MGT 3200 Exam 1 September 29 PPT
A ___________ will utilize a stable growth strategy
cash cow
high market share, low market growth
cash cow
BCG matrix: ________________ High share of a low growth market. Has a lot of customers and a low potential to gain new customers. Tried and true product/service that people have been using a long time, brand loyalty is high. Utilize a stable growth strategy: spend just enough resources to keep current position in the market (keep your products/services fresh). Profitability is high due to high sales volume with low costs of operation (efficient production). Profits will be used to fund stars and new ventures.
cash cows
the market share the business currently has and the rate of demand growth in the market determines the business's _________________ and ultimately its business level strategy
classification
A focus strategy can also be ___________ with another generic stategy
combined
The _________________ strategy is to own that portfolio of businesses that will maximize market share and profitability.
corporate
this strategy focuses on what businesses does the organization want to own
corporate
A ____________ typically wants to own a mix of new ventures, stars and cash cows. Occasionally, the dog will be part of the portfolio if it continues to be profitable.
corporation
With a _________ strategy, an organization focuses on a specific segment of the market (niche) rather than the entire market. Common market segments are geographic and customer based.
focus
Far____________resources are allocated to the upper quadrants than the lower quadrants in the matrix.
greater
A ______________ in the adaptation model is very similar to a star and new venture in the BCG matrix, as the three use a growth strategy
prospector
Environmental Scan: the organization sees demand for the product as growing (dynamic environment). 1)ENTR: find and exploit new markets. Develop new & different products (growth). 2)ENG: flexible production to take advantage of multiple opportunities. 3)ADM: Organizational structure has few rules/regulations. Far less budgetary constraints/cost controls. (Loose control)
prospector strategy
A _________ is a dog in the BCG matrix but not all dogs are this. Some dogs have a set strategy that allows them to be profitable
reactor
This is the worst of the four strategic types. It is constantly reacting to what other companies are doing and as a result, how it answers the three questions is constantly changing. There is no set strategy in place so not much gets done. Both customers and employees not sure what the organization is trying to accomplish.
reactor
Profits from stars and new ventures are _____________ to gain greater market share.
reinvested
A __________ will utilize a growth strategy
star
high marker share, high market growth
star
BCG matrix: __________ High share of a high growth market. Has a lot of customers and a high potential to gain new customers. Very attractive, well-known product/service. Utilize a growth strategy: expand production, offer new variations of products/services and/or complimentary products/services, aggressive marketing/advertising. Greater market share is the #1 priority, profits from the star are reinvested to gain market share. May need infusion of cash to exploit opportunities. CASH HOGS especially at first.
stars
The ________ quadrants of the matrix provide the portfolio with market share whereas the ______________ quadrants provide it with profitability
upper lower
In the BCG Matrix, if a company has a high share of a low growth market, it is classified as a _________. 1.cash cow 2.new venture 3.star 4.dog
1
In the BCG Matrix, what business-level strategy would one select for a dog that is profitable? 1.Retrenchment 2.Growth 3.Stable growth 4.Divestment
1
4 Strategic Types in the Adaptation Model of Strategy
1. defender 2. prospector 3. analyzer 4. reactor
Porter's 3 generic strategies
1. differentiation 2. overall leadership 3. focus
Approaches to Strategy Formulation
1.Business Portfolio Matrix Approach 2.Porter's Generic Strategies 3.Adaptation Model of Strategy
A defender strategy is like what strategy in the BCG matrix? 1.Star 2.Cash Cow 3.New Venture 4.Dog 5.Both Cash Cow and Dog
2
PXG makes golf clubs that offer outstanding performance and feel to golfers. These clubs are also custom fit to a golfer's swing based on an extensive swing analysis. These golf clubs are very expensive (3 times the price of other top-line golf clubs) and are sold only through PXG fitting specialists. This reflects the use of what generic strategy? 1.Overall cost leadership 2.Differentiation 3.Defender 4.Analyzer
2
In the BCG Matrix, where are most of the corporation's resources invested? 1.Cash Cows and Dogs 2.Cash Cows and Stars 3.Stars and New Ventures 4.Cash Cows and New Ventures 5.New Ventures and Dogs
3
In the Business Portfolio Matrix approach, the corporate strategy is to own the mix of businesses that maximizes: 1.market share. 2.profitability. 3.both market share and profitability. 4.None of the above
3
Which of the following is a combination strategy in the adaptation model of strategy? 1.Defender 2.Reactor 3.Prospector 4.Analyzer
4
In the BCG Matrix, what business-level strategy would one select for a new venture that has a negative growth forecast? 1.Retrenchment 2.Growth 3.Stable growth 4.Divestment 5.Either retrenchment or divestment.
5
In the Business Portfolio Matrix approach, which of the following would be included in the organization's business portfolio or corporate strategy? 1.Star 2.Cash Cow 3.New Venture 4.Dog that is profitable 5.All of the above 6.Only Star, Cash Cow, and New Venture.
5
Which of the following is NOT true concerning a prospector strategy? 1.It works best in a dynamic environment. 2.It uses a growth strategy. 3.It operates using flexible production. 4.It has fewer rules and regulations. 5.It has tight cost controls.
5
The various business-level strategies utilized are determined via the __________) matrix.
BCG (Boston Consulting Group
__________________ believes that once top managers have scanned their external environment and have a feel for their industry/market, they can adopt one of three generic strategies to gain competitive advantage. This approach to strategy formulation deals only with business-level strategy
Porter
This model of strategy formulation states that an organization's strategy must be aligned with its external environment for the organization to be effective. The process of strategic alignment depends on the organization's environmental scan which provides the basis for the answers to three very important questions.
adaptation
Three Questions answered by and organization's environmental scan: 1.Entrepreneurial ?: This question is concerned with how the organization will compete (This is the organization's business-level strategy) 2.Engineering ?: This question is concerned with how the organization will produce & market its good/service. 3.Administrative ?: This question is concerned with how the organization will structure itself to achieve the answers to first 2 questions. The 1st question focuses on ________ the strategy with the external environment and the 2nd and 3rd questions focus on ___________ the organization with its strategy (ie making sure its implemented correctly)
aligning aligning
An ______________ in the adaptation model is very similar to a star and new venture since it has a prospector division and a cash cow since it has a defender division
analyzer
This strategy is a combination of prospector and defender. It has an environmental scan that sees demand growing in some areas and demand stabilizing/decreasing in other areas. But it's a combination "in name only." There are divisions of the company that are operated as defenders and there are other divisions that are operated as prospectors. The key here is that these divisions are kept separate. Defender and prospector characteristics are never mixed.
analyzer strategy
Two Levels of Strategy
business level and corporate level
This approach to strategy formulation involves 2 levels of strategy: corporate and business-level. The corporate strategy is to own that mix of businesses that maximizes market share and profitability. (Business Portfolio)
business portfolio matrix approach to strategy formulation
this strategy focuses on how an organization wants to compete in a market/industry
business-level
A ___________ in the adaptation model is very similar to a cash cow in the BCG matrix, as both use a stable growth strategy.
defender
Environmental Scan: the organization sees demand for the product as not growing (stable environment). 1)ENTR: seal off market share thru overall cost leadership (stable growth). 2)ENG: efficient production to lower costs. 3)ADM: Organizational structure emphasizes use of rules/regulations. Lots of budgetary constraints/cost controls. (Tight control)
defender strategy
With a ____________ strategy, the organization makes its product different in terms of design, quality, service, and image so it can charge a high price; exclusivity is desired. The profit margin on each item sold is high.
differentiation
BCG matrix: ___________ Low share of a high growth market. Doesn't have a lot of customers and very low potential to gain new ones. Can be the result of technological obsolescence or customer preferences changing. The strategy utilized will depend on the profitability of the dog. If the dog is not profitable (which is most of the time), then divestment is called for. If the dog is profitable, then a retrenchment strategy (cost cutting strategy is called for, maximizing profits. The dog will not typically be around for very long, regardless of the strategy used.
dog
low market share, low market growth
dog
The __________ strategy will depend on its profitability. If profitable, retrench. If not profitable, divest.
dog's
each strategic type in the adaptation model of strategy has a different __________ scan and thus different answers to the 3 questions
environmental
_______________ is the rate of growth in demand for the market; in BCG matrix model can be high or low
market growth
______________ is the percentage of customers in the market the business has; in BCG matrix model can be high or low
market share
In this model, each business that a corporation owns is classified into the BCG matrix. The BCG matrix is comprised of two factors: ____________ and ____________
market share market growth
___________ resources are allocated to cash cows to keep their positions in the market (e.g., customers).
minimal
The life cycle of a product/service can be seen in the BCG matrix. A new venture becomes a star as it grows its market share, a star will become a cash cow when demand for it stabilizes, and the cash cow will become a dog when demand for it decreases and a dog will eventually die out. This is reason we want cash cows to fund new ventures, new ventures to grow in stars, and stars to become cash cows. So the organization does not die out, we keep the cycle rolling. This is a case of __________.
negative entropy
low market share, high market growth
new venture
The _____________ strategy will depend on its forecast. Forecast is negative for growth, retrench or divest. Forecast is positive for growth, then utilize a growth strategy
new venture's
BCG matrix: ________________ Low share of a high growth market. Doesn't have a lot of customers and has potential to gain new customers. The question is whether it will achieve it's potential or not. The strategy used here depends upon the forecast. If the forecast sees the new venture gaining market share and becoming a star, then a growth strategy is used. If the forecast sees the new venture becoming a problem child and then a dog, then a divestment or retrenchment strategy is warranted.
new ventures
In the BCG matrix, profits from cash cows and occasionally dogs is deployed to fund__________and stars in their efforts to expand their market share.
new ventures
With an ________________ strategy, an organization offers a good quality product at a low price. An organization must do a high volume business. The profit margin on each item sold is small.
overall cost leadership
