Chapter 2: Strategic Planning

Question 1

Value Proposition

Answer 1

statement that summarizes the key benefits or value for target customers. It explains why customers should buy a product, why stakeholders should donate, or why prospective employees may want to work for an organization.

Question 2

Target Markets

Answer 2

The group of customers toward which an organization directs its marketing efforts.

Question 3

Corporate Level Plans

Answer 3

plans developed for the whole corporation as a whole take place at the corporate level.

Question 4

Strategic Planning

Answer 4

process that helps an organization allocate its resources to capitalize on opportunities in the marketplace.

Question 5

Strategic Business Unit (SBU)

Answer 5

business or product line within an organization that has its own competitors, customers, and profit center for accounting purposes.

Question 6

Business Level Plans

Answer 6

plans developed for each SBU that have their own mission statement.

Question 7

First Mover Strategy

Answer 7

corporate level strategy theorizing that being the first organization to offer a product in the marketplace will be the long-term market leader.

Question 8

Second Mover Strategy

Answer 8

corporate level strategy theorizing that closely observing the innovations of the first movers, and then improving on them can help an organization gain advantage in the marketplace.

Question 9

strategic planning process

Answer 9

conducting a situation analysis and developing the organization’s mission statement, objectives, value proposition, and strategies

Question 10

Strategic Planning Process Steps

Answer 10

1. Inputs to the Planning Process
   a. Evaluate the External Environment (economy, competition, political-legal environment, etc.)
   b. Evaluate the Internal Environment (the firm’s financial and human resources, technological capabilities, etc.)
2. Mission
3. Objectives
4. Value Proposition and 5. Strategy Formulation

Question 11

Situation Analysis

Answer 11

involves analyzing both the external and internal environments.

Question 12

SWOT Analysis

Answer 12

strengths, weaknesses, opportunities, threats.

a. Strengths and weaknesses are internal factors and are somewhat controllable.
b. Opportunities and threats are factors that are external to the firm and largely uncontrollable.

Question 13

Five Forces Model

Answer 13

Direct competition, potential threats, bargaining power of buyers, bargaining power of suppliers, substitutes

Question 14

Competitive analysis

Answer 14

involves looking at any information available on competitors.

Question 15

Mystery Shoppers

Answer 15

people who act like customers, that visit a business to learn about their customer service and products.

Question 16

Green marketing

Answer 16

marketing environmentally safe products and services in a way that is good for the environment.

Question 17

Mission statement

Answer 17

states the purpose of the organization and why it exists.

Question 18

Objectives

Answer 18

what organizations want to accomplish - the end results they want to achieve - in a given time frame.

Question 19

Strategies

Answer 19

means to the ends, or what a firm’s going to do to meet its objectives.

Question 20

Marketing Plan

Answer 20

strategic plan at the functional level that provides a firm’s marketing group with direction.

Question 21

Market Penetration Strategies

Answer 21

focus on increasing a firm’s sales of its existing products to its existing customers.

Question 22

Product Development Strategies

Answer 22

creating new products for existing customers.

Question 23

Market Development Strategies

Answer 23

focus on entering new markets with existing products.

Question 24

export

Answer 24

sell their product to buyers abroad.

Question 25

license

Answer 25

sell the right to use some aspect of their production processes, trademarks, or patents to individuals or firms in foreign markets.

Question 26

Franchising

Answer 26

longer-term form of licensing that is extremely popular with service firms.

Question 27

Contract Manufacturing

Answer 27

allows companies to hire manufacturers to produce their products in another country.

Question 28

Joint ventures

Answer 28

combine the expertise of investments of two companies and help companies enter foreign markets.

Question 29

Direct investment

Answer 29

owning a company or facility overseas.

Question 30

Diversification strategies

Answer 30

entering new markets with new products or doing something outside a firm’s current businesses.

Question 31

Portfolio

Answer 31

a group of businesses

Question 32

Portfolio planning approach

Answer 32

involves analyzing a firm’s entire collection of businesses relative to one another.

Question 33

Boston Consulting Group Matrix

Answer 33

Dogs, Stars, Question Marks, Cash Cows

Question 34

Star

Answer 34

product with high growth and a high market share.

Question 35

Cash Cows

Answer 35

product with low growth and a high market share.
have a large share of a shrinking market.
generate a lot of cash but do not have a long-term future.

Question 36

Question Marks

Answer 36

product has a low share of a high-growth market.

must decide whether or not they will become stars or eliminate/sell them.

Question 37

Dogs

Answer 37

product with low growth and low market share.

do not make money and do not have a promising future.

Question 38

Harvest

Answer 38

firm lowers investment in a product.

Question 39

Divest

Answer 39

firm drops or sells a product.

Question 40

GE Approach

Answer 40

General Electric; examines a businesses strengths and the attractiveness of the industry in which it competes.

Question 41

GE Traffic Light

Answer 41

Red: harvest or divest products; stop investing in new products, markets or technology.
Yellow: hold market share
Green: build market share; invest in new products, market or technology.