Functional Strategy in Business Management
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Questions and Answers

What is a key characteristic of a mass-production system?

  • Production of a large number of high-cost goods
  • Production of large numbers of low-cost, standardized goods (correct)
  • Focus on exclusive, luxury items
  • Customization of products for individual needs

    • Which aspect is critical for service-oriented firms to ensure quality?

  • Delivering error-free services that match standard requirements (correct)
  • Offering the lowest possible prices
  • Minimizing customer interactions to reduce errors
  • Providing services at an inconsistent level

    • What is the importance of flexibility in service-oriented operations?

  • To eliminate the need for staff training
  • To enforce strict schedules without alterations
  • To anticipate and adapt to changing consumer preferences (correct)
  • To maintain a rigid service design regardless of customer changes

    • How can service-oriented firms improve their dependability?

    <p>By forecasting problems and implementing preventive measures</p> Signup and view all the answers

    What strategy should service-oriented firms adopt regarding costs?

    <p>Analyze operations costs to eliminate unnecessary expenses</p> Signup and view all the answers

    What type of financing involves selling company stock to investors?

    <p>Equity Financing</p> Signup and view all the answers

    Which operations strategy is best suited for a manufacturing system that handles customized production?

    <p>Job Shop</p> Signup and view all the answers

    What financial strategy provides a competitive advantage through flexibility in raising capital?

    <p>Financial Strategy</p> Signup and view all the answers

    In which operations strategy do machines function like a job shop but are arranged in a specific order?

    <p>Connected Line Batch Flow</p> Signup and view all the answers

    Which option is NOT a type of equity financing?

    <p>Bond issuance</p> Signup and view all the answers

    What is a characteristic of flexible manufacturing systems?

    <p>Production of a wide variety of mass-produced items</p> Signup and view all the answers

    Which strategy is characterized by minimal human labor and is designed for mass production?

    <p>Dedicated Transfer Lines</p> Signup and view all the answers

    Which factor does NOT influence a firm's operations strategy?

    <p>Customer demographics</p> Signup and view all the answers

    What is a functional strategy primarily concerned with?

    <p>Achieving corporate and business unit objectives</p> Signup and view all the answers

    Which of the following best describes how functional strategies relate to competitive advantage?

    <p>They help in nurturing distinctive competencies.</p> Signup and view all the answers

    What type of functional strategy might a business unit that emphasizes high quality require?

    <p>Expensive quality assurance processes</p> Signup and view all the answers

    How do functional strategies vary according to regional markets?

    <p>They adapt to local consumer preferences and behaviors.</p> Signup and view all the answers

    Which of the following is NOT classified as a type of functional strategy?

    <p>Human resources strategy</p> Signup and view all the answers

    What marketing strategy approach might Mr.Donut have employed when entering Japan?

    <p>Positioning donuts as a snack food for afternoons</p> Signup and view all the answers

    Which orientation dictates a functional strategy's development?

    <p>The parent business unit's strategy</p> Signup and view all the answers

    What is the primary focus of a marketing strategy as a functional strategy?

    <p>Pricing, selling, and distributing products</p> Signup and view all the answers

    What is a market development strategy primarily focused on?

    <p>Increasing market share for existing products through saturation</p> Signup and view all the answers

    Which of the following is an example of a product development strategy?

    <p>Nissan introducing the Leaf electric vehicle in response to environmental concerns</p> Signup and view all the answers

    What does brand extension refer to in marketing strategy?

    <p>Using a successful brand name to market new types of products</p> Signup and view all the answers

    What is the aim of a push strategy in marketing?

    <p>To increase the prominence of products in retail through trade promotions</p> Signup and view all the answers

    How does a pull strategy differ from a push strategy?

    <p>A pull strategy builds consumer demand through advertising while a push strategy promotes to retailers</p> Signup and view all the answers

    What is a common objective of market saturation in a market development strategy?

    <p>To achieve a dominant market share in a product category</p> Signup and view all the answers

    In what way can a company use a product development strategy?

    <p>By introducing new products for both existing and new markets</p> Signup and view all the answers

    Which of the following best illustrates trade promotion in a push strategy?

    <p>Retailer discounts provided to boost product visibility</p> Signup and view all the answers

    Signup and view all the answers

    Study Notes

    Learning Objectives

    • Learners will be able to define functional strategy.
    • Explain how companies use functional strategies for competitive advantage.
    • List different types of functional strategies.
    • Apply functional strategies to provide business advantages.

    Functional Strategy

    • Functional strategy is a way to achieve corporate and business unit objectives by optimizing resource usage and developing unique strengths.
    • Each business unit (within a larger corporation) has its own set of departments which have their own functional strategies.
    • The parent business unit's strategy dictates the functional strategy. For example, a company focused on high quality might prioritize expensive quality control in manufacturing over low-cost methods.

    Types of Functional Strategy

    • Marketing Strategy: Deals with pricing, sales, and distribution of products.

      • Market Development: Expanding into new markets or finding new uses for existing products.
        • Example: Consumer product giants (like P&G, Colgate-Palmolive) use market saturation strategies to dominate markets with advertising and promotions.
      • Product Development: Creating new products for existing or new markets.
        • Example: Nissan creating the electric Leaf in response to consumer desire for electric vehicles and rising fuel prices.
      • Brand Extension: Using an established brand name for new products.
        • Example: Dove, initially a soap brand, expanded into various personal care items.
      • Push Strategy: Using trade promotions to encourage product placement/sales in retail, like discounts or in-store offerings.
        • Example: Samsung offering subsidies on handsets to retailers to boost sales volume.
      • Pull Strategy: Using wider consumer advertising to build brand awareness.
        • Example: Brand building campaigns such as YouTube advertisements

    • Financial Strategy: Addresses the financial implications of strategic options.

      • Equity Financing: Raising capital by selling company stock.
      • Debt Financing: Borrowing money from financial institutions.

    • Operations Strategy: Determines manufacturing or delivery processes, vertical integration, technological decisions, and supplier relations.

      • Examples for Manufacturing Firms:
        • Job Shop: Customized production using skilled labor.
        • Connected Line Batch Flow: Standardized parts processed in a specific order.
        • Flexible Manufacturing System: Producing a wide range of mass-produced items.

    Types of Operations Strategies for Service-Oriented Firms

    • Quality: Reliability and meeting customer needs.
    • Flexibility: Designing services that accomodate various demands.
    • Speed: Fast and timely service delivery.
    • Dependability: Consistency in service quality.
    • Cost: Efficient operations with reasonable prices.

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    Related Documents

    CBMEC 413 Strategic Management Functional Strategy Notes PDF

    Description

    This quiz focuses on the definition and application of functional strategies within business units. Learners will explore different types of functional strategies, such as marketing strategy, and understand their role in gaining competitive advantage. Ideal for those looking to deepen their understanding of strategic business management.

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