Chapter 14

Question 1

What is Strategy?

Answer 1

Strategy is a plan to create value for customers while standing out from competitors.

Question 2

What is Core Competence?

Answer 2

Core competence is what a company does best to take advantage of opportunities and avoid threats.

Question 3

What are the Five Forces in Competitive Analysis?

Answer 3

The Five Forces: Existing customers, potential new companies, buyer power, supplier power, and substitutes.

Question 4

. What is Value Leadership (Product Differentiation)?

Answer 4

Offering unique, superior products that customers love, leading to brand loyalty and higher prices.

Question 5

What is Cost Leadership?

Answer 5

Offering products at lower costs than competitors through efficiency and waste reduction

Question 6

What is Economies of Scale?

Answer 6

Reducing costs by producing large volumes of a product, saving money in the long run.

Question 7

What is Economies of Scope?

Answer 7

Saving money by using the same resources to produce different products.

Question 8

What is the First Step in Selecting a Strategy?

Answer 8

Identify the problem: decide if the company should focus on being cheaper (cost leadership) or better (value leadership)

Question 9

What Should You Analyze After Identifying the Problem?

Answer 9

Gather and analyze information about competitors, customers, and product details.

Question 10

Why is Predicting the Future Important?

Answer 10

Predicting future trends helps companies stay ahead, especially for fast-changing products like technology.

Question 11

What Happens After Making a Decision on Strategy?

Answer 11

Implement the strategy, improve internal processes, and reduce errors to increase quality and speed.

Question 12

What are Key Success Factors (KSFs)?

Answer 12

Activities that are necessary for the successful execution of a strategy.

Question 13

What is Reengineering?

Answer 13

Redesigning business processes to improve efficiency, cost, speed, and customer satisfaction.

Question 14

What is the Balanced Scorecard?

Answer 14

A tool that translates an organization’s strategy into performance measures to help execute the strategy.

Question 15

What Does the Financial Perspective of the Balanced Scorecard Focus On?

Answer 15

Measures how profitable the strategy is and the value it creates for shareholders.

Question 16

What Does the Customer Perspective of the Balanced Scorecard Focus On?

Answer 16

Measures how well the company is meeting customer needs and satisfying target markets

Question 17

What Does the Internal Business Perspective Focus On?

Answer 17

Focuses on internal operations that create value for customers, improving financial results.

Question 18

What Does the Learning and Growth Perspective Focus On?

Answer 18

Focuses on the capabilities and skills the company needs to grow and improve.

Question 19

What is Needed for Successful Balanced Scorecard Implementation?

Answer 19

Top management commitment and clear communication to all employees

Question 20

What Makes a Good Balanced Scorecard?

Answer 20

Tells a story of strategy with cause-and-effect links, motivates managers, and focuses on critical measures.

Question 21

What Should Managers Avoid When Using the Balanced Scorecard?

Answer 21

Don’t assume cause-and-effect is always correct and don’t focus on improving everything all the time.

Question 22

Why Should Both Costs and Benefits Be Considered in a Balanced Scorecard?

Answer 22

Costs can often be overlooked, but both costs and benefits matter for making good decisions.

Question 23

Why Should Non-financial Measures Be Included?

Answer 23

Non-financial measures, like customer satisfaction, are just as important as financial ones

Question 24

Why Should Managers Avoid Too Many Measures?

Answer 24

Focusing on too many measures can be confusing and less effective.

Question 25

What is the Growth Component of Strategic Analysis?

Answer 25

It measures how much the company’s operating income grew because it sold more of its product.

Question 26

What is the Price-recovery Component of Strategic Analysis?

Answer 26

It measures how much operating income changed because of price changes (both costs and sales prices).

Question 27

What is the Productivity Component of Strategic Analysis?

Answer 27

It measures how costs changed based on changes in the amount of input used (like labor or materials).

Question 28

What is a Cost Leadership Strategy?

Answer 28

strategy focused on offering the lowest costs in the industry while still meeting customer needs.

Question 29

How Does the Balanced Scorecard Help Evaluate Cost Leadership?

Answer 29

It tracks cost reductions, efficiency, and customer satisfaction to ensure the cost leadership strategy is working

Question 30

How Can Productivity and Capacity Control Impact Balanced Scorecard Goals?

Answer 30

Improving productivity and managing resources well can lead to better internal processes and financial results.