MIE 480 Ch 1 & 2
Mickey is the CEO of a multidivisional company who has determined that it is time for the company to revisit its strategic plan and is working on the agenda for the meeting, beginning with a review of the company's mission, vision, and values. On day 2, Mickey plans to conduct an analysis of internal and external forces affecting the company. The invitee list for the strategic planning session includes the CFO, the COO, the vice president of human resources, and the vice president of sales. Mickey believes this smaller team will be able to reach a greater consensus and be efficient in developing the strategic plan for the next five years. Which potential pitfall could impact the strategic plan for this company?
An "ivory tower" approach could lead the executive team to a plan created in a vacuum without an understanding of current operating realities.
An industrial tool manufacturer relies on a distributor network with the largest online outlet and store network aimed at construction workers. The distributor network is seeking a manufacturer to provide them with private label products. They've decided they will offer only their own product line and not any other brand in this category of industrial tools. Now the industrial tool company must decide whether to agree to this proposition or lose this company as a customer. This is an example of which of the competitive forces at play in this industry?
Bargaining power of buyers
In which of the following situations would a buyer be the most powerful?
Because of the industry's competitive nature, its participants have virtually eliminated switching costs for industry customers.
Binh was recently named general manager of a newly created business unit of a multidivisional company. His first order of business will be to implement the new division's strategic plan. Which of these statements about Binh's responsibilities for the company is true?
Binh works with managers within his business unit to develop and implement concrete strategies for his division that align with corporate goals.
According to this text's authors, Hill and Schilling, which of these would be considered an important step in a formal strategic management process?
Defining the company's corporate mission and major corporate goals.
An HVAC contractor is considering expanding into a new business line, offering commercial facility maintenance and service in addition to construction contracting services. As the contractor considers this potential strategy, it conducts a strategic planning process for this business unit, analyzing external and internal factors. Which of these can be classified as a part of the external operating environment of the company?
Local commercial properties are most often served by one of three big national HVAC service firms and a handful of local smaller firms.
Why should strategic managers be concerned with the life cycle of the industry in which their companies operate?
Recognizing the crucial points in an industry's development is essential to forecasting and strategizing for the future.
Rowan is the manager of sales and marketing for one of the organization's products. He was invited to participate in the strategic planning process for launching a new type of sunglasses to the millennial market. Rowan, age 25, was excited to be able to contribute to this product because he liked these new sunglasses and, when he showed them to his three best buddies, they also liked them. During the planning session, Rowan convinced the team that they did not need to conduct expensive focus groups to test the viability of the sunglasses. Rowan also convinced the team that the glasses would sell because of the numerous compliments he received when wearing a pilot pair of the sunglasses. Ultimately, the management team decided to go with Rowan's strategy and did not conduct focus groups before launching the new product. Which cognitive bias was at work in this situation?
Representativeness
At Hy-Vee grocery stores, a frequent shopper card for customers tracks their purchases and automatically offers discounts on the products they buy most often, building brand loyalty to the store. At which stage of the industry life cycle is this approach most effective?
Shakeout
Which of these is a definition for an emergent strategy making process?
Strategies that evolve as the unplanned responses to unforeseen circumstances, arising from autonomous action by individual managers, serendipitous events, and changed circumstances
Which of these could be an example of a competitive advantage?
The ability of a firm to outperform its rivals by achieving profitability and growth than others in the industry
A business-level manager in a multidivisional company is:
a strategic manager who is the head of an entire division, responsible for translating the corporate strategy into concrete strategies for the business unit.
An analysis using the competitive forces model of an industry can indicate:
areas of threat and areas of opportunity that can serve as the basis of strategy formulation and implementation.
In the competitive forces model, the central element that the other four elements contribute directly to strength is:
rivalry among established firms in the industry.
A nonprofit organization is considering holding a series of sessions to develop its mission, vision, goals, operation model, and strategic plan. Differentiate between planning for charities versus for companies. How will the process be different for the nonprofit?
The strategic goals of the organization will include a combination of performance goals toward the charity's mission, revenue, and fundraising goals.
There are four main categories of strategies that managers may define to create and sustain a competitive advantage. Which of these is an example of a business-level strategy?
A general manager defining a superior customer service strategy for his division to better deliver its products
Macroeconomic forces contribute to an industry's ability to be profitable. Which of the following examples shows how a company might appeal to new customers and increase its revenues by focusing on a macroeconomic force?
A home mortgage company creates a sales promotion with incentives for potential home buyers to take advantage of a particularly favorable interest rate.
Strategic managers may believe that they have to choose between what is best for the shareholders versus what is best for the company's customers and employees to achieve a competitive advantage. However, there is good evidence to suggest that the best way to maximize the return to shareholders is to focus on the customers and employees. Which of these scenarios is an illustration of that evidence?
A tech company determines that it should pay its top-performing employees above-market wages, decreasing shareholder returns in the short-term. But the employee longevity pays off through sustained research and development and breakthrough products that result in sales growth and lower recruitment costs.
Which of the following statements about cognitive biases is true?
An awareness of cognitive biases allows managers to analyze whether the decision is being made strategically or relying on a "rule of thumb" or heuristic.
In the toy industry, Mattel is one of the world leaders with its line of Barbie dolls. However, it has faced competition from MGA Entertainment with its Bratz dolls since the 1990s. Which of these statements is true about the strategic group in which these companies compete?
By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.
Chris is a mid-level manager who has been working with an executive coach to become a better leader within his organization. One of Chris's goals has been to develop his emotional intelligence. Recently, Chris scheduled a meeting with a challenging objective - to inform his team of employees that the executive team has decided to abandon the project they've been working on. When Chris discusses the situation with the team, which of these approaches would best demonstrate emotional intelligence?
Chris should start by complimenting the team on their hard work on the project so far and then explain that the company is shifting direction and is no longer pursuing the project. He should have as much information as is available for the employees on how this change will affect their job status.
There are multiple techniques for improving decision making in the formulation and implementation of strategic plans. Which of these is a means of improving decision making?
Comparing a strategic plan against previous similar plans and reviewing the results of those experiences to gain an outside view
Which of the following statements about complementors as a strategic force is true?
Complementors can gain so much power that they become a competitive threat to the industry rather than a complementor.
In reviewing the competitive forces model through an industry life-cycle analysis, which of these could be true of an embryonic industry?
Complementors: The industry will likely have few complementors, with few products available that would add value when used in combination with the product or service.
Which of the following steps precedes a SWOT analysis in the strategic planning process?
Crafting an organization's mission statement
Adrian is vice president for product management at a Brazilian-based skin care company. As a functional leader, Adrian led a strategy planning process with his team to create a new tan-enhancing cream. After a thorough strategy process, the team built consensus around a deployment plan for this new product. They introduced the tan enhancer to a regional segment of the marketplace as a prototype. Sales were dismal. After some focus groups, the team learned that consumers were not interested in it.But Adrian didn't give up, insisting the team continue to promote the product, pushing a deployment plan and launching to the entire market, along with a robust and expensive television and magazine ad campaign. Just like during the regional trial, it was a dismal failure with limited sales. The executive team suggested that Adrian's strategy planning was flawed in selecting this type of new product as the core of his strategy. Consider the potential techniques for improving decision making that Adrian could have utilized to avoid defects in his planning process.
Devil's advocacy: Adrian could have assigned one member of his team to identify potential problems with the plan and present them to team members, who would agree to take them into consideration.
Which of these is an example of a product or service in an industry operating in the growth stage?
Employee performance management software
Which parts of the SWOT analysis deal with the external environment and which parts deal with the internal environment?
External: opportunities and threats. Internal: strengths and weaknesses.
Lake, the vice president of sales and marketing for a software development company, has been working with the sales force in recent months to develop a promotion strategy to sell obsolete software quickly at a reduced price rather than the original suggested price. Which strategic manager role is Lake fulfilling with this approach?
Functional-level manager
The industry life-cycle analysis has several potential limitations. Which of these is a limitation that strategic managers should be aware of?
Industries will not always travel through the stages in a predictable way.
A leader's use of power can influence his or her overall effectiveness as a strategic manager. Which of these statements is true?
Jeffrey Pfeffer explains that ultimately a manager's power comes from his or her control over resources, such as budgets, capital, positions, information, and knowledge.
All of the following would be in the same strategic group within the auto industry EXCEPT:
Mercedes
In articulating what a company does in terms of its customers, their needs, and through what core competencies, managers first formulate the company's:
Mission statement
Which of these is characteristic of a well-constructed goal?
My company has set a goal of launching five new products each year for the next five years through at least a 10% annual investment in research and development.
Which of these mission statements is customer-focused?
Nike: To bring inspiration and innovation to every athlete in the world.
A telecommunications company is impacted by government regulations of the wireless spectrum, cell tower locations, and Internet accessibility. The company decides to hire a lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and Congress. This is an example of a company managing which forces in the macroenvironment?
Political and legal forces
Potential competitors may enter an industry and begin to take market share from existing companies. What would be one of the largest challenges a new entrant would need to overcome to be successful when entering the industry?
Production costs are high and require high volumes to achieve profitability.
All of the following would be part of a business model that outlines strategies for a company wanting to achieve competitive advantage EXCEPT:
The changes to be made in the external environment
A discount membership general merchandise store has been educating customers about its business model of a membership fee based on the volume of products they buy. The store has been focused on reducing cost through the development of its supply chain and inventory systems. What would you add to the company's strategy as the industry moves from the shakeout stage to the mature stage?
The company should monitor prices of similar products at other discount membership stores, such as Costco and Sam's Club, matching prices to maximize profitability and avoid a price war.
Michael Porter's theory of punctuated equilibrium suggests periods of freezing and reshaping of industries. Which of these represents a formerly declining industry now in a reshaping period?
The global mass transit industry is reshaping as people in developed countries seek environmental benefits and those in developing nations look for ways to serve dense populations.
The Baby Boomer generation (those born immediately after World War II) is aging. A local healthcare network is looking at several expansion strategies. Which strategy might be the best response to this demographic force in the macroenvironment?
The network will build a blended-use community that offers independent retirement living, assisted living, and skilled nursing care.
Jordan's mobile communications device company is conducting an industry analysis as it considers new strategies for its five-year strategic plan. The analysis reveals that recent government deregulation has reduced the barriers to entry and several start-ups are entering the industry. Which of these strategies could be a part of the plan to counteract this?
Utilize an intensive advertising campaign to build brand loyalty.
The pace of technological change has accelerated. Technological forces can have an impact on the macroenvironment, creating conditions that are:
both creative and destructive, making established products obsolete overnight and creating new product possibilities at the same time.
Logan is an entrepreneur with a new idea for a software product. His start-up company grows quickly to a team of about 25. A new federal law recently passed by Congress will cause the software to become obsolete without a major change in the programming. The investment in the programming is going to be costly, and the company faces some hard choices. Logan announces a move back to his programming roots and an intention to work alongside the software development team, taking the salary of a programmer, to ensure that the newest version of the software will be compliant with the new law. Which of these characteristics of an effective leader is Logan demonstrating the most?
commitment
Strategic groups exist because:
companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies.
Scenario planning is one methodology strategic managers can use to avoid pitfalls in their planning process. In scenario planning, managers:
create a what-if scenario for the future and develop strategic options associated with that future state.
Through research and development, a cable company has found a way to use its existing network lines to serve customers with a new product offering - home security systems. The company is offering the service for a lower monthly fee than most security companies. However, the sales force didn't see a lot of interest among its customers who had an existing security system from a competitor until they ran a promotion for reduced prices on equipment and free installation. Which of the competitive forces is at play?
customer switching costs
Market saturation is an indication that an industry has entered the:
mature stage
An analysis of the macroenvironment includes the:
economic, global, technological, demographic, social, and political context within which a company operates.
An industry that is attracting large numbers of new customers through increased interest and education is at the _____ stage of industry life cycle.
growth
Companies can reduce the impact of the substitute products force in the competitive forces model by:
identifying an industry by the customers that it serves and the needs it fulfills rather than by the products it sells and staying focused on ensuring its products meet those needs.
The most immediate threat to a company's profitability comes from:
its closest competitors, companies within the same strategic group.
Emotional intelligence is a term used to describe a group of psychological attributes that strong and effective leaders exhibit. Which of these is an emotional intelligence attribute?
self-regulation
As an industry environment evolves over time, the:
strength of the competitive forces in the industry change.
Industry competitive structure identifies the number and size of companies. Fragmented industries often:
suffer from excess capacity and price wars
The idea that the strategy-making process is constantly ongoing and adapting over time with the input of additional information is:
the feedback loop
Where a company operates and sells its product can have an impact on its profitability because:
the health of a country's economy, measured by growth rate and other factors, can affect both the customers' ability to purchase products and the price they're willing to pay.
The hubris hypothesis of takeovers is a term that describes:
the overconfidence of leaders in their ability to create value by acquiring another company.
All of the following are examples of a cognitive bias that can lead to poor strategic decisions EXCEPT:
willingness to delegate
Experts who study strategic leadership have identified the key characteristics of high-performing leaders. Which of these is a characteristic for strategic leadership?
willingness to delegate and empower