Functional Strategy and Strategic Choice

Question 1

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

Answer 1

Functional strategy

Question 2

It is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a
competitive advantage

Answer 2

Functional strategy

Question 3

a company or business unit can (1) capture a larger share of an existing
market for current products through market saturation and market penetration or (2) develop
new uses and/or markets for current products.

Answer 3

market
development strategy,

Question 3

deals with pricing, selling, and distributing a product

Answer 3

Marketing strategy

Question 4

a company or unit can (1) develop new products for existing markets or (2) develop new products for new markets.

Answer 4

product development strategy,

Question 4

market
development strategy,

Answer 4

a company or business unit can (1) capture a larger share of an existing
market for current products through market saturation and market penetration or (2) develop
new uses and/or markets for current products.

Question 5

product development strategy,

Answer 5

(1) develop new products for existing markets or (2) develop new products for new markets.

Question 6

Using a successful brand name to market other products. it is a good way to appeal to a company’s current customers.

Answer 6

brand extension

Question 7

spending a large amount of money on trade promotion in order to gain or hold
shelf space in retail outlets.

Answer 7

push strategy

Question 8

When pricing a new product, a company or business unit can follow one of two strategies. What it is?

Answer 8

skim pricing and Penetration pricing

Question 9

it offers the opportunity to “skim the cream” from the
top of the demand curve with a high price while the product is novel and competitors are few

Answer 9

skim pricing

Question 10

attempts to hasten market development and offers the pioneer
the opportunity to use the experience curve to gain market share with a low price and then
dominate the industry.

Answer 10

Penetration pricing

Question 11

examines the financial implications of corporate and business-level strategic options and identifies the best financial course of action.

Answer 11

Financial strategy

Question 12

It can also provide competitive
advantage through a lower cost of funds and a flexible ability to raise capital to support a business strategy

Answer 12

Financial strategy

Question 13

usually attempts to maximize the financial value of a firm.

Answer 13

Financial strategy

Question 14

what is (LBO)

Answer 14

leveraged buyout

Question 15

A very popular financial strategy

Answer 15

leveraged buyout (LBO).

Question 16

a company is acquired in a transaction financed largely by debt, usually
obtained from a third party, such as an insurance company or an investment banker.

Answer 16

leveraged buyout

Question 17

MBOs

Answer 17

Management BuyOuts

Question 18

A number of firms have been supporting the price of their stock by using ______________

Answer 18

reverse stock
splits

Question 19

deals with product and process innovation and improvement.

Answer 19

R&D strategy

Question 20

It also deals with
the appropriate mix of different types of R&D (basic, product, or process) and with the question of how new technology should be accessed—through internal development, external acquisition, or strategic alliances.

Answer 20

R&D strategy

Question 21

R&D choices

Answer 21

a technological leader and technological follower

Question 22

pioneering an innovation

Answer 22

technological leader

Question 23

imitating the products of competitors

Answer 23

technological follower

Question 24

Research and
Development
Strategy and
Competitive
Advantage: Technological Leadership : Cost Advantage

Answer 24

Pioneer the lowest-cost production
design.
Be the first down the learning curve.
Create low cost ways of performing
value activities.

Question 25

Research and
Development
Strategy and
Competitive
Advantage: Technological Followership : Cost Advantage

Answer 25

Lower the cost of the product or
value activities by learning from the
leader’s experience.
Avoid R & D costs through
imitation

Question 26

Research and
Development
Strategy and
Competitive
Advantage: Technological Leadership : Differentiation

Answer 26

Pioneer a unique product that increases
buyer value.
Innovate in other activities to increase
buyer value

Question 26

Research and
Development
Strategy and
Competitive
Advantage: Technological Followership : Differentiation

Answer 26

Adapt the product or delivery
system more closely to buyer needs
by learning from the leader’s
experience

Question 26

determines how and where a product or service is to be manufactured,
the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers.

Answer 26

Operations strategy

Question 27

is revolutionizing operations worldwide
and should continue to have a major impact as corporations strive to integrate diverse business activities by using computer assisted design and manufacturing (CAD/CAM) principles.

Answer 27

Advanced Manufacturing Technology (AMT)

Question 27

(AMT)

Answer 27

Advanced Manufacturing Technology

Question 28

an excellent method to produce a large number of low-cost, standard goods and services

Answer 28

mass-production system

Question 29

deals with obtaining the raw materials, parts, and supplies needed to perform the operations function

Answer 29

Purchasing strategy

Question 30

_________ reduces transaction costs and builds quality by having the purchaser and
supplier work together as partners rather than as adversaries

Answer 30

Sole sourcing

Question 31

deals with the flow of products into and out of the manufacturing process.

Answer 31

Logistics strategy

Question 32

Three trends related to this strategy are evident:

Answer 32

centralization, outsourcing, and the use of the
Internet

Question 33

(HRM) strategy

Answer 33

HUMAN RESOURCE MANAGEMENT strategy

Question 34

HRM strategy,

Answer 34

among other things, addresses the issue of whether a company or business unit
should hire a large number of low-skilled employees who receive low pay, perform repetitive
jobs, and are most likely quit after a short time (the McDonald’s restaurant strategy) or hire
skilled employees who receive relatively high pay and are cross-trained to participate in self managing work teams.

Question 35

to provide business units
with competitive advantage.

Answer 35

information technology strategy

Question 36

Corporations are increasingly using _________________ to provide business units
with competitive advantage

Answer 36

information technology strategy

Question 37

is purchasing from someone else a product or service that had been previously
provided internally

Answer 37

Outsourcing

Question 38

is the outsourcing of an activity or a function to a wholly owned company or
an independent provider in another country

Answer 38

Offshoring

Question 39

A study of 91 outsourcing efforts conducted by European and North American firms found
seven major errors that should be avoided

Answer 39

1. Outsourcing activities that should not be outsourced: Companies failed to keep core
   activities in-house.
2. Selecting the wrong vendor: Vendors were not trustworthy or lacked state-of-the-art
   processes.
3. Writing a poor contract: Companies failed to establish a balance of power in the
   relationship.
4. Overlooking personnel issues: Employees lost commitment to the firm.
5. Losing control over the outsourced activity: Qualified managers failed to manage the
   outsourced activity.70
6. Overlooking the hidden costs of outsourcing: Transaction costs overwhelmed other
   savings.
7. Failing to plan an exit strategy: Companies failed to build reversibility clauses into the
   contract

Question 40

Strategies to avoid

Answer 40

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

Question 41

is composed not only of the probability that the strategy will be effective
but also of the amount of assets the corporation must allocate to that strategy and the length of
time the assets will be unavailable for other uses.

Answer 41

Risk

Question 42

is a plan to bring stakeholders into agreement with a corporation’s actions.
Some of the most commonly used political strategies are constituency building, political action committee contributions, advocacy advertising, lobbying, and coalition building. Research reveals that large firms, those operating in concentrated industries, and firms that are
highly dependent upon government regulation are more politically active.

Answer 42

political strategy i

Question 43

is the evaluation of alternative strategies and selection of the best alternative.

Answer 43

Strategic choice

Question 44

When crafted correctly, an effective policy accomplishes three things:

Answer 44

It forces trade-offs between competing resource demands.
It tests the strategic soundness of a particular action.
It sets clear boundaries within which employees must operate while granting them freedom to experiment within those constraints.