MGT4000 Chapter 1 & 2

Due to economic regression in Jabu, the profitability of the large corporation Honey Comb Inc. was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would Honey Comb Inc. find it most easy to exit? A. the e-commerce retail business, where investments on assets are low B. the airline business, where the company's strategic commitments are long-term C. the pharmaceutical business, where the company has a large number of fixed costs D. the automobile industry, where the company has contractual obligations with suppliers

A.

According to Porter's Five Forces approach, the overall goal of applying the Five Forces analysis to an industry is to make a judgment about its A. future volatility. B. market share. C. overall attractiveness. D. revenue streams.

C.

Which of the following strategy plans might work best in an industry that is considered a fast-changing environment with new laws going into effect regularly? A. dominant planning B. top-down planning C. scenario planning D. bottom-up planning

C.

Fallacy of detachment

impossible to divorce formulation from implementation

What is Strategy?

an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals

fallacy of formalization

inhibits flexibility, spontaneity, intuition and learning

Scenario Planning

Strategy-planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses.

Strategy as Planned Emergence

- Combines top-down and bottom-up - combines planning and rational with adaptability and responding to external/internal forces

resource based view model

- Have unique resources and capabilities - Leverage them

The Bad Strategy

- There is a plan but no goals - good plan but bad implementation

Industrial organization model

- identifying profitable industry - occupy unique position

Two Fundamental Approaches to Strategy

- industrial organization model - resource based view model

Types of mission statements

- product oriented - customer oriented

The Ugly Strategy

- setting goals without strategy - 20% revenue growth / 20% profit growth

Three Faces if Strategy

- the good - the bad - the ugly

Strategy Making Process

1. Strategic Planning 2. Scenario Planning 3. Strategy as Planned Emergence

The ________ is a model that links strategy analysis, strategy formulation, and strategy implementation, which together helps managers plan and implement a strategy that can improve performance and result in competitive advantage. A. AFI Strategy framework B. Sarbanes-Oxley Act C. Stakeholder impact analysis D. Ansoff's growth strategy matrix

A

We Ensure Inc., an insurance firm, replaced its existing project management software with new software from another supplier. Since the new software has different features and abilities, We Ensure has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents We Ensure's A. switching cost. B. opportunity cost. C. octroi charge. D. excise duty.

A.

During an interview for a CEO position, Jennifer's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be? A. "Industry effects. They have the most substantial effect on superior firm performance." B. "Firm effects. I will be able to have the most impact on those." C. "Neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful." D. "Neither. I would focus on business cycle effects. These are the most predictable, so they are worth the most effort."

B.

Steve manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Steve's reaction be? A. If the industry barriers to entry are high, he doesn't need to do anything. B. He needs to find out if his company as well as other companies can provide the complements. C. He should consult lawyers about the possibility of suing for copyright infringement. D. If the industry barriers to entry are low, he doesn't need to do anything.

B.

The CEO of All Star Corp. has decided to enter the markets of emerging nations like China and Brazil. This means that the books, magazines, and websites published under the Chyron Media banner would be made available in these nations. Which of the following strategies does this scenario best illustrate? A. divisional strategy B. corporate strategy C. business strategy D. functional strategy

B.

BuyNow Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially lower than its competitors because of minimal investments in operation and administration. In this scenario, BuyNow Inc. has most likely been able to provide superior value and cost control through A. strategic profiling. B. strategic parity. C. strategic positioning. D. strategic liquidation.

C.

While Sesmic Inc. operates in a monopolistically competitive industry, Energy 4 All Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true? A. Sesmic will have more profit potential than Energy 4 All. B. The number of buyers will be limited for both Sesmic and Energy 4 All. C. The threat of new entrants will be higher for Sesmic than for Energy 4 All. D. Sesmic will have more pricing power than Energy 4 All does.

C.

Who among the following is responsible for making business strategies in a large conglomerate? A. he shareholder of the company B. the board of directors at the headquarters C. the general managers of individual business units D. the lower-level employees in the company

C.

Andrew is a management consultant. Hard Supplies Inc. asks him to evaluate their company, and he finds that the difference between the cost of producing the firm's products and the value of those products is extremely narrow. What should Andrew suggest that Hard Supplies Inc. management do? A. Find a way to pass on as much profit as possible to suppliers and customers. B. Shore up the company's strong position by erecting entry barriers. C. Encourage customers to buy complements to their products. D. Find a way to widen the gap between cost and value.

D.

The Good Strategy

Diagnosis - understand challenge and root cause Coherent Actions - consistent set of actions Unique - doing different things or doing things differently

Fallacy of prediction

the future is unknown

Maria and Tom both serve as SBU managers of their divisions. They have both been asked by the CEO to generate two different courses of action for a new product launch. This strategic decision-making technique can be described as A. devil's advocacy decision framework. B. dialectic inquiry. C. group think. D. strategic intent

B.

Todd is a manager in an industry that has a few large players and that has remained relatively stable over the past few years. He finds out that legislators are proposing new laws to deregulate the industry. If the laws pass, which of these scenarios will Todd most likely face? A. technological innovation B. the end of globalization C. across-the-board price increases D. many new competitors

D.

competitive advantage

superior performance relative to other competitors in the same industry or the industry average

The AFI framework (analysis, formulation, implementation) affects a firm at nearly every level. Which of the following would be classified as the top level of strategy within a firm? A. the corporate level B. the functional level C. the operational level D. the business level

A.

In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry? A. if the company is able to put up a credible threat of retaliation B. if the customer switching costs in the industry are high C. if the industry has recently become deregulated D. if the capital requirements in the industry are high

C.

Suger & Sweet Sodas has seen its market share erode in recent years, as consumers increasingly turn toward healthier beverage choices such as unsweetened sparkling water. Hoping to rekindle interest in sugary sodas, Suger & Sweet decides to produce a limited run of "throwback" cans using labeling first introduced in the 1980s. What is wrong with this strategy? A. It lacks strategic commitments. B. It does not involve concrete actions. C. It fails to face the competitive challenge. D. It tries to be everything to everybody.

C.

Better Capsules is a highly successful vitamin manufacturer. At the close of its most recent fiscal year, the company's balance sheet showed cash holdings of $110 million. Which of the following actions will provide the most benefit for stakeholders? A. Buy out the leading competitor to reduce competition and maintain B. price stability. Save the excess cash as a precaution against black swan events. C. Reward the CEO with a significant bonus payment. D. Reinvest profits into expanding the company and creating more jobs.

D.

________are best described as the ethical standards and norms that govern the behavior of individuals within a firm. A. Customs duties B. Job descriptions C. Corrective controls D. Organizational core values

D.

Sally manages the supply chain for a company that sells diamond watches. She learns that economists are predicting a moderate to severe recession in the next six to eight months. Based on that information, what action should Sally recommend to the company's owner? A. Reduce supply. Customers generally reduce their purchases of luxury items when the economy falters. B. Increase supply. During recessions, businesses that focus on low-cost solutions make significant profits. C. Wait six months and see what happens. Recessions rarely affect consumer spending. D. Maintain the supply at its current rate. Economic forecasts are rarely accurate.

A.

Top- Down Strategic Planning

Analysis - internal/external analysis and mission/values Formulation - corporate, business, and functional strategy Implementation - structure, culture, corporate governance, and ethics