Chapter 8 Vocabulary

Question 1

A cluster of decisions about what goals to pursue, what actions to take and how to use resources to achieve goals.

Answer 1

Strategy

Question 2

A broad declaration of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors.

Answer 2

Mission statement

Question 3

A plan that indicates how a division intends to compete against its rivals in an industry.

Answer 3

Business-level strategy

Question 4

The ability of the CEO and top managers to convey a compelling mission of what they want the organization to achieve to their subordinates.

Answer 4

Strategic leadership

Question 5

A planning exercise in which managers identify organizational strengths (S) and weaknesses (W) and environmental opportunities (O) and threats (T).

Answer 5

SWOT analysis

Question 6

Expanding a company’s operations either backward or forward into an industry that produces inputs for its products or forwards into an industry that uses, distributes, or sells its products.

Answer 6

Vertical integration

Question 7

Performance gains when individuals and departments coordinate their actions.

Answer 7

Synergy

Question 8

Allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee.

Answer 8

Licensing

Question 9

Selling to a foreign organization and rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits.

Answer 9

Franchising

Question 10

An agreement in which managers pool or share their organization’s resources and know-how with a foreign country, and the two organizations share the rewards and risks of starting a new venture.

Answer 10

Strategic alliance

Question 11

A strategic alliance among two or more companies that agree to jointly establish and share the ownership of a new business.

Answer 11

Joint venture