Strategic Development and Evaluation

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Questions and Answers

What is a key characteristic of a focus strategy?

Targeting the entire market

Aiming at a specific segment of the market (correct)

Emphasizing product differentiation

Focusing on low-cost production

What is the primary goal of a competitive strategy?

To reduce production costs

To achieve an enhanced competitive position (correct)

To increase market share

To launch new products

What is the Ansoff Matrix used for?

Developing marketing campaigns

Assessing potential strategic growth directions (correct)

Analyzing competitor strategies

Evaluating market trends

What is the main difference between a growth strategy and a stability strategy?

The direction of strategic development Signup and view all the answers

Why do SMEs typically have to operate a focus competitive strategy?

Because they are small in scale Signup and view all the answers

What is retrenchment strategy?

A strategy to reduce the activities of the SBU Signup and view all the answers

What is the primary concern of strategic selection?

All of the above Signup and view all the answers

What is the main focus of a competitive strategy?

Achieving competitive advantage in the chosen market Signup and view all the answers

What is the primary goal of a business when competing with its competitors?

To gain customers and achieve profitability Signup and view all the answers

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 Signup and view all the answers

What is the main objective of a differentiation strategy?

To persuade customers that a product is superior in some way Signup and view all the answers

What are the three primary issues concerned with formulating business strategy?

Competitive strategy, strategic direction, and strategic methods Signup and view all the answers

What is the primary goal of a market penetration strategy?

To increase market share in existing markets with existing products Signup and view all the answers

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 Signup and view all the answers

What is the primary goal of a product development strategy?

To develop new products for existing markets Signup and view all the answers

What type of stability strategy involves reducing investment and reducing unnecessary expenditure to increase margins?

Profit Signup and view all the answers

What is the main characteristic of a diversification strategy?

Developing new products to serve new markets Signup and view all the answers

What is the purpose of a 'pause/proceed with caution' stability strategy?

To take a break before continuing a growth or retrenchment strategy Signup and view all the answers

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 Signup and view all the answers

What is the purpose of screening in evaluating strategic options?

To eliminate clearly unsuitable options Signup and view all the answers

Which of the following is a criterion for evaluating strategic options?

Feasibility Signup and view all the answers

What is the focus of the acceptability criterion in evaluating strategic options?

Evaluating the expected performance outcomes of a strategy Signup and view all the answers

According to Johnson et al., what are the 'three Rs of acceptability'?

Reactions, Returns, Risks Signup and view all the answers

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 Signup and view all the answers

At what level of an organization are strategic decisions typically made?

Highest level Signup and view all the answers

What do strategic options at the highest level concern?

Positioning the organization in respect to its product and resource markets Signup and view all the answers

What is the significance of competitive strategy decisions?

They define the organization's competitive position and configure internal value chain activities Signup and view all the answers

Why are product and market decisions important?

They determine the organization's profitability and survival Signup and view all the answers

What type of decisions are concerned with configuring and managing internal parts of the organization?

Operational-level decisions Signup and view all the answers

What further decisions are typically required in product and market development?

Decisions on market categories Signup and view all the answers

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

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Description

This quiz covers strategic development, evaluation, and selection methods, including identifying strategic options and making high-level organizational decisions.