Podcast
Questions and Answers
What is the main purpose of backward vertical integration?
What is the main purpose of backward vertical integration?
- To enter a new market
- To combine with competitors
- To become a distributor
- To control inputs (correct)
What is an example of a diversification strategy?
What is an example of a diversification strategy?
- Reducing costs
- Entering a new but related industry (correct)
- Merging with a competitor
- Becoming a supplier
What is the main difference between retrenchment and turnaround strategies?
What is the main difference between retrenchment and turnaround strategies?
- The type of organization
- The extent of restructuring (correct)
- The level of cost-cutting
- The industry in which they are used
What is a major driver of the importance of corporate sustainability practices?
What is a major driver of the importance of corporate sustainability practices?
What is the goal of a retrenchment strategy?
What is the goal of a retrenchment strategy?
What is forward vertical integration?
What is forward vertical integration?
What is the main goal of grand strategies?
What is the main goal of grand strategies?
What is horizontal integration?
What is horizontal integration?
What is a key requirement for a successful sustainability strategy?
What is a key requirement for a successful sustainability strategy?
What is a challenge that companies face when pursuing globalization?
What is a challenge that companies face when pursuing globalization?
Why is it important to formulate goals for products and services?
Why is it important to formulate goals for products and services?
What can be a consequence of not considering variabilities in different countries or regions?
What can be a consequence of not considering variabilities in different countries or regions?
What is a benefit of setting business direction?
What is a benefit of setting business direction?
Why is it important to consider political or social upheaval in global markets?
Why is it important to consider political or social upheaval in global markets?
What is the primary goal of a growth strategy?
What is the primary goal of a growth strategy?
What is the main purpose of a grand strategy?
What is the main purpose of a grand strategy?
What type of strategy is used when an organization is in trouble and needs to improve its performance?
What type of strategy is used when an organization is in trouble and needs to improve its performance?
What is a characteristic of a stability strategy?
What is a characteristic of a stability strategy?
What is the primary focus of a grand strategy?
What is the primary focus of a grand strategy?
What is a result of a successful growth strategy?
What is a result of a successful growth strategy?
What is the difference between a growth strategy and a stability strategy?
What is the difference between a growth strategy and a stability strategy?
Why is a renewal strategy necessary?
Why is a renewal strategy necessary?
Study Notes
Strategic Management Process
- Strategic Management Process involves Strategy Formulation and Setting Business Direction.
Grand Strategies
- A grand strategy determines what businesses a company is in or wants to be in, and what it wants to do with those businesses.
- Three main types of grand strategies are:
- Growth strategy
- Stability strategy
- Renewal strategy
Growth Strategy
- Expands the number of markets served or products offered, either through its current business(es) or through new business(es).
- Increases revenues, number of employees, or market share.
Types of Growth Strategies
- Integration
- Backward vertical integration: becomes its own supplier to control inputs.
- Forward vertical integration: becomes its own distributor to control outputs.
- Horizontal integration: combines with competitors.
- Diversification
- Related diversification: combines with other companies in different, but related, industries.
- Unrelated diversification: combines with companies in unrelated industries.
Stability Strategy
- Continues to do what it is currently doing.
- Examples: continuing to serve the same clients, offering the same product or service, maintaining market share, and sustaining current business operations.
Renewal Strategy
- Addresses declining performance.
- Two types of renewal strategies:
- Retrenchment
- Turnaround
Retrenchment Strategy
- Short-run renewal strategy for minor performance problems.
- Helps stabilize operations, revitalize organizational resources and capabilities, and prepare to compete once again.
Turnaround Strategy
- More drastic action needed for serious performance problems.
- Managers cut costs and restructure organizational operations more extensively than in retrenchment strategy.
Sub-Grand Strategies
- Sustainability Strategy
- Elevates sustainability to the level of organizational governance.
- Formulates goals for products and services, processes, and entire supply chain.
- Measures achievements and strives for improvements.
- Links executive compensation to sustainability goals.
- Global Strategy
- Faces issues of globalization, such as variability in different countries and regions.
- Threat of political or social upheaval.
- Difficulty of coordinating and managing far-flung operations.
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Description
This quiz covers the strategic management process, specifically strategy formulation and setting business direction, including grand strategies and their applications.
