Chapter 8--Strategy Formulation and Execution Student: ___________________________________________________________________________
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Research Research has shown that that strateg strategic ic thinking thinking and planning planning positivel positively y aect aect a irm!s irm!s peror perormance mance and and inancial success. "rue
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Strategic Strategic thinkin thinking g is more import important ant -proi -proitt $usinesses $usinesses than or or non-pro non-proit it organi%a organi%ations tions.. "rue
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False
"he /ow do we compete0 uestion concerns unctional-level strategy. strategy. "rue
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False
Corpor Corporate ate-le -level vel strat strategy egy pertai pertains ns to the the organi organi%at %ation ion as a whole whole.. "rue
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False
"he com$ina com$ination tion o $eneit $eneitss received received and costs costs paid $y the custome customerr reers reers to value. value. "rue
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False
Core competen competence ce is the the plan o o action action that prescri$es prescri$es resourc resourcee allocation allocation and and other activities activities or dealing with the environment. "rue
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False
"he interact interaction ion o *roduct *roduction ion and Sales Sales working working together together to produce produce proit proit greater greater than the the total total o $oth working separately is an example o synergy. synergy. "rue
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False
Competitiv Competitivee advantage advantage reers reers to the set o decisions decisions and actions actions used to to ormulate ormulate and implemen implementt strategies. "rue
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False
Front-line Front-line managers managers have the inal responsi$i responsi$ility lity or strategic strategic planning. planning. "rue
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False
"op managers managers and chie chie executives executives have the the inal inal respons responsi$ili i$ility ty or or strategic strategic planning. planning. "rue
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False
False
"he three levels o strategy are $usiness2 corporate2 and glo$al. "rue
False 1
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Strategic partnerships are the current trend2 rather than mergers and acuisitions. "rue
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False
3n a tur$ulent $usiness climate2 managers should ocus on strategic sta$ility rather than lexi$ility. lexi$ility. "rue
False
1' Strategy implementation involves the planning and decision making that lead to the esta$lishment o . the irm!s goals. "rue 1(.
False Scenario - SS.com
Faced with rapidly growing $usiness2 Swit Stocks2 3nc.2 a glo$al $rokerage company co mpany with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission commission rates. Swit Stock is ollowing which strategy2 according to *orter2 through the .com su$sidiary0 a. $. c. d. e.
Sta$ility Cost leadership Focus 4ierentiation Retrenchment
1) 55555 is the set o decisions and actions used to ormulate and implement strategies strategies that will provide a . competitively superior it $etween the organi%ation and its environment so as to achieve organi%ational goals. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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"he plan o action that prescri$es resource allocation a nd other activities or dealing with the environment and helping the organi%ation attain its goals is called a6n7 55555. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
18 $usiness $usiness activity that an organi%ation does particularly well relative to its competition is known as . a6n7 55555. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 1, .
For the social networking site Face$ook2 technological know-how and an aggressive and innovative culture are signiicant strengths to include in its S9:" analysis. "rue
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"hreats are characteristics o the internal environment that may prevent the organi%ation rom achieving its strategic goals. "rue
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False
"he uestion mark exists in a new2 rapidly growing industry $ut has only a small market share2 according to the ;C= >atrix. "rue
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False
"he ;C= 6;oston Consulting =roup7 matrix evaluates S;
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False
n S;< stands or Star ;usiness
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False
"he mix o $usiness units and product lines that it together in a logical way to provide synergy and competitive advantage or the corporation pertains to portolio strategy. strategy. "rue
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False
:pportunities are characteristics o the internal environment that have the potential to help the organi%ation achieve or exceed its strategic goals. "rue
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False
"he task environment sectors are the most relevant to strategic $e havior and include the $ehavior $eh avior o competitors2 customers2 suppliers2 and the la$or supply. "rue
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False
False
ccording to the ;C= >atrix2 the cash cow c ow has a large market share in a rapidly growing industry. industry. "rue
False &
#8 "he dog2 according to the ;C= >atrix2 is a poor perormer. . "rue False #, .
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4iversiication is a strategy o moving into new lines o $usiness. "rue
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False
False
?ertical integration means a irm expands into $usinesses that either produce the supplies needed to make products or that distri$ute and sell those products to customers. "rue
False
&# 4ierentiation2 4ierentiation2 cost leadership2 and ocus are three o *orter!s competitive strategies. . "rue False && Cost leadership is a type o competitive strategy with which the organi%ation seeks to distinguish its . products or services rom that o competitors. competitors. "rue &' .
:rgani%ation!s with a ocus strategy concentrate on a speciic regional market o r $uyer group. "rue
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False
"he world-wide standardi%ation o product design and advertising reers to glo$ali%ation. "rue
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False
;usiness-level strategies include all o the ma@or unctions2 including inance2 research and development2 marketing2 and manuacturing. "rue
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False
director o inance would most likely $e interested in executing unctional level strategies. "rue
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False
False
"he transnational strategy handles markets independently or each country. country. "rue
False
&, 9ith 9ith a multidomestic strategy2 a company will achieve the glo$ali%ation glo$a li%ation or standardi%ation o . marketing and production approaches. "rue
False
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' transnational transnational strategy seeks to achieve $oth glo$al integration and national responsiveness. . "rue False '1 .
transnational strategy com$ines degrees o $oth glo$al standardi%ation and national responsiveness. "rue
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Communication is one o the most important methods or eective strategy execution. "rue
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False
False
For successul execution2 alignment o everyone in the organi%ation must occur. "rue
False
'' 3n order to protect an organi%ationAs mission2 mission2 the human resource unctions are removed rom strategic . goals. "rue
False
'( 3n strategy implementation2 leadership is the a$ility to inluence people to adopt the new $ehaviors . needed. "rue ').
False "o remain competitive2 companies should develop strategies that ocus on core competencies2 providing synergy2 synergy2 and creating value or 55555. .
custom ers ;. suppliers C stockholders . 4 employees . E $oard . mem$ers
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"he set o decisions and actions used to ormulate and implement strategies that will provide a competitively superior it $etween the organi%ation and its environment so as to achieve organi%ational goals is known asB .
; . C . 4 .
strategy ormulati on. strategic planning. strategic management. strategy implementation.
E strategy . evaluation. '8.
"he plan o action that prescri$es resource allocation and other activities or dealing with the environment and helping the organi%ation attain its goals is known as a6n7 55555. . ; . C . 4 . E .
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go al o$@ect ive missi on visio n strate gy
9hich o the ollowing is a $usiness activity that an organi%ation does especially well relative to its competition0 . ;. C. 4 . E .
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Strate gy Synergy Cash cow Core competence >ultidomes tic
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"he condition that exists when the organi%ation!s parts interact to produce a @oint eect that is greater greater than the sum o the parts acting alone a lone is known asB .
core competenc e. ;. synergy. C. value creation. 4 $usiness-level . strategy. E multidomestic . strategy. (1.
9hen properly managed2 55555 can create additional value with existing resources2 providing a $ig $oost to the $ottom line. . synergy ;. competitors C. government contacts 4. command structure E cooperation among . customers
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55555 can $e deined as the com$ination o $eneits received and costs paid $y the customer. .
:rgani% ational $eneits ;. ?alue C Cost-$eneit . diversity 4. Synergy E Core . competence
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ter Sunshine Systems merged with R"4 Enterprises2 company executives noticed that due to increased employee colla$oration $etween the two units2 costs were down and revenues increased within $oth areas. "his is an example o what $usiness phenomenon0 .
; . C . 4. E . ('.
9hen "" decided to $uy >edia :ne2 a ca$le company2 it was pursuing a6n7 a 6n7 55555 strategy. strategy. .
; . C . 4 . E . ((.
Strateg y executi on *ortolio strategy Core competency Synergy 4elivering value
uncti onallevel internal growth multidomestic corporatelevel $usinesslevel
55555 level strategy pertains to the ma@or unctional departments within the $usiness unit. .
; . C . 4 . E .
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:per ation al Corpora te Dationa l ;usines s Function al
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9hen *hilip->orris2 the to$acco giant2 $ought rat2 3nc.2 it was pursuing a 55555. .
; . C . 4 . E . (+.
corporatelevel strategy $usiness-level strategy unctional-level strategy multidomestic strategy retrenchment strategy
9hich o the ollowing pertains to the organi%ation as a whole0 .
;usinesslevel strategy ; Functional-level . strategy C Corporate-level strategy . 4 :perational-level . strategy E Competitive-level . strategy
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Sears! decision to sell o much o its inancial services division is an example o aB .
corpora te-level strategy . ; $usiness-level . strategy. C unctional-level . strategy.
4 . E .
,
growth strategy. sta$ility strategy.
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corporate-level strategy is concerned with the uestionB .
what $usiness are we in0 ;. how do we compete0 C how do we support our chosen . strategy0 4 where do we market our . products0 E should we promote rom . within0
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9hen Coca-Cola introduced Surge2 a new citrus sot-drink2 what type o strategy was $eing pursued0 .
; . C . 4 . E . )1.
Functional -level strategy >ulti-domestic strategy Corporate-level strategy Retrenchment strategy ;usiness-level strategy
Ford!s decision to completely redesign its Ford "aurus can $e classiied as aB .
corpora te level strategy . ; $usiness level . strategy. C unctional level . strategy.
4 retrenchment . strategy. E sta$ility . strategy.
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anessa is the CE: o a privately-held sotware company. 3n deining corporate-level strategies2 which o the ollowing uestions would she most likely $e concerned with0 . /ow do we compete0 ;. 9hat $usiness are we in0 C. /ow does marketing support the $usiness0 4. /ow can we maximi%e proits0 E /ow can we make manuacturing processes more . eicient0
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4ecisions regarding the proper amount o advertising or a particular good or service are related toB .
; . C . 4 . E . )'.
corporatelevel strategies. unctional-level strategies. tactical-level strategies. $usiness-level strategies. retrenchment strategies.
9hich o these uestions is central to a unctionallevel strategy0 .
9hat $usiness are we in0 ;. /ow do we compete0 C /ow do we support our . chosen strategy0 4 9hat $usiness do we $uy0 . E 9here to market our . products0
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9hich o the ollowing lists the strategic management process in proper order0 .
; . C . 4 . E . )).
Formulate s S9:" anal Execute str *erorm S9:" analysisG Evaluate current missionHgoalsG Fo 4eine new missionHgoals. Evaluate current missionHgoalsG 4eine new missionHgoalsG F *erorm S9:" analysis . Evaluate current missionHgoalsG *erorm S9:" analysisG 4e strategyG Execute strategy. strategy. 4eine new missionHgoalsG Execute strategyG Formulate strate *erorm S9:" analysis.
55555 reers to the use o managerial tools to direct resources toward the achievement o strategic goals. .
; . C . 4 . E .
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Strategy ormula tion Strategy coordination Strategy execution Strategy control Strategy planning
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9hich o the ollowing reers to the planning and decision making that lead to the esta$lishment o the organi%ation!s goals and o a speciic strategic plan0 .
Str ate gy or m ula tio n ;Strateg y imple mentat ion CStrateg y coordi nation 4Strate gy contro l E S9 . :" )8.
Fred has $een assigned to conduct a S9:" analysis or his organi%ation2 cme2 3nc. s part o this assignment2 Fred willB .
conduct an external wage survey. search or the strengths2 weaknesses2 opportunities2 and threats that impact his irm. C choose a grand grand strategy or his irm. 4 do a costH$eneit . analysis. E develop a . mission.
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"echniues used to monitor external environments includeB .
hirin g scan ning orga ni%at ions. hiring the competitive intelligence proessiona ls. governme nt reports. 4proession al @ournals. E all o . these. +.
Classy Clay has extremely creative employees who2 in the opinion o the organi%ation2 keep the company ahead o the competition. "he creativity o these employees would $e classiied as a6n7 55555. .
intern al weak ness ; external . opportunity
C . 4 . E .
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external strength internal strength neutral actor
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*aramount2 3nc. is particularly concerned a$out pending legislation in Congress that would urther regulate their organi%ation. "his legislation would $e classiied as a6n7 55555. .
; . C. 4 . E . +#.
external opportuni ty internal strength external threat external weakness congressional chaos
Sherri has $een asked to participate on a crossunctional task orce that is charged with perorming an audit checklist or her advertising advertising irm. "he task orce will analy%e organi%ational strengths and weaknesses as they apply to the the irm. SherriAs SherriAs task is to analy%e anal y%e management uality2 uality2 sta uality2 degree o centrali%ation2 and organi%ational charts. "his level o analysis pertains to which area o the audit0 .
; . C .
>an age ment and orga ni%at ion >arketi ng /uman resources
4Research and developm ent E *roducti . on
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9here does the inormation a$out opportunities and threats comes rom0 .
n analysis o the organi%ation!s internal environment ; department $y department . study o the organi%ation
C . 4. E . +'.
Scanning the external environments Employee grievances Financial ratios o the organi%ation
9hat type o organi%ational unit has a uniue $usiness mission2 product line2 competitors2 and markets relative to other units in the same corporation0 . *roduct unit ;. Functional unit C. Strategic $usiness unit 4. :perational unit E ;usiness consulting group . unit
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/ow $usiness units and product lines it together in a logical way is the essence oB .
; . C . 4 . E .
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$usinesslevel strategy. portolio strategy. competitive strategy. inancial strategy. unctional strategy.
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=atekeep
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"he ;C= matrix organi%es along which o the ollowing dimensions0 .
>arket share and proit ; Sales and . market share
C;usiness growth rate and market share 4;usiness growth rate and proit E Sales and . proits +8.
4ou$le Click2 3nc. has a num$er o strategic $usiness units. "heir hand-held computer unit has a large market share in this rapidly rap idly growing industry. "heir hand-held computer $usiness would $e classiied asB . a dog. ;. a star. C a uestion mark. . 4. a cash cow. E stuck in the . middle.
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9hich o these is true a$out the cash cow0 .
; . C . 4 . E . 8.
3t generates tremendous proits in a rapidly growing industry. industry. 3t has a small market share in a rapidly growing industry. 3t has a small market share in a slow growth industry. 3t has a large market share in a slow growth industry. 3t is generally a dead $usiness that should $ e divested.
"he star has aB .
large market share in a rapidly growing industry. ; large market share in a slow growth industry. industry. . C small market share in a rapidly growing . industry. 4 small share o a slow growth market. . E moderate market share in a slow growth . industry.
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9hich o the ollowing portolio categories is made up o poor perormers who command only on ly a small share o a slow growth market0 S . t a r ; Ca sh co w CIu esti on ma rk 4 4 . o g E C . a t 18
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"he uestion mark has aB .
large market share in a rapidly growing industry. ; large market share in a slow growth industry. industry. . C small market share in a rapidly growing . industry. 4 small share o a slow growth market. . E moderate market share in a slow growth . industry.
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9hich o these is true a$out the dog division0 .
3t has a large market share in a rapidly growing industry. 3t has a large market share in a slow growth industry.
; . C 3t has a small market share in a rapidly growing industry. . 4 3t has a small share o a slow growth market. . E 3t has a moderate market share in a rapidly growing . industry. 8'.
=illette operates numerous strategic $usiness units. >ost o its units in the personal care division have low market share $ut high $usiness growth. "hese units are classiied as 55555. . dogs ; uestion . marks C. stars 4 cash cows . E none o . these
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ccording to the ;C= >atrix2 which o the ollowing exists in a mature2 slow-growth industry2 industry2 $ut is a dominant $usiness in the industry2 industry2 with a large market share0 .
; . C. 4. E . 8).
9hen an organi%ation expands into a totally new line o $usiness2 it is implementing a strategy oB .
8+.
Iue stio n mar k steris k 4og Star Cash cow
Related diversiicat ion
; . C .
4 . E .
*roduct line diversiication 3ndustry diversiication
Semway2 a regional $ank2 recently announced that it would soon $egin oering inancial planning services. "his is an example o which o these0 .
Related diversiicat ion
; . C .
4 . E .
*roduct line diversiication 3ndustry diversiication
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"he purpose o 55555 is to expand the irmAs $usiness operations to produce new kinds o valua$le products and services0 . ; . C. 4. E .
8,.
9hich o the ollowing strategies reers to moving into a new $usiness that is related to the company!s existing $usiness activities0 .
; . C . 4 . E . ,.
retrenc hment diversiicatio n liuidation cash cow internal growth
/ori%onta l integratio n ?ertical integration
ll o the ollowing are *orter!s competitive orces exceptB .
dierentia tion. ; $argaining power o . $uyers. C $argaining power o . suppliers.
4 threat o su$stitute . products. E potential new . entrants.
#1
,1.
9hich o the ollowing is D:" one o *orter!s competitive orces0 . ; . C . 4 . E .
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*otential new entrants ;argaining power o suppliers ;argaining power o stockholders ;argaining power o customers Rivalry among competitors
9hich o the ollowing strategies involve an attempt to distinguish the irm!s products or services rom others in the industry0 .
Cost leade rship ; 4ierenti . ation
C. Focus 4 3nternal . growth E Jiuidati . on ,&.
9hich strategy can $e proita$le or an organi%ation when customers are loyal and willing to pay pa y high prices0 .
Focu s ; =lo$ali%a . tion C :verall :verall cost leadership 4 4ierenti . ation E Jiuidati . on
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"he 55555 strategy involves seeking eicient acilities2 cutting costs and using tight cost controls to $e more eicient than competitors. .
cost lead ershi p ; dierenti . ation
C. ocus 4 internal . growth E liuidati . on ,(.
"he human resource department at *aula!s *owerwheels is implementing a num$er o unctional level strategies. "hese strategies include ocusing on ways to retain and develop a sta$le work orce and ways to improve eiciency in the organi%ation. "hese unctional-level strategies are consistent with which o the ollowing strategies0 .
Cost lead ershi p ; 4ierenti . ation
CDew product developme nt 4Dew market developme nt E 4ivestitu . re
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9ith a6n7 55555 strategy2 the organi%ation concentrates on a speciic regional market or $u yer group. .
cost lead ershi p ; dierenti . ation
C. ocus 4 internal . growth E liuidati . on ,+.
>ingles2 3nc. concentrates its eorts on its target market o 18 to #( year olds. 3t is using a6n7 55555 strategy. . ; . C . 4 . E .
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ocus dierentiation cost leadership multidomestic universal strategy
,8.
=eneral *roducts 3nc. is a small clothing designer and manuacturer located in the
=lo$ali% ation strategy ; >ultidomestic . strategy
C . 4 . E . ,,.
Export strategy "ransnational strategy 4omestic strategy
FJK 3ndustries is a glo$al conglomerate company headuartered in the
=lo$ali% ation strategy ; >ultidomestic . strategy
C . 4 . E .
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Export strategy "ransnational strategy 4omestic strategy
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3 ;C 3nternational has standardi%ed its product line throughout the world it is pursuing aB .
; . C . 4 . E . 11.
"he assumption that a single glo$al market exists would lead to aB .
; . C . 4 . E . 1#.
multido mestic strategy. retrenchment strategy. diversity strategy. glo$ali%ation strategy. liuidation strategy.
glo$ali%a tion strategy. multidomestic strategy. diversity strategy. domestic strategy. liuidation strategy.
9hich o the ollowing strategies would $e appropriate when the need or $oth national responsiveness and glo$al integration is low0 .
=l o$ ali %at io n ;>ulti dome stic C Exp . ort 4"rans nation al E 3mp . ort #)
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55555 reers to the modiication o product design and advertising strategies to suit the speciic needs o individual countries. . ;. C . 4 . E .
1'.
9hich o the ollowing reers to a strategy that com$ines glo$al coordination to attain eiciency with lexi$ility to meet speciic needs in various countries0 . ;. C . 4 . E .
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4omestic strategy =lo$al strategy "ransnational strategy >ultidomestic strategy >arket design strategy
4omestic strategy =lo$al strategy "ransnational strategy >ultidomestic strategy Region design strategy
Some people argue that 55555 is the most diicult and most important part o strategic management. . ; . C . 4 . E .
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S9:" analysis strategic ormation strategic execution strategic analysis strategy evaluation
1).
*ersuasion2 motivation2 and changes in cultures and values are examples o which o the dimensions used to implement strategy0 .
Jeade rship ; Structural . design C /uman . resources 43normation and control systems E Compensati . on 1+.
9hich o the ollowing is D:" one o the tools used or putting strategy into action0 . ;. C. 4. E .
18.
?isi$le leadership 4iversiication /uman Resources Communication Clear roles and accounta$ility
*eople need to understand how their individual actions can contri$ute to achieving an organi%ational strategy. strategy. "his can $e accomplished $y delegating authority2 authority2 creating teams2 and deining roles. "hese actions are part o which tool or putting strategy into action0 . ;. C. 4 . E .
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?isi$le leadership Candid communication /uman resources Clear roles and accounta$ility ;argaining power o employees
1,.
"he 55555 unction recruits selects2 trains2 transers2 promotes2 and lays o employees to achieve strategic goals. .
product ion ;. leadership Cinormation and control systems 4 structural . design E human . resource 11.
Scenario - Theresa Teutul Teutul
"heresa "eutul "eutul was an executive with 4igital 3ndustries2 a leading manuacturer o color televisions. She recogni%ed that the color television market in the late 1,+!s was acing signiicant challenges. ter two decades o highly successul development and marketing2 the sales o color co lor televisions had slowed and replacing older color television sets largely created her market.
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Star Cash Cow Iuestion >ark 4og Done o these
111.
Scenario - Theresa Teutul Teutul
"heresa "eutul "eutul was an executive with 4igital 3ndustries2 a leading manuacturer o color televisions. She recogni%ed that the color television market in the late 1,+!s was acing signiicant challenges. ter two decades o highly successul development and marketing2 the sales o color co lor televisions had slowed and replacing older color television sets largely created her market. "he strategy that the ;C= matrix suggests that "heresa should take or this S;< isB a. $. c. d. e.
&
invest and gro liuidate while still proita$le. proita$le. ask ask her her ast astrolo rolog ger or advi dvice. keep keep the the S;< S;< healt healthy hy and and use use its its exc excess ess earnin earnings gs to to inves investt in other other S;
11#.
Scenario - SS.com
Faced with rapidly growing $usiness2 Swit Stocks2 3nc.2 a glo$al $rokerage company co mpany with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission commission rates. Swit Stock!s traditional $rokerage $usiness could $e classiied as a 55555. a. $. c. d. e.
&1
cash cow dog star uestion mark stuck uck in th the middle $usiness
11&.
Scenario - SS.com
Faced with rapidly growing $usiness2 Swit Stocks2 3nc.2 a glo$al $rokerage company co mpany with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission commission rates. SS.com su$sidiary or Swit Stocks can $e classiied as a 55555. a. $. c. d. e.
&#
cash cow dog star uestion mark stuck uck in th the middle $usiness
11'.
Scenario - SS.com
Faced with rapidly growing $usiness2 Swit Stocks2 3nc.2 a glo$al $rokerage company co mpany with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission commission rates. 3 Swit Stock!s traditional $rokerage $usiness were to ace a declining $usiness growth2 it may need to $e reclassiied as a 55555. a. $. c. d. e.
11 (.
cash cow dog star uestion mark dead $usiness
9hen organi%ational parts interact to produce a @oint eect that is greater than the sum o the parts acting alone2 55555 occurs. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
11 "he uestion What business are we in? concerns in? concerns the 55555 strategy. ). 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 11 "he uestion How uestion How do we compete? concerns compete? concerns 55555 555 55 strategy. +. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 11 "he uestion How uestion How do we support the business-level competitive strategy? concerns strategy? concerns 55555 strategy. strategy. 8. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 11 55555 includes the planning and decision making that lead to the esta$lishment o the irm!s goals and ,. the development o a speciic strategic plan. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 &&
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"he use o managerial and organi%ational tools to direct resources toward accomplishing strategic results is known as 55555. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
1# 55555 is a type o corporate-level strategy that pertains to the organi%ation!s organi%ation!s mix o strategic $usiness 1. units. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 1# #.
3n the ;C= matrix2 the dog has 55555 market share and 55555 $usiness growth rate. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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3n the ;C= matrix2 the star has a6n7 55555 market share in a rapidly growing industry. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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"he acuisition o a $usiness that is related to current product lines or that takes the corporation into new areas is called 55555. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
1# "he 55555 strategy involves an attempt to distinguish the irm!s products or services rom others in the (. industry. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 1# 9ith 9ith a6n7 55555 strategy2 strategy2 the organi%ation aggressively seeks eicient acilities2 pursues cost ). reductions2 and uses tight cost controls to produce products more eiciently than competitors. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 1# 9ith 9ith a6n7 55555 strategy2 the organi%ation concentrates on a speciic regional market or $u yer group. +. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 1# 8.
"he standardi%ation o product design and advertising strategies throughout the world is called 55555. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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9hen an organi%ation chooses a6n7 55555 strategy2 it means that $usiness decisions such as product design are made on a country-$y-country $asis. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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6n7 55555 strategy seeks to achieve $oth $o th glo$al integration and national responsiveness. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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1& "he a$ility to inluence people to adopt the new $ehaviors needed or strategy implementation is called 1. 55555. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555 1& #.
3t is argued that 55555 is the most diicult and most important part o strategic management. 5555555555555555555555555555555555555555 555555555555555555555555555 5555555555555
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Jist the our components o a S9:" analysis.
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Jist the three glo$al corporate strategies.
1& 3n order or companies to remain competitive2 their strategies must ocus on three things. 4escri$e (. these three ocuses.
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Compare and contrast the three levels o strategy in an organi%ation.
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4ierentiate $etween strategy ormulation and strategy implementation.
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;riely descri$e the ;oston Consulting =roup matrix2 including its dimensions2 uadrants2 and strategic recommendations.
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;riely discuss *orter!s three competitive strategies.
1' Dame and descri$e the three types o glo$al strategies. .
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;riely descri$e the tools or putting strategy into action.
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Chapter 8--Strategy Formulation and Execution ey 1. "R
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1&&. S9:" includes strengths2 weaknesses2 opportunities2 and threats. 1&'. =lo$ali%ation strategy2 transnational strategy2 and multidomestic strategy. 1&(. "he three ocuses are core competencies2 synergy2 synergy2 and value creation. Core competence is something the organi%ation does very well in comparison to its competitors. core competence represents a competitive advantage $ecause the company acuires expertise that competitors do not have. Synergy occurs when organi%ational parts interact to produce a @oint eect that is greater than the sum o the parts acting alone. "he organi%ation may attain a special advantage with respect to cost2 market po wer2 technology2 technology2 or management skill. ?alue ?alue creation should $e at the heart o strategy. strategy. ?alue ?alue is the com$ination o $eneits received and costs paid $ y the customer. >anagers help their companies create value $y devising strategies that exploit core competencies and attain synergy. synergy. 1&). "here are three levels o strategy in an organi%ationB corporate-level2 corporate-level2 $usiness-level2 and unctional-level. Corporate-level strategies strategies involve the whole organi%ation. "his level o strategy is most concerned with answering the uestionB 9hat $usiness are we in0 "hese types o decisions oten involve issues o growth2 retrenchment2 andHor @oint ventures. ;usiness-level strategies are concerned with the uestion /ow do we compete0 "hey ocus on how the individual $usiness unit competes within its industry. "hey may involve such issues as advertising2 product changes2 and new product development. Functional-level Functional-level strategies strategies are concerned concerned with the uestion uestion o /ow do we support the $usiness-level $usiness-level strategy0 strategy0 3nvolving all o the organi%ation!s ma@or unctions2 these types o strategies link the unctional unit with the strategic $usiness unit. 1&+. Strategy ormulation includes the planning and decision making that lead to the esta$lishment o the irm!s goals and the development o a speciic strategic plan. lso2 lso2 it includes assessing the e xternal environment and internal pro$lems and integrating the r esults into goals and strategies. Strategy implementation uses managerial and organi%ational tools to direct resources toward accomplishing strategic results. 1&8. "he two dimensions o the matrix are $usiness growth rate and market share. 9hen growth is high and share is high2 the S;< has the $est situation and is called a star. star. 9hen growth is low and share is high2 the S;< is known as a cash cow. cow. 9hen growth is high $ut share is low2 the S;< is a uestion mark. 3n the ourth u adrant2 growth and share are $oth low. "his is the worst situation2 and the S;< is a dog. "he strategic recommendations areB 617 invest in starsG 6#7 milk the cash cowG 6&7 invest in uestion marks to create stars or divest the uestion marksG and 6'7 divest the dogs. 1&,. *orter identiied three competitive strategiesB dierentiation2 dierentiation2 cost leadership2 and ocus. dierentiation strategy involves the o rgani%ation attempting to distinguish its product or service rom those o its competition. dvertising2 dvertising2 product eatures2 and customer service are some o the ways an organi%ation can successully dierentiate. cost leadership strategy is $ased on the organi%ation achieving a low-cost position relative to the competition. company company may achieve a cost leadership through the operation o eicient acilities2 acilities2 cutting costs2 or maintaining tight cost control. 9hen a company uses a dierentiation or a cost leadership strategy in a particular market or $u yer group2 they are employing a ocus strategy. "his strategy allows the organi%ation to concentrate on a narrow market niche. 1'. "he three types o glo$al strategies are glo$ali%ation2 multidomestic2 and transnational. =lo$ali%ation =lo$ali%ation means that a company!s product design and advertising strategies are standardi%ed standardi%ed throughout the world. "his approach is $ased on the assumption that a single glo$al market exists or many consumer and industrial products. "he theory is that people everywhere want to $uy the same products and live the same way. >ultidomestic strategies $elieve that competition in each country is handled independently o industry competition in other countries. "hus2 marketing2 advertising2 and product design is encouraged to $e modiied and adapted to the speciic needs o each country the company is present in. >any companies re@ect the idea o a single glo$al market. "ransnational strategies strategies seek to achieve $oth glo$al integration and national responsiveness. true transnational strategy is diicult to achieve2 $ecause one goal reuires close glo$al coordination while the other goal reuired local lexi$ility. lexi$ility. /owever2 many industries are inding that2 although increased competition means they must achieve glo$al eiciency2 eiciency2 growing pressure to meet local needs demands national responsiveness. 1'1. "he tools or putting strategy into action include visi$le leadership2 clear roles and accounta$ility2 accounta$ility2 human resources2 and candid communication. L ?isi$le leadership is used to motivate motivate people2 people2 shape culture and and values2 values2 and model desired desired $ehaviors L Clear roles and and accounta$ility accounta$ility include include delegating delegating authority authority and and responsi$ility2 responsi$ility2 creating creating teams2 teams2 and deining roles L /uman resource tools tools include include recruiting employees2 providing training2 training2 and managing managing transers transers and promotions promotions L Candid communication communication is used used to open lines lines o communication and to encourage honesty and de$ate
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