Chapter 2 - Strategic Planning for Competitive Advantage

Question 1

Strategic Planning

Answer 1

Is the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities.

Question 2

Strategic Business Units

Answer 2

A subgroup of a single business or collection of related businesses within the larger organization

Question 3

What are the characteristics of Strategic Business Units

Answer 3

A distinct mission and a specific target market

Control over its resources

Its own competitors

A single business or a collection of related businesses

Plans independent of the other SBUs in the total organization.

Question 4

What is a portfolio of a business and what is the goal behind it?

Answer 4

Collection of products, services and achievements of the company.

The goal is to create a presence of the business on the market, attract more customers, and show how the business differs from its direct competitors.

Its like a resume for a business for customers

Question 5

What are the four options in the Ansoff Strategic Opportunity Mix?

Answer 5

1. Market Penertration
2. Market Development
3. Product Development
4. Diversification

Question 6

What is the innovation matrix?

Answer 6

A system developed to help companies see exactly what types of assets need to be developed and what types of markets are possible to grow into BASED ON THE COMPANY’S CORE CAPABILITIES.

Question 7

What are the three levels in the innnovation matrix?

Answer 7

1. Core Innovation
2. Adjacent Innovation
3. Transformational Innovation

Question 8

What is core innovation?

Answer 8

Decisions implementing changes to existing assets to provide added convience to existing customers and entice customers away from competitors in the same market share.

Question 9

What is Adjacent Innovation?

Answer 9

Decisions of using existing abilities/products in new ways and putting it in similar markets.

Question 10

What is Transformation Innovation?

Answer 10

Decisions made to make brand new products for brand new markets.

Question 11

What is a portfolio matrix?

Answer 11

A tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate.

Question 12

What is relative market share?

Answer 12

It is the ratio between the company’s share and the share of the largest competitor.

Question 13

What 4 categories does an portfolio matrix break an SBU into?

Answer 13

1. Stars
2. Cash Cows
3. Problem Child
4. Dogs

Question 14

What is a SBU categorized as a Star and what tactics should be employed as a martketing strategy?

Answer 14

Star SBU’s have large profits but need lots of cash to finance rapid growth.
Tactics: Protect the existing market share by reinvesting earnings in product improvement, better distribution, more promotion, and production efficiency.

Question 15

What is a SBU categorized as a Cash Cow and what tactics should be employed?

Answer 15

A SBU that generates more cash than it needs to maintain its market share. It is in a low growth market.
Tactics:
- Maintain market dominance by being the price leader and making technological improvements in the product.
- Managers should resist pressure to extend the basic line unless they can dramatically increase demand.
- Allocate excess cash to the product categories where growth prospects are the greatest.

Question 16

What is an SBU categorized as a problem child and what tactics should be employed?

Answer 16

A SBU that has low growth potential and a small market share.

Tactic is to cancel or reduce production or divest.

Question 17

Divest

Answer 17

Process of selling subsidiary assets, investments, or divisions to maximize the value of the parent company.

Question 18

What are the 4 Basic Strategies for SBU’s in the matrix after classifying the SBU using the profile matrix?

Answer 18

• Build
• Hold
• Harvest
• Divest

Question 19

What is planning?

Answer 19

The process of anticipating future events and determining strategies to achieve organizational objectives in the future.

Question 20

Marketing Planning

Answer 20

Involves designing activities relating to marketing objectives and changing the marketing enviroment

Question 21

What question does the firms mission statement adress?

Answer 21

What business are we in?

Question 22

What is marketing myopia?

Answer 22

Defining a business in terms of goods and services rather than in terms of the benefits customers seek

Question 23

What is the importance of SWOT

Answer 23

Marketers must understand the current and potential environment in which the product or service will be marketed.

Question 24

What does SWOT stand for?

Answer 24

Strengths, Weaknesses, External Opportunities, Threats

Question 25

What is environmental Scanning?

Answer 25

The collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan.

Question 26

Competitive Advantage

Answer 26

A set of unique factors of a company and its products that are perceived by the target market as significant and superior to those of competition.

Question 27

What is cost competitive advantage?

Answer 27

Means being the low-cost competitor in an industry while maintaining satisfactory profit margins.

Question 28

What are the ways costs can be reduced?

Answer 28

-Experience curves 
 Efficient Labor
No-Frills goods and services
Gov subsidiaries
Product Design
Reengineering
Design
Innovation
New methods of service delivery

Question 29

What is product/Service differentiation competitive advantage?

Answer 29

Exists when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.

Question 30

What is a niche competitive advantage?

Answer 30

Advantage achieved when a firm seeks to target and effectively serve a small segment of market.

Question 31

What is Sustainable Competitive Advantage?

Answer 31

An advantage that cannot be copied by the competition.

Question 32

What is a marketing objective?

Answer 32

A statement of what will be accomplished through marketing activities.

Question 33

What is a market segment?

Answer 33

A group of individuals or organizations who share one or more characteristics.

Question 34

MOA (Marketing Opportunity Analysis

Answer 34

The description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments.

Question 35

What is the marketing mix?

Answer 35

Refers to a unique blend of product, place (distribution), promotion, and pricing strategies (often referred to as the four Ps) designed to produce mutually satisfying exchanges with a target market.

Question 36

What are the four characteristics of a marketing audit?

Answer 36

Comprehensive
Systematic
Independent
Periodic

Question 37

What is implementation?

Answer 37

The process that turns a marketing plan into action assignments and ensures that these assignments are executed in a way that accomplishes the plan’s objectives.

Question 38

What is evaluation?

Answer 38

Entails gauging the extent to which marketing objectives have been achieved during the specified time period.

Question 39

What is a marketing audit?

Answer 39

A thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization.