TEST BANK: Daft, Richard L. Management, 11th ed. 2014 8 Strategy Formula

Chapter 8--Strategy Formulation and Execution Student: ___________________________________________________________________________ 

1.

Research Research has shown that that strateg strategic ic thinking thinking and planning planning positivel positively y aect aect a irm!s irm!s peror perormance mance and and inancial success. "rue

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Strategic Strategic thinkin thinking g is more import important ant -proi -proitt $usinesses $usinesses than or or non-pro non-proit it organi%a organi%ations tions.. "rue

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False

"he /ow do we compete0 uestion concerns unctional-level strategy. strategy. "rue

11 .

False

Corpor Corporate ate-le -level vel strat strategy egy pertai pertains ns to the the organi organi%at %ation ion as a whole whole.. "rue

1 .

False

"he com$ina com$ination tion o $eneit $eneitss received received and costs costs paid $y the custome customerr reers reers to value. value. "rue

,.

False

Core competen competence ce is the the plan o o action action that prescri$es prescri$es resourc resourcee allocation allocation and and other activities activities or dealing with the environment. "rue

8.

False

"he interact interaction ion o *roduct *roduction ion and Sales Sales working working together together to produce produce proit proit greater greater than the the total total o  $oth working separately is an example o synergy. synergy. "rue

+.

False

Competitiv Competitivee advantage advantage reers reers to the set o decisions decisions and actions actions used to to ormulate ormulate and implemen implementt strategies. "rue

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False

Front-line Front-line managers managers have the inal responsi$i responsi$ility lity or strategic strategic planning. planning. "rue

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False

"op managers managers and chie chie executives executives have the the inal inal respons responsi$ili i$ility ty or or strategic strategic planning. planning. "rue

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False

False

"he three levels o strategy are $usiness2 corporate2 and glo$al. "rue

False 1

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Strategic partnerships are the current trend2 rather than mergers and acuisitions. "rue

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False

3n a tur$ulent $usiness climate2 managers should ocus on strategic sta$ility rather than lexi$ility. lexi$ility. "rue

False

1' Strategy implementation involves the planning and decision making that lead to the esta$lishment o . the irm!s goals. "rue 1(.

False Scenario - SS.com

Faced with rapidly growing $usiness2 Swit Stocks2 3nc.2 a glo$al $rokerage company co mpany with the largest market share2 recently announced that it has esta$lished an on-line stock investment and trading su$sidiary2 su$sidiary2 SS.com2 where investors can trade stocks at the lowest rates in the industry. "he .com su$sidiary has less than one percent market share  $ut it aces a very high $usiness growth rate. 3n the  $rokerage industry the competition is ierce and all  players are cutting their on-line commission commission rates.  Swit Stock is ollowing which strategy2 according to *orter2 through the .com su$sidiary0 a.  $. c. d. e.

Sta$ility Cost leadership Focus 4ierentiation Retrenchment

1)  55555 is the set o decisions and actions used to ormulate and implement strategies strategies that will provide a . competitively superior it $etween the organi%ation and its environment so as to achieve organi%ational goals.  5555555555555555555555555555555555555555   555555555555555555555555555 5555555555555 

#

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"he plan o action that prescri$es resource allocation a nd other activities or dealing with the environment and helping the organi%ation attain its goals is called a6n7 55555.  5555555555555555555555555555555555555555   555555555555555555555555555 5555555555555 

18  $usiness $usiness activity that an organi%ation does particularly well relative to its competition is known as . a6n7 55555.  5555555555555555555555555555555555555555   555555555555555555555555555 5555555555555  1, .

For the social networking site Face$ook2 technological know-how and an aggressive and innovative culture are signiicant strengths to include in its S9:" analysis. "rue

# .

"hreats are characteristics o the internal environment that may prevent the organi%ation rom achieving its strategic goals. "rue

#1 .

False

"he uestion mark exists in a new2 rapidly growing industry $ut has only a small market share2 according to the ;C= >atrix. "rue

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False

"he ;C= 6;oston Consulting =roup7 matrix evaluates S;ultidomes tic

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"he condition that exists when the organi%ation!s  parts interact to produce a @oint eect that is greater greater than the sum o the parts acting alone a lone is known asB .

core competenc e. ;. synergy. C. value creation. 4  $usiness-level . strategy. E multidomestic . strategy. (1.

9hen properly managed2 55555 can create additional value with existing resources2 providing a  $ig $oost to the $ottom line. . synergy ;. competitors C. government contacts 4. command structure E cooperation among . customers

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55555 can $e deined as the com$ination o $eneits received and costs paid $y the customer. .

:rgani% ational  $eneits ;. ?alue C Cost-$eneit . diversity 4. Synergy E Core . competence

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ter Sunshine Systems merged with R"4 Enterprises2 company executives noticed that due to increased employee colla$oration $etween the two units2 costs were down and revenues increased within $oth areas. "his is an example o what  $usiness phenomenon0 .

; . C . 4. E . ('.

9hen "" decided to $uy >edia :ne2 a ca$le company2 it was pursuing a6n7 a 6n7 55555 strategy. strategy. .

; . C . 4 . E . ((.

Strateg y executi on *ortolio strategy Core competency Synergy 4elivering value

uncti onallevel internal growth multidomestic corporatelevel  $usinesslevel

55555 level strategy pertains to the ma@or unctional departments within the $usiness unit. .

; . C . 4 . E .

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:per  ation al Corpora te  Dationa l ;usines s Function al

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9hen *hilip->orris2 the to$acco giant2 $ought rat2 3nc.2 it was pursuing a 55555. .

; . C . 4 . E . (+.

corporatelevel strategy  $usiness-level strategy unctional-level strategy multidomestic strategy retrenchment strategy

9hich o the ollowing pertains to the organi%ation as a whole0 .

;usinesslevel strategy ; Functional-level . strategy C Corporate-level strategy . 4 :perational-level . strategy E Competitive-level . strategy

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Sears! decision to sell o much o its inancial services division is an example o aB .

corpora te-level strategy . ;  $usiness-level . strategy. C unctional-level . strategy.

4 . E .

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growth strategy. sta$ility strategy.

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 corporate-level strategy is concerned with the uestionB .

what $usiness are we in0 ;. how do we compete0 C how do we support our chosen . strategy0 4 where do we market our .  products0 E should we promote rom . within0

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9hen Coca-Cola introduced Surge2 a new citrus sot-drink2 what type o strategy was $eing  pursued0 .

; . C . 4 . E . )1.

Functional -level strategy >ulti-domestic strategy Corporate-level strategy Retrenchment strategy ;usiness-level strategy

Ford!s decision to completely redesign its Ford "aurus can $e classiied as aB .

corpora te level strategy . ;  $usiness level . strategy. C unctional level . strategy.

4 retrenchment . strategy. E sta$ility . strategy.

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anessa is the CE: o a privately-held sotware company. 3n deining corporate-level strategies2 which o the ollowing uestions would she most likely $e concerned with0 . /ow do we compete0 ;. 9hat $usiness are we in0 C. /ow does marketing support the $usiness0 4. /ow can we maximi%e proits0 E /ow can we make manuacturing processes more . eicient0

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4ecisions regarding the proper amount o advertising or a particular good or service are related toB .

; . C . 4 . E . )'.

corporatelevel strategies. unctional-level strategies. tactical-level strategies.  $usiness-level strategies. retrenchment strategies.

9hich o these uestions is central to a unctionallevel strategy0 .

9hat $usiness are we in0 ;. /ow do we compete0 C /ow do we support our . chosen strategy0 4 9hat $usiness do we $uy0 . E 9here to market our .  products0

11

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9hich o the ollowing lists the strategic management process in proper order0 .

; . C . 4 . E . )).

Formulate s S9:" anal Execute str  *erorm S9:" analysisG Evaluate current missionHgoalsG Fo 4eine new missionHgoals. Evaluate current missionHgoalsG 4eine new missionHgoalsG F *erorm S9:" analysis . Evaluate current missionHgoalsG *erorm S9:" analysisG 4e strategyG Execute strategy. strategy. 4eine new missionHgoalsG Execute strategyG Formulate strate *erorm S9:" analysis.

55555 reers to the use o managerial tools to direct resources toward the achievement o strategic goals. .

; . C . 4 . E .

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Strategy ormula tion Strategy coordination Strategy execution Strategy control Strategy  planning

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9hich o the ollowing reers to the planning and decision making that lead to the esta$lishment o the organi%ation!s goals and o a speciic strategic plan0 .

Str  ate gy or  m ula tio n ;Strateg y imple mentat ion CStrateg y coordi nation 4Strate gy contro l E S9 . :" )8.

Fred has $een assigned to conduct a S9:" analysis or his organi%ation2 cme2 3nc. s part o this assignment2 Fred willB .

conduct an external wage survey. search or the strengths2 weaknesses2 opportunities2 and threats that impact his irm. C choose a grand grand strategy or his irm. 4 do a costH$eneit . analysis. E develop a . mission.

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"echniues used to monitor external environments includeB .

hirin g scan ning orga ni%at ions. hiring the competitive intelligence  proessiona ls. governme nt reports. 4proession al  @ournals. E all o . these. +.

Classy Clay has extremely creative employees who2 in the opinion o the organi%ation2 keep the company ahead o the competition. "he creativity o these employees would $e classiied as a6n7 55555. .

intern al weak  ness ; external . opportunity

C . 4 . E .

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external strength internal strength neutral actor 

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*aramount2 3nc. is particularly concerned a$out  pending legislation in Congress that would urther regulate their organi%ation. "his legislation would $e classiied as a6n7 55555. .

; . C. 4 . E . +#.

external opportuni ty internal strength external threat external weakness congressional chaos

Sherri has $een asked to participate on a crossunctional task orce that is charged with perorming an audit checklist or her advertising advertising irm. "he task orce will analy%e organi%ational strengths and weaknesses as they apply to the the irm. SherriAs SherriAs task is to analy%e anal y%e management uality2 uality2 sta uality2 degree o centrali%ation2 and organi%ational charts. "his level o analysis pertains to which area o the audit0 .

; . C .

>an age ment and orga ni%at ion >arketi ng /uman resources

4Research and developm ent E *roducti . on

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9here does the inormation a$out opportunities and threats comes rom0 .

n analysis o the organi%ation!s internal environment ;  department $y department . study o the organi%ation

C . 4. E . +'.

Scanning the external environments Employee grievances Financial ratios o the organi%ation

9hat type o organi%ational unit has a uniue  $usiness mission2 product line2 competitors2 and markets relative to other units in the same corporation0 . *roduct unit ;. Functional unit C. Strategic $usiness unit 4. :perational unit E ;usiness consulting group . unit

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/ow $usiness units and product lines it together in a logical way is the essence oB .

; . C . 4 . E .

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$usinesslevel strategy.  portolio strategy. competitive strategy. inancial strategy. unctional strategy.

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=atekeep atrix2 which o the ollowing exists in a mature2 slow-growth industry2 industry2  $ut is a dominant $usiness in the industry2 industry2 with a large market share0 .

; . C. 4. E . 8).

9hen an organi%ation expands into a totally new line o $usiness2 it is implementing a strategy oB .

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Iue stio n mar  k  steris k  4og Star  Cash cow

Related diversiicat ion

; . C .

ultidomestic strategies $elieve that competition in each country is handled independently o industry competition in other countries. "hus2 marketing2 advertising2 and product design is encouraged to $e modiied and adapted to the speciic needs o each country the company is present in. >any companies re@ect the idea o a single glo$al market. "ransnational strategies strategies seek to achieve $oth glo$al integration and national responsiveness.  true transnational strategy is diicult to achieve2 $ecause one goal reuires close glo$al coordination while the other goal reuired local lexi$ility. lexi$ility. /owever2 many industries are inding that2 although increased competition means they must achieve glo$al eiciency2 eiciency2 growing pressure to meet local needs demands national responsiveness. 1'1. "he tools or putting strategy into action include visi$le leadership2 clear roles and accounta$ility2 accounta$ility2 human resources2 and candid communication. L ?isi$le leadership is used to motivate motivate people2 people2 shape culture and and values2 values2 and model desired desired $ehaviors L Clear roles and and accounta$ility accounta$ility include include delegating delegating authority authority and and responsi$ility2 responsi$ility2 creating creating teams2 teams2 and deining roles L /uman resource tools tools include include recruiting employees2 providing training2 training2 and managing managing transers transers and promotions promotions L Candid communication communication is used used to open lines lines o communication and to encourage honesty and de$ate

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