BUS 496 Strategic Management Ch. 5 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Long-Term Objectives
answer
Represent the results expected from pursuing certain strategies; 3-5 years
question
Strategies represent the actions to be taken to accomplish:
answer
Long-term objectives
question
Objectives should be:
answer
Quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, & congruent among organizational units
question
Financial Objectives
answer
Associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, etc
question
Strategic Objectives
answer
Include things such as a larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, etc.
question
Benefits of having clear objectives
answer
Provide direction by revealing expectations, allow synergy, aid in evaluation by serving as standards, establish priorities, reduce uncertainty, minimize conflicts, stimulate exertion, aid in allocation of resources, aid in design of jobs, & provide basis for consistent decision making
question
Strategist should avoid:
answer
Managing by extrapolation, managing by crisis, managing by subjectives, & managing by hope
question
Types of strategies
answer
Forward integration, backward integration, horizontal integration, market penetration, market development, product development, related diversification, unrelated diversification, retrenchment, divestiture, & liquidation
question
Combination Strategy
answer
Simultaneously pursuing two or more strategies is exceptionally risky
question
Levels of Strategies - Large Company
answer
Corporate level, division level, functional level, & operational level
question
Levels of Strategies - Small Company
answer
Company level, functional level, & operational level
question
Vertical Integration
answer
Allow a firm to gain control over distributors, suppliers, or competitors; collection of forward, backwards, and horizontal integrations
question
Forward Integration
answer
Involves gaining ownership or increased control over distributors or retailers
question
Franchising
answer
An effective means of implementing forward integration
question
Backward Integration
answer
A strategy of seeking ownership or increased control of a firm's suppliers
question
Horizontal Integration
answer
A strategy of seeking ownership of or increased control over a firm's competitors
question
Intensive Strategies
answer
Market penetration, market development, & product development; require intensive efforts if a firm's competitive position with existing products is to improve.
question
Market Penetration
answer
Seeks to increase market share for present products or services in present markets through greater marketing efforts
question
Market Development
answer
Involves introducing present products or services into new geographic areas.
question
Product Development
answer
Seeks increased sales by improving or modifying present products or services
question
Types of Diversification Strategies
answer
Related diversification & unrelated diversification
question
Related Diversification
answer
Value chains possess competitively valuable cross-business strategic fits
question
Unrelated Diversification
answer
Value chains are so dissimilar that no competitively valuable cross-business relationship exists
question
Defensive Strategies
answer
Retrenchment, divestiture, & liquidation
question
Retrenchment
answer
Occurs when an organization regroups through cost & asset reduction to reverse declining sales and profits
question
Alternative names for retrenchment
answer
Turnaround & reorganizational strategy
question
Bankruptcy
answer
Allows a firm to avoid major debt obligations & to void union contracts
question
Chapter 7 Bankruptcy
answer
Liquidation procedure used only when a corporation sees no hope of being able to operate successfully or to obtain the necessary creditor agreement
question
Chapter 9 Bankruptcy
answer
Applies to municipalities
question
Chapter 11 Bankruptcy
answer
Allows organizations to recognize & come back after filing a petition for protection
question
Chapter 12 Bankruptcy
answer
Created by the Family Farmer Bankruptcy Act of 1986 and provides special relief to family farmers with debt equal to or less than $1.5 million
question
Chapter 13 Bankruptcy
answer
Reorganization plan similar to Chapter 11, but is available only to small businesses owned by individuals with unsecured debts of less than $100,000 & secured debt of less than $350,000
question
Divestiture
answer
Selling a division or part of an organization
question
Liquidation
answer
Selling all of a company's assets, in parts, for their tangible worth
question
Porter's Generic Strategies
answer
Allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, & focus
question
Cost Leadership
answer
Emphasizes producing standardized products at a low per-unit cost for consumers who are price-sensitive
question
Type 1 Cost Leadership
answer
Low-cost strategy that offers products or services to a wide range of customers at the lowest price available on the market
question
Type 2 Cost Leadership
answer
Best-value strategy that offers products or services to a wide range of customers at the best price-value available on the market
question
Differentiation (Type 3)
answer
A strategy aimed at producing products & services considered unique industry wide & directed at consumers who are relatively price-insensitive
question
Focus
answer
Producing products & services that fulfill the needs of small groups of consumers
question
Type 4 Focus
answer
Low-cost strategy that offers products or services to a small range (niche group) of customers at the lowest price available on the market
question
Type 5 Focus
answer
Best-value strategy that offers products or services to a small group of customers at the best price-value available on the market
question
Turbulent, High Velocity Markets
answer
Industries that are changing rapidly
question
Joint Venture
answer
Occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity
question
Cooperative Arrangements
answer
R&D partnerships, cross-distribution agreements, cross-licensing agreements, cross-manufacturing agreements, & joint-bidding consortia
question
Merger
answer
Occurs when two organizations of about equal size unite to form one enterprise
question
Acquisition
answer
Occurs when a large organization purchases (acquires) a smaller firm, or vice versa
question
Takeover or Hostile Takeover
answer
When a merger or acquisition is not desired by both parties
question
Friendly Merger
answer
When a acquisition is desired by both parties
question
White Knight
answer
Refers to a firm that agrees to acquire another firm when that other firm is facing a hostile takeover by some company
question
Leveraged Buyout (LBO)
answer
Occurs when a corporation's shareholders are bought by the company's management & other private investors using borrowed funds
question
First Mover Advantages
answer
The benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms
question
Business-Process Outsourcing (BPO)
answer
Involves companies hiring other companies to take over various parts of their functional operations, such as human resources, IS, payroll, accounting, customer service, and marketing
question
Reshoring
answer
US companies planning to move some of their manufacturing back to the US