Chapter 5

Question 1

What an organization does to
achieve its mission and vision.

Answer 1

strategic management

Question 2

A comprehensive and ongoing
management process aimed at
formulating and implementing
effective strategies; it is a way
of approaching business
opportunities and challenges
such that the firm achieves its
vision and mission.

Answer 2

strategic management process

Question 3

Synonymous with business
planning and strategic
planning. The set of processes
involved in creating or
determining the strategies of
the organization; it focuses on
the content of strategies.

Answer 3

strategy formulation

Question 4

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

Answer 4

strategy implementation

Question 5

The set of strategic alternatives
that an organization chooses
from as it manages its
operations simultaneously
across several industries and
several markets.

Answer 5

corporate strategy

Question 6

The interaction of two or more
activities, creating a combined
effect greater than the sum of
their individual efforts.

Answer 6

synergy

Question 7

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

Answer 7

diversification

Question 8

The set of strategic alternatives
that an organization chooses
from as it conducts business in
a particular industry or
market.

Answer 8

business strategy

Question 9

An assessment of strengths,
weaknesses, opportunities, and
threats.

Answer 9

SWOT analysis

Question 10

A competitive advantage that
will exist after all attempts at
strategic imitation have
ceased.

Answer 10

sustainable competitive advantage

Question 11

Key Takeaway 5.2

Answer 11

Strategy formulation is an essential component of planning; it forms the
bridge that enables the organization to progress from vision and mission to
goals and objectives. In terms of the P-O-L-C framework, strategy
formulation is the P (planning) and strategy implementation is realized by
O-L-C. Corporate strategy helps to answer questions about which businesses
to compete in, while business strategy helps to answer questions about how
to compete. The best strategies are based on a thorough SWOT
analysis—that is, a strategy that capitalizes on an organization’s strengths,
weaknesses, opportunities, and threats.

Question 12

The strategy conceived of by
managers and the impetus for
initial attempts at strategy
implementation.

Answer 12

intended strategy

Question 13

The actual strategy that is
implemented and comes to
fruition as a consequence of
implementation and other
internal and external factors.

Answer 13

realized strategy

Question 14

A pattern of action that
develops over time in an
organization in the absence of
vision, mission, and goals, or
despite missions and goals, or
in addition to what was
conceived of in the intended
and deliberate strategies.

Answer 14

emergent strategy

Question 15

A plan of action, flowing from
the intended strategy, that an
organization chooses and
implements to support its
vision, mission, and goals.

Answer 15

deliberate

Question 16

Key Takeaway 5.3

Answer 16

You learned about the processes surrounding strategy development.
Specifically, you saw the difference between intended and realized strategy,
where intended strategy is essentially the desired strategy, and realized
strategy is what is actually put in place. You also learned how strategy is
ultimately made. Ultimately, the best strategies come about when managers
are able to balance the needs for design (planning) with being flexible
enough to capitalize on the benefits of emergence.

Question 17

When an organization is clear
about its mission and vision
and has a coherent, wellarticulated strategy for
achieving those.

Answer 17

strategic focus

Question 18

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

Answer 18

Overall lower cost or cost leadership

Question 19

The strategy where
competitive advantage is based
on superior products or
service.

Answer 19

Differentiation

Question 20

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

Answer 20

differentiation strategy

Question 21

A strategy in which an
organization concentrates on a
specific regional market,
product line, or group of
buyers in combination with its
pursuit of either an overall cost
leadership or differentiation
strategy.

Answer 21

focus strategy

Question 22

Where the strategy
emphasizes superb
operations and execution.

Answer 22

operational excellence

Question 23

Where the strategy
emphasizes innovation and
brand-based marketing.

Answer 23

product leadership

Question 24

Where the strategy
emphasizes customer
attention and customer
service.

Answer 24

customer intimacy

Question 25

Key Takeaway 5.4

Answer 25

Strategic focus seems to be a common element in the strategies across
successful firms. Two prevalent views of strategy where focus is a key
component are strategy as trade-offs and strategy as discipline. Michael
Porter identifies three flavors of strategy: (1) cost leadership, (2)
differentiation, or (3) focus of cost leadership or differentiation on a
particular market niche. Firms can straddle these strategies, but such
straddling is likely to dilute strategic focus. Strategy also provides discipline.
Treacy and Wiersema’s three strategic disciplines are (1) operational
excellence, (2) product leadership, and (3) customer intimacy.

Question 26

A particular bundle of
resources and capabilities that
provides unique competitive
advantages to the firm

Answer 26

core competencies

Question 27

The primary and support activities that an organization
uses to create value in the form of products or services.

Answer 27

value chain

Question 28

Stands for valuable, rare, inimitable, and organization.

Answer 28

VRIO

*** This VRIO framework is the foundation
for internal analysis.VRIO analysis is at the core of the resource-based view of the
firm.

Question 29

Key Takeaway 5.5

Answer 29

Internal analysis begins with the identification of resources and capabilities. Resources can be tangible and intangible; capabilities may have such
characteristics as well. VRIO analysis is a way to distinguish resources and
capabilities from core competencies. Specifically, VRIO analysis should show
you the importance of value, rarity, inimitability, and organization as
building blocks of competitive advantage.

Question 30

Stands for the political, economic, social, technological,
environmental, and legal dimensions of an
organization’s external
environment.

Answer 30

PESTEL

Question 31

A group of firms producing
products that are close substitutes.

Answer 31

industry

Question 32

Consists of stakeholder groups
that a firm has regular dealings
with

Answer 32

industry microenvironment

Question 33

Key Takeaway 5.6

Answer 33

External environment analysis is a key input into strategy formulation.
PESTEL is an external environment analysis framework that helps guide
your prospecting in the political, economic, social, technological,
environmental, and legal spheres of an organization’s external environment.
Working inward to the focal organization, we discussed the broad
dimensions of the stakeholders feeding into the firm. Porter’s five forces
analysis considers (1) barriers to entry and new entry threats, (2) buyer
power, (3) supplier power, (4) threat from substitutes, and (5) rivalry as key
external environmental forces in developing strategy.

Question 34

A framework comprising five
facets for understanding the
content of a strategy; the facets
are arenas, differentiators,
vehicles, staging and pacing,
and economic logic.

Answer 34

strategy diamond

*** Arenas, staging, vehicles, differentiators, economic logic

Question 35

An asset that has a value and
physically exists.

Answer 35

tangible asset

Question 36

An asset that cannot be physically touched, or is not physical in nature.

Answer 36

intangible asset

Question 37

Key Takeaway 5.7

Answer 37

In this section, we discussed how to put together a strategy diamond. The
first step involves identifying the organization’s arenas, differentiators, and
economic logic. This step involves a basic understanding of strategy and
summarizes many of the traditional views in strategic management. The second step involves contemplating how the organization would compete or
grow in existing or new arenas, and this is where the vehicles came into
play. Finally, you considered the sequencing and speed of strategic
initiatives by learning about the strategy diamond facet of staging and
pacing. Together, these five facets (i.e., arenas, differentiators, economic logic, vehicles, staging, and pacing) constitute the strategy diamond. We
concluded the chapter with an application of the strategy diamond to your personal situation.

Question 38

How individual and team work
within an organization are coordinated.

Answer 38

organizational structure