22 Questions
What is the main purpose of backward vertical integration?
To control inputs
What is an example of a diversification strategy?
Entering a new but related industry
What is the main difference between retrenchment and turnaround strategies?
The extent of restructuring
What is a major driver of the importance of corporate sustainability practices?
Government regulations
What is the goal of a retrenchment strategy?
To stabilize operations
What is forward vertical integration?
Becoming a distributor
What is the main goal of grand strategies?
To achieve organizational growth
What is horizontal integration?
Combining with a competitor
What is a key requirement for a successful sustainability strategy?
Elevating sustainability to the level of organizational governance
What is a challenge that companies face when pursuing globalization?
Coordinating and managing far-flung operations
Why is it important to formulate goals for products and services?
To measure achievements and strive for improvements
What can be a consequence of not considering variabilities in different countries or regions?
Strategic decisions that do not work
What is a benefit of setting business direction?
Formulating goals for products and services
Why is it important to consider political or social upheaval in global markets?
To consider the threat of upheaval
What is the primary goal of a growth strategy?
To increase revenues and expand into new markets
What is the main purpose of a grand strategy?
To decide what businesses a company is in or wants to be in
What type of strategy is used when an organization is in trouble and needs to improve its performance?
Renewal strategy
What is a characteristic of a stability strategy?
Maintaining current business operations
What is the primary focus of a grand strategy?
The organization's mission and goals
What is a result of a successful growth strategy?
Increased revenues and number of employees
What is the difference between a growth strategy and a stability strategy?
A growth strategy focuses on increasing revenues, while a stability strategy focuses on maintaining current operations
Why is a renewal strategy necessary?
To address declining performance
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.
This quiz covers the strategic management process, specifically strategy formulation and setting business direction, including grand strategies and their applications.
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