chapter 8

Question 1

strategic management

Answer 1

the process of determining an organization’s basic mission and long-term objectives and then implementing a plan of action for pursuing the mission and attaining these objects

Question 2

mission statement

Answer 2

a description of what an organization actually does - what its business is - and why it does it

Question 3

vision statement

Answer 3

expresses organization’s ultimate objectives

Question 4

approaches to formulating and implementing strategy

Answer 4

1. economic imperative
2. political imperatives
3. quality imperative
4. administrative coordination

Question 5

economic imperative:

Answer 5

worldwide strategy based on cost leadership, differentiation, and segmentation

• typically products for which a large portion of value is added in the upstream activities of the industry’s value chain
• product is basically homogeneous and requires no alteration from country to country; worldwide strategy that is consistent
• generic good
• global sourcing

Question 6

political imperative

Answer 6

strategy formulation and implementation utilizing strategies that are country-responsive and designed to protect local market niches

• large portion of product value added in the downstream activities of the value chain
• success of product or service depends on: marketing, sales, service
• these MNCS usually use country-centered or multi-domestic strategy

Question 7

Quality Imperative

Answer 7

takes two interdependent paths:

1. a change in attitudes and a raising of expectations for service equality
2. the implementation of management practices designed to make quality improvement an ongoing process (TQM-total quality management)

Question 8

Administrative Coordination

Answer 8

• MNC makes strategic decisions based on the merits of the individual situation rather than using a predetermined economic or political strategy
• used when rapid, flexible decision making is needed to close the sale
• least common approach to formulation and implementation of strategy

Question 9

Global Integration

Answer 9

production and distribution of products and services of a homogeneous type and quality on a worldwide basis

Question 10

National Responsiveness

Answer 10

• the need to adapt tools and techniques for managing the local workforce
• need to understand different consumer tastes in segmented regional markets and respond to different national standards and regulations imposed by autonomous governments and agencies

Question 11

Global Strategy

Answer 11

a low-cost strategy when attempting to benefit from scale economies in production, distribution, marketing (integrated strategy: price competition)

Question 12

International strategy

Answer 12

make use of valuable core competencies that host-country competitors lack (mixed strategy: low demand for integration and responsiveness)

Question 13

Transnational Strategy

Answer 13

pursued when there are high cost pressures and high demand for local responsiveness (integrated strategy: high global integration and local responsiveness)

Question 14

Multi-domestic Strategy

Answer 14

useful with high pressure for local responsiveness and low pressures for cost reductions (differentiated strategy: local adaptation)

Question 15

Strategic Planning Process

Answer 15

define/clarify mission and objects -> assess environment for threats, opportunities -> assess internal strengths and weaknesses -> consider alternative strategies using competitive analysis -> choose strategy

Question 16

Environmental scanning

Answer 16

provides management with accurate forecasts of trends relating to external changes in geographic areas where the firm is doing business or considering doing business

Question 17

environmental factors that can affect the company

Answer 17

industry or market, technology, regulations, economic aspects, social aspects, political aspects

Question 18

strategic tripod

Answer 18

helps choose among strategic alternatives

Industry- Industry based competition (industrial organization)

Internal factors- firm-specific resources and capabilities (resource based view)

External environment- institutional conditions and transitions (institutional perspective

Question 19

Implementation

Answer 19

implement strategy through complementary structure, systems, and operational processes–> set up control and evaluation systems to ensure success, feedback to planning

Question 20

performance measures

Answer 20

accounting based measures- ROI, ROE, ROA, profit margin, corporate ratios;
market-based measures- market shares, EPS, etc.;
cross sectional analysis;
bench marking;
trend analysis;
value chain analysis

Question 21

Factors to consider when choosing a country

Answer 21

• advanced industrialized countries offer largest markets for goods/services
• amount of government control
• restrictions on foreign investment
• specific benefits offered by host countries

Question 22

What are the 2 primary considerations when choosing a location?

Answer 22

1. the country: the amount of gov’t control and restrictions is a factor as well as specific benefits offered by host countries include low tax rates, low/no interest loans, subsidies (but this trend is changing)
2. the specific locale within the chosen country: access to markets, proximity to competitors, availability of transportation and electric power, desirability of location for employees coming in from outside

Question 23

what are frontier markets?

Answer 23

frontier markets are pre-emerging markets that offer potentially high rewards, but with high risk; are often located in Africa and Asia, and a potential strategy for them is to go for a joint venture with a local company with cultural knowledge of the market

Question 24

What are country-specific advantages?

Answer 24

country-specific advantages or CSAs are natural resource endowments, the labor force, or less tangible factors (education and skills, institutional protections of intellectual property, entrepreneurial dynamism, etc.)

Question 25

What are firm specific advantages?

Answer 25

unique capabilities proprietary to the firm that may be based on product or process tech, marketing or distributional skills, or managerial know-how

Question 26

why do execs fail?

Answer 26

the most common reason was their inability to execute strategy.