Business Strategy and SBU's
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Questions and Answers

What is the primary focus of a corporate strategy?

  • Crafting business strategies for SBU's
  • Adding value to stakeholders
  • Competing within a specific market
  • Determining the scope of the organisation (correct)

    • What is the main difference between a corporate strategy and a business strategy?

  • One focuses on the market, the other on the organisation (correct)
  • One is short-term, the other is long-term
  • One is for SBU's, the other is for the parent organisation
  • One adds value, the other creates value

    • What should a parent organisation ideally do in regards to its SBU's?

  • Interfere heavily in their activities
  • Set their business strategies for them
  • Allow them full autonomy
  • Add value to their strategies (correct)

    • What is the purpose of a business strategy?

    <p>To compete effectively within a market</p> Signup and view all the answers

    Why is it important to consider the values and goals of the parent organisation when analyzing an SBU?

    <p>To ensure the SBU's strategy aligns with the parent organisation</p> Signup and view all the answers

    What may signal some strategic implications for the future?

    <p>A gap between the wishes of the parent organisation and the SBU</p> Signup and view all the answers

    What is the focus of this module?

    <p>How to set up a business to compete effectively</p> Signup and view all the answers

    What is the ideal role of a parent organisation in regards to its SBU's?

    <p>To interfere as little as possible in their activities</p> Signup and view all the answers

    What is a key characteristic of a Strategic Business Unit (SBU)?

    <p>It has its own vision and direction, but no autonomy</p> Signup and view all the answers

    What is the ultimate goal of a Strategic Business Unit (SBU) in its chosen market?

    <p>To achieve a competitive advantage over its rivals</p> Signup and view all the answers

    What is necessary for an SBU to be successful in its chosen market?

    <p>It must create value for its users that is superior to that of its rivals</p> Signup and view all the answers

    What is the benefit of organizing a corporation as separate SBUs?

    <p>Encourages accountability and responsibility for competitive strategy</p> Signup and view all the answers

    What is the relationship between an SBU's competitive strategy and the parent corporation's vision?

    <p>The SBU's competitive strategy must ultimately be aligned to the parent corporation's vision</p> Signup and view all the answers

    What is the purpose of an SBU's competitive strategy?

    <p>To achieve a competitive advantage above that of its rivals</p> Signup and view all the answers

    What is the role of an SBU in its chosen market?

    <p>To compete in a specific market, supplying goods or services for a distinct domain of activity</p> Signup and view all the answers

    What is the relationship between an SBU's autonomy and the parent corporation?

    <p>The degree of autonomy is dependent on the wishes of the parent corporation</p> Signup and view all the answers

    What is the primary objective of a focus strategy?

    <p>To target a narrow domain of activity or competitive scope</p> Signup and view all the answers

    What is another term for a focus strategy?

    <p>Niche market strategy</p> Signup and view all the answers

    What are the two variants of focus strategies?

    <p>Cost focus and differentiation focus</p> Signup and view all the answers

    What is the goal of a cost-focused organisation?

    <p>To identify areas where broader cost-based strategies fail</p> Signup and view all the answers

    What is a key characteristic of a differentiation-focused organisation?

    <p>It looks for specific needs that broader differentiators do not serve so well</p> Signup and view all the answers

    What is a hybrid strategy?

    <p>A strategy that combines cost focus and differentiation focus</p> Signup and view all the answers

    What is NOT a characteristic of a focus strategy?

    <p>It tries to serve a wide range of market segments</p> Signup and view all the answers

    What is an example of a niche market?

    <p>A very specific geographic area</p> Signup and view all the answers

    What is the purpose of identifying a target market for a product or service?

    <p>To achieve a competitive advantage</p> Signup and view all the answers

    What is the main difference between 'cost' and 'price' in a cost-leadership strategy?

    <p>Cost refers to the production cost, while price refers to the selling price</p> Signup and view all the answers

    What is the ultimate goal of an SBU when choosing a target market?

    <p>To achieve a competitive advantage and derive value</p> Signup and view all the answers

    What is the main characteristic of a cost-leadership strategy?

    <p>Becoming the lowest-cost organisation in a domain of activity</p> Signup and view all the answers

    What is the purpose of understanding a business's generic strategy in Strategic Plan Part 2?

    <p>To suggest alternative strategic options that align with the business strategy</p> Signup and view all the answers

    What was the main limitation of Mass Customisation before the advent of the Internet and advances in supply chain collaboration and manufacturing automation?

    <p>Limited real-time manufacturing capabilities</p> Signup and view all the answers

    What type of competitive strategy would you suggest as a way of competing with Vanguard?

    <p>Low-cost strategy</p> Signup and view all the answers

    What is the difference between a broad target market and a narrow target market?

    <p>A broad target market is focused on a range of demographics, while a narrow target market is focused on a specific demographic</p> Signup and view all the answers

    What should you do if you identify a strategic option that is not aligned with the organisation's generic business strategy?

    <p>Question the wisdom of taking this path</p> Signup and view all the answers

    What is the purpose of the activity in the case study 'Illustration 7.1 Vanguard's low cost strategy comes to Europe'?

    <p>To prepare for the Assessment 3 Strategic Plan Part 1</p> Signup and view all the answers

    What is the main benefit of comparing the generic business strategy of an organization to that of its direct rivals?

    <p>Identifying opportunities to take a different path</p> Signup and view all the answers

    What is the purpose of defining a target market in terms of demographics, income, and education?

    <p>To understand the target audience of the organisation</p> Signup and view all the answers

    What is the main focus of the Module 6 Lecture Video: Hybrid Strategies?

    <p>Hybrid strategies</p> Signup and view all the answers

    What is the main benefit of Mass Customisation?

    <p>Real-time manufacturing capabilities</p> Signup and view all the answers

    What is the main purpose of the Assessment 3 Strategic Plan Part 1?

    <p>To develop a strategic plan for an organization</p> Signup and view all the answers

    What is the main benefit of comparing the generic business strategy of an organization to that of its direct rivals in the context of the Assessment 3 Strategic Plan Part 2?

    <p>Identifying opportunities to take a different path</p> Signup and view all the answers

    Study Notes

    Business Strategy vs Corporate Strategy

    • A corporate strategy is about the scope of the organisation, what industries, markets, and geographical locations it will operate in, and how to add value to its Strategic Business Units (SBUs).
    • A business strategy is about how a business competes within a market and creates value for its stakeholders.

    SBU's and their Purpose

    • An SBU is a fully functional unit of a business that has its own vision and direction, and reports to the parent company headquarters.
    • Each SBU can be held responsible for the success or failure of its own competitive strategy, encouraging accountability.
    • The key purpose of an SBU is to achieve a competitive advantage above that of its competitors by creating value for its users.

    Generic Business Strategies

    • A business can focus on a broad target or a narrow target, choosing one of three generic business strategies: cost leadership, differentiation, or focus.
    • A cost leadership strategy involves becoming the lowest-cost organisation in a domain of activity.
    • A focus strategy targets a narrow domain of activity or competitive scope, tailoring products or services to the needs of a specific segment.

    Focus Strategies

    • A focus strategy can be achieved through cost focus or differentiation focus.
    • Cost focus involves identifying areas where broader cost-based strategies fail.
    • Differentiation focus looks for specific needs that broader differentiators do not serve so well.

    Hybrid Strategies & Mass Customisation

    • A hybrid strategy combines different generic strategies, such as low cost and high differentiation.
    • Mass customisation enables real-time manufacturing, combining different generic strategies.

    Activity: Generic Strategies

    • Read and analyse case studies to reinforce understanding of generic business strategies and assist with prework for the Strategic Plan Part 1.

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    Description

    This quiz focuses on the differences between corporate strategy and competitive business strategy, and how to manage Strategic Business Units (SBU's) effectively and efficiently.

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