Chapter 6: Strategic Management

Question 1

Strategic Positioning

Answer 1

Strategy that attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company

Question 2

Corporate-level strategy

Answer 2

Focuses on the organization as a whole

Question 3

Business-level strategy

Answer 3

Focuses on individual business units or product/service lines

Question 4

Functional-level strategy

Answer 4

Plan of ­action by each functional area of the organization to support higher level strategies

Question 5

Current reality assessment

Answer 5

Assessment to look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization’s mission

Question 6

Strategy formulation

Answer 6

The process of choosing among different strategies and altering them to best fit the organization’s needs

Question 7

Strategy implementation

Answer 7

The implementation of strategic plans

Question 8

Strategic control

Answer 8

Monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed

Question 9

Sustainable competitive advantage

Answer 9

Exists when other companies cannot duplicate the value delivered to customers

Question 10

SWOT analysis

Answer 10

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

Question 11

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

Organizational weaknesses

Answer 12

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

Question 13

Organizational opportunities

Answer 13

Environmental factors that the organization may exploit for competitive advantage

Question 14

Organizational threats

Answer 14

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

Question 15

VRIO

Answer 15

Is a framework for analyzing a resource of capability to determine its competitive strategic potential by answering four questions about its Value, Rarity, Imitability, and Organization

Question 16

Forecast

Answer 16

A vision of projection of the future

Question 17

Trend analysis

Answer 17

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

Question 18

Contingency planning

Answer 18

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

Question 19

Scenario analysis

Answer 19

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

Question 20

Benchmarking

Answer 20

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

Question 21

Growth strategy

Answer 21

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 22

Innovation strategy

Answer 22

Grows market share or profits by innovating improvements in products or services

Question 23

Stability strategy

Answer 23

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

Question 24

Defensive strategy

Answer 24

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

Question 25

BCG matrix

Answer 25

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

Question 26

Diversification

Answer 26

Strategy by which a company operates several businesses in order to spread the risk

Question 27

Related diversification

Answer 27

When a company purchases a new business that is related to the company’s existing business portfolio

Question 28

Unrelated diversification

Answer 28

Occurs when a company acquires another company in a completely unrelated businesses

Question 29

Vertical integration

Answer 29

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 30

Porter’s model for industry analysis

Answer 30

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 31

Porter’s four competitive strategies

Answer 31

Also called four generic strategies; (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

Question 32

Cost-leadership strategy

Answer 32

One of Porter’s four competitive strategies; keeping the costs, and hence prices, of a product or service below those of competitors and to target a wide market

Question 33

Differentiation strategy

Answer 33

One of Porter’s four competitive strategies; offering products or services that are of unique and superior value compared with those of competitors but to target a wide market

Question 34

Cost-focus strategy

Answer 34

One of Porter’s four competitive strategies; keeping the costs, and hence prices, of a product or service below those of competitors and to target a narrow market

Question 35

Focused-differentiation strategy

Answer 35

One of Porter’s four competitive strategies; offering products or services that are of unique and superior value compared to those of competitors and to target a narrow market

Question 36

Execution

Answer 36

Using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve the results promised