Strategic Management Overview
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Questions and Answers

What is market development primarily focused on?

  • Introducing products to an untapped or competitively dominated market (correct)
  • Expanding operations within the same industry
  • Acquiring companies to enhance product offerings
  • Introducing new products to existing customers

    • Which type of diversification involves introducing new and unrelated products to existing customers?

  • Vertical Integration
  • Conglomerate Diversification
  • Concentric Diversification
  • Horizontal Diversification (correct)

    • What strategy does vertical integration include?

  • Entering completely new industries with unrelated products
  • Controlling the manufacturing of inputs or the distribution of outputs (correct)
  • Acquiring competitors to eliminate market competition
  • Developing new products for existing markets

    • Which turnaround strategy seeks to increase profits by acquiring new customers?

    <p>Revenue-increasing strategies</p> Signup and view all the answers

    What characterizes backward integration in vertical strategy?

    <p>Acquiring control over suppliers</p> Signup and view all the answers

    What is the primary purpose of environmental scanning in strategic management?

    <p>To compare external threats and opportunities</p> Signup and view all the answers

    Which type of diversification involves entering new markets with completely unrelated products?

    <p>Conglomerate Diversification</p> Signup and view all the answers

    Which of the following best defines strategy implementation?

    <p>Taking action to achieve organizational goals</p> Signup and view all the answers

    What is an essential function of the evaluation and control phase in strategic management?

    <p>To evaluate actual outcomes against expected outcomes</p> Signup and view all the answers

    What is the primary purpose of a business unit strategy?

    <p>To create competitive market advantage.</p> Signup and view all the answers

    What is an essential requirement for cost-cutting strategies to be effective?

    <p>Sales close to break-even point</p> Signup and view all the answers

    Which element of strategic management provides a comprehensive guideline for decision-making?

    <p>Policies</p> Signup and view all the answers

    Which of the following best describes a differentiation strategy?

    <p>Building a brand around unique product features.</p> Signup and view all the answers

    Which of the following best describes concentric diversification?

    <p>Introducing new tech-like products to existing/new markets</p> Signup and view all the answers

    What does strategic planning generally serve as?

    <p>A roadmap for achieving long-term goals</p> Signup and view all the answers

    Which strategy focuses on a specific or narrow segment of the market?

    <p>Focus strategy</p> Signup and view all the answers

    What is the role of the Board of Directors in a corporate setting?

    <p>To set and implement strategic plans.</p> Signup and view all the answers

    Which of the following is a drawback of strategic planning?

    <p>It can be difficult and time-consuming</p> Signup and view all the answers

    What best defines a conglomerate?

    <p>A company made up of several businesses in different industries.</p> Signup and view all the answers

    What does the corporate strategy primarily focus on?

    <p>The growth direction of multiple businesses within a corporation</p> Signup and view all the answers

    Which of the following is NOT a method a business uses to implement a growth strategy?

    <p>Reducing operational costs across all departments.</p> Signup and view all the answers

    In strategic management, what does strategy typically maximize?

    <p>Competitive advantages while minimizing disadvantages</p> Signup and view all the answers

    What is a potential downside of a low-cost leadership position?

    <p>The need for continuous cost reduction efforts.</p> Signup and view all the answers

    What is the main characteristic of a stability strategy?

    <p>Avoiding drastic changes and recalibrating activities.</p> Signup and view all the answers

    What is a key characteristic of asset-reduction strategies?

    <p>They are adopted in cases of low sales relative to the break-even point.</p> Signup and view all the answers

    Which of the following best defines a divestiture?

    <p>The sale or disposal of assets for cash or securities.</p> Signup and view all the answers

    Under what circumstances might a company choose to liquidate?

    <p>Weak leadership or dwindling market demand.</p> Signup and view all the answers

    What distinguishes a joint venture from other forms of strategic alliances?

    <p>It is a special partnership arrangement for a specific project.</p> Signup and view all the answers

    What is the primary focus of outsourcing?

    <p>Delegating noncore business processes to external providers.</p> Signup and view all the answers

    What is the typical outcome of a liquidation process?

    <p>The assets are sold to pay off debts during insolvency.</p> Signup and view all the answers

    What does licensing allow a licensee to do?

    <p>Use the licensor's intellectual property for a fee.</p> Signup and view all the answers

    Which of the following is NOT a reason for liquidation?

    <p>Strong market demand.</p> Signup and view all the answers

    What are the two purposes of the unified code of conduct for business?

    <p>To establish a framework for ethical behavior</p> Signup and view all the answers

    Which of the following is NOT one of the five common risk identification methods?

    <p>Quantitative risk analysis</p> Signup and view all the answers

    What type of obligation involves multiple creditors who can demand payment from any debtor?

    <p>Solidary obligation</p> Signup and view all the answers

    Which element is NOT part of the performance assessment methods for risk?

    <p>Assessment of the competitor's financial health</p> Signup and view all the answers

    Which type of solidarity binds debtors and creditors by the agreement of the parties?

    <p>Conventional solidarity</p> Signup and view all the answers

    What is a key characteristic of passive solidarity?

    <p>Creditors can enforce payment from any debtor</p> Signup and view all the answers

    What type of risk relates to the chance of an investment losing value?

    <p>Market risk</p> Signup and view all the answers

    Which of the following is classified under a taxonomy-based risk identification method?

    <p>Categorizing risks based on origin</p> Signup and view all the answers

    Study Notes

    Strategic Management

    • Strategic Management is the process of formulating, implementing, and evaluating cross-functional decisions that enable organizations to achieve their goals.
    • Basic Elements of Strategic Management:
      • Environmental Scanning: Analyzing external threats and opportunities.
      • Strategy Formulation: Creating long-term plans to manage environmental factors.
      • Strategy Implementation: Taking action to achieve organizational goals.
      • Evaluation and Control: Assessing the strategy's effectiveness.
    • Mission: The organization's purpose and reason for existence.
    • Objectives: Planned outcomes and goals.
    • Strategies: Broad plans outlining how to achieve the mission and objectives, maximizing competitive advantages.
    • Policies: Comprehensive guidelines for decision-making, linking strategy formulation and implementation.
    • Strategic Management Model: Provides a framework for understanding how strategic management operates at the company level.
    • Types of Analysis:
      • External environmental analysis
      • Internal organizational analysis
      • Industrial analysis

    Drawbacks of Strategic Planning:

    • Can be difficult and time-consuming.
    • Immediate results may not be achieved.
    • May limit organizations to rational and risk-free options.

    Levels of Strategy:

    • Corporate Strategy: Defines the general direction for the growth of multiple businesses, creating a unified vision and mission.
    • Business Unit Strategy: Determines how a company should compete in a specific market to gain a competitive advantage.
    • Functional-Level Strategies: Support business unit strategies and are focused within specific departments.

    Business Unit Strategies:

    • Cost Leadership: Gaining competitive advantage with the lowest operational cost among competitors.
    • Differentiation Strategy: Offering unique and superior products for a competitive advantage.
    • Focus Strategy: Targeting a specific or narrow market segment or customer group.
    • Stability Strategy: Maintaining existing strategies, avoiding drastic changes.
    • Growth Strategy: Achieving a higher market share than currently held.

    Growth Strategies:

    • Market Penetration: Increasing market share through intensive marketing efforts.
    • Market Development: Introducing products into new markets (untapped or competitor-dominated).
    • Product Development: Introducing new products to existing markets.
    • Diversification: Expanding into new industries with unrelated products.
      • Horizontal Diversification: Providing new products unrelated to current offerings, but relevant to existing customers.
      • Concentric Diversification: Offering new products to new or existing markets, with technological similarities to existing products.
      • Conglomerate Diversification: Expanding into completely new markets with unrelated products to reach new customer bases.
    • Vertical Integration: Controlling input manufacturing or output distribution along the supply chain.
      • Forward Integration: Owning or controlling product distribution downstream in the value chain.
      • Backward Integration: Owning or controlling input suppliers upstream in the value chain.

    Turnaround Strategies:

    • Revenue-Increasing Strategies: Increasing market share with new customers to generate higher profits.
    • Cost-Cutting Strategies: Focusing on cost reduction to improve profitability.
    • Asset-Reduction Strategies: Selling non-essential assets to improve financial position.
    • Downsizing Strategies: Reducing workforce and operations to improve efficiency.
    • Exit Strategies: Selling the company or parts of it to an investor or another company.

    Exit Strategies:

    • Divestiture: Selling assets, product lines, or subsidiaries for cash or securities.
    • Liquidation: Shutting down operations and selling remaining assets to pay off debts.

    Strategic Alliances:

    • Mutual beneficial partnerships to offer new products and expand into new markets.

    Joint Ventures:

    • Special partnerships between two or more entities to undertake a specific project.

    Licensing:

    • Agreements where a licensor grants a licensee access to intellectual property rights (patents, trademarks, etc.) for a fee or royalty.

    Outsourcing:

    • Transferring non-core business processes to a service provider.

    Finance (BUS3)

    • Corruption: Illegal and unethical acts involving misuse of power for personal gain.
    • Types of Corruption:
      • Bribery
      • Embezzlement
      • Nepotism
      • Kickbacks
      • State capture
    • Anti-Graft and Corruption Efforts:
      • Criminalization of bribery (active and passive)
      • Anti-Money Laundering Act
      • Revised Penal Code
      • Practices Act

    Government Initiatives:

    • Procurement reform
    • Improvement of Business Ethics
    • Unified Code of Conduct for Business
    • Code of Ethics for the Philippine Business
    • The Consumer Act of the Philippines
    • The Food, Drug, and Cosmetics Act
    • The Intellectual Property Code of the Philippines

    Risk Management:

    • Risk Assessment: Identifying, analyzing, and evaluating potential risks.
    • Business Risk: Potential threats that could negatively impact an organization's performance.
    • Types of Business Risk:
      • Default Risk
      • Liquidity Risk

    Risk Identification Methods:

    • Objective-Based Risk Identification
    • Scenario-Based Risk Identification
    • Taxonomy-Based Risk Identification
    • Common Risk Identification
    • Risk Charting

    Business Risk Assessment Elements:

    • Identification, characterization, and assessment of threats.
    • Assessing the vulnerability of critical assets to threats.
    • Determining the risk level.
    • Identifying risk reduction strategies.
    • Prioritizing risk reduction measures.

    Investment Risks:

    • Various risks associated with different types of investments.

    Stakeholder Interests:

    • Identifying the interests of those affected by the activities of a business.

    Unified Code of Conduct for Business:

    • Purposes:
      • Establish ethical standards for business conduct.
      • Promote responsible and sustainable business practices.

    Obligations (BLAW)

    • Individual Obligation: One obligor and one obligee.
    • Collective Obligation: Two or more debtors and/or two or more creditors.
    • Joint Obligation: Each party is responsible for a proportionate share of the obligation.
    • Solidary Obligation: Each debtor is responsible for the entire obligation, and each creditor can demand the full amount from any debtor.

    Types of Solidary Obligations:

    • Passive Solidarity: Solidarity on the part of the debtor.
    • Active Solidarity: Solidarity on the part of the creditor.
    • Mixed Solidarity: Solidarity on the part of both the debtor and the creditor.

    Sources of Solidary Obligations:

    • Conventional Solidarity: Agreed upon by the parties.
    • Real Solidarity: Imposed by the nature of the obligation.
    • Legal Solidarity: Imposed by law.

    • Uniform: All parties are bound by the same stipulation.

    • Non-Uniform: Parties are not subject to the same stipulation.

    • A solidary creditor can take actions that benefit other creditors but cannot do anything that would harm them.

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    BUS111 Strategic Management PDF

    Description

    This quiz explores the key concepts of Strategic Management, including environmental scanning, strategy formulation, implementation, and evaluation. Test your knowledge on how these elements work together to achieve organizational goals and understand the significance of mission, objectives, and policies.

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