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Questions and Answers
What is the main purpose of backward vertical integration?
What is an example of a diversification strategy?
What is the main difference between retrenchment and turnaround strategies?
What is a major driver of the importance of corporate sustainability practices?
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What is the goal of a retrenchment strategy?
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What is forward vertical integration?
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What is the main goal of grand strategies?
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What is horizontal integration?
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What is a key requirement for a successful sustainability strategy?
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What is a challenge that companies face when pursuing globalization?
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Why is it important to formulate goals for products and services?
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What can be a consequence of not considering variabilities in different countries or regions?
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What is a benefit of setting business direction?
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Why is it important to consider political or social upheaval in global markets?
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What is the primary goal of a growth strategy?
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What is the main purpose of a grand strategy?
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What type of strategy is used when an organization is in trouble and needs to improve its performance?
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What is a characteristic of a stability strategy?
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What is the primary focus of a grand strategy?
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What is a result of a successful growth strategy?
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What is the difference between a growth strategy and a stability strategy?
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Why is a renewal strategy necessary?
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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.