Functional Strategy

Question 1

Functional Strategy

Answer 1

The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity.

Question 2

Functional Strategy 2

Answer 2

Marketing strategy
Financial strategy
R&D strategy
Operations strategy
Purchasing strategy
Logistics strategy
HRM strategy
IT strategy

Question 3

STRATEGIC MARKETING ISSUES

Answer 3

A business can not achieve its objectives unless it provides something that customers value.
BUT
Just creating an innovative product that meets many users needs isn’t sufficient

Question 4

STRATEGIC MARKETING ISSUES 2

Products must be;

Answer 4

Conveniently available
Competitively priced
Uniquely promoted

Question 5

STRATEGIC MARKETING ISSUES 3

Answer 5

Market Position & Segmentation
Marketing Mix (4P: Product, Place, Price, Promotion)
Product Life Cycle
Brand & Corporate Reputation

Question 6

Selling Concept

Answer 6

Starting Point: Factory
Focus: Existing product
Means: Selling and promoting
Ends: Profits through sales volume

Question 7

Marketing Concept

Answer 7

Starting Point: Market
Focus: Customer needs
Means: integrated marketing
Ends: Profits Through Customer Satisfaction

Question 8

Marketing Strategy

Answer 8

Push strategy – Pull strategy
Pricing strategy
Distribution strategy

Question 9

Push strategy – Pull strategy

Answer 9

PUSH: Spending a large amount of money on trade promotion in order to gain or hold shelf space in retail outlets
PULL: Spending more money on consumer advertising so that shoppers will ask for the product. creating an ongoing relationship with the brand

Question 10

Distribution strategy

Answer 10

Use distributors and dealers
Use mass merchandisers
Use the internet to sell directly to consumers

Question 11

Pricing Strategy

Answer 11

Skim pricing
Penetration pricing
Dynamic Pricing

Question 12

MARKETING MIX

Answer 12

Product: quality, features, brand, size, packaging.
Price: tariff, sale, discount
Place or distribution: channel, area, point of sale.
Promotion or communication: advertising, sales force, sales promotion.

Question 13

Marketing Strategy

Answer 13

Using a “market development strategy”

Using a “product development strategy”

Question 14

Using a “market development strategy”

Answer 14

1- Capture a larger share of an existing market for current products (through market saturation and market penetration by advertising and promotion)
2- Develop new markets for current products

Question 15

Using a “product development strategy”

Answer 15

1- Develop new products for existing markets
(Using a successful brand name to other products is called “line extension”)
2- Develop new products for new markets

Question 16

Financial Strategy 1

Answer 16

The trade-off between achieving the desired debt-to-equity ratio and relying on internal long-term financing via cash flow is a key issue.
For example ;
– Equity financing is preferred for related diversification
– Debt financing is preferred for unrelated diversification

Question 17

STRATEGIC FINANCIAL ISSUES

Answer 17

Financial leverage
The ratio of total debt to total assets
Capital budgeting
Check against the accepted criteria of “hurdle rate” (required rate of return)

Question 18

Financial Strategy 2

Answer 18

The management of dividends and stock price is an important part of a corporation’s financial strategy;
– Fast growth, no dividends
– Stable, support the value of a stock by offering consistent dividend (even go into debt to finance dividends)
Reversed stock split
Selling Patents
A profit strategy

Question 19

STRATEGIC R&D ISSUES

R&D Mix

Answer 19

-Basic R&D
Patents and research publications
-Product R&D
Product and product-packing innovations and improvements
-Process R&D (Engineering R&D)
Innovation and improvements on processes, production equipment, and quality control

THIS MIX VARIES BY INDUSTRY, COMPANY, AND PRODUCT LINE

Question 20

STRATEGIC OPERATIONS ISSUES

Answer 20

• Operating leverage; reaping the benefits of “economies of scale”
• Flexible manufacturing for mass customization
  From economies of scale to economies of scope

Question 21

Operations Strategy

Answer 21

Job shop
Connected line batch flow
Flexible manufacturing systems
Dedicated transfer lines

Question 22

Job shop

Answer 22

One of a kind production using skilled labor

Question 23

Connected line batch flow

Answer 23

Components are standardized; each machine functions like a job-shop but is positioned in the same order as the parts are processed

Question 24

Flexible manufacturing systems

Answer 24

Parts are grouped into manufacturing families to produce a wide variety of mass-produced items

Question 25

Dedicated transfer lines

Answer 25

Highly automated assembly lines that make one mass-produced product using little human labor

Question 26

Purchasing Strategy

Answer 26

Multiple sourcing
Sole sourcing ( Using JIT and JIT II )
Parallel sourcing

Question 27

Logistics Strategy

Answer 27

Centralization
Outsourcing
Internet

Question 28

HRM Strategy

Answer 28

Low skilled, low pay, or
High skilled, high pay…

As work increases in complexity and innovation, choices shifts to ; teams, cross-trained self-managing work teams, high skilled employees

Question 29

HRM Strategy 2

Answer 29

• 360-degree appraisal (very popular tool in developing new managers)
• A diverse workforce can be a competitive advantage
• Older workers perform as well as -if not better than young employees

Question 30

HRM Strategy 3

Answer 30

Increasing use of teams
Union relations 
Temporary workers
Quality of work-life
Human diversity

Question 31

Information Technology Strategy –

Answer 31

• Internet
• Intranet
• Follow-the-sun management
• Spontaneous translation tools

(On average going to the web reduces processing time by one-third)

Question 32

Information systems/technology contributions to performance:

Answer 32

Automation of back-office processes
Automation of individual tasks
Enhancement of key business functions
Development of a competitive advantage

Question 33

Outsourcing errors

Answer 33

Activities that should not be outsourced
Wrong vendor selection
Writing poor contract
Overlooking personnel issues
Hidden costs of outsourcing
Failing to plan exit strategy

Question 34

Strategies to Avoid

Answer 34

Follow the leader
Hit another home run
Arms race
Do everything
Losing hand

Question 35

Subjective Factors Affecting Decisions

Answer 35

Management’s attitude toward risk
Pressures from stakeholders
Pressures from corporate culture
Needs and desires of key managers

Question 36

Strategic choice

Answer 36

the evaluation of alternative strategies and selection of the best alternative
Avoiding the Consensus Trap –

Devil’s Advocate
Dialectical Inquiry

Question 37

Penetration pricing

Answer 37

is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the expectation that customers will switch to the new brand because of the lower price.

Question 38

Penetration and Skimming Price

Answer 38

With pricing penetration, companies advertise new products at low prices, with modest or nonexistent margins. Conversely, a skimming strategy involves companies marketing products at high prices with relatively high margins. A skimming strategy works well for innovative or luxury products where early adopters have low price sensitivity and are willing to pay higher prices. Effectively, producers are skimming the market to maximize profits. Over time, prices will reduce to levels comparable to market prices in order to capture the rest of the market.
Small businesses or those in niche markets can benefit from price skimming when their products or services are differentiated from competitors’ and when synonymous with quality and a positive brand image.

Question 39

Dynamic Pricing

Answer 39

Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing is a pricing strategy in which businesses set flexible prices for products or services based on current market demands