Mgnted32 Exam Chapter 8,9

Question 1

is an analysis of the Strengths and Weaknesses present internally in the organisation, coupled with
the Opportunities and Threats that the organisation faces externally.

Answer 1

SWOT

Question 2

There are three main generic options:

Answer 2

cost leadership, differentiation and focus

Question 3

are the three
basic strategies of cost leadership, differentiation and focus (sometimes called niche) open to any
business

Answer 3

Generic strategies

Question 4

has built and maintains plant, equipment, labour costs and
working practices that deliver the lowest costs in that industry

Answer 4

Low-cost leadership

Question 5

occurs when the products of an organisation meet the needs of some customers in
the market place better than others

Answer 5

Differentiation

Question 6

is the identification of specific groups who respond differently from other
groups to competitive strategies.

Answer 6

Market segmentation

Question 7

occurs when the organisation focuses on a specific niche in the market place
and develops its competitive advantage by offering products especially developed for that niche.

Answer 7

focus strategy

Question 8

involves targeting a small segment of the market. It may operate by using a low-cost focus
or differentiated focus approach.

Answer 8

Focus

Question 9

identifies the product and market options available to the organisation,
including the possibility of withdrawal and movement into unrelated markets

Answer 9

market options matrix

Question 10

A manufacturer becomes involved in the activities of the organisation’s outputs
such as distribution, transport, logistics.

Answer 10

Forward integration

Question 11

The organisation extends its activities to those of its inputs such as its suppliers
of raw materials, plant and machinery

Answer 11

Backward integration

Question 12

The organisation moves into areas immediately related to its existing activities
because either they compete or they are complementary

Answer 12

Horizontal integration

Question 13

is the main reason given for such activities. It means essentially that the whole is worth
more than the sum of the parts: the value to be generated from owning and controlling more of the
value chain is greater because the various elements support each other. This concept is relatively easy
to understand but rather more diffi cult to analyse precisely.

Answer 13

Synergy

Question 14

explores in a structured way the methods by which the market
opportunities associated with strategy options might be achieved.

Answer 14

expansion method matrix

Question 15

are similar to acquisitions in the sense of two companies combining.

Answer 15

Merger

Question 16

is the formation of a company whose shares are owned jointly by two parent companies.
It usually shares some of the assets and skills of both parents.

Answer 16

Joint venture

Question 17

is a form of licensing agreement in which the contractor provides the licensee with a
preformed package of activity.

Answer 17

Franchise

Question 18

are defined as a group of skills and technologies that enable an organisation to
provide a particular benefit to customers.

Answer 18

Core competencies

Question 19

are the extra cost savings that occur when higher volume production allows unit
costs to be reduced.

Answer 19

Economies of scale

Question 20

are the extra cost savings that are available as a result of separate products
sharing some facilities.

Answer 20

Economies of scope

Question 20

is the relationship between the unit costs of a product and the total units
ever produced of that product, plotted in graphical form, with the units being cumulative from the
first day of production.

Answer 20

experience curve

Question 21

is the level of plant in operation at any time, usually expressed as a percentage of total production capacity of that plant

Answer 21

Capacity utilisation

Question 22

means the strategic decisions that lead companies to diversify from one business into other business areas, either related or unrelated.

Second, means the role of the corporate headquarters in directing and influencing strategy
across a multi-product group of companies.

Answer 22

corporate-level strategy

Question 23

are those trading in more than one market, each with its
relatively autonomous and discrete operating companies: such operations are diversified .

Answer 23

multi-business companies

Question 24

occurs when an organisation moves away from a single product or
dominant business area into other business areas, which may or may not be related to the
original business.

Answer 24

Diversification strategy

Question 25

the different companies within the group may have different
products or services but have some form of close affinity such as common customers, common
suppliers or common overheads.

Answer 25

close-related diversification

Question 25

although the diff erent companies in the group will have quite different products or services, possibly using wholly diff erent technologies, they will share the same
underpinning core competencies or some other area of technology or service that would benefi t
from co-ordination by a central headquarters.

Answer 25

distant-related diversification

Question 25

the diff erent companies in the group have little in common with regard
to products, customers or technologies. However, they benefi t from the resources of the headquarters with regard to the availability of lower-cost fi nance, quality of management direction and
other related matters

Answer 25

unrelated diversification

Question 25

have a range of products serving many customers in diff erent markets: such
companies have a diversifi ed portfolio of products

Answer 25

Diversified companies

Question 26

products with high relative market shares operating in high-growth markets.

Answer 26

stars

Question 26

the range of products possessed by an organisation (its portfolio) against two criteria: relative market share and market growth.

Answer 26

portfolio
matrix analyses

Question 26

product areas that have high relative
market shares but exist in low-growth markets.

Answer 26

cash cows

Question 27

products with low relative market shares in high-growth markets.

Answer 27

Problem children

Question 27

products that have low relative market shares
in low-growth businesses

Answer 27

dogs

Question 27

is undertaken using only two variables: relative market share and market
growth. It is clearly a weakness that other variables are not included.

Answer 27

BCG portfolio analysis

Question 27

the corporate headquarters of a group of subsidiaries whose areas of business
may be unrelated to each other.

Answer 27

parenting concerns

Question 27

provides a means of analysing a company that has a range of products.

Answer 27

portfolio analysis

Question 27

involve the headquarters in making
the fi nal decision with regard to acquisitions and other major restructuring

Answer 27

HQ transaction decisions

Question 28

s is to add value to the subsidiaries that are associated with
the organisation, otherwise the cost of running a corporate headquarters cannot be justifi ed.

Answer 28

corporate headquarters

Question 29

occurs when a company moves away from a single product into other business
areas that may or may not be related to the original business. There are three levels of diversifi cation in such companies: close-related, distant-related and unrelated. Each is important in assessing the benefi ts from operating a corporate-level strategy.

Answer 29

Diversification