Chapter 8--Strategy Formulation and Execution

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Research has shown that strategic thinking and planning positively a ect a irm!s per ormance and inancial success. "rue False

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Strategic thinking is more important -pro it $usinesses than or non-pro it organi%ations. "rue False

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"op managers and chie executives have the inal responsi$ility or strategic planning. "rue False

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Front-line managers have the inal responsi$ility or strategic planning. "rue False

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Competitive advantage re ers to the set o decisions and actions used to ormulate and implement strategies. "rue False

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"he interaction o *roduction and Sales working together to produce pro it greater than the total o $oth working separately is an example o synergy. "rue False

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Core competence is the plan o action that prescri$es resource allocation and other activities or dealing with the environment. "rue False

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"he com$ination o $ene its received and costs paid $y the customer re ers to value. "rue False

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Corporate-level strategy pertains to the organi%ation as a whole. "rue False

1- "he ./ow do we compete0. 1uestion concerns unctional-level strategy. . "rue False 11 "he three levels o strategy are $usiness2 corporate2 and glo$al. . "rue False 1

1# Strategic partnerships are the current trend2 rather than mergers and ac1uisitions. . "rue False 1& 3n a tur$ulent $usiness climate2 managers should ocus on strategic sta$ility rather than lexi$ility. . "rue False 1' Strategy implementation involves the planning and decision making that lead to the esta$lishment o . the irm!s goals. "rue False 1(. Scenario - SS.com Faced with rapidly growing $usiness2 Swi t Stocks2 3nc.2 a glo$al $rokerage company with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission rates. Swi t Stock is ollowing which strategy2 according to *orter2 through the .com su$sidiary0
a. $. c. d. e. Sta$ility Cost leadership Focus 4i erentiation Retrenchment

1) 55555 is the set o decisions and actions used to ormulate and implement strategies that will provide a . competitively superior it $etween the organi%ation and its environment so as to achieve organi%ational goals. 5555555555555555555555555555555555555555

1+ "he plan o action that prescri$es resource allocation and other activities or dealing with the . environment and helping the organi%ation attain its goals is called a6n7 55555. 5555555555555555555555555555555555555555 18 8 $usiness activity that an organi%ation does particularly well relative to its competition is known as . a6n7 55555. 5555555555555555555555555555555555555555 1, For the social networking site Face$ook2 technological know-how and an aggressive and innovative . culture are signi icant strengths to include in its S9:" analysis. "rue False #- "hreats are characteristics o the internal environment that may prevent the organi%ation rom . achieving its strategic goals. "rue False #1 "he task environment sectors are the most relevant to strategic $ehavior and include the $ehavior o . competitors2 customers2 suppliers2 and the la$or supply. "rue False ## :pportunities are characteristics o the internal environment that have the potential to help the . organi%ation achieve or exceed its strategic goals. "rue False #& "he mix o $usiness units and product lines that it together in a logical way to provide synergy and . competitive advantage or the corporation pertains to port olio strategy. "rue False #' 8n S;< stands or Star ;usiness <nit. . "rue False #( "he ;C= 6;oston Consulting =roup7 matrix evaluates S;<s with respect to their $usiness growth rate . and geographical location. "rue False #) "he 1uestion mark exists in a new2 rapidly growing industry $ut has only a small market share2 . according to the ;C= >atrix. "rue False #+ 8ccording to the ;C= >atrix2 the cash cow has a large market share in a rapidly growing industry. . "rue False &

#8 "he dog2 according to the ;C= >atrix2 is a poor per ormer. . "rue False #, <nrelated diversi ication occurs when an organi%ation expands into a totally new line o $usiness. . "rue False &- 4iversi ication is a strategy o moving into new lines o $usiness. . "rue False &1 ?ertical integration means a irm expands into $usinesses that either produce the supplies needed to . make products or that distri$ute and sell those products to customers. "rue False &# 4i erentiation2 cost leadership2 and ocus are three o *orter!s competitive strategies. . "rue False && Cost leadership is a type o competitive strategy with which the organi%ation seeks to distinguish its . products or services rom that o competitors. "rue False &' :rgani%ation!s with a ocus strategy concentrate on a speci ic regional market or $uyer group. . "rue False &( 8 director o inance would most likely $e interested in executing unctional level strategies. . "rue False &) ;usiness-level strategies include all o the ma@or unctions2 including inance2 research and . development2 marketing2 and manu acturing. "rue False &+ "he world-wide standardi%ation o product design and advertising re ers to glo$ali%ation. . "rue False &8 "he transnational strategy handles markets independently or each country. . "rue False &, 9ith a multidomestic strategy2 a company will achieve the glo$ali%ation or standardi%ation o . marketing and production approaches. "rue False

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'- 8 transnational strategy seeks to achieve $oth glo$al integration and national responsiveness. . "rue False '1 8 transnational strategy com$ines degrees o $oth glo$al standardi%ation and national responsiveness. . "rue False '# Communication is one o the most important methods or e ective strategy execution. . "rue False '& For success ul execution2 alignment o everyone in the organi%ation must occur. . "rue False '' 3n order to protect an organi%ationAs mission2 the human resource unctions are removed rom strategic . goals. "rue False '( 3n strategy implementation2 leadership is the a$ility to in luence people to adopt the new $ehaviors . needed. "rue False '). "o remain competitive2 companies should develop strategies that ocus on core competencies2 providing synergy2 and creating value or 55555. 8. custom ers ;. suppliers C stockholders . 4 employees . E $oard . mem$ers

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"he set o decisions and actions used to ormulate and implement strategies that will provide a competitively superior it $etween the organi%ation and its environment so as to achieve organi%ational goals is known asB 8. ; . C . 4 . strategy ormulati on. strategic planning. strategic management. strategy implementation.

E strategy . evaluation. '8. "he plan o action that prescri$es resource allocation and other activities or dealing with the environment and helping the organi%ation attain its goals is known as a6n7 55555. 8. ; . C . 4 . E . ',. go al o$@ect ive missi on visio n strate gy

9hich o the ollowing is a $usiness activity that an organi%ation does especially well relative to its competition0 8. Strate gy ;. Synergy C. Cash cow 4 Core . competence E >ultidomes . tic

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"he condition that exists when the organi%ation!s parts interact to produce a @oint e ect that is greater than the sum o the parts acting alone is known asB 8. ;. C. 4 . E . core competenc e. synergy. value creation. $usiness-level strategy. multidomestic strategy.

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9hen properly managed2 55555 can create additional value with existing resources2 providing a $ig $oost to the $ottom line. 8. synergy ;. competitors C. government contacts 4. command structure E cooperation among . customers

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55555 can $e de ined as the com$ination o $ene its received and costs paid $y the customer. 8. :rgani% ational $ene its ;. ?alue C Cost-$ene it . diversity 4. Synergy E Core . competence

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8 ter Sunshine Systems merged with R"4 Enterprises2 company executives noticed that due to increased employee colla$oration $etween the two units2 costs were down and revenues increased within $oth areas. "his is an example o what $usiness phenomenon0 8. Strateg y executi on *ort olio strategy Core competency Synergy 4elivering value

; . C . 4. E . ('.

9hen 8"C" decided to $uy >edia :ne2 a ca$le company2 it was pursuing a6n7 55555 strategy. 8. ; . C . 4 . E . uncti onallevel internal growth multidomestic corporatelevel $usinesslevel

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55555 level strategy pertains to the ma@or unctional departments within the $usiness unit. 8. ; . C . 4 . E . :per ation al Corpora te Dationa l ;usines s Function al

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9hen *hilip->orris2 the to$acco giant2 $ought Era t2 3nc.2 it was pursuing a 55555. 8. ; . C . 4 . E . corporatelevel strategy $usiness-level strategy unctional-level strategy multidomestic strategy retrenchment strategy

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9hich o the ollowing pertains to the organi%ation as a whole0 8. ;usinesslevel strategy ; Functional-level . strategy C Corporate-level strategy . 4 :perational-level . strategy E Competitive-level . strategy

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Sears! decision to sell o much o its inancial services division is an example o aB 8. corpora te-level strategy . ; $usiness-level . strategy. C unctional-level . strategy. 4 . E . growth strategy. sta$ility strategy.

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8 corporate-level strategy is concerned with the 1uestionB 8. what $usiness are we in0 ;. how do we compete0 C how do we support our chosen . strategy0 4 where do we market our . products0 E should we promote rom . within0

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9hen Coca-Cola introduced Surge2 a new citrus so t-drink2 what type o strategy was $eing pursued0 8. ; . C . 4 . E . Functional -level strategy >ulti-domestic strategy Corporate-level strategy Retrenchment strategy ;usiness-level strategy

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Ford!s decision to completely redesign its Ford "aurus can $e classi ied as aB 8. corpora te level strategy . ; $usiness level . strategy. C unctional level . strategy. 4 retrenchment . strategy. E sta$ility . strategy.

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Fanessa is the CE: o a privately-held so tware company. 3n de ining corporate-level strategies2 which o the ollowing 1uestions would she most likely $e concerned with0 8. /ow do we compete0 ;. 9hat $usiness are we in0 C. /ow does marketing support the $usiness0 4. /ow can we maximi%e pro its0 E /ow can we make manu acturing processes more . e icient0

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4ecisions regarding the proper amount o advertising or a particular good or service are related toB 8. ; . C . 4 . E . corporatelevel strategies. unctional-level strategies. tactical-level strategies. $usiness-level strategies. retrenchment strategies.

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9hich o these 1uestions is central to a unctionallevel strategy0 8. 9hat $usiness are we in0 ;. /ow do we compete0 C /ow do we support our . chosen strategy0 4 9hat $usiness do we $uy0 . E 9here to market our . products0

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9hich o the ollowing lists the strategic management process in proper order0 8. ; . C . 4 . E .

Formulate s S9:" anal Execute stra *er orm S9:" analysisG Evaluate current missionHgoalsG For 4e ine new missionHgoals. Evaluate current missionHgoalsG 4e ine new missionHgoalsG Fo *er orm S9:" analysis . Evaluate current missionHgoalsG *er orm S9:" analysisG 4e strategyG Execute strategy. 4e ine new missionHgoalsG Execute strategyG Formulate strate *er orm S9:" analysis.

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55555 re ers to the use o managerial tools to direct resources toward the achievement o strategic goals. 8. ; . C . 4 . E . Strategy ormula tion Strategy coordination Strategy execution Strategy control Strategy planning

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9hich o the ollowing re ers to the planning and decision making that lead to the esta$lishment o the organi%ation!s goals and o a speci ic strategic plan0 8. Str ate gy or m ula tio n ;Strateg y imple mentat ion CStrateg y coordi nation 4Strate gy contro l E S9 . :"

)8.

Fred has $een assigned to conduct a S9:" analysis or his organi%ation2 8cme2 3nc. 8s part o this assignment2 Fred willB 8. conduct an external wage survey. search or the strengths2 weaknesses2 opportunities2 and threats that impact his irm. C choose a grand strategy or his irm. 4 do a costH$ene it . analysis. E develop a . mission. 1&

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"echni1ues used to monitor external environments includeB 8. hirin g scan ning orga ni%at ions. hiring the competitive intelligence pro essiona ls. governme nt reports. 4 pro ession al @ournals. E all o . these.

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Classy Clay has extremely creative employees who2 in the opinion o the organi%ation2 keep the company ahead o the competition. "he creativity o these employees would $e classi ied as a6n7 55555. 8. intern al weak ness ; external . opportunity C . 4 . E . external strength internal strength neutral actor

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*aramount2 3nc. is particularly concerned a$out pending legislation in Congress that would urther regulate their organi%ation. "his legislation would $e classi ied as a6n7 55555. 8. external opportuni ty ; internal strength . C. external threat 4 external . weakness E congressional . chaos

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Sherri has $een asked to participate on a crossunctional task orce that is charged with per orming an audit checklist or her advertising irm. "he task orce will analy%e organi%ational strengths and weaknesses as they apply to the irm. SherriAs task is to analy%e management 1uality2 sta 1uality2 degree o centrali%ation2 and organi%ational charts. "his level o analysis pertains to which area o the audit0 8. >an age ment and orga ni%at ion >arketi ng /uman resources

; . C .

4Research and developm ent E *roducti . on

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9here does the in ormation a$out opportunities and threats comes rom0 8. 8n analysis o the organi%ation!s internal environment ; 8 department $y department . study o the organi%ation C . 4. E . Scanning the external environments Employee grievances Financial ratios o the organi%ation

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9hat type o organi%ational unit has a uni1ue $usiness mission2 product line2 competitors2 and markets relative to other units in the same corporation0 8. *roduct unit ;. Functional unit C. Strategic $usiness unit 4. :perational unit E ;usiness consulting group . unit

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/ow $usiness units and product lines it together in a logical way is the essence o B 8. ; . C . 4 . E . $usinesslevel strategy. port olio strategy. competitive strategy. inancial strategy. unctional strategy.

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=atekeep <tilities is a su$sidiary o =9 Enterprises. =atekeep has a mission and product line that is uni1ue rom =9. =atekeepAs competitors are also very di erent rom those o its parent2 and the su$sidiary markets to a very di erent group o customers. 8s such2 =atekeep can $e descri$ed as a6n7 55555. 8. product unit ;. unctional unit C. operational unit 4 strategic $usiness unit . E $oston consulting group . unit

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"he ;C= matrix organi%es along which o the ollowing dimensions0 8. >arket share and pro it ; Sales and . market share C;usiness growth rate and market share 4;usiness growth rate and pro it E Sales and . pro its

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4ou$le Click2 3nc. has a num$er o strategic $usiness units. "heir hand-held computer unit has a large market share in this rapidly growing industry. "heir hand-held computer $usiness would $e classi ied asB 8. a dog. ;. a star. C a 1uestion mark. . 4. a cash cow. E stuck in the . middle.

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9hich o these is true a$out the cash cow0 8. ; . C . 4 . E . 3t generates tremendous pro its in a rapidly growing industry. 3t has a small market share in a rapidly growing industry. 3t has a small market share in a slow growth industry. 3t has a large market share in a slow growth industry. 3t is generally a dead $usiness that should $e divested.

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"he star has aB 8. large market share in a rapidly growing industry. ; large market share in a slow growth industry. . C small market share in a rapidly growing . industry. 4 small share o a slow growth market. . E moderate market share in a slow growth . industry.

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9hich o the ollowing port olio categories is made up o poor per ormers who command only a small share o a slow growth market0 8 S . t a r ;Ca sh co w CIu esti on ma rk 4 4 . o g E C . a t 18

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"he 1uestion mark has aB 8. large market share in a rapidly growing industry. ; large market share in a slow growth industry. . C small market share in a rapidly growing . industry. 4 small share o a slow growth market. . E moderate market share in a slow growth . industry.

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9hich o these is true a$out the dog division0 8. 3t has a large market share in a rapidly growing industry. ; 3t has a large market share in a slow growth industry. . C 3t has a small market share in a rapidly growing industry. . 4 3t has a small share o a slow growth market. . E 3t has a moderate market share in a rapidly growing . industry.

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=illette operates numerous strategic $usiness units. >ost o its units in the personal care division have low market share $ut high $usiness growth. "hese units are classi ied as 55555. 8. dogs ; 1uestion . marks C. stars 4 cash cows . E none o . these

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8ccording to the ;C= >atrix2 which o the ollowing exists in a mature2 slow-growth industry2 $ut is a dominant $usiness in the industry2 with a large market share0 8. Iue stio n mar k 8steris k 4og Star Cash cow

; . C. 4. E . 8).

9hen an organi%ation expands into a totally new line o $usiness2 it is implementing a strategy o B 8. ; . C . 4 . E . Related diversi icat ion <nrelated diversi ication Cross- unctional diversi ication *roduct line diversi ication 3ndustry diversi ication

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Semway2 a regional $ank2 recently announced that it would soon $egin o ering inancial planning services. "his is an example o which o these0 8. ; . C . 4 . E . Related diversi icat ion <nrelated diversi ication Cross- unctional diversi ication *roduct line diversi ication 3ndustry diversi ication

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"he purpose o 55555 is to expand the irmAs $usiness operations to produce new kinds o valua$le products and services0 8. ; . C. 4. E . retrenc hment diversi icatio n li1uidation cash cow internal growth

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9hich o the ollowing strategies re ers to moving into a new $usiness that is related to the company!s existing $usiness activities0 8. /ori%onta l integratio n ?ertical integration <nrelated diversi ication Related diversi ication Strategic partnership

; . C . 4 . E . ,-.

8ll o the ollowing are *orter!s competitive orces exceptB 8. ; . C . di erentia tion. $argaining power o $uyers. $argaining power o suppliers.

4 threat o su$stitute . products. E potential new . entrants.

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9hich o the ollowing is D:" one o *orter!s competitive orces0 8. ; . C . 4 . E . *otential new entrants ;argaining power o suppliers ;argaining power o stockholders ;argaining power o customers Rivalry among competitors

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9hich o the ollowing strategies involve an attempt to distinguish the irm!s products or services rom others in the industry0 8. Cost leade rship ; 4i erenti . ation C. Focus 4 3nternal . growth E Ji1uidati . on

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9hich strategy can $e pro ita$le or an organi%ation when customers are loyal and willing to pay high prices0 8. Focu s ; =lo$ali%a . tion C :verall cost leadership 4 4i erenti . ation E Ji1uidati . on

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"he 55555 strategy involves seeking e icient acilities2 cutting costs and using tight cost controls to $e more e icient than competitors. 8. cost lead ershi p ; di erenti . ation C. ocus 4 internal . growth E li1uidati . on

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"he human resource department at *aula!s *owerwheels is implementing a num$er o unctional level strategies. "hese strategies include ocusing on ways to retain and develop a sta$le work orce and ways to improve e iciency in the organi%ation. "hese unctional-level strategies are consistent with which o the ollowing strategies0 8. Cost lead ershi p ; 4i erenti . ation CDew product developme nt 4Dew market developme nt E 4ivestitu . re

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9ith a6n7 55555 strategy2 the organi%ation concentrates on a speci ic regional market or $uyer group. 8. cost lead ershi p ; di erenti . ation C. ocus 4 internal . growth E li1uidati . on

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>ingles2 3nc. concentrates its e orts on its target market o 18 to #( year olds. 3t is using a6n7 55555 strategy. 8. ; . C . 4 . E . ocus di erentiation cost leadership multidomestic universal strategy

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=eneral *roducts 3nc. is a small clothing designer and manu acturer located in the <nited States. 8 vast ma@ority o the companyAs revenues comes rom <.S. sales2 although a$out ten percent o the companyAs revenue come rom sales to Canada. =eneral *roducts 3nc. can $est $e descri$ed as using which glo$al corporate strategy0 8. =lo$ali% ation strategy ; >ultidomestic . strategy C . 4 . E . Export strategy "ransnational strategy 4omestic strategy

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FJK 3ndustries is a glo$al conglomerate company head1uartered in the <nited States that does $usiness in over i ty countries. "he company seeks to $alance glo$al e iciencies and local responsiveness $y hiring locally as well as rom home. 3t can $est $e descri$ed as using which glo$al corporate strategy0 8. =lo$ali% ation strategy ; >ultidomestic . strategy C . 4 . E . Export strategy "ransnational strategy 4omestic strategy

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3 8;C 3nternational has standardi%ed its product line throughout the world it is pursuing aB 8. ; . C . 4 . E . multido mestic strategy. retrenchment strategy. diversity strategy. glo$ali%ation strategy. li1uidation strategy.

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"he assumption that a single glo$al market exists would lead to aB 8. ; . C . 4 . E . glo$ali%a tion strategy. multidomestic strategy. diversity strategy. domestic strategy. li1uidation strategy.

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9hich o the ollowing strategies would $e appropriate when the need or $oth national responsiveness and glo$al integration is low0 8. =l o$ ali %at io n ; >ulti dome stic C Exp . ort 4 "rans nation al E 3mp . ort #)

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55555 re ers to the modi ication o product design and advertising strategies to suit the speci ic needs o individual countries. 8. ;. C . 4 . E . 4omestic strategy =lo$al strategy "ransnational strategy >ultidomestic strategy >arket design strategy

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9hich o the ollowing re ers to a strategy that com$ines glo$al coordination to attain e iciency with lexi$ility to meet speci ic needs in various countries0 8. ;. C . 4 . E . 4omestic strategy =lo$al strategy "ransnational strategy >ultidomestic strategy Region design strategy

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Some people argue that 55555 is the most di icult and most important part o strategic management. 8. ; . C . 4 . E . S9:" analysis strategic ormation strategic execution strategic analysis strategy evaluation

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*ersuasion2 motivation2 and changes in cultures and values are examples o which o the dimensions used to implement strategy0 8. Jeade rship ; Structural . design C /uman . resources 43n ormation and control systems E Compensati . on

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9hich o the ollowing is D:" one o the tools used or putting strategy into action0 8. ;. C. 4. E . ?isi$le leadership 4iversi ication /uman Resources Communication Clear roles and accounta$ility

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*eople need to understand how their individual actions can contri$ute to achieving an organi%ational strategy. "his can $e accomplished $y delegating authority2 creating teams2 and de ining roles. "hese actions are part o which tool or putting strategy into action0 8. ;. C. 4 . E . ?isi$le leadership Candid communication /uman resources Clear roles and accounta$ility ;argaining power o employees

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"he 55555 unction recruits selects2 trains2 trans ers2 promotes2 and lays o employees to achieve strategic goals. 8. product ion ;. leadership C in ormation and control systems 4 structural . design E human . resource

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Scenario - Theresa Teutul "heresa "eutul was an executive with 4igital 3ndustries2 a leading manu acturer o color televisions. She recogni%ed that the color television market in the late 1,+-!s was acing signi icant challenges. 8 ter two decades o highly success ul development and marketing2 the sales o color televisions had slowed and replacing older color television sets largely created her market. <sing the logic o the ;C= grid2 "heresa should recogni%e that her strategic $usiness unit was in which 1uadrant0
a. $. c. d. e. Star Cash Cow Iuestion >ark 4og Done o these

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Scenario - Theresa Teutul "heresa "eutul was an executive with 4igital 3ndustries2 a leading manu acturer o color televisions. She recogni%ed that the color television market in the late 1,+-!s was acing signi icant challenges. 8 ter two decades o highly success ul development and marketing2 the sales o color televisions had slowed and replacing older color television sets largely created her market. "he strategy that the ;C= matrix suggests that "heresa should take or this S;< isB
a. $. c. d. e.

invest and grow li1uidate while still pro ita$le. ask her astrologer or advice. keep the S;< healthy and use its excess earnings to invest in other S;<!s. divestiture.

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Scenario - SS.com Faced with rapidly growing $usiness2 Swi t Stocks2 3nc.2 a glo$al $rokerage company with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission rates. Swi t Stock!s traditional $rokerage $usiness could $e classi ied as a 55555.
a. $. c. d. e. cash cow dog star 1uestion mark stuck in the middle $usiness

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11&.

Scenario - SS.com Faced with rapidly growing $usiness2 Swi t Stocks2 3nc.2 a glo$al $rokerage company with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission rates. SS.com su$sidiary or Swi t Stocks can $e classi ied as a 55555.
a. $. c. d. e. cash cow dog star 1uestion mark stuck in the middle $usiness

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Scenario - SS.com Faced with rapidly growing $usiness2 Swi t Stocks2 3nc.2 a glo$al $rokerage company with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share $ut it aces a very high $usiness growth rate. 3n the $rokerage industry the competition is ierce and all players are cutting their on-line commission rates. 3 Swi t Stock!s traditional $rokerage $usiness were to ace a declining $usiness growth2 it may need to $e reclassi ied as a 55555.
a. $. c. d. e. cash cow dog star 1uestion mark dead $usiness

11 9hen organi%ational parts interact to produce a @oint e ect that is greater than the sum o the parts (. acting alone2 55555 occurs. 5555555555555555555555555555555555555555 11 "he 1uestion What business are we in? concerns the 55555 strategy. ). 5555555555555555555555555555555555555555 11 "he 1uestion How do we compete? concerns 55555 strategy. +. 5555555555555555555555555555555555555555 11 "he 1uestion How do we support the business-level competitive strategy? concerns 55555 strategy. 8. 5555555555555555555555555555555555555555 11 55555 includes the planning and decision making that lead to the esta$lishment o the irm!s goals and ,. the development o a speci ic strategic plan. 5555555555555555555555555555555555555555 &&

1# "he use o managerial and organi%ational tools to direct resources toward accomplishing strategic -. results is known as 55555. 5555555555555555555555555555555555555555 1# 55555 is a type o corporate-level strategy that pertains to the organi%ation!s mix o strategic $usiness 1. units. 5555555555555555555555555555555555555555 1# 3n the ;C= matrix2 the dog has 55555 market share and 55555 $usiness growth rate. #. 5555555555555555555555555555555555555555 1# 3n the ;C= matrix2 the star has a6n7 55555 market share in a rapidly growing industry. &. 5555555555555555555555555555555555555555 1# "he ac1uisition o a $usiness that is related to current product lines or that takes the corporation into '. new areas is called 55555. 5555555555555555555555555555555555555555 1# "he 55555 strategy involves an attempt to distinguish the irm!s products or services rom others in the (. industry. 5555555555555555555555555555555555555555 1# 9ith a6n7 55555 strategy2 the organi%ation aggressively seeks e icient acilities2 pursues cost ). reductions2 and uses tight cost controls to produce products more e iciently than competitors. 5555555555555555555555555555555555555555 1# 9ith a6n7 55555 strategy2 the organi%ation concentrates on a speci ic regional market or $uyer group. +. 5555555555555555555555555555555555555555 1# "he standardi%ation o product design and advertising strategies throughout the world is called 55555. 8. 5555555555555555555555555555555555555555 1# 9hen an organi%ation chooses a6n7 55555 strategy2 it means that $usiness decisions such as product ,. design are made on a country-$y-country $asis. 5555555555555555555555555555555555555555 1& 86n7 55555 strategy seeks to achieve $oth glo$al integration and national responsiveness. -. 5555555555555555555555555555555555555555

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1& "he a$ility to in luence people to adopt the new $ehaviors needed or strategy implementation is called 1. 55555. 5555555555555555555555555555555555555555 1& 3t is argued that 55555 is the most di icult and most important part o strategic management. #. 5555555555555555555555555555555555555555 1& Jist the our components o a S9:" analysis. &.

1& Jist the three glo$al corporate strategies. '.

1& 3n order or companies to remain competitive2 their strategies must ocus on three things. 4escri$e (. these three ocuses.

1& Compare and contrast the three levels o strategy in an organi%ation. ).

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1& 4i erentiate $etween strategy ormulation and strategy implementation. +.

1& ;rie ly descri$e the ;oston Consulting =roup matrix2 including its dimensions2 1uadrants2 and 8. strategic recommendations.

1& ;rie ly discuss *orter!s three competitive strategies. ,.

1' Dame and descri$e the three types o glo$al strategies. -.

1' ;rie ly descri$e the tools or putting strategy into action. 1.

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Chapter 8--Strategy Formulation and Execution Eey

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1&&. 8 S9:" includes strengths2 weaknesses2 opportunities2 and threats. 1&'. =lo$ali%ation strategy2 transnational strategy2 and multidomestic strategy. 1&(. "he three ocuses are core competencies2 synergy2 and value creation. Core competence is something the organi%ation does very well in comparison to its competitors. 8 core competence represents a competitive advantage $ecause the company ac1uires expertise that competitors do not have. Synergy occurs when organi%ational parts interact to produce a @oint e ect that is greater than the sum o the parts acting alone. "he organi%ation may attain a special advantage with respect to cost2 market power2 technology2 or management skill. ?alue creation should $e at the heart o strategy. ?alue is the com$ination o $ene its received and costs paid $y the customer. >anagers help their companies create value $y devising strategies that exploit core competencies and attain synergy. 1&). "here are three levels o strategy in an organi%ationB corporate-level2 $usiness-level2 and unctional-level. Corporate-level strategies involve the whole organi%ation. "his level o strategy is most concerned with answering the 1uestionB .9hat $usiness are we in0. "hese types o decisions o ten involve issues o growth2 retrenchment2 andHor @oint ventures. ;usiness-level strategies are concerned with the 1uestion ./ow do we compete0. "hey ocus on how the individual $usiness unit competes within its industry. "hey may involve such issues as advertising2 product changes2 and newproduct development. Functional-level strategies are concerned with the 1uestion o ./ow do we support the $usiness-level strategy0. 3nvolving all o the organi%ation!s ma@or unctions2 these types o strategies link the unctional unit with the strategic $usiness unit. 1&+. Strategy ormulation includes the planning and decision making that lead to the esta$lishment o the irm!s goals and the development o a speci ic strategic plan. 8lso2 it includes assessing the external environment and internal pro$lems and integrating the results into goals and strategies. Strategy implementation uses managerial and organi%ational tools to direct resources toward accomplishing strategic results. 1&8. "he two dimensions o the matrix are $usiness growth rate and market share. 9hen growth is high and share is high2 the S;< has the $est situation and is called a star. 9hen growth is low and share is high2 the S;< is known as a cash cow. 9hen growth is high $ut share is low2 the S;< is a 1uestion mark. 3n the ourth 1uadrant2 growth and share are $oth low. "his is the worst situation2 and the S;< is a dog. "he strategic recommendations areB 617 invest in starsG 6#7 milk the cash cowG 6&7 invest in 1uestion marks to create stars or divest the 1uestion marksG and 6'7 divest the dogs. 1&,. *orter identi ied three competitive strategiesB di erentiation2 cost leadership2 and ocus. 8 di erentiation strategy involves the organi%ation attempting to distinguish its product or service rom those o its competition. 8dvertising2 product eatures2 and customer service are some o the ways an organi%ation can success ully di erentiate. 8 cost leadership strategy is $ased on the organi%ation achieving a low-cost position relative to the competition. 8 company may achieve a cost leadership through the operation o e icient acilities2 cutting costs2 or maintaining tight cost control. 9hen a company uses a di erentiation or a cost leadership strategy in a particular market or $uyer group2 they are employing a ocus strategy. "his strategy allows the organi%ation to concentrate on a narrow market niche. 1'-. "he three types o glo$al strategies are glo$ali%ation2 multidomestic2 and transnational. =lo$ali%ation means that a company!s product design and advertising strategies are standardi%ed throughout the world. "his approach is $ased on the assumption that a single glo$al market exists or many consumer and industrial products. "he theory is that people everywhere want to $uy the same products and live the same way. >ultidomestic strategies $elieve that competition in each country is handled independently o industry competition in other countries. "hus2 marketing2 advertising2 and product design is encouraged to $e modi ied and adapted to the speci ic needs o each country the company is present in. >any companies re@ect the idea o a single glo$al market. "ransnational strategies seek to achieve $oth glo$al integration and national responsiveness. 8 true transnational strategy is di icult to achieve2 $ecause one goal re1uires close glo$al coordination while the other goal re1uired local lexi$ility. /owever2 many industries are inding that2 although increased competition means they must achieve glo$al e iciency2 growing pressure to meet local needs demands national responsiveness. 1'1. "he tools or putting strategy into action include visi$le leadership2 clear roles and accounta$ility2 human resources2 and candid communication. L ?isi$le leadership is used to motivate people2 shape culture and values2 and model desired $ehaviors L Clear roles and accounta$ility include delegating authority and responsi$ility2 creating teams2 and de ining roles L /uman resource tools include recruiting employees2 providing training2 and managing trans ers and promotions L Candid communication is used to open lines o communication and to encourage honesty and de$ate

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