Chapter 3

Question 1

a statement of an organization’s fundamental purpose that sets a business apart from another

Answer 1

Mission

Question 2

a goal set by and for an organization’s top management that focuses on broad general issues

Answer 2

strategic goal

Question 3

a goal set by and for an organization’s middle managers that focuses on how to operationalize actions necessary to achieve a goal

Answer 3

tactical goal

Question 4

a goal set by and for an organization’s lower level managers that is concerned with short term issues

Answer 4

operational goal

Question 5

a general plan outlining decisions about the resource allocation, priorities, and action steps necessary to reach strategic goals that is set by a board of directors and extends over a wide scope of topics

Answer 5

Strategic plan

Question 6

aimed at achieving tactical goals, is developed to implement specific parts of strategic plan that involves upper management and has more of a concrete focus

Answer 6

tactical plans

Question 7

a plan that focuses on carrying out tactical plans to achieve operational goals that are developed by middle and lower management with a short term focus and a narrow scope

Answer 7

operational plans

Question 8

what does an organization’s mission outline?

Answer 8

• purpose
• premises
• values
• directions

Question 9

what are the four important purposes of goals?

Answer 9

• Provide guidance and a unified direction for people in the organization
• Goal setting practices strongly affect other aspects of planning
• Goals can serve as a source of motivation for an organization’s employees
• Goals provide an effective mechanism for evaluation and control

Question 10

a comprehensive plan for accomplishing an organization’s goals

Answer 10

strategy

Question 11

a comprehensive and ongoing management process aimed at formulating and implementing effective strategies; a way of approaching business opportunities and challenges

Answer 11

strategic management

Question 12

a strategy that promotes a superior alignment between the organization and its environment and the achievement of strategic goals

Answer 12

effective strategy

Question 13

what three areas does a well conceived strategy address?

Answer 13

• distinctive competence
• scope
• resource deployment

Question 14

an organizational strength possessed by only a small number of competing firms

Answer 14

distinctive competence

Question 15

when applied to strategy, it specifies the range of markets in which an organization will compete

Answer 15

scope

Question 16

how an organization distributes its resources across the areas in which it competes

Answer 16

resource deployment

Question 17

what two levels do most businesses develop strategies at?

Answer 17

business level and corporate level

Question 18

the set of strategic alternatives from which an organization chooses as it conducts business in a particular industry or market

Answer 18

business level strategy

Question 19

the set of strategic alternatives from which an organization chooses as it manages its operations simultaneously across several industries and several markets

Answer 19

corporate level strategy

Question 20

the set of processes involved in creating or determining an organization’s strategies; it focuses on the content of strategies

Answer 20

strategy formulation

Question 21

the methods by which strategies are operationalized or executed within the organization; it focuses on the processes through which strategies are achieved

Answer 21

strategy implementation

Question 22

an acronym that stands for strengths, weaknesses, opportunities, and threats

Answer 22

SWOT

Question 23

a skill or capability that enables an organization to create and implement its strategies

Answer 23

organizational strengths

Question 24

a strength possessed only by a small number of competing firms

Answer 24

Distinctive competence

Question 25

an area in the environment that if exploited may generate higher performance

Answer 25

organizational opportunities

Question 26

an area that increases the difficulty of an organization performing at a high level

Answer 26

organizational threats

Question 27

a skill or capability that does not enable an organization to choose and implement strategies that support its mission

Answer 27

organizational weaknesses

Question 28

a strategy in which an organization seeks to distinguish itself from competitors through the quality of its products or services

Answer 28

differentiation strategy

Question 29

a strategy in which an organization attempts to gain a competitive advantage by reducing its costs below the costs of the competing firm

Answer 29

overall cost leadership strategy

Question 30

a strategy in which an organization concentrates on a specific regional market, product line or group of buyers

Answer 30

focus strategy

Question 31

a model that portrays how sales volume for products changes over the life of products

Answer 31

product life cycle

Question 32

what are the four stages of the product life cycle

Answer 32

- introduction - growth stage - maturity stage - decline stage

Question 33

each business or set of businesses within an organization is frequently referred to as this

Answer 33

strategic business unit

Question 34

the number of different businesses that an organization is engaged in and the extent to which these businesses are related to one another

Answer 34

diversification

Question 35

What are the three types of diversification?

Answer 35

- single product strategy - Related diversification - Unrelated diversification

Question 36

a strategy in which an organization manufactures just one product or service and sells it in a single geographic market

Answer 36

single product strategy

Question 37

a strategy in which an organization operates in several businesses that are somehow linked with one another

Answer 37

related diversification

Question 38

What are the three primary advantages of related diversification?

Answer 38

- It reduces an organization’s dependence on any one of its business activities and then reduces economic risk - By managing several businesses at the same time, an organization can reduce the overhead costs associated with managing any one business - Related diversification allows an organization to exploit its strengths and capabilities in more than one business

Question 39

a strategy in which an organization operates multiple businesses that are not logically associated with one another

Answer 39

Unrelated Diversification

Question 40

what are two advantages of unrelated diversification?

Answer 40

- A business that uses this strategy should be able to achieve stable performance over time - Because organizations that implement unrelated diversification fail to exploit important synergies, they are a competitive disadvantage compared to organizations that use related diversification

Question 41

methods that diversified organizations use to determine in which businesses to engage and how to manage these businesses to maximize corporate performance

Answer 41

Portfolio management techniques

Question 42

What are two important portfolio management techniques

Answer 42

- BCG (Boston Consulting Group) Matrix | - GE Business Screen

Question 43

a framework for evaluating businesses relative to the growth rate of their market and the organization’s share of the market

Answer 43

BCG (Boston Consulting Group) Matrix

Question 44

In the BCG Matrix, what is a dog?

Answer 44

businesses that have a very small share of the market that is not expected to grow

Question 45

In the BCG Matrix, what is a cash cow?

Answer 45

businesses that have a large share of a market that is not expected to grow substantially

Question 46

In the BCG Matrix, what is a question mark?

Answer 46

businesses that only have a small share of fast growing market

Question 47

In the BCG Matrix, what is a star?

Answer 47

businesses that have the largest share of a rapidly growing market

Question 48

a method of evaluating businesses along two dimensions: 1. Industry attractiveness and 2. Competitive position; in general, the more attractive the industry and the more competitive the position, the more an organization should invest in a business.

Answer 48

GE Business Screen

Question 49

what can determine the attractiveness of an industry?

Answer 49

In addition to market growth, determinants such as market size, capital requirements, and competitive intensity

Question 50

what can determine the competitiveness of an industry?

Answer 50

In addition to market share, determinants such as technological know how, product quality, service network, price competitiveness, and operating costs

Question 51

a plan aimed at achieving tactical goals and developed to implement parts of a strategic plan; an organized sequence of steps designed to execute strategic plans

Answer 51

tactical plans

Question 52

two basic forms of operational planning

Answer 52

- single use plans | - standing plans

Question 53

a single use plan for a large set of activities

Answer 53

programs

Question 54

a single use plan of less scope and complexity than a program

Answer 54

project

Question 55

developed for activities that recur regularly over a period of time

Answer 55

standing plans

Question 56

a standing plan that specifies the organization’s general response to a designated problem or situation

Answer 56

policy

Question 57

a standard plan that outlines the steps to be followed in particular circumstances

Answer 57

SOP

Question 58

describe exactly how specific activities are to be carried out

Answer 58

rules and regulations

Question 59

the determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate

Answer 59

contingency planning

Question 60

at what four points does contingency planning come into play?

Answer 60

1. Management develops the organizations basic plans 2. The plan that management chooses is put into effect 3. The company specifies certain indicators or signs that suggest a contingency event is about to take place 4. Marks the successful completion of either the original or a contingency plan

Question 61

the set of procedures the organization uses in the event of a disaster or other unexpected calamity

Answer 61

crisis management