Podcast
Questions and Answers
What is NOT considered a characteristic of effective long-term objectives?
What is NOT considered a characteristic of effective long-term objectives?
- Hierarchical
- Ambiguous (correct)
- Understandable
- Congruent among organizational units
Which of the following is a function of long-term objectives?
Which of the following is a function of long-term objectives?
- Create conflicts
- Decrease organizational direction
- Increase uncertainty
- Establish priorities (correct)
What is a potential downside of pursuing a combination strategy?
What is a potential downside of pursuing a combination strategy?
- It can be exceptionally risky if taken too far (correct)
- It is the safest approach for all organizations
- It minimizes resource allocation
- It always leads to market dominance
Which characteristic should objectives NOT possess?
Which characteristic should objectives NOT possess?
What is the primary role of long-term objectives in resource allocation?
What is the primary role of long-term objectives in resource allocation?
Which of the following best describes Porter’s five generic strategies?
Which of the following best describes Porter’s five generic strategies?
Why is it important for objectives to be congruent among organizational units?
Why is it important for objectives to be congruent among organizational units?
What is a consequence of having poorly defined long-term objectives?
What is a consequence of having poorly defined long-term objectives?
What scenario suggests an organization should pursue related diversification?
What scenario suggests an organization should pursue related diversification?
Which of the following is a guideline for unrelated diversification?
Which of the following is a guideline for unrelated diversification?
What is a primary characteristic of retrenchment as a defensive strategy?
What is a primary characteristic of retrenchment as a defensive strategy?
When is it appropriate for an organization to consider unrelated diversification?
When is it appropriate for an organization to consider unrelated diversification?
Which factor would discourage an organization from pursuing diversification?
Which factor would discourage an organization from pursuing diversification?
Under which condition should an organization consider implementing a retrenchment strategy?
Under which condition should an organization consider implementing a retrenchment strategy?
What does an organization aim to achieve through cost and asset reduction during retrenchment?
What does an organization aim to achieve through cost and asset reduction during retrenchment?
What is a common reason for an organization to pursue divestiture?
What is a common reason for an organization to pursue divestiture?
What is a potential advantage of pursuing unrelated diversification?
What is a potential advantage of pursuing unrelated diversification?
Which of the following is not a guideline for related diversification?
Which of the following is not a guideline for related diversification?
What is a guideline for deciding on divestiture?
What is a guideline for deciding on divestiture?
What does liquidation involve?
What does liquidation involve?
When might an organization decide that liquidation is its only option?
When might an organization decide that liquidation is its only option?
Which of the following indicates a division might need to be divested?
Which of the following indicates a division might need to be divested?
Which situation might lead an organization to sell off its assets in liquidation?
Which situation might lead an organization to sell off its assets in liquidation?
What is a potential consequence of pursuing a retrenchment strategy?
What is a potential consequence of pursuing a retrenchment strategy?
What does the cost leadership strategy focus on?
What does the cost leadership strategy focus on?
Which strategy offers products at the lowest price available?
Which strategy offers products at the lowest price available?
How does the best-value strategy differ from the cost leadership strategy?
How does the best-value strategy differ from the cost leadership strategy?
Which of the following is NOT a characteristic of the low-cost strategy?
Which of the following is NOT a characteristic of the low-cost strategy?
What is a primary goal of the best-value strategy?
What is a primary goal of the best-value strategy?
Which aspect is essential for a company pursuing a cost leadership strategy?
Which aspect is essential for a company pursuing a cost leadership strategy?
In which scenario would a company likely adopt a best-value strategy?
In which scenario would a company likely adopt a best-value strategy?
Which of the following is a potential challenge of pursuing a cost leadership strategy?
Which of the following is a potential challenge of pursuing a cost leadership strategy?
What is the primary distinction between a merger and an acquisition?
What is the primary distinction between a merger and an acquisition?
Which term describes a merger or acquisition that is not desired by both parties?
Which term describes a merger or acquisition that is not desired by both parties?
What is one of the key benefits of being a first mover in the market?
What is one of the key benefits of being a first mover in the market?
Which of the following is NOT an advantage of outsourcing?
Which of the following is NOT an advantage of outsourcing?
How does outsourcing contribute to a firm's competitive advantage?
How does outsourcing contribute to a firm's competitive advantage?
Which of the following correctly summarizes first mover advantages?
Which of the following correctly summarizes first mover advantages?
What is a common characteristic of a friendly merger?
What is a common characteristic of a friendly merger?
What is Business-process outsourcing (BPO)?
What is Business-process outsourcing (BPO)?
Study Notes
Long-Term Objectives
- Objectives should be measurable, realistic, understandable, challenging, hierarchical, obtainable, and congruent.
- Objectives provide direction, aid in evaluation, establish priorities, reduce uncertainty, minimize conflicts, and aid in resource allocation and job design.
Types of Strategies
- Organizations typically pursue a combination of strategies.
- An organization cannot afford to pursue every potentially beneficial strategy.
Related Diversification Guidelines
- Consider related diversification when an organization competes in a slow growth industry, with new products that would enhance sales, and when a strong management team is available.
Unrelated Diversification Guidelines
- Consider unrelated diversification when a company's current products would increase revenue with the addition of the new product. Consider when a company's current distribution channels can be used to market the new product to current customer.
Defensive Strategies
- Retrenchment: A strategy used when an organization regroups through cost and asset reduction to reverse declining sales and profits.
- Divestiture: A strategy that involves selling a division or part of an organization. This is often used to raise capital for further strategic acquisitions or investments.
- Liquidation: Selling all of a company's assets in parts for their tangible worth. It can be an emotionally challenging strategy.
Porter's Five Generic Strategies
- Cost Leadership: emphasizes producing standardized products at a low per-unit cost for price-sensitive consumers.
- Differentiation: Focuses on providing unique and high-quality products or services to a wide range of customers.
- Focus: Concentrates on serving a specific market niche, either by offering lower costs (cost focus) or differentiated products (differentiation focus).
Means for Achieving Strategies
- Mergers and Acquisitions: Merge when two companies combine to form a new entity. Acquisition occurs when a larger company purchases a smaller company.
- First Mover Advantages: Benefits a firm gains by entering a new market before competitors, often securing access to resources, market share, and a defensible position.
- Outsourcing: Companies take over functional operations of other firms, such as human resources, information systems, payroll, accounting, and customer service.
- Advantages of Outsourcing: Less expensive, allows the company to focus on core businesses, provides flexibility, and aligns with best-in-world suppliers.
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Description
Test your knowledge on long-term objectives and strategic diversification methods. This quiz covers essential concepts including related and unrelated diversification, as well as various business strategies organizations can adopt. Challenge yourself to understand key principles that aid in effective decision-making.
