Strat Mgmt Test 3

Differentiators tend to score highly on most competitive elements on a strategy canvas, while cost leaders tend to hover near the bottom of the strategy canvas.

True

For ideas and inventions to be innovative, they must first be commercialized.

True

Global Strategy

A firm using a global strategy sacrifices responsiveness to local requirements within each of its markets in favor of emphasizing lower costs and better efficiency

Multi-Domestic Strategy

A firm using a multi-domestic strategy does not focus on cost or efficiency but emphasizes responsiveness to local requirements within each of its markets

Transnational Strategy

A firm using a transnational strategy seeks a middle ground between a multi-domestic strategy and a global strategy

Disruptive Innovation

An innovation that conflicts with, and threatens to replace, traditional approaches to competing within an industry

Generic Business Level Strateies

Broad Cost Leadership Broad Differentiation Focused Cost Leadership Focused Differentiation

Synergy

Cooperation or interaction of two or more business units so that they perform more effectively together than they would if independent.

Multinational Corporation

Firm that has operations in more than one country

International Strategy

Firms pursuing an international strategy are neither concerned about costs nor adapting to the local cultural conditions

Stars

High market share units within fast-growing industries

Reshoring

Jobs that had been sent overseas are returning home.

Which of the following scenarios would be characteristic of an entrepreneur?

John implemented a new and more efficient way to produce pottery.

Dogs

Low market share units within slow-growing industries

Question Marks

Low-market-share units within fast-growing industries

Foothold

Small position that a firm intentionally establishes within a market in which it does not yet compete

Administrative Distance

The legal and political systems of the home and target countries determine the administrative distance between the two.

Proactiveness

The tendency to anticipate and act on future opportunities rather than rely solely on existing products and services.

Innovativeness

The tendency to pursue novel ideas, creative processes, and experimentation.

Risk Taking

The tendency to take bold actions rather than being cautious.

When examining all the generic strategies, which of the following below is inherently superior in every industry?

There is no single superior business-level strategy.

Administrative and political distances, such as the presence or absence of colonial ties, are part of the CAGE distance framework.

True

Radical Innovation

When new products or services are developed using new technology that open up new markets

Economies of Scale

created when the costs of offering goods and services decreases as a firm is able to sell more items.

Jennifer is the strategic business unit (SBU) CEO in charge of manufacturing stereo speakers for computers and laptops. Her SBU earnings and cash flow are both low and unstable. Which of the following strategies should Jennifer enact if examining her SBU through the Boston Consulting Group (BCG) matrix lens?

harvest and/or divest

Geographical Distance

he literal physical distance between the home and target country are a key consideration of this dimension as well as communication

Fulcrum Feet is a manufacturer of athletic shoes. It has released an improved version of its premier running shoe in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate?

incremental innovation

A disruptive innovation leverages ________ technologies, while architectural innovations are based on ________ technologies.

new; existing

PolyCon Corp., a tool and die maker, is considering where to locate its new factories and offices. According to the CAGE distance model, which of these countries is statistically most attractive to PolyCon?

one that is in the same trading bloc as PolyCon's home country

Cultural risk

potential for a company's operations in a country to struggle because of differences in language, customs, norms, and customer preferences

Core Competency

skill set that is difficult for competitors to imitate, can be leveraged in different businesses, and contributes to the benefits enjoyed by customers within each business

Cultural Distance

Differences of cultures between the target and home countries.

BCG Matrix (Boston Consulting Group)

Best-known approach to portfolio planning—assessing a firm's prospects for success within the industries in which it competes.

Strategic Alliance

Cooperative arrangement between two or more organizations that does not involve the creation of a new entity.

Joint Venture

Cooperative arrangement that involves two or more organizations with each contributing to the creation of a new entity

CAGE Framework

Cultural Distance Administrative Distance Geographic Distance Economic Distance

International Strategy

Determining how to do business outside the borders of a firm's home country

Cash Cows

High market share units within slow-growing industries

Four Types of Innovation

Incremental Disruptive Architectural Radical

Blue Ocean Strategy

Instead of trying to outmaneuver its competition, a firm using a blue ocean strategy tries to make the competition irrelevant

Product Life Cycle

Introduction Growth Maturity Decline

Offshoring

Involves relocating a business activity to another country.

Why is following an unrelated diversification strategy especially advantageous in an emerging economy?

It allows the conglomerate to overcome institutional weaknesses in emerging economies.

Lauren is the CEO of TimeEx Inc. and is competing in an industry that is shifting due to disruptive innovation. Which of the following strategies should she consider to most appropriately respond to this disruptive innovation?

Lauren should guard against the disruptive innovation by protecting the low end of the market.

Fighting Brand

Lower-end brand that a firm introduces to try to protect the firm's market share without damaging the firm's existing brands

Architectural Innovation

New products or services use existing technology to create new markets and/or new consumers that did not purchase that item before.

Geographic Diversification

Operating in various geographic markets, which is the corporate strategy of Starbucks, Target, and KFC.

Entrepreneurial Orientation

Processes, practices, and decision-making styles of organizations that act entrepreneurially

Fang and Bone Inc. is a snack manufacturer that wants to expand globally. Few people abroad are familiar with Fang and Bone snacks. The countries into which the company wants to expand require a high degree of local responsiveness when it comes to food, and the citizens of those countries already spend plenty of money on snacks. Which action should the leaders of Fang and Bone take?

Pursue a multidomestic strategy that includes new "local" brands.

Internal Development

The company develops and launches the new business themselves

Economical Distance

The greater the differences in the two economies, the more difficult it is to be successful

Todd is a strategist for a furniture manufacturer that has a large presence in the United States and Canada. By checking economic and political reports, he knows that trade and investment barriers are falling among wealthy nations. He also knows that the price of oil has dropped 50 percent in the previous two years. Based on this information, what action should Todd and his company take?

They should seriously consider globalization because of the falling trade and investment barriers.

One of the key lessons when differentiating between strategies is that "business level strategy" attempts to define how a firm will compete while "corporate level strategy" is defined by where they compete.

True

Mergers

Two firms decide to combine into one entity, often gaining strength in the market

Acquisition

Usually done by the larger firm acquiring the smaller firm. The end result is basically the same, with two companies combining into one.

John owns John's Trucking Corporation and is trying to determine if his firm should engage in vertical integration and diversify the range of services his business sells. Before John goes through with these decisions, he'll need to consider what is his

corporate level strategy.

According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?

innovation that allows competitors to emerge with more economical replacements

Economic risk

potential for a country's economic conditions and policies, property rights protections, and currency exchange rates to harm a firm's operations within a country.

Political risk

potential for government upheaval or interference with business to harm an operation within a country

Related Diversification

Diversifying into business lines in the same industry; Volkswagen acquiring Audi is an example.

Unrelated Diversification

Diversifying into new industries, such as Amazon entering the grocery store business with its purchase of Whole Foods.

Konmatfix Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU). The desktop SBU has been experiencing drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent. This has been attributed to the low growth in the desktop market after the arrival of tablet computers and laptops. In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under

Dogs

Incremental Innovation

Making improvements on an existing product or service.

Dinotopia is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Dinotopia in terms of cultural distance?

Maldonia, where people speak English and have a low standard of living

Finger Lickin' BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage?

eliminating brick-and-mortar locations and offering delivery from a central kitchen

Bath & Chill is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Bath & Chill is following a

focused differentiation strategy.