MGT4960 Chapter 8 - Strategy Formulation: Functional

Strategy & Strategic Choice

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1. Functional _________________________ is the approach a functional 13. Penetration _________________________ attempts to hasten market
Strategy area takes to achieve corporate and business Pricing development and offers the pioneer the
unit objectives and strategies by maximizing opportunity to use the experience curve to
resource productivity. gain market share with a low price and then
dominate the industry.
2. Marketing _________________________ deals with pricing, selling,
Strategy and distributing a product. 14. Penetration Which pricing strategy is more likely to raise
Pricing a unit's operating profit in the long-term?
3. Pricing, Marketing strategy deals with what 3
Selling, activities? 15. Dynamic The use of the Internet to market goods
Distributing Pricing directly to consumers allows a company to
of a Product use _________________________, a practice in which
prices vary frequently based upon demand,
4. Market Using a _________________________ strategy, a
market segment, and product availability.
Development company or business unit can (1) capture a
larger share of an existing market for current 16. Demand, In using the dynamic pricing strategy, prices
products through market saturation and Market vary frequently based upon what three
market penetration, or (2) develop new uses Segment, factors?
and/or markets for current products. Product
Availability
5. Product Using the _________________________ strategy, a
Development company or unit can (1) develop new 17. Financial _________________________ examines the financial
products for existing markets, or (2) develop Strategy implications of corporate and business-level
new products for new markets. strategic options and identifies the best
financial course of action.
6. Existing, New Using the product development strategy, a
company or unit can (1) develop new 18. Financial Financial strategy usually attempts to
products for _________________________ markets, or (2) Value maximize the _________________________ of a firm.
develop new products for _________________________
19. Leveraged In a _________________________, a company is
markets.
Buyout acquired in a transaction largely by debt,
7. Brand Using a successful brand name to market usually obtained from a third party, such as
Extension other products is called _________________________. an insurance company or an investment
banker.
8. Push Many large food and consumer companies in
the U.S. and Canada follow a 20. Reverse A number of firms have been supporting the
_________________________ strategy by spending a Stock Splits price of their stock using _________________________.
large amount of money on trade promotion in
21. R&D Strategy _________________________ deals with product and
order to gain or hold shelf space in retail
process innovation and improvement.
outlets.
22. Basic, What are the three different types of R&D?
9. Trade _________________________ include discounts, in-store
Product,
Promotions special offers, and advertising allowances
or Process
designed to "push" products through the
distribution system. 23. Technological What are the 2 R&D choices?
Leader,
10. Advertising Using a pull strategy means that a company
Technological
uses _________________________ to "pull" its products
Follower
through the distribution channels.
24. Pioneers an What does a technological leader do?
11. Skim Pricing, What two pricing strategies does a company
Innnovation
Penetration or business unit follow when pricing a new
Pricing product? 25. Imitated the What does a technological follower do?
Products of
12. Skim Pricing For new-product pioneers, _________________________
Competitors
offers the opportunity to "skim the cream"
from the top of the demand curve with a high
price while the product is novel and
competitors are few.
26. Open Innovation
27. Venture Capital
28. Operations Strategy
29. Advanced Manufacturing
Technology (AMD)
30. Computer-Assisted Design
and Manufacturing
31. CAD/CAM, Flexible
Manufacturing Systems,
Computer Numerically
Controlled Systems,
Automatically Guided
Vehicles, Robotics,
Manufacturing Resource
Planning (MRP II), Optimized
Production Technology, and
JIT Techniques
32. Job Shop
A newer approach to R&D is 33.
_________________________, in which a
firm uses alliances and
connections with corporate,
government, academic labs,
34.
and consumers to develop
new products and
processes.
Investing corporate
35.
_________________________ is one way
to gain access to promising
innovation at a lower cost
than by developing them
internally. 36.
_________________________
determines how and where
a product or service is to be 37.
manufactured, the level of
vertical integration in the
production process, the
deployment of physical 38.
resources, and relationships
with suppliers.
_________________________ is
revolutionizing operations
worldwide and should
continue to have a major 39.
impact as corporations
strive to integrate diverse
business activity by using
40.
computer-assisted design
and manufacturing
principles.
41.
What does CAD/CAM stand
for?
What techniques contribute
42.
to increased flexibility, quick
response time, and higher
productivity?
(*Hint: Operations Strategy)
43.
A _________________________ is a
one-of-a-kind production
using skilled labor.
Connected A _________________________ involves standardized
Batch Flow components; each machine functions such
as a job-shop but is positioned in the same
order as the parts are processed.
Flexible What is a manufacturing system in which arts
Manufacturing are grouped into manufacturing families to
System produce a wide variety of mass-produced
items?
Dedicated What is a manufacturing system in which
Transfer Lines highly automated assembly lines making one
mass-produced product using little human
labor.
Mass- A _________________________ was an excellent
Production method to produce a large number of low-
System cost, standard goods and services.
Continuous Under the _________________________ companies
Improvement empowered cross-functional teams to
System constantly strive to improve production
processes.
Modular The strategy of _________________________ is a
Manufacturing strategy in which preassembled
subassemblies are delivered as they are
needed to a company's assembly-line
workers, who quickly piece the modules
together into a finished product.
Internet The _________________________ is being increasingly
used both to find new sources of supply
and to keep inventories replenished.
Logistics _________________________ deals with the flow of
Strategy products into and out of the manufacturing
process.
Centralization, What are the three trends related to
Outsourcing, logistics strategy?
Internet
HRM Strategy _________________________ addresses the issue of
whether a company or business unit should
hire a large number of low-skilled
employees who receive low pay, perform
repetitive jobs, and will most likely quit after
a short time or hire skilled employees who
receive relatively high pay and are cross-
trained to participate in self-managing work
teams.
Diverse Using their HRM strategy, companies are
Workforce finding that having a _________________________ can
be a competitive advantage.
44. Follow-the- Multinational corporations are finding that 55. Use industry scenarios to What is the first step in
Sun having a sophisticated intranet allows develop a set of constructing a corporate
Management employees to practice _________________________, in assumptions about the task scenario?
which project team members living in one environment.
country can pass their work to team members
56. Develop common size What is the second step in
in another country in which the work days is
financial statements for the constructing a corporate
just beginning.
company's or business unit's scenario?
45. Exranets The use of information technology through previous years to serve as
_________________________ makes it easier for a the basis for the trend
company to buy from others rather than make analysis projections of pro
it themselves. forma financial statements.
46. Outsourcing _________________________ is purchasing from 57. Construct detailed pro What is the third step in
someone else a product or service that had forma financial statements constructing a corporate
been previously provided internally. for each strategic scenario?
alternative.
47. Offshoring _________________________ is the outsourcing of an
activity or a function to a wholly owned 58. Risk _________________________ is
company or an independent provider in composed not only of the
another country. probability that the strategy
will be effective but also of
48. Follow the What is a strategy in which the company
the amount of assets the
Leader imitates a leading competitor's strategy.
corporation must allocate to
49. Hit Another When a company is successful because it that strategy and the length
Home Run pioneered an extremely successful product, it of time the assets will be
tends to search for another super product unavailable for other uses.
that will ensure growth and prosperity. This
59. Risk is composed not only of Risk
strategy is called _________________________.
the probability that the
50. Arms Race Entering into a spirited battle with another strategy will be effective but
firm for increased market share might also of the amount of assets
increase sales revenue, but that increase will the corporation must
probably be more than offset by increases in allocate to that strategy and
advertising, promotion, R&D, and the length of time the assets
manufacturing costs. This strategy is called will be unavailable for other
_________________________. uses.
51. Do When faced with several interesting 60. Real-Options According to the
Everything opportunities, management might tend to _________________________ approach,
leap at all of them. This strategy is called when the future is highly
_________________________. uncertain, it pays to have a
52. Losing Hand A corporation might have invested so much in broad range of options open.
a particular strategy that top management is 61. Net Present Value (NPV) _________________________ is an
unwilling to accept its failure. This strategy is approach that calculates the
called _________________________. value of a project by
53. Corporate _________________________ are pro forma balance predicting its payouts,
Scenarios sheets and income statements that forecast adjusting them for risk, and
the effect each alternative strategy and its subtracting the amount
various programs will likely have on division invested.
or corporate return on investment 62. (1) Interest in the Stakeholders can be
54. Pro Forma Corporate scenarios are _________________________ corporation's activities, categorized in terms of their
balance sheets and income statements that and (2) Relative power to (1) _________________________, and (2)
forecast the effect each alternative strategy influence the corporation's _________________________ .
and its various programs will likely have on activities.
division or corporate return on investment
63. Political Strategy A _________________________ is a plan to bring stakeholders into agreement with a corporation's actions.
64. Take a chance on ignoring In evaluating a strategic alternative, strategy makers must consider pressures form the corporate
culture, culture and assess a strategy's compatibility with that culture. If there is little fit, management must
Manage around the culture decide if its should...
and change the
implementation plan,
Try to change the culture to
fit the strategy,
Change the strategy to fit the
culture.
65. Strategic Choice _________________________ is the evaluation of alternative strategies and selection of the best alternative.
66. Consensus There is mounting evidence that when an organization is facing a dynamic environment, the best
strategic decisions are not arrived at through _________________________ when everyone agrees on one
alternative.
67. Devil's Advocate The ideal of the _________________________ originated in the medieval Roman Catholic Church as a way of
ensuring that imposters were not canonized as saints.
68. Dialectical Inquiry _________________________ requires that two proposals using different assumptions be generated for each
alternative strategy under consideration.
69. 1. Mutual Exclusivity, Regardless of the process used to generate strategic alternatives, each resulting alternative must be
2. Success, rigorously evaluated in terms of its ability to meet what four criteria?
3. Completeness, and
4. Internal Consistency