Strategy Formulation

Question 1

to gain competitive advantage with an industry by working with other firms

Answer 1

Cooperative Strategies

Question 1

is the active cooperation of firms within
an industry to reduce output and raise prices in
order to get around the normal economic law of
supply and demand.

Answer 1

Collusion

Question 2

is a long term cooperative
arrangement between two or more independent
firms or business units that engage in business
activities for mutual economic gain.

Answer 2

Strategic Alliances

Question 3

2 Basic Concentration Strategies

Answer 3

Vertical Growth
Horizontal Growth

Question 4

it grows by making its own supplies and
/ by distributing its own products.

Answer 4

Vertical Growth

Question 5

seeking ownership or
increased control of firm’s suppliers.

Answer 5

Backward integration

Question 6

gaining ownership or increased control over distributors or retailers.

Answer 6

Forward integration

Question 7

a firm internally makes 100% of its key supplies and completely control its distributors.

Answer 7

Full Integration

Question 8

a firm internally produces less than half of its
own requirements and buys the rest from
outside suppliers.

Answer 8

Taper Integration (concurrent sourcing)

Question 9

a company does not make any of its key supplies but purchases most of its requirements from outside suppliers that are under its partial control.

Answer 9

Quasi-Integration

Question 10

are agreements between two firms to provide agreed upon goods and services to each other for a specified period of time.

Answer 10

Long Term Contracts

Question 11

expanding its operations into other geographic locations and / or by increasing the range of products & services
offered to current markets.

Answer 11

Horizontal Growth

Question 12

shipping goods produced in the company’s
home country to other countries for marketing.

Answer 12

Exporting

Question 13

the firm grants rights to another firm in the host country to produce and sell a product.

Answer 13

Licensing

Question 14

the firm grants rights to another company to open a retail store using the franchiser’s
name and operating system

Answer 14

Franchising

Question 15

between a foreign corporation & a domestic company is the most popular strategy used to enter a new country.

Answer 15

Joint Ventures

Question 16

purchasing another company.

Answer 16

Acquisition

Question 17

the company doesn’t want to purchase another company’s problems along with its assets and build its own manufacturing plant and distribution system.

Answer 17

Greenfield Development-

Question 18

process of combining the higher labor skills and technology available in developed countries with the lower cost.

Answer 18

Production Sharing

Question 19

are typically contracts for the construction of operating facilities in exchange for a fee.

Answer 19

Turnkey Operations

Question 20

corporation can use some of its personnel to assist a firm in a host country for a specified fee and period of time.

Answer 20

Management Contracts

Question 21

happens when opportunities for growth depleted.

Answer 21

Diversification Strategies

Question 22

by focusing on its distinctive competence & uses it for
diversification.

Answer 22

Concentric Diversification

Question 23

diversifying to an industry unrelated to its current one.

Answer 23

Conglomerate Diversification

Question 24

continuing its current activities without any significant change in direction.

Answer 24

STABILITY STRATEGIES

Question 25

an opportunity to rest before continuing a growth or retrenchment strategy.

Answer 25

Pause/ proceed with caution strategy

Question 26

is a decision to do nothing new.

Answer 26

No-change Strategy

Question 27

is a decision to do nothing new in a worsening situation but instead to act as though the company’s problems are only temporary.

Answer 27

Profit Strategy

Question 28

it is applicable when it has a weak competitive position in some or all of its product lines resulting in poor performance.

Answer 28

RETRENCHMENT STRATEGIES

Question 29

emphasizes the improvement of operational efficiency & its probably most appropriate when a corporation’s problems are pervasive but not yet critical.

Answer 29

Turn Around Strategy

Question 30

involves giving-up independence in exchange for security.

Answer 30

Captive Company Strategy

Question 31

involves giving-up the management of the firm to the courts in return for some settlement of the corporation’s obligations.

Answer 31

Bankruptcy/ Liquidation Strategy

Question 32

the corporation has multiple business lines & it chooses to sell off a division with low growth potential.

Answer 32

Sell out / Divestment Strategy

Question 33

top management views its product lines & business units as a series of investments from which it express a profitable return.

Answer 33

PORTFOLIO ANALYSIS

Question 34

ADVANTAGES OF PORTFOLIO ANALYSIS

Answer 34

It encourages top management to evaluate each of the corporation’s businesses individually & to set objectives and allocate resources for each. It stimulates the use of externally oriented data to supplement management’s judgment. It raises the issue of cash flow availability for use in expansion & growth.

Question 35

it views a corporation in terms of resources & capabilities that can be used to build business unit value as well as generate synergies across business units.

Answer 35

CORPORATE PARENTING

Question 36

Business Strategies 2 Generic Competitive Strategies by Michael Porter

Answer 36

Lower Cost Strategy Differentiation Strategy

Question 36

3 ANALYTICAL STEPS IN DEVELOPING A CORPORATE PARENTING STRATEGY

Answer 36

Examine each business unit in terms of its strategic factors. Examine each business unit in terms of areas in which performance can be improved. Analyze how well the parent corporation fits with the business unit.

Question 37

is the ability of a company or a business unit to design, produce and market a comparable product more efficiently than its competitors.

Answer 37

Lower Cost Strategy

Question 38

is the ability of a company to provide unique and superior value to the buyer in terms of product quality, special features or after sales service

Answer 38

Differentiation Strategy

Question 39

first mover/pioneer that establish a reputation as an industry leader.

Answer 39

Timing Tactic

Question 39

deals with where a company implement a strategy.

Answer 39

Market Location Tactics

Question 39

is a specific operating plan that details how a strategy is to be implemented in terms of when & where it is to be put into action.

Answer 39

Tactics

Question 40

TACTICS USED TO IMPLEMENT COMPETITIVE STRATEGIES

Answer 40

Timing Tactic Market Location Tactics

Question 41

METHODS USED TO ATTACK COMPETITOR’S POSITION

Answer 41

Frontal Assault Flacking Maneuver Bypass attack Encirclement

Question 42

The attacking firm goes head to head with its competitor.

Answer 42

Frontal Assault

Question 43

a firm may attack a part of the market where the competitor is weak.

Answer 43

Flacking Maneuver

Question 44

this tactic attempts to cut the market out from under the established defender by offering a new type of product that makes the competitor’s product unnecessary.

Answer 44

Bypass attack

Question 45

it occurs as an attacking company or unit encircles the competitor’s position in terms of products or market or both.

Answer 45

Encirclement

Question 46

It accepts small gains and avoid pushing the establish competitor to the point that it must respond/else lose face.

Answer 46

Guerilla warfare