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(1) Concentrate on a Single Industry - A growing company pursues this strategy as it reinvests its
profits to strengthen a competitive position in its current industry.
(2) Vertical Integration - Occurs when an organization, performing well in its industry, becomes involved in either producing its own inputs or distributing and selling its own outputs. Using this strategy, an organization can add value to its products by making them unique or can lower the costs of making and selling them.
(3) Diversification - Expanding a company's business
operations into a new industry in order to produce new kinds of goods or services. Managers can pursue either related diversification or unrelated diversification strategies. An organization using related diversification enters a new business or industry to create a competitive advantage in one or more of its existing businesses. Unrelated diversification involves entering new industries that are not related to the
organization's current businesses or industries, creating value by turning around that business and increasing its performance.
(4) International Competition - Adopt a global corporate strategy, selling the same standardized product in each national market in which their company competes. Or, choose a multi-domestic
strategy to customize products and marketing strategies for specific markets or countries.
Olav is the CEO for Blue Stone, Ltd., which makes costume jewelry designed by a Spanish artist named Valeria. As a result, this jewelry has strong appeal in areas of the United States with a large Latino population. However, the U.S. market already has two companies that make high-quality costume jewelry, which are popular with people who have a mid-to-high range income. Considering all of these elements, what should Olav
do to ensure Blue Stone gains market share and is profitable?
A) He should make sure every department, including production and marketing, is focused on highlighting how Valeria's designs are different from those of the competition.
B) He should focus the efforts of all departments on showing U.S. customers why Blue Stone's costume jewelry is better quality than fine jewelry.
C) He should ensure that every department, from production to marketing to shipping, focuses on reducing their
costs below those of their competitors.
D) He should narrow the company's target market to just the Latino market in a few areas of the United States and ensure that Blue Stone's prices are the lowest.
An organization purchases one of its suppliers in order to obtain access to the raw materials which it needs for its production. It also decides to sell its products through its own retail outlets. Which of the following corporate-level strategies is the organization using?
Vertical integration
Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products (backward vertical integration) or forward into a new industry that uses, distributes, or sells the company's products (forward vertical integration)
When Proctor & Gamble uses the same distribution system to deliver its oral care products and its hair care products to drugstore chains, this is an example of:
Synergy
The way Proctor & Gamble's disposable diaper and paper towel divisions cooperate is a good example of the successful production of synergies. These divisions share the costs of procuring inputs such as paper and packaging, a joint sales force sells both products to retail outlets, and both products are shipped using the same distribution system.
When Electrix Ltd., sells its TVs and VCRs using the same basic marketing approach in various countries, it is pursuing which of the following strategies?
Global Strategy
If managers decide that their organization should sell the same standardized product in each national market in which it competes, and use the same basic marketing approach, they adopt a global strategy.
Jespher, Inc., allows Hertonz, a foreign organization, to take charge of both manufacturing and distributing one or more of its products in Thailand in return for a negotiated fee. This is an example of which mode of international expansion?
Licensing
In licensing, a company (the licenser) allows a foreign organization (the license) to take charge of both manufacturing and distributing one or more of its products in the licensee's country or world region in return for a negotiated fee.
Procter & Gamble uses a joint sales force to sell both its laundry detergent products and its bath soap products to the same supermarket chains. This is an example of which of the following strategies?
Synergy
The way Proctor & Gamble's disposable diaper and paper towel divisions cooperate is a good example of the successful production of synergies. These divisions share the costs of procuring inputs such as paper and packaging, a joint sales force sells both products to retail outlets, and both products are shipped using the same distribution system.
Which of the following organizational strategies states the methods that a division or organization will use to compete against its rivals in the industry?
Business-level strategy
At the business level, the managers of each division create a business-level plan that details (1) the long-term divisional goals that will allow the division to meet corporate goals and (2) the division's business-level strategy and structure necessary to achieve divisional goals. Business-level strategy outlines the specific methods a division business unit or organization, will use to compete effectively against its rivals in an industry.
Which of the following is an advantage of the differentiation strategy?
Greater barriers to entry
Differentiation makes industry entry difficult because new companies have no brand name to help them compete and customers do not perceive other products to be close substitutes, so this allows for the premium pricing and results in high profits.
Manages at Ferwin Pvt. Ltd. which is number two in market share in the local sports equipments manufacturing industry, develop strategies to take over the number-one-spot. Under which of the following levels of organizational strategies would this strategy fall?
Business-level
Business-level strategy outlines the specific methods a division, business unit, or organization will use to compete effectively against its rivals in an industry.
A general guide to action for the managers of an organization is known as a:
policy
A policy is a general guide to action in an organization.
Managers at Dimensions, Inc., analyze the current situation of their organization and then develop plans to help their organization accomplish its mission and achieve its goals. This is known as:
strategy formulation
In strategy formulation, managers work to develop the set of strategies that will allow an organization to accomplish its mission and achieve its goals. Strategy formulation begins with managers systematically analyzing the factors or forces inside an organization and outside in the global environment that affect the organization's ability to meet its goals now and in the future.
Which of the following plans of an organization contains top management's decisions about the organization's mission, goals, strategy, and structure?
Corporate-level plan
The corporate-level plan contains top management's decision concerning the organization's mission and goals, overall (corporate-level) strategy, and structure.
Another name for the business level of the organization is:
divisional level
In large organizations planning usually takes place at three levels of management: corporate, business or division, and department or functional.
Firestone Tire and Rubber Company set up a chain of Firestone retail stores to sell its tires to American consumers. This is an example of:
forward vertical integration
Setting up stores that sell the company's own products makes it forward vertical integration. Vertical integration is a corporate-level strategy in which a company expands its business operations either backward into a new industry that produces inputs for the company's products (backward vertical integration) or forward into a new industry that uses, distributes, or sells the company's products (forward vertical integration).
Which of the following modes of international expansion gives an organization high potential return because the organization does not have to share its profits with a foreign organization, and its reduces the level of risk because the organization's managers have full control over all aspects of their foreign company's operations?
Wholly owned foreign subsidiary
When managers decide to establish a wholly owned foreign subsidiary they invest in establishing production operations in a foreign country independent of any logical direct involvement. It gives an organization high potential return because the organization does not have to share its profits with a foreign organization, and it reduces the level of risk because the organization's managers have full control over all aspects of their foreign subsidiary's operations.
Which of the following organizational strategies specifies the activities of managers at the departmental level of the organization?
Functional-level strategy
Functional-level strategy is a plan of action that managers of individual functions (such as manufacturing or marketing) can take to improve the ability of each function to perform its task-specific activities in ways that add value to an organization's goods and services and thereby increase the value customers receive
Arrow Corp. attempts to gain a competitive advantage by driving down its production costs per unit below those of its competitors. Which of the following strategies is Arrow pursing?
Low-cost strategy
With a low-cost strategy, managers try to gain a competitive advantage by focusing the energy of all the organization's departments or functions on driving the company's costs down below the costs of its industry rivals.
______ strategy specifies in which industries and national markets an organization intends to compete and why.
Corporate-level
Corporate-level plan contains top management's decisions concerning the organization's mission and goals, overall (corporate-level) strategy, and structure. Corporate-level strategy specifies in which industries and national markets an organization intends to compete and why.
Organizations that use a global strategy typically customize the product to meet the needs of customers in different countries
False
When managers decide that their organization should sell the same standardized product in each national market in which it competes, and use the same basic marketing approach, they adopt a global strategy.
A strategic alliance can take the form of a written contract between two or more companies to exchange resources, or it can result in the creation of a new organization.
True
A strategic alliance can take the form of a written contract between two or more companies to exchange resources, or it can result in the creation of a new organization.
At the functional level, the business-level plan provides the framework within which functional managers devise their plans
True
At the functional level, the business-level plan provides the framework within which functional managers devise their plans. A functional-level plan states the goals that the managers of each function will pursue to help their division attain its business-level goals, which, in turn, will allow the entire company to achieve its corporate goals.
The number of months covered in the typical business plan is known as the time horizon of the plan
True
Time horizon is the period of time over which plans are intended to apply or endure.
Corporate-level strategy involves choosing the industry in which a company will compete.
True
Corporate-level strategy is a plan of action that involves choosing in which industries and countries a company should invest its resources to achieve its mission and goals.
A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals, is called an organization's strategy.
True
Strategy is a cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals.
Planning involves identifying and selecting appropriate goals and courses of action for an organization
True
Planning is a process managers use to identify and select appropriate goals and courses of action for an organization.
The divisions of an organization exist at the functional level of the organization
False
At the business level are the different divisions or business units of a company that compete in distinct industries.