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MGT 8803: Strategy Execution Through
Diversification – Module 4 Overview.
Which three levels do strategies need to be formulated at? - Answers: ✅ ✅
- Corporate
- Business
- Functional
Which three grand strategies do corporations follow? - Answers: ✅ ✅
- Growth
- Stability
- Renewal
What are the 4 growth strategies for corporations? - Answers: ✅ ✅
- Concentration
- Vertical integration
- Horizontal integration
- Diversification
What is the most important issue dealt with at the corporate strategy level? - Answers:
✅ ✅Scope of the firm (what businesses the firm is in)
When is a forward integration strategy effective? - Answers: ✅ ✅When there are few quality distributors available or when distributors have high profit margins.
Why do firms use backward integration? - Answers: ✅ ✅To secure stable inputs of resources and become more efficient
When is backward integration most beneficial? - Answers: ✅ ✅When a firms current suppliers are unreliable, expensive or cannot supply the required inputs.
What is the biggest benefit of vertical integration? - Answers: ✅ ✅More control over the value chain.
Which diversification strategy is considered as the suicide sell by Ansoff? - Answers: ✅
✅Product market diversification, where both the product and the market are new.
What is the max % of business that can come from its largest line of business for a firm to
be considered diversified? - Answers: ✅ ✅70%
What are the 3 C's - Answers: ✅ ✅
- Company
- Customer
- Competition
What are three positioning approaches? - Answers: ✅ ✅
- Functional (functional characteristics of the product)
- Experiental (focusing on product experiences)
- Symbolic (what the product symbolizes)
What is planning? - Answers: ✅ ✅Identifying goals and strategies to get to those goals.
What was the focus of classical management? - Answers: ✅ ✅Productivity, making workers and organizations more efficient.
What are Fayol's four functions of management? - Answers: ✅ ✅
- Planning (deciding business goals and how to achieve them)
- Organizing - (determining the best allocation of people and resources)
- Leading - coordination the directing the activities of the employees
What are three approaches to creating competitive advantage? - Answers: ✅ ✅
- Cost leadership
- Differentiation
- Focus
What is a business model? - Answers: ✅ ✅How the various components of th ebusiness fit together to produce a profit. It is the end results of decisions and tradeoffs made by management in formulating strategy
Name three components of a business model. - Answers: ✅ ✅
- Markets Service Served
- Firm infrastructure
- Economic model
What are the core competencies of a firm? - Answers: ✅ ✅its unique capabilities and resources that enable the firm to deliver and support a value proposition to its customers
Which three levels can business strategy be developed at? - Answers: ✅ ✅
- Corporate
- Business unit (products, services, etc)
- Functional
What type of strategy is at the corporate level? - Answers: ✅ ✅An organizational strategy that specifies what businesses a company is in or wants to be in
What type of strategy is at the business unit level? - Answers: ✅ ✅This is where competitive strategy is developed.
What type of strategy is at the functional level? - Answers: ✅ ✅These strategies support the overall business unit strategies.
What are the three forms of grand strategies? - Answers: ✅ ✅
- Growth
- Stability
- Renewal
What is a growth strategy? - Answers: ✅ ✅A corporate strategy where an organization expands the number of markets served or products offered though its current businesses or through new business
What is a stability strategy? - Answers: ✅ ✅Where a corporation continues to do what it currently does and is happy to grow at the rate of current market growth.
What is a renewal strategy? - Answers: ✅ ✅These relate to firms that are in trouble.
What is a retrenchment strategy? - Answers: ✅ ✅A renewal strategy. It's a short-run strategy used for minor performance issues to help stabilize operations.
What is a turnaround strategy? - Answers: ✅ ✅A renewal strategy. Typically involves shredding unprofitable businesses or slashing operations. Often involves bankruptcy.
What are the 4 types of growth strategies? - Answers: ✅ ✅
- Concentration (refocus on core business)
- Diversification (deviate from core business)
- Vertical Integration (acquires a supplier or distribution channel)
- Horizontal Integration (acquires a business competitor)
What does the A,F & I stand for in the AFI framework? - Answers: ✅ ✅Analysis
Formulation
Implementation
Economic Societal Technology Ecological Legal
What is a PESTEL analysis? - Answers: ✅ ✅A simple and effective tool used in situation analysis to identify the key macro-environmental forces that can effect the industry or firm.
What is the SCP model of strategy? - Answers: ✅ ✅Structure, Conduct, Performance. This model assumes structure determines firm conduct which in turn drives firm performance.
What are the implications of perfect competition? - Answers: ✅ ✅Passive price takers, no ability to differentiate (crude oil and other commodities)
What are the implications of monopolistic competition? - Answers: ✅ ✅Products have unique features and price differentiation is possible (auto makers, fine dining)
What are the implications of oligopoly? - Answers: ✅ ✅Marketing firm strategies are interdependent (soft drinks, tobacco)
What are the implications of monopoly? - Answers: ✅ ✅Accrue significant market power (public utilities, telecommunications)
What are the 5 forces in the Porter model? - Answers: ✅ ✅
- Bargaining power of suppliers
- Threat of new entrants
- Bargaining power of customers
- Threat of substitutes
- Competitive rivalry within the industry
Which measure is the most common measure of competition ratio? - Answers: ✅ ✅The CR4. It combines the market share of the four largest competitors in an industry.
What is considered a low concentration ratio? - Answers: ✅ ✅ 0 - 50%
What is considered a medium concentration ratio? - Answers: ✅ ✅ 50 - 80%
What are the three steps for a Porter analysis? - Answers: ✅ ✅
- Gather information
- Analyze results
- Formulate strategies
What is the 6th force to the Porter model? - Answers: ✅ ✅Complements
What is resource based view of competitive advantage? - Answers: ✅ ✅An approach to try and gain a competitive advantage by using resources in a new way instead of developing new skills for each new opportunity.
What are two critical assumptions of the resource based view? - Answers: ✅
✅Resources are heterogeneous (an organization's skills differ from others) and immobile (resources do not move from one company to another)
What qualities are important for a resource to be the basis of competitive advantage? -
Answers: ✅ ✅It must be valuable, rare, costly to imitate and organized (VRIO)
What is a VRIO analysis? - Answers: ✅ ✅A framework that assumes a firm can only gain a sustained competitive advantage if has the resources to satisfy VRIO requirements. It's essentially a decision tree based on 4 questions.
What are three reasons resources can be hard to imitate? - Answers: ✅ ✅
- Historical conditions
What are the 4 alternatives for business growth using Ansoff's matrix? - Answers: ✅ ✅
- Market penetration
- Product development
- Market development
- Diversification
What are 5 differentiation approaches? - Answers: ✅ ✅
- Product Features
- Customer Service
- Customization
- Complements
- Customer Experience
When pursuing differentiation, how many approaches do firms usually use? - Answers: ✅ ✅Two (a dominant and a secondary one called the differentiator)
What is focus-differentiation? - Answers: ✅ ✅A differentiation strategy but targeted towards a niche market with limited competition and where the firm can specialize. This is the most common focus strategy.
What is focus-cost strategy? - Answers: ✅ ✅A cost strategy targeted towards a niche market. This is a less common approach.
What type of firm is a focus strategy most appropriate for? - Answers: ✅ ✅Small, aggressive businesses that do not have the ability and resources to engage in a nationwide marketing effort....or if the target market is small.
What is a disadvantage of a combination strategy, such as a combination of differentiation and cost leadership? - Answers: ✅ ✅The firm may not achieve a competitive advantage and get stuck in the middle.
What is a requirement of a successful combination strategy? - Answers: ✅ ✅The tradeoffs between differentiation and cost leadership be reconciled.
What is economies of scope? - Answers: ✅ ✅Any situation where savings can be recognized from producing or selling two or more products together.
What are Porter's Generic Strategies? - Answers: ✅ ✅
- Differentiation
- Cost Leadership
- Focus
What two factors determine the success of competitive strategies? - Answers: ✅ ✅
- How well a firm leverages core competencies and strategic resources
- How well a firm exploits external opportunities while minimizing risks and threats.
What are the two types of product knowledge required according to the Henderson and Clark model? - Answers: ✅ ✅
- Component knowledge
- Architectural knowledge
What are the 4 types of innovation in the Henderson and Clark model? - Answers: ✅ ✅
- Incremental innovations
- Architectural innovation
- Modular innovation
- Radical innovation
