Business Strategy Overview

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Questions and Answers

What does the net present value approach primarily focus on when evaluating a project?

Ignoring future uncertainties to maximize profits

Involving stakeholders in every decision-making process

Building political coalitions to support the project

Adjusting predicted payouts for risk and subtracting the initial investment (correct)

In the context of strategic choice, what two factors are used to categorize stakeholders?

Management decisions and marketing strategies

Interest in activities and relative power to influence (correct)

Cultural fit and corporate values

Financial contributions and public opinion

When management encounters a cultural mismatch, which of the following is NOT a recommended option?

Change the strategy to fit the culture

Completely ignore the cultural aspects (correct)

Manage around the culture and adjust the implementation plan

Attempt to alter the culture to align with the strategy

How can organizations effectively deal with pressures from their corporate culture?

Adjust their strategic implementation plans to fit the culture Signup and view all the answers

What strategy should be employed when the future is highly uncertain according to the real-options approach?

Maintain a broad range of options Signup and view all the answers

What does a push strategy primarily involve?

Trade promotions to gain retail shelf space Signup and view all the answers

In research and development strategy, what does the term 'technological follower' refer to?

Imitating competitor products Signup and view all the answers

What is the primary intent of the skim pricing strategy?

To charge high prices to maximize initial profits Signup and view all the answers

What is a brand extension?

Using a successful brand name to market additional products Signup and view all the answers

Which strategy focuses on utilizing alliances to innovate products?

Open innovation Signup and view all the answers

What does the operations strategy determine?

How and where to manufacture products Signup and view all the answers

What is the primary characteristic of sole sourcing?

Relying on a single supplier for a part Signup and view all the answers

What is the purpose of the follow-the-sun management style?

To synchronize project work around the world across time zones Signup and view all the answers

Which sourcing method involves purchasing from several vendors?

Multiple sourcing Signup and view all the answers

What does parallel sourcing involve?

Two suppliers as sole sources for different parts Signup and view all the answers

What does the purchasing strategy concern itself with?

Acquiring raw materials and supplies for operations Signup and view all the answers

What should a firm consider outsourcing?

Activities with low potential for competitive advantage Signup and view all the answers

What type of innovation does the research and development strategy encompass?

Both product and process improvement Signup and view all the answers

What is the central dilemma in HRM strategy regarding employee hiring?

Deciding between hiring skilled or unskilled workers Signup and view all the answers

Which of the following describes offshoring?

Performing a function in a different country Signup and view all the answers

What is a factor in deciding to outsource a function?

The potential for competitive advantage Signup and view all the answers

Logistics strategy primarily deals with what aspect of a company?

Flow of products into and out of manufacturing Signup and view all the answers

Which of these is NOT a form of sourcing mentioned?

Consolidated sourcing Signup and view all the answers

What is one of the main purposes of an effective policy?

It sets clear boundaries while allowing flexibility in execution. Signup and view all the answers

What does 'timing tactic' refer to in strategy implementation?

The decision on when to carry out strategic activities. Signup and view all the answers

Which option best describes a 'first mover' in a strategic context?

The initial company to launch a new product or service. Signup and view all the answers

What issue may arise from an inefficient information system during strategy implementation?

It may lead to misalignment with strategic goals. Signup and view all the answers

How does an effective policy test the strategic soundness of an action?

By ensuring it aligns with the company's key goals and strategies. Signup and view all the answers

What role do programs play in the implementation of a strategic plan?

They consist of tactics that translate strategies into action. Signup and view all the answers

Why is internal consistency important in strategy implementation?

It helps align various strategic decisions within the firm. Signup and view all the answers

What challenge arises from inadequately defined implementation tasks?

It hinders the ability to evaluate strategic success. Signup and view all the answers

What is the purpose of market location tactics?

To determine where a company implements its strategy Signup and view all the answers

Which tactic is primarily concerned with responding to attacks from competitors?

Defensive tactic Signup and view all the answers

In the context of synergy, what indicates a successful divisional corporation?

A return on investment greater than independent operations Signup and view all the answers

What does the phrase 'structure follows strategy' imply?

Changes in strategy require structural adjustments Signup and view all the answers

What is one of the defensive tactics a corporation can implement?

Raise structural barriers Signup and view all the answers

Which statement accurately describes the final check on strategy feasibility in a corporation?

Planning a budget Signup and view all the answers

What is a natural behavior of first movers in the market?

Ignoring certain market segments Signup and view all the answers

Which of the following best describes an offensive market tactic?

Entering into an established competitor's market location Signup and view all the answers

What is a key characteristic of a matrix structure?

Functional and product forms are combined simultaneously. Signup and view all the answers

Which of the following is NOT an internal block to changing stages in an organization?

Economic conditions Signup and view all the answers

Which phase is NOT part of the development of a matrix structure?

Stagnant structure Signup and view all the answers

What does the organizational life cycle describe?

How organizations grow, develop, and decline Signup and view all the answers

What is one of the primary focuses of Lean Six Sigma?

Removing unnecessary steps and fixing remaining processes Signup and view all the answers

Which condition is necessary for effective matrix structures?

Improve processing abilities and decision making. Signup and view all the answers

What is the main goal of Six Sigma?

To achieve near-perfect results in production Signup and view all the answers

Which of the following best describes a network structure?

Eliminates in-house business functions in favor of virtual collaborations Signup and view all the answers

What does a divisional structure emphasize?

Management of product lines in multiple industries with decentralized decisions Signup and view all the answers

What is a primary advantage of a functional structure?

Team of managers replacing the entrepreneur Signup and view all the answers

Study Notes

Functional Strategy

Functional strategy is the approach a functional area takes to achieve corporate and business unit objectives.
It focuses on maximizing resource productivity.

Marketing Strategy

Marketing strategy deals with pricing, selling, and distributing a product.
Market development strategy involves either capturing a larger share of an existing market or developing new uses and markets for existing products.
Product development strategy involves developing new products for existing or new markets.
Brand extension uses a successful brand name for other products.
Push strategy involves trade promotions to gain shelf space.
Pull strategy uses advertising to draw customers to products.
Skim pricing involves high initial prices for new products.
Penetration pricing involves low initial prices to quickly capture market share.

Financial Strategy

Financial strategy examines the financial implications of strategic options and identifies the best financial courses of action.
Management of dividends and stock price is an important part of a corporation's financial strategy.
Leveraged buyout involves acquiring a company with significant debt financing.
Reverse stock split involves reducing the number of shares outstanding.

Research and Development Strategy

Research and development strategy deals with product and process innovation.
It considers the appropriate mix of different types of R&D.
Technological leader pioneers innovation.
Technological follower imitates existing innovations.

Operations Strategy

This determines how and where a product is made, the level of vertical integration in the process, the deployment of physical resources, and relationships with suppliers.

Purchasing Strategy

Deals with obtaining raw materials, parts, and supplies needed for operations.
Multiple sourcing involves ordering from several vendors.
Sole sourcing relies on a single vendor.
Parallel sourcing uses two suppliers for different parts.

HRM Strategy

Addresses whether a company hires low-skilled, low-pay employees or skilled employees with higher pay.

Information Strategy

Follow-the-sun management involves teams working across different countries where the time zones overlap.

Outsourcing

Outsourcing is the act of purchasing products or services from external providers to avoid internal production.
Offshoring is the act of outsourcing production to a different country.

Logistics Strategy

Deals with the flow of products in and out of the manufacturing process.
Trends include changes in the manufacturing supply chain.

Disadvantages of Outsourcing

Customer complaints
Inability to learn new skills
Lack of cost savings
Poor product quality

Errors to Avoid in Outsourcing

Selecting incorrect activities or vendors.
Writing poor contracts.
Overlooking personnel issues,
Ignoring hidden costs
Neglecting an exit strategy

Strategic Choice

The corporation should select a strategy that minimizes external pressure and maximizes stakeholder support.
Understanding that stakeholders may not always be in agreement.

Stakeholders' Concerns

How stakeholders will be affected by a decision.
How much will each stakeholder likely get from a particular choice.

Managing Corporate Culture for Strategy Implementation

The corporate culture needs to be considered as stakeholders' needs are taken into account and change implementation strategies as needed.

Strategy Implementation

Strategy implementation is the sum total of all activities and choices required for the execution of a strategic plan.
Who is responsible and needed to execute the plan.

Types of organizational structures

Simple Structure: A flexible structure typical of small start-up companies.
Functional Structure: Organised around departments (e.g., marketing, operations).
Divisional Structure: Multiple product lines in various industries.
Matrix Structure: Functional and product lines are implemented simultaneously.
Network Structure: A flexible modular structure with interconnected groups.
Cellular/Modular Structure: Composed of self-managing teams.

Market Location Tactics

Offensive tactics are employed in competitors' markets, positioning the company for strategic advantage.
Defensive tactics involve defending a company's current market position.

Competitive Advantage

Competitive advantage arises from activities with low potential in the value chain that contribute little to the organization's product or service value.
Activities contributing the most to the organization's products or services should be kept in-house.

Stages of Corporate Development

Stages of corporate development outline a company's changes and adaptations as they grow (e.g., from simple to highly sophisticated structures).

Stages of International Development

Stages of international development define how companies establish themselves in global markets.

Centralization vs. Decentralization

Centralization focuses decision-making in the headquarters.
Decentralization delegates this decision-making to various units and locations.

Geographic Area Structure

The company customizes products for varying regional preferences.

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Description

This quiz covers various aspects of business strategy, including functional, marketing, and financial strategies. You'll learn about approaches to maximize resources, market and product development tactics, and pricing strategies. Test your knowledge on how these strategies contribute to achieving corporate objectives.