Chapter 2 MGMT 375

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The strategic management process:
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Process that involves developing a game plan to guide the company as it strives to accomplish its vision, mission, goals, and objectives and to keep it from straying off its desired course
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A small business’s “aggregation of factors that sets it apart from its competitors” is its:
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Competitive advantage
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How is the strategic planning process for small companies different from that for large
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Small companies have natural advantages over large companies; small companies have fewer product lines, more clearly defined customer base, and a limited geographic marker area. Small businesses find that strategic management comes more naturally for them than large companies
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________ focuses everyone’s attention and efforts on the same target market. It is an expression of what the owner believes in.
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Vision
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Answering the question “What business am I in?” defines the company’s:
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mission statement
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Once the vision and mission are established, the entrepreneur needs to:
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Assess the company’s strengths and weaknesses
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________ are positive internal factors that contribute towards accomplishing the company’s objectives.
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Strengths
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When the small business owner assesses her company’s strengths and weaknesses, she is dealing with the ________ business environment.
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competitive
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Corey notices a “backlash” against health food among people who eat out. He decides to open a restaurant that stresses “good home cooking,” heavy with gravies, breads, oils, etc. Corey has identified and is trying to capitalize on a(n) ________ in the market environment.
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opportunity
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Every business is characterized by a set of controllable variables called ________ that determines the relative success (or lack of it) of market participants:
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key success factors
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A small firm’s ability to identify and manipulate the ________ in its business determines its ability to compete effectively.
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key success factors
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A small business owner would conduct a competitive analysis in order to:
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Competitor analysis benefits: Avoid surprises from existing competitors’ new strategies and tactics, identify potential new competitors and the threats they pose, improve reaction time to competitor’s actions, anticipate rivals’ next strategic moves, and improve ability to differentiate your company from competitors
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The information-gathering process in competitive analysis:
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Competitive Intelligence Programs
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________ are the broad, long-range attributes the small business seeks to accomplish; ________ are the specific, measurable milestones the company wants to achieve.
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goals; objectives
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The small firm’s “master plan” is its:
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Their strategy- a road map that guides a company through turbulent environments as it seeks to fulfill its mission, goals, and objectives
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A differentiation strategy:
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A company following this seeks to build customer loyalty by positioning its good or services in a unique or different fashion. A company that strives to be better than its competitors at something that its customers value
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What is a danger in choosing a differentiation strategy?
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One danger is trying to differentiate a product or service on the basis of something that does not boost its performance or lower its cost to the buyer. Another is trying to differentiate on the basis of something that customers do not perceive as important. Another one is over-differentiating and charging so much that a company prices its products or services out of its target customers’ reach. Another risk focusing only on important psychological factors
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Rather than attempting to serve the total market, the small firm pursuing a ________ strategy specializes in serving a specific target segment.
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focus strategy
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An effective strategic plan does what?
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Produces a competitive advantage, the strength factors that sets the company apart from its rivals
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The most successful strategic plans make the ________ focal.
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customers
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Small bookstores have a giant killer of a competitive advantage in their:
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Extensive collections of books, appealing to target customers. Ex) specializing in hard to find books
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A small business owner needs to remember that when it comes to employee involvement in the strategic planning process:
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Delegating authority to them is essential, because these projects affect them most directly.
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The ________ is a set of measures unique to the company that gives managers a quick and comprehensive view of how the business is doing and includes both financial and operational factors.
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balanced scorecards
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It is important for the small business owner to remember that the strategic planning process is:
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An ongoing procedure that owners must repeat and gain experience, so the steps become much easier.
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In the creation of the balanced scorecard, the entrepreneur needs to:
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Identify the right factors and measurements to be included on the scorecard.
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Intellectual capital of a company is comprised of which components?
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Human capital, Structural capital, and Customer capital.
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Small businesses have a natural advantage over large competitors when it comes to
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Developing a strategy for establishing a competitive advantage.
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What strategy recognizes that not all markets are homogenous?
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focus strategy
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________ are a unique set of capabilities that a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, speed, responsiveness, and others that allow it to vault past competitors.
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Core competences
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To be effective, these competencies should be ________ for competitors to duplicate, and they must provide customers with a valuable perceived benefit.
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difficult
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The idea behind strategic planning is to give the business owner a way to match his/her company’s strengths and weaknesses to the opportunities and threats in the business environment.
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FALSE
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“What business am I in?” This is a question the entrepreneur needs to answer when creating the mission statement.
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TRUE
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After a company’s strengths and weakness are assessed, the strategic planning process should identify opportunities and threats facing the company and should isolate the key factors for success in the business.
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TRUE
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Key success factors are simply relationships between controllable factors and critical elements that permit a firm to compete in its industry.
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TRUE
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Most small business owners believe it is relatively unimportant to monitor their competitors’
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FALSE

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