MGT 3013 Chapter 6

Which of the following is not a stage in the strategic-management process? A. Conduct a trend analysis. B. Maintain strategic control. C. Establish the grand strategy. D. Establish the mission and vision. E. Carry out the strategic plans.

A. Conduct a trend analysis.

Which of the following carmakers pursues a focused-differentiation strategy? A. Ferrari B. Ford C. Volkswagen D. Honda E. Kia

A. Ferrari

Which of the following is not a question that Bossidy and Charan believe a strong strategic plan must address? A. How will deviations from the plan be handled? B. What is the assessment of the external environment? C. What are the critical issues facing the business? D. Can the business execute the strategy? E. Are the short term and long term balanced?

A. How will deviations from the plan be handled?

Faisal has been running a commercial real estate business for nearly 30 years. As he approaches retirement, he is content to simply lease the commercial space he currently has, rather than make new deals to develop additional properties. Faisal is using which grand strategy? A. Stability B. Retrenchment C. Inducement D. Defensive E. Growth

A. Stability

When analyzing the "O" in SWOT analysis, a manager might take note of A. favorable government regulations. B. absenteeism among employees. C. good morale among workers. D. high service levels. E. good financial position.

A. favorable government regulations.

Milo owns and manages a small bike repair store. In order to determine if strategic planning will be likely to help his business, Milo should primarily assess A. how many competitors he has. B. foot traffic by his location. C. his profitability in the prior six months. D. industry trends. E. how much he intends to grow in the next five years.

A. how many competitors he has.

The skills and capabilities that give the organization advantages in executing strategies in pursuit of its mission are known as A. organizational strengths. B. organizational opportunities. C. organizational threats. D. organizational weaknesses. E. competitive strategies.

A. organizational strengths.

A grand strategy that involves reduction in the organization's efforts is the ______ strategy. A. retrenchment B. reorganization C. downsizing D. growth E. stability

A. retrenchment

Apple's iPad has a very high percentage of the market for tablet computers, and this is also a quickly growing market. Thus, using the BCG matrix, the iPad would be classified as a A. star. B. cloud. C. question mark. D. cash cow. E. dog.

A. star.

The process of choosing among different strategies and altering them to best fit the organization is called A. strategy formulation. B. contingency planning. C. strategic control. D. strategy implementation. E. trend analysis.

A. strategy formulation.

Which of the following is not a typical cause of bad planning? A. Information overload. B. Inadequate planning budgets. C. Ineffective group dynamics. D. Poor assessment of an organization's capabilities. E. Faulty assumptions about the future.

B. Inadequate planning budgets.

Which of the following steps of the strategic-management process is the source of its feedback loop? A. Carry out the strategic plan. B. Maintain strategic control. C. Establish the grand strategy. D. Establish the mission and vision. E. Formulate the strategic plans.

B. Maintain strategic control.

A vision or projection of the future is called a(n) A. trend. B. forecast. C. contingency. D. strategy. E. opportunity.

B. forecast.

An example of a firm that pursues a differentiation strategy is A. Cartier. B. Lexus. C. Bic. D. A regional discount gas station chain. E. Home Depot.

C. Bic.

Porter's competitive strategies include A. prospector, defender, analyzer, and reactor. B. growth, stability, and retrenchment. C. cost leadership, differentiation, cost focus, and focused differentiation. D. strengths, weaknesses, opportunities, and threats. E. stars, questions marks, cash cows, and dogs.

C. cost leadership, differentiation, cost focus, and focused differentiation.

After film manufacturer Kodak failed to reinvent itself and declared bankruptcy in 2012, it decided to focus on its business of making inkjet printers as part of a ______ strategy. A. growth B. stability C. defensive D. reorganization E. reactor

C. defensive

Time Warner runs different divisions specializing in television, music, and publishing. Time Warner is using a(n) ______ strategy. A. stability B. defensive C. diversification D. differentiation E. infiltration

C. diversification

A recent survey found that the top concern among CEOs worldwide is A. profit growth. B. customer loyalty. C. excellence in execution. D. stimulating innovation. E. finding qualified employees.

C. excellence in execution.

Which of the following is most likely to use a diversification strategy? A. A tax preparation business B. A flower shop C. A lawn service D. A grocery store E. A shoe store

D. A grocery store

Which of the following is not one of Bryan Barry's recommendations to keep a strategic plan on track? A. Keep moving. B. Engage people. C. Keep it simple. D. Avoid compromise. E. Stay focused.

D. Avoid compromise.

Which of the following is not one of the forces that affects industry competition, according to Porter's model for industry analysis? A. Threats of new entrants. B. Threats of substitute products and services. C. Bargaining power of buyers. D. Threats of government interference. E. Bargaining power of suppliers.

D. Threats of government interference.

Which of the following would be considered a reason for adopting strategic management and strategic planning? A. To enhance employee loyalty. B. To keep corporate taxes at a minimum. C. To develop independent work from the staff. D. To provide develop a sustainable competitive advantage. E. To increase market dominance with repeat purchase.

D. To provide develop a sustainable competitive advantage.

Daniel is assessing his company's portfolio of products. One of them is the best-selling brand of mayonnaise, although this is now a slow-growing market. If Daniel uses the BCG matrix, he would classify this product as a star. B. cloud. C. question mark. D. cash cow. E. dog.

D. cash cow.

According to Bossidy and Charan, effective ______ requires managers to build a foundation for it within three core process: people, strategy, and operations. A. tactical planning B. strategy C. follow-through D. execution E. controlling

D. execution

Bossidy and Charan believe that to excel at execution, a leader should A. be hands-off once the strategy is set. B. micromanage the tactics. C. empower employees to take over the execution. D. probe for weaknesses in the substance and details. E. let the plan run its course before attempting to revise it.

D. probe for weaknesses in the substance and details.

Which of the following is not a behavior of a leader who executes? A. Reward the doers. B. Insist on realism. C. Follow through. D. Know yourself. E. Respect others' limitations.

E. Respect others' limitations.

A manager assessing the organization's access to capital is involved in analysis of A. strengths. B. weaknesses. C. opportunities. D. threats. E. strengths or weaknesses depending on the outcome of the assessment.

E. strengths or weaknesses depending on the outcome of the assessment.

A development strategy is the common grand strategy that involves expansion

FALSE

Luxury carmaker Rolls-Royce has a focused-differentiation strategy

TRUE

Organizational threats are the environmental factors that hinder an organization's ability to achieve a competitive advantage

TRUE

SWOT analysis helps management to develop a realistic understanding of the organization in relation to internal and external environments

TRUE

Explain the three core processes of business and how they relate to execution

A company's overall ability to execute is a function of effectively executing in terms of its people processes, strategic processes, and operational processes. People process: An effective leader tries to evaluate talent by linking people to particular strategic milestones, developing future leaders, dealing with nonperformers, and transforming the mission and operations of the human resource department. Strategic processes: A good strategic plan addresses nine questions. In considering whether the organization can execute the strategy, a leader must take a realistic and critical view of its capabilities and competencies. Operations processes: The strategy process defines where an organization wants to go, and the people process defines who's going to get it done. Operations or the operating plan provides the path for people to follow. The operating plan should address all the major activities in which the company will engage and then define short-term objectives for these activities, to provide targets for people at which to aim.

Which of the following is not an area in which a company needs to get and stay ahead in order to sustain a competitive advantage? A. Talented employees B. Quality C. Effectiveness D. Being responsive to customers E. Innovating

A. Talented employees

Creation of alternative hypothetical but equally likely future conditions is called A. contingency planning. B. trend analysis. C. balancing the scorecard. D. strategy formulation. E. forecasting.

A. contingency planning.

An organization is developing a low-cost line of environmentally friendly cleaning products that it intends to distribute internationally. Here, the organization is following a ______ strategy. A. cost leadership B. differentiation C. cost focus D. retrenchment E. focused-differentiation

A. cost leadership

Timex Group USA makes inexpensive but reliable watches sold throughout the United States and is an example of an organization pursuing a _________ strategy. A. cost-leadership B. differentiation C. cost-focus D. focused-differentiation E. retrenchment

A. cost-leadership

According to Bossidy and Charan, which business process is most important for effective execution? A. Strategy B. People C. Alignment D. Operations E. Research

B. People

A situational analysis is also known as A. strategic control. B. SWOT analysis. C. trend analysis. D. contingency planning. E. forecasting.

B. SWOT analysis.

______ consists of monitoring the execution of strategy and making adjustments, if necessary. A. Mission translation B. Strategic control C. Strategy implementation D. Contingency planning E. SWOT analysis

B. Strategic control

__________ refers to the idea that the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately. A. Structural benefit B. Synergy C. Selective function D. Alignment E. Consolidation

B. Synergy

When analyzing the "T" in SWOT analysis, a manager might take note of A. the firm's cash flow problems. B. a competitor's new product. C. employee absenteeism. D. strong corporate culture. E. high service levels.

B. a competitor's new product.

An organization that is offering unique, superior products or services to a wide market is pursuing a strategy of A. cost leadership. B. differentiation. C. cost focus. D. diversification. E. focused differentiation.

B. differentiation.

The benefit of the single-product strategy for a company is A. synergy. B. focus. C. isolated systems. D. differentiation. E. lower costs.

B. focus.

Computer technology corporation Dell recently acquired Quest software, an IT management software provider, in order to expand upon its software expertise and offerings. Dell is pursuing a(n) ______ strategy. A. escalation B. growth C. stability D. merger E. defensive

B. growth

Environmental factors that the organization may exploit for a competitive advantage are known as A. organizational strengths. B. organizational opportunities. C. organizational threats. D. organizational weaknesses. E. competitive strategies.

B. organizational opportunities.

Amanda has just determined that her employees will require extensive training if they are to acquire the necessary technological expertise to produce a new product line. She has discovered one of her firm's A. strengths. B. weaknesses. C. opportunities. D. threats. E. market challenges.

B. weaknesses.

A small firm is likely to benefit significantly from strategic planning A. regardless of the nature of its industry or market. B. when it is in a very competitive industry. C. when it is in a very new industry. D. when it is in a very stable industry. E. when it has a very small market.

B. when it is in a very competitive industry.

Which of the following statements about strategic planning and strategic management is true? A. Strategic planning is rarely used in the current environment of fast change because it does not allow for flexibility. B. Strategic management is a process completed by top managers. C. Both should be implemented because they can provide direction and momentum. D. Middle managers need not understand strategies; they simply follow them. E. Strategic planning is used to accomplish tactical goals.

C. Both should be implemented because they can provide direction and momentum.

Consumers can use a national company called Service Magic to receive bids from quality providers of a variety of services, including home remodel, landscaping, plumbing, and housecleaning. Service Magic charges service providers for the leads it provides to them monthly. Which of the following is the source of Service Magic's strategic position? A. Low-profit margin and many customers. B. Broad needs and few customers. C. Broad needs and many customers. D. High-profit margin and many customers. E. High-profit margin and few customers.

C. Broad needs and many customers.

A fine luggage maker was struggling with heavy debt and a sharp decline in customers, and it eventually declared bankruptcy. The company followed which grand strategy? A. Growth B. Stability C. Defensive D. Reduction E. Reactive

C. Defensive

Which of the following best represents a currently popular strategy among big companies like Apple, Google, and Amazon? A. Become involved in the community. B. Seek niches where there is less competition. C. Get consumers tightly connected to the company's ecosystem. D. Offer personal or emotional connections to customers. E. Discourage price comparisons.

C. Get consumers tightly connected to the company's ecosystem.

High Peaks Skate and Snowboard is a small shop that provides equipment for Utah snowboarders in winter months. It has decided to increase advertising during this period in the Salt Lake Tribune and the Park Record in Park City, as well as to sponsor a new on-mountain competition. It is following which strategy? A. Inducement B. Defensive C. Growth D. Stability E. Enhancement

C. Growth

Rafaela is interested in learning more about what one of her competitors is doing so that she can anticipate its upcoming moves and react quickly. Which of the following would you suggest to her for this purpose? A. Go through the competitor's trash on its property. B. Pose as an applicant for a job with the competitor. C. Use investor information. D. Call the competitor, explain who you are, and ask directly. E. Pay the competitor's customers for information.

C. Use investor information.

An organization that keeps costs and prices low in targeting a narrow market is pursuing a strategy of A. cost leadership. B. differentiation. C. cost focus. D. stability. E. focused differentiation.

C. cost focus.

The common grand strategies are A. star, question mark, cash cow, and dog. B. cost-leadership, differentiation, cost focus, and focused differentiation. C. growth, stability, and defensive. D. strengths, weaknesses, opportunities, and threats. E. defender, prospector, analyzer, and reactor.

C. growth, stability, and defensive.

When analyzing the "W" in SWOT analysis, a manager might take note of A. a decrease in consumer demand. B. a competitor's bankruptcy. C. high turnover of employees. D. good financial resources of the firm. E. institution of a tariff on foreign competitors.

C. high turnover of employees.

A ______ represents an "educated guess" about what must be done in the long term for survival or the prosperity of the organization or its principal parts. A. trend analysis B. mission C. strategy D. forecast E. contingency plan

C. strategy

Actively selling strategic plans to middle and supervisory managers, rather than just announcing them, is helpful for A. situation analysis. B. strategy formulation. C. strategy implementation. D. contingency planning. E. strategic control.

C. strategy implementation.

A time-series forecast, which is used to predict long-term trends, cyclic patterns, and seasonal variations, is one type of A. organizational strength. B. contingency planning. C. trend analysis. D. balanced scorecard. E. strategy formulation.

C. trend analysis.

Define competitive intelligence and explain how you might go about obtaining it legally

Competitive intelligence means gaining information about one's competitors' activities so that one can anticipate their moves and react appropriately. Gaining competitive intelligence isn't always easy, but there are several avenues and most of them are public sources including (1) the public prints and advertising, (2) investor information like corporate annual reports, and (3) informal sources such as trade show gossip and information from company salespeople.

Describe what determines competitiveness within a particular industry using Porter's model for industry analysis. Provide an example for at least three of the five forces in the model

Competitiveness within a particular industry originates in the five primary competitive forces in the firm's environment: 1. Threats of new entrants: for Kraft, new entrants might be store brands or Annie's. 2. Bargaining power of suppliers: companies without multiple suppliers are at the mercy of the one. 3. Bargaining power of buyers: customers who use the Internet to shop around are more able to negotiate a better price. 4. Threats of substitute products or services: for big oil companies, firms making ethanol provide a substitute product. 5. Rivalry among competitors: for Coca-Cola, Pepsi is an established rival.

Which of the following is not a likely source of information for competitive intelligence? A. Competitors' press releases B. Industry gossip C. Competitors' annual reports D. Competitor's customer records E. Sales visits to customers

D. Competitor's customer records

An Iowa ethanol production company has been suffering from a combination of lower demand for gasoline (into which its product is mixed) and higher corn prices (which is the largest input cost). It has responded by selling off land, buildings, and some of its reserve product inventory. This is a variation of which of these grand strategies? A. Right-size B. Growth C. Stability D. Defensive E. Reorganization

D. Defensive

Recently ConocoPhillips, America's third-biggest oil company, spun off its refineries, pipelines, and chemicals division to form a new company called Phillips 66. Now ConocoPhillips will concentrate on its upstream operations. This is a variation of which of these grand strategies? A. Right-size B. Growth C. Stability D. Defensive E. Reorganization

D. Defensive

Which of the following should be included in a good vision statement? A. Firm's attitude toward its employees. B. Geographical areas in which the firm will compete. C. Firm's basic technology. D. Firm's standards of excellence and high ideals. E. Firm's major products or services.

D. Firm's standards of excellence and high ideals.

Which of the following strategy tools suggests that an organization will do better in fast-growing markets in which it has a high market share rather than in slow-growing markets in which it has a low market share? A. SWOT analysis B. Porter's model for industry analysis C. Porter's competitive strategies D. The BCG matrix E. Trend analysis

D. The BCG matrix

"Find out what customers want, then provide it to them as cheaply and quickly as possible" is Walmart's A. growth plan. B. technical plan. C. synergy. D. strategy. E. forecast.

D. strategy.

When analyzing the "S" in a SWOT analysis, a manager might take note of A. a decrease in the size of the market. B. competitors' new products. C. high turnover of employees. D. strong financial resources of the firm. E. lifting of governmental regulations.

D. strong financial resources of the firm.

Alexis has prepared a report that details how prices for several raw materials her firm uses in production have risen by up to 30% in the last year. Her report would be an input into the __________ part of a SWOT analysis. A. strengths B. weaknesses C. opportunities D. threats E. structure

D. threats

Anne runs a small bakery on the main street of a resort town. Though hers was the only bakery around, the business had been suffering during the economic slowdown, and she was contemplating whether she should attempt strategic planning. Anne should be aware of what research finding regarding strategic planning? A. Only large firms show performance gains from strategic planning. B. Only small firms show performance gains from strategic planning. C. Performance gains from strategic planning are equal among small and large firms. D. Both small and large firms benefit from strategic planning, but small firms get a larger boost in performance. E. Both small and large firms benefit from strategic planning, but the small improvement in performance may not be worth the effort for small firms.

E. Both small and large firms benefit from strategic planning, but the small improvement in performance may not be worth the effort for small firms.

Which of the following statements about strategy and strategic positioning is false? A. Many customers with broad needs can be a source of strategic position. B. A company has to choose not only what strategy to follow but what strategy not to follow. C. Few customers with broad needs can be a source of strategic position. D. Strategy involves creating a "fit" among activities. E. Few customers with narrow needs can be a source of strategic position.

E. Few customers with narrow needs can be a source of strategic position.

__________ means performing different activities from rivals or performing similar ones in different ways. A. Competitive planning B. Distinctive positioning C. Collaborative planning D. Strategic segmentation E. Strategic positioning

E. Strategic positioning

Oil companies must be aware of other firms' development of ethanol products since this is an example of which one force in Porter's model for industry analysis? A. Bargaining power of buyers. B. Rivalry among competitors. C. Bargaining power of suppliers. D. Threats of new entrants. E. Threats of substitute products and services.

E. Threats of substitute products and services.

Which of the following is a question that should be answered by a company's mission statement? A. Will it inspire enthusiasm and encourage commitment? B. Does it set standards of excellence? C. Is it appropriate for the organization? D. Is it well articulated? E. Who is our customer?

E. Who is our customer?

Gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately is called A. strategic forecasting. B. corporate espionage. C. contingency planning. D. trend analysis. E. competitive intelligence.

E. competitive intelligence.

Careful monitoring of an organization's internal and external environment to detect early signs of opportunities and threats that may influence the firm's plans is called A. competitive intelligence. B. forecasting. C. contingency planning. D. trend analysis. E. environmental scanning.

E. environmental scanning.

An organization that offers unique, superior products or services to a narrow market is pursuing a strategy of A. cost leadership. B. differentiation. C. cost focus. D. diversification. E. focused differentiation.

E. focused differentiation.

Effective strategic management involves A. only top management. B. only top and middle management. C. only middle and lower management levels. D. only lower management level. E. managers from all parts of the organization.

E. managers from all parts of the organization.

Analysis of changing demographics of the U.S. population would be part of the assessment of a company's A. strengths. B. weaknesses. C. opportunities. D. threats. E. opportunities or threats depending on the outcome of the analysis.

E. opportunities or threats depending on the outcome of the analysis.

A company must be able to execute three core processes of business including people, products, and administration

FALSE

A continuity strategy is the common grand strategy that involves little or no significant change

FALSE

A small florist most likely follows a diversification strategy

FALSE

After the assessment of current organizational performance, the subsequent explanation of how its mission is to be accomplished is called a comprehensive strategy

FALSE

Contingency planning is a hypothetical extension of a past series of events into the future

FALSE

Execution is tactical in nature, rather than part of a company's strategy

FALSE

General Electric sells lighting products and is also involved in plastics, broadcasting, and financial services. GE uses a related diversification strategy

FALSE

Guthrie Community College has done a SWOT analysis and discovered that the number of college-bound high-school juniors in its state has grown by nearly 20% in the past few years. This is a strength for Guthrie

FALSE

In Porter's model for industry analysis, there are three primary competitive forces in a firm's environment

FALSE

In a cost-leadership strategy, an organization targets a wide market and offers products or services of unique and superior value compared to competitors

FALSE

Managers who execute well insist on constant optimism

FALSE

Obsolete technology and outdated facilities are examples of organizational threats

FALSE

One of the ways to keep a strategic plan on track is to make it very comprehensive, covering as many scenarios for the future as you can

FALSE

Strategy actualization is the term for putting strategic plans into effect

FALSE

Synergy is one of the benefits of a single-product strategy

FALSE

The BCG matrix is a means of evaluating strategic business units on the basis of both their business growth rates and their profitability

FALSE

The primary purpose of competitive intelligence is to challenge the thinking of employees to make them better equipped to produce novel ideas for business

FALSE

The starting point in establishing a grand strategy is usually an analysis of Porter's competitive forces

FALSE

The use of hedging to manage the cost of aviation fuel is an example of trend analysis

FALSE

Two types of forecasting are trend analysis and competitive intelligence

FALSE

Define forecasting and discuss its importance. Describe the two types of forecasting described in the text.

Forecasting is developing a vision or projection of the future, which is a necessary component of strategic planning. The two types are trend analysis and contingency planning. Trend analysis is a hypothetical extension of a past series of events into the future. Contingency planning is the creation of alternative hypothetical but equally likely future conditions.

Explain the positive and negative aspects of pursuing a single-product strategy versus a diversification one. Provide an example of a company that uses each type of strategy

In a single-product strategy, a company makes and sells only one product within its market. Making just one product allows you to focus your manufacturing and marketing efforts just on that product. This means that your company can become savvy about repairing defects, upgrading production lines, scouting the competition, and doing highly focused advertising and sales. The risk, of course, is that if you do not focus on all aspects of the business, if a rival gets the jump on you, or if an act of God intervenes (for a florist, roses suffer a blight right before Mother's Day), your entire business may go under. The single-product strategy is seen all the time as you drive past the small retail businesses in a small town: There may be one shop that sells only flowers, one that sells only security systems, and so on. Diversification is operating several businesses in order to spread the risk. Diversification may be related or unrelated. Related diversification has three advantages: reduced risk—because if one product is weak, others may take up the slack, management efficiencies—because administration is spread over several businesses, and synergy, that the sum is greater than the parts. You see the diversification strategy at the small retailer level when you drive past a store that sells gas and food and souvenirs and rents DVD movies

Describe Porter's four competitive strategies and explain how they differ from each other. Provide an example of a firm that might use each

Porter identified two "wide" strategies (cost-leadership and differentiation) that deal with broad markets, and two "narrow" strategies (cost-focus and focused-differentiation) that target specific markets. 1. Cost-leadership focuses on keeping costs and prices low for a wide market, and examples are Dell, Timex, Home Depot, and Bic. 2. Differentiation stresses offering unique and superior products and services to a wide market and examples include Ritz-Carlton, Lexus, and PepsiCo. 3. Cost-focus emphasizes keeping low costs and prices, but to a narrow market and examples include low-cost products sold at discount store and discount regional gas station chains. 4. Focused-differentiation stresses unique and superior products to a narrow market and examples include Rolls Royce, Cartier, Turnbull & Asser, and niche books.

Explain strategy implementation, including the role of resistance

Putting strategic plans into effect is strategy implementation. Strategy implementation is the stage of the strategic management process where managers determine possible roadblocks within the organization and see if the right people and control systems are available to execute the plans. Resistance may be encountered when people feel the plans threaten their livelihoods or their influence. This is especially true when plans are being implemented quickly, as delays (a form of resistance) can easily be constructed and these delays may heavily damage a plan. Thus, top managers can't just announce the plans; they have to actively sell them to middle and supervisory managers

What are the fundamental differences in examining internal and external environments when conducting a situation analysis?

SWOT analysis, also called a situation analysis, looks at internal strengths and weaknesses and external opportunities and threats. The internal environment looks at organizational strengths—the skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission, and organizational weaknesses—the drawbacks that hinder an organization in executing strategies in pursuit of its mission—are also part of the internal environment. The external environment includes organizational opportunities—environmental factors that the organization may exploit for competitive advantage. It also includes organizational threats—environmental factors that hinder an organization's achieving a competitive advantage.

Give examples of what managers might look at in performing each element of a SWOT analysis. SWOT analysis—also known as a situational analysis—is a search for the strengths, weaknesses, opportunities, and threats affecting the organization. Examples of a firm's strengths and weaknesses: work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, other internal matters.

SWOT analysis—also known as a situational analysis—is a search for the strengths, weaknesses, opportunities, and threats affecting the organization. Examples of a firm's strengths and weaknesses: work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, other internal matters. Examples of a firm's opportunities and threats: market segment analysis, industry and competition analysis, impact of technology on organization, product analysis, governmental impacts, other external matters (see Figure 6.2).

Define strategic positioning. Explain the three principles that underlie strategic positioning

Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means, according to Porter, "performing different activities from rivals, or performing similar activities in different ways." Three key principles underlie strategic positioning: Strategy is the creation of a unique and valuable position, which emerges from three sources: few needs, many customers; broad needs, few customers; or broad needs, many customers. Strategy requires trade-offs in competing. A company has to choose not only what strategy to follow but what strategy not to follow. Strategy involves creating a "fit" among activities. "Fit" has to do with the ways a company's activities interact and reinforce one another.

A common challenge to strategy implementation is resistance by people within the organization

TRUE

A defensive strategy is sometimes called a retrenchment strategy

TRUE

A grand strategy can be established using tools like SWOT analysis and forecasting

TRUE

A single-product strategy can be described as focused but vulnerable

TRUE

Alaska Airline was profitable in 2011, prompting is to decide to remain a "smallish, specialized, regional airline in a world of global giants," which is an example of a stability strategy

TRUE

Burberry makes outerwear, accessories like umbrellas, and children's clothing, which is called a related diversification strategy.

TRUE

Cash cows in the BCG matrix have slow growth but high market share

TRUE

Contingency planning can also be called scenario analysis

TRUE

Forecasting is a strategic-planning tool used to make long-term strategy

TRUE

Insisting on realism is among the leader behaviors that help a manager successfully execute a strategy

TRUE

Kraft Macaroni & Cheese is now challenged by new competitors such as Annie's and other store brands, which Porter's model for industry analysis calls the threat of new entrants

TRUE

Strategy formulation is the process of choosing among different strategies and altering them to best fit the organization's needs

TRUE

Too little or unreliable historical data may result in erroneous trend analyses

TRUE

List at least five of the seven essential types of leader behaviors that are needed to fuel the engine of execution

The seven essential types of leader behaviors are: 1. Know your people and your business: engage intensely with your employees. 2. Insist on realism: don't let others avoid reality. 3. Set clear goals and priorities: focus on a few rather than many goals. 4. Follow through: establish accountability and check on results. 5. Reward the doers: show top performers that they matter. 6. Expand people's capabilities: develop the talent. 7. Know yourself: do the hard work of understanding who you are.

Describe the strategic management process. Explain what the "feedback loop" is and why it is important. The strategic management process involves five steps: 1. Establish the mission and vision. 2. Establish the grand strategy. 3. Formulate the strategic plans. 4. Carry out the strategic plans. 5. Maintain strategic control.

The strategic management process involves five steps: 1. Establish the mission and vision. 2. Establish the grand strategy. 3. Formulate the strategic plans. 4. Carry out the strategic plans. 5. Maintain strategic control. The feedback loop comes out of strategic control. Through control, managers monitor progress and take corrective action early and rapidly when things go awry, returning to earlier steps to fix problems.

Name the three common grand strategies and provide an example of how a company might use each.

There are the three common grand strategies: 1. A growth strategy is a grand strategy that involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served. Examples: It can improve an existing product or service to attract more buyers. It can increase its promotion and marketing efforts to try to expand its market share. It can expand into new products or services. It can acquire similar or complementary businesses. 2. A stability strategy is a grand strategy that involves little or no significant change. Examples: It can go for a no-change strategy (if, for example, it has found that too-fast growth leads to foul-ups with orders and customer complaints). It can go for a little-change strategy (if, for example, the company has been growing at breakneck speed and feels it needs a period of consolidation). 3. A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts. Examples: It can reduce costs, as by freezing hiring or tightening expenses. It can sell off (liquidate) assets—land, buildings, inventories, and the like. It can gradually phase out product lines or services. It can declare bankruptcy.