objectives

objectives; strategies

*BCG matrix*: high growth markets and small market share

question marks

What is the *first* step in the *planning* process?

setting an objective

What is the *second* step in the strategic planning model?

setting objectives

The Resource based approach isolates the ___ process and capabilities a firm does better than its rivals

specific

*BCG matrix*: fast growth markets and large market share

stars

Objectives are very important because they become the focal point for ___ direction

strategic

Strategic planning decisions are made by:

top management

A production supervisor is more likely to be involved with planning horizons of how long?

up to one year

What are other steps associated with planning (strategic planning)?

-Defining mission/vision (leading) -Implementing plan (organizing, leading) -Monitoring implementation (controlling) -Evaluating effectiveness (controlling)

Short range plans (lower management)

1 day to a year

Intermediate range plans (middle management)

1 to 3 years

What are the two main combinations organizations look for after they do a SWOT analysis?

1. leverage your strengths to take advantage of opportunities 2. Analyze what threats are out there

Long range plans (top management)

3 to 5 years

____ consists of a unique company business (within a larger diversified firm) that has its own mission, product or service lines, competition, customers, threats, and opportunities

A strategic business unit (SBU)

____ is a tool in strategic planning for diversified corporations

BCG (Boston Consulting Group) Matrix

___ is a strategy where a firm operates with a single line of business

Concentration

___ are end results of organizations activities

Objectives

Favorable happenings in the external environment

Opportunities

___ is defined as the process of establishing objectives and determining how to best achieve them

Planning

___ is the process of establishing objectives and how to achieve them (a 3 step process)

Planning

___ based view focuses on what resources and capabilities a firm does better than its rivals

Resource

___ organizations are usually *centralized*

Small

What does SMART stand for?

Specific, Measurable, Attainable, Results oriented, Time oriented

In which step of the *planning* process do you make assumptions about the future and scan your environment?

Step 2

Each of these larger companies therefore consists of a portfolio of several distinct *smaller* businesses called:

Strategic business units (SBU)

___ is defined as those activities that involve defining the organizations vision, mission, setting objectives, and developing strategies to help it operate successfully

Strategic planning

Unfavorable external circumstances that can negatively effect the organization

Threats

Simplicity with powerful visual representation is an ___ of the BCG matrix

advantage

Strategic planning is usually the ___ of large amount of resources

allocation

What are the two types of markets you can target?

broad and narrow

*BCG matrix*: mature, slow growing market and high market share

cash cows

Done by single person or planning department

centralized

Planning is more _______________ when it is done by a single person or group such as at the corporate level.

centralized

What are some *corporate growth* strategies?

concentration, horizontal integration, vertical integration

Each of the following is one of the three basic steps in planning except:

defining the mission

What is the *third* step in the *planning* process?

developing a systematic approach to achieve the objective

An ___ of the BCG matrix is that only 2 aspects are being represented namely 1) industry growth rate 2) relative market share

disadvantage

What are some *corporate diversification* strategies?

diversification, related diversification, unrelated diversification

*BCG matrix*: low growth market and low market share

dogs

Where is planning done?

done on a continuum that ranges from centralized to decentralized

Why is the *strategic planning* process very important?

due to increasing complexities of both the external and internal environments