Session 10

Question 1

Functional strategy

Answer 1

approach a functional area takes to achieve corporate and business unit objectives

Question 2

marketing strategy

Answer 2

deals with pricing, selling and distributing a product
-market development
-product development
-brand extension
-push strategy
-pull strategy
-skim pricing
-penetration pricing

Question 3

financial strategy

Answer 3

examines the financial implications of corporate and identifies the best
financial course of action
-leveraged buyout
-reverse stock split

Question 4

research and development strategy

Answer 4

deals with product and process innovation and improvement
-technological leader
-technological follower
-open innovation

Question 5

operations strategy

Answer 5

how and where a product or service is to be manufactured

Question 6

purchasing strategy

Answer 6

deals with obtaining raw materials, parts and supplies needed to perform the operations function
-multiple sourcing
-sole sourcing
-parallel sourcing

Question 7

logistics strategy

Answer 7

deals with the flow of products into and out of the manufacturing process
-centralisation
-outsourcing
-internet

Question 8

HRM strategy

Answer 8

issue of whether a company or business unit should hire a large number of low-skilled employees who
receive low pay

Question 9

information technology strategy

Answer 9

-follow-the-sun management
project team members living in one country can pass their work to team members in another country

Question 10

sourcing decision

Answer 10

-outsourcing
purchasing from someone else
-offshoring
outsourcing of an activity to an independent provider in another country

Question 11

disadvantages of outsourcing

Answer 11

-customer complais
-locked in long-term contracts
-lack of cost savings
-poor product quality

Question 12

errors in outsourcing

Answer 12

-outsourcing the wrong activities
-selecting wrong vendor
-writing poor contracts
-overlooking personnel issues
-lack of control

Question 13

proposed outsourcing matrix

Answer 13

-taper vertical integration (produce some internally; high competitive advantage and low value-added)
-full vertical integration (produce all internally; high competitive and high value-added)
-outsource completely (buy; low competitive and low value-added)
-outsource (purchase with long term contracts; low competitive and high value-added)

Question 14

management’s attitude toward risk

Answer 14

-real-options approach
when future is highly uncertain
-net present value
calculates the value of a project

Question 15

process of strategic choice

Answer 15

evaluation of alternative strategies and selection of the best alternative
1. mutual exclusivity
2. success
3. completeness
4. internal consistency

Question 16

avoiding consensus trap

Answer 16

-devil’s advocate
identify potential pitfalls and problems with a proposed alternative strategy
-dialectical inquiry
requires that two proposals using different assumptions be generated for each alternative strategy under consideration