MGT 3013 Chapter 6

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A plan that is updated every year to take account of changing conditions is called a(n) ________ plan.

rolling A corporate- or business-level plan that extends over several years is typically treated as a rolling plan—a plan that is updated and amended every year to take account of changing conditions in the external environment. Rolling plans enable managers to make midcourse corrections if environmental changes warrant or to change the thrust of the plan altogether if it no longer seems appropriate.

Carnegie Steel Company was a United States steel producing company. The company controlled not only the mills where the steel was made, but also the mines where the iron ore was extracted, the coal mines that supplied the coal, the ships that transported the iron ore, the railroads that transported the coal to the factory, and the coke ovens where the coal was cooked. This is an example of ________.

backward vertical integration Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products ( backward vertical integration ) or forward into a new industry that uses, distributes, or sells the company's products (forward vertical integration).

Which of the following threats affects how much profit organizations competing within the same industry can expect to make?

Few large customers Porter identified these five factors as major threats because they affect how much profit organizations competing within the same industry can expect to make: the level of rivalry among organizations in an industry; the potential for entry into an industry; the power of large suppliers; the power of large customers; and the threat of substitute products. If only a few large customers are available to buy an industry's output, they can bargain to drive down the price of that output. As a result, industry producers make lower profits.

Which of the following best describes standing plans?

They are used in situations in which programmed decision making is appropriate. Standing plans are used in situations in which programmed decision making is appropriate. When the same situations occur repeatedly, managers develop policies, rules, and standard operating procedures (SOPs) to control the way employees perform their tasks.

According to Henri Fayol, which of the following qualities of an effective plan means that only one central, guiding plan is put into operation to achieve an organizational goal?

Unity Henri Fayol, the originator of the model of management, said that effective plans should have four qualities: unity, continuity, accuracy, and flexibility. Unity means that at any time only one central, guiding plan is put into operation to achieve an organizational goal; more than one plan to achieve a goal would cause confusion and disorder.

According to Porter, when is an organization "stuck in the middle"?

When it has not made the choice between a low-cost strategy and a differentiation strategy According to Porter, managers must choose between a low-cost strategy and a differentiation strategy. He refers to managers and organizations that have not made this choice as being "stuck in the middle."

Which of the following factors is most likely to be considered an opportunity in a SWOT analysis?

Your company sells a line of healthy products, and the local market is becoming more health conscious. A SWOT analysis is a planning exercise in which managers identify internal organizational strengths (S) and weaknesses (W) and external environmental opportunities (O) and threats (T). Based on a SWOT analysis, managers at the different levels of the organization select the corporate, business, and functional strategies to best position the organization to achieve its mission and goals.

The level of involvement, investment, and degree of risk is highest in ________.

a wholly owned foreign subsidiary When managers decide to establish a wholly owned foreign subsidiary, they invest in establishing production operations in a foreign country independent of any local direct involvement. This method of international expansion is much more expensive than the others because it requires a higher level of foreign investment and presents managers with many more threats.

A plan that indicates which industries and national markets an organization intends to compete in is a(n) ________-level strategy.

corporate The corporate-level plan contains top management's decisions concerning the organization's mission and goals, overall (corporate-level) strategy, and structure. Corporate-level strategy specifies in which industries and national markets an organization intends to compete and why.


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