10 Questions
What was the outcome of the alliance between Commerce One and SAP in 1999?
It improved Commerce One's position in the e-marketplace, but failed to deliver expected results.
Why did Toyota's strategy for marketing its sedans in Japan become ineffective?
The company's customer base grew younger and found the image unattractive.
What is the primary focus of strategic decisions in a firm?
Forecasting and projecting future market trends and customer needs.
What is the key characteristic of strategic issues in a firm?
They are long-term and have multifunctional or multibusiness consequences.
What is the primary goal of strategy formulation in a firm?
To develop a competitive advantage and gain market share.
Why is it important for a firm to take a proactive stance towards change?
To maintain market share and profitability in a turbulent and competitive environment.
What is the likely outcome of a firm's failure to adapt to changes in the market?
The firm will experience a decline in market share and profitability.
What is the key challenge facing Toyota in foreign markets?
To reformulate and implement a strategy that will reignite interest in its image.
What is the outcome of Commerce One's failure to adapt to changes in the market?
The company's alliance with SAP failed to deliver expected results.
What is the primary characteristic of strategic management?
It is proactive and focused on anticipating and responding to changes in the market.
Study Notes
Strategic Management
- Executives employ management processes to position their firm optimally in its competitive environment by maximizing anticipation of environmental changes and unexpected internal and competitive demands.
Key Components of Strategic Management
- Formulate the company's mission, including broad statements about its purpose, philosophy, and goals.
- Conduct an analysis of the company's internal conditions and capabilities.
- Assess the company's external environment, including both competitive and general contextual factors.
- Analyze the company's options by matching its resources with the external environment.
- Identify the most desirable options by evaluating each option in light of the company's mission.
- Select a set of long-term objectives and grand strategies that will achieve the most desirable options.
- Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies.
- Implement the strategic choices by means of budgeted resource allocations.
- Evaluate the success of the strategic process as an input for future decision making.
Definition and Importance of Strategy
- Strategy refers to a company's game plan for interacting with the competitive environment to achieve company objectives.
- A strategy reflects a company's awareness of how, when, and where it should compete; against whom it should compete; and for what purposes it should compete.
Examples of Strategic Management
- Commerce One created an alliance with SAP in 1999 to improve its position in the e-marketplace for business to business (B2B) sales.
- Toyota had a successful strategy of marketing its sedans in Japan, but it remained unchanged, leading to a decline in appeal to a younger customer market.
Characteristics of Strategic Decisions
- Strategic decisions are based on forecasting and projections, rather than on what is currently known.
- Emphasis is placed on the development of projections that will enable the firm to select the most promising strategic options.
- Strategic decisions have complex implications for most areas of the firm and involve multiple strategic business units (SBUs), divisions, or program units.
This quiz assesses knowledge of business management processes that help firms adapt to environmental changes and stay competitive. It covers strategies for maximizing profits and perfecting processes to respond to changing demands.
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