30 Questions
What is a key characteristic of a focus strategy?
Aiming at a specific segment of the market
What is the primary goal of a competitive strategy?
To achieve an enhanced competitive position
What is the Ansoff Matrix used for?
Assessing potential strategic growth directions
What is the main difference between a growth strategy and a stability strategy?
The direction of strategic development
Why do SMEs typically have to operate a focus competitive strategy?
Because they are small in scale
What is retrenchment strategy?
A strategy to reduce the activities of the SBU
What is the primary concern of strategic selection?
All of the above
What is the main focus of a competitive strategy?
Achieving competitive advantage in the chosen market
What is the primary goal of a business when competing with its competitors?
To gain customers and achieve profitability
According to Michael Porter's Generic Strategies, what is the basis of a cost leadership strategy?
Organizing and managing value-adding activities to be the lowest cost producer
What is the main objective of a differentiation strategy?
To persuade customers that a product is superior in some way
What are the three primary issues concerned with formulating business strategy?
Competitive strategy, strategic direction, and strategic methods
What is the primary goal of a market penetration strategy?
To increase market share in existing markets with existing products
What is the main difference between stability strategies and 'doing nothing'?
Stability strategies involve taking actions to defend market position, while 'doing nothing' involves inaction
What is the primary goal of a product development strategy?
To develop new products for existing markets
What type of stability strategy involves reducing investment and reducing unnecessary expenditure to increase margins?
Profit
What is the main characteristic of a diversification strategy?
Developing new products to serve new markets
What is the purpose of a 'pause/proceed with caution' stability strategy?
To take a break before continuing a growth or retrenchment strategy
What is the primary concern of the suitability criterion in evaluating strategic options?
Evaluating if a strategy can enable the organization to achieve its strategic objectives
What is the purpose of screening in evaluating strategic options?
To eliminate clearly unsuitable options
Which of the following is a criterion for evaluating strategic options?
Feasibility
What is the focus of the acceptability criterion in evaluating strategic options?
Evaluating the expected performance outcomes of a strategy
According to Johnson et al., what are the 'three Rs of acceptability'?
Reactions, Returns, Risks
What is the primary difference between feasibility and suitability in evaluating strategic options?
Feasibility focuses on whether a strategy can work in practice, while suitability focuses on whether a strategy can achieve strategic objectives
At what level of an organization are strategic decisions typically made?
Highest level
What do strategic options at the highest level concern?
Positioning the organization in respect to its product and resource markets
What is the significance of competitive strategy decisions?
They define the organization's competitive position and configure internal value chain activities
Why are product and market decisions important?
They determine the organization's profitability and survival
What type of decisions are concerned with configuring and managing internal parts of the organization?
Operational-level decisions
What further decisions are typically required in product and market development?
Decisions on market categories
Study Notes
Competitive Strategy
- Differentiation can be based on premium product features or creating consumer perceptions that a product is superior
- Focus strategy is aimed at a segment of the market rather than the whole market, suitable for SMEs due to their small scale
- Michael Porter's Generic Strategies:
- Cost leadership strategy: being the lowest cost producer of a product or service
- Differentiation strategy: persuading customers that a product is superior to competitors
Strategic Directions
- Growth strategies: expanding the activities of the SBU
- Stability strategies: maintaining the activities of the SBU
- Retrenchment strategies: reducing the activities of the SBU
- Igor Ansoff's Product-Market Framework:
- Market penetration: increasing market share in existing markets with existing products
- Market development: entering new markets with existing products
- Product development: developing new products for existing markets
- Diversification: developing new products for new markets
Strategic Management
- Pre-conditions for strategic success:
- Suitable strategy
- Feasible strategy
- Acceptable strategy
- Strategic options:
- Formulation of strategic options
- Evaluating the available options
- Selecting the options most likely to lead to strategic success
Stability Strategies
- Three variants of stability:
- Pause/proceed with caution: resting and reflecting before continuing a growth or retrenchment strategy
- No change: continuing current operations without significant change in direction
- Profit: doing nothing new in a worsening environmental position, focusing on supporting profits
Strategic Evaluation and Selection
- Screening: assessing whether a strategy is suitable for achieving strategic objectives
- Feasibility: assessing whether a strategy is capable of working in practice
- Acceptability: assessing the expected performance outcomes of a strategy to determine whether they are acceptable to stakeholders
This quiz covers strategic development, evaluation, and selection methods, including identifying strategic options and making high-level organizational decisions.
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