Chapter 6

Question 1

Harvard Business School professor Michael Porter is recognized as

Answer 1

one of the most influential businesses school professors.

Question 2

According to Porter, strategic positioning attempts to

Answer 2

achieve sustainable competitive advantage by preserving what is distinctive about a company. It means he says, performing different activities from rivals, or performing similar activities in different ways.

Question 3

What are the three key principles that underlie strategic positioning

Answer 3

1. Strategy is the creation of a unique and valuable position.
2. strategies requires trade-offs in competing
3. Strategy involves creating a “Fit” among activities

Question 4

What are the three levels of strategy?

Answer 4

Corporate, business, and functional level strategy.

Question 5

Corporate level strategy focuses on

Answer 5

the corporation as whole

Question 6

Business level strategy focuses on

Answer 6

individual business units or product/service lines.

Question 7

Functional level strategy is a

Answer 7

plan of action by each functional area of the organization to support higher-level stratifies.

Question 8

What are the five steps of the strategic management process?

Answer 8

1. Establish
2. Assess the current reality
3. Formulate corporate, business, and functional strategies
4. Strategic implementation
5. Maintain strategic control

Question 9

What is the SWOT Analysis?

Answer 9

Also known as a situational analysis, the search for the Strengths, Weaknesses, Opportunities, and Threats affecting the organization

Question 10

The SWOT Analysis is divided into two parts:

Answer 10

Internal strengths and weaknesses (internal environment) and external opportunities and threats (external environment)

Question 11

What are organizational strengths?

Answer 11

The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission.

Question 12

What are the organizational weaknesses?

Answer 12

The drawbacks that hinder an organization in executing strategies in pursuit of its mission

Question 13

What are the organizational opportunities?

Answer 13

Environmental factors that the organization may exploit for competitive advantage.

Question 14

What are the organizational threats?

Answer 14

environmental factors that hinder an organization’s achieving a competitive advantage

Question 15

What is the VRIO?

Answer 15

is a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its value, rarity, imitability, and organization.

Question 16

What is a forecast?

Answer 16

is a vision or projection of the future

Question 17

What is a trend analysis?

Answer 17

A hypothetical extension of a past series of events into the future

Question 18

What is contingency planning?

Answer 18

Also known as scenario planning and scenario analysis; the creation of alternative hypothetical but equally likely future conditions

Question 19

What is benchmarking?

Answer 19

A process by which a company compares its performance with that of high-performing organizations.

Question 20

What are the three methods of corporate level strategy?

Answer 20

1. The growth strategy
2. The stability strategy
3. The defensive strategy

Question 21

What is the BCG Matrix?

Answer 21

A management strategy by which companies evaluate their strategic business units on the basis of (1) their business growth rates and (2) their share of the market. Was developed by the Boston Consulting Group

Question 22

What is the Growth Strategy?

Answer 22

One of three grand strategies, this strategy involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served.

Question 23

What is the stability strategy?

Answer 23

One of three grand strategies, this strategy involves little or no significant change

Question 24

What is the defensive strategy?

Answer 24

Also called retrenchment strategy, one of three grand strategies, this strategy involves reduction in the organization’s efforts.

Question 25

What is the diversification strategy?

Answer 25

The strategy of moving into new lines of business, such as Amazon purchasing Hole Foods. Is called diversification. Strategy by which a company operates several businesses in order to spread the risk

Question 26

When a company purchases a new business that is related to the company’s existing business portfolio, the organization is implementing?

Answer 26

Related diversification

Question 27

What is called when a company acquires another company on a completely unrelated business?

Answer 27

Unrelated diversification

Question 28

What is the vertical integration?

Answer 28

Diversification strategy where a firm expands into businesses that provide the supplies it needs to make its products or that distribute and sells its products

Question 29

What is the Porter’s Five competitive forces OR model for industry analysis?

Answer 29

Model proposes that business-level strategies originate in five primary competitive forces in the firm’s environment:
(1) threats of new entrants,
(2) bargaining power of suppliers,
(3) bargaining power of buyers,
(4) threats of substitute products or services, and (5) rivalry among competitors

Question 30

What is Porter’s four competitive strategies OR generic strategies?

Answer 30

(1) cost leadership,
(2) differentiation,
(3) cost-focus, and
(4) focused differentiation. The first two strategies focus on wide markets, the last two on narrow markets.