Question 1: Describe the benefits of Good Strategic Planning? Define and give examples of key terms of Strategic Management?
Answer:
Strategic planning provides a variety of benefits in the organization. Below are some of the benefits:
Key terms of Strategic Management
- Purpose – this includes the reason why an organization exists. It includes a description of its current and future business. The purpose of an organization is its primary role in society, a broadly defined aim (such as manufacturing electronic equipment) that it may share with many other organizations of its type.
- Mission – it is the unique reason of an organization for its existence and what sets it apart from all others. The organization's mission describes why the organization exists and guides what it should be doing. Often, the organization's mission is defined in a formal, written mission statement. Decisions on mission are the most important strategic decisions, because the mission is meant to guide the entire organization. Although the terms " purpose " and " mission" are often used interchangeably, to distinguish between them may help in understanding organizational goals.
- Goals – this is the desired future state that the organization attempts to realize. It is a personal or organizational desired end-point in some sort of assumed development. Many people endeavor to reach goals within a finite time by setting deadlines.
- Objectives – refers to specific targets for which measurable results can be obtained. It also points out to the specific kinds of result the organization seeks to achieve through its existence and operations. What the organization hopes to accomplish.
- Strategy – are means by which long term objectives will be achieved. Its role is to identify the general approaches that the organization utilize to achieve its organizational objectives.
- Tactics – are specific actions, sequences of actions and schedules an organization uses to fulfill its strategy. It is also considered as game plan.
- Policy - Policies include guidelines, procedures, rules, programs, and budgets established to support efforts to achieve stated objectives. Therefore, policies become important management tools for implementing them.
- Strategists - are the individuals who are involved in the strategic management process. Several levels of management may be involved in strategic decision making. However, the people responsible for major strategic decisions are the board of director, president, the chief executive officer, the chief operating officer, and the division managers
Question 2: Explain the concept of SBU in a Multi Business Organization. Identify the Three levels of Strategy-Corporate, Business and Functional. How do Goals and Objectives vary at each Level?
Answer:
The concept is that a strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. Corporate Strategy level is fundamentally concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business. The primary items for this level are the following: reach, competitive contact, managing activities and business interrelationships and management practices.
Business level on the other hand is a strategic business unit that may be a division, product line or profit center that can be planned independently from other business units of the organization. In this level, the strategic issues are less about coordination of operating units and more about developing and sustaining competitive advantage for the goods and services they produced. The third is Functional level, where it is the operating divisions and departments. The strategic issues at the functional level are related to business processes and value chain. It involves the development and coordination of resources through which business unit level strategies can be executed effectively. Functional units of an organization are involved in higher level strategies by providing input into the business unit level and corporate level strategy such as providing information on resources and capabilities on which the higher level can be based.
Goals and objectives are often interchanged at each level. Basically it is more geared towards what the organization would want to be in the future and the means by which to get there. The means are needed to be quantifiable to gather accurate interpretations.
Question 3: What should be the key Traits of a CEO? What are the forces that design the Strategic Management Systems?
Answer:
It is noted that no two persons are alike this is also true with regards to their personality and how they run their corporations/organizations. However, below are some of the traits a CEO should possess to effectively run his/her organization. 1.
- Conveys strong sense of vision
- Links compensation to performance
- Communicates frequently with employees
- Emphasizes ethics
- Plans for management succession
- Communicates frequently with customers
- Reassigns or Terminates
- Rewards loyalty
- Makes sound decisions
Production lead time
Capital intensive
Labor intensive
Manufacturing process
Technology
Market reaction time
Nature of problems – determining nature of problems help in the design of the system as they can come up with counter measures to solve the situation.
Question 4: Discuss the various grand strategies at the Corporate Level i.e. Stability, Growth and Retrenchment.
Answer:
In Growth, the company seeking growth faces different subgroups for it: horizontal growth (concentration), diversification and vertical growth.
Horizontal growth
– There are 3 components to horizontal growth. First a companymay decide to look for new customers. Second, a company may decide to pursue new product. Third, the company may pursue new locations.
Vertical Integration
– It is an integration along a supply chain. An example would be if a retailer now manufactures the products it sells, that is considered as increasing its level of vertical integration.
Diversification
– there are 2 types of diversification. First is related diversification, which is a common core of one’s resources and capabilities. With this, synergy rises because the related activity can increase the value and economies of scale can save money. Second is the unrelated diversification where it is used to lower the relative risk. Basically it is like a portfolio, the more different each portfolio is to each other the better. Another example is that when a product is released. It is done so over several markets to hedge risk of failure. In Stability, when a company is seeking slow growth or stagnation, management usually seeks strategies geared towards stability. There are 3 elements to which stability is used to strategize.
Pause
– if the internal resources are already stretched thin, organizations will often scale down a bit and focus on control. Proceeding with caution – if there are problems in the macro environment, the company may opt for a strategy that goes for a formidable growth..
Profit
– if the company has loyal customers, solid base, the strategy is to go for research and development.
Retrenchment – this strategy revolves around cutting sales. It is also a strategy that seeks to reduce size or diversity of an organization’s operations. Expenditures are also cut off or minimize to become financially stable. Manpower headcount is also affected when there is retrenchment. As the size of manpower is lowered to meet viable financial stability.
Assignment – C
Objective Questions 1. Which approach to the study of leadership emphasizes the role of situational factors and how these moderate the relationship between leader traits or leadership behaviors and leadership effectiveness?
a) Leader-oriented approach.
b) Contingency approach.
c) Transactional approach.
d) Transformational approach
2. Porter has designed a framework to help understand why certain countries achieve global competitive advantage in certain industries. It also helps internationalizing firms to make location decisions. The framework is called: a)
Porter's value chain
b) Porter's Five Forces
c) Porter's Generic Strategies
d) Porter's Diamond
3.It is generally agreed that the role of strategy is to:
a)Make best use of resources
b)Make profits for the organization
c)Make the best products and services
d)Achieve competitive advantage
4.Kay (1993) sees the strategy of an organization as matching internal capabilities with:
a)Its external relationships
b)Its customer needs
c) The industry life cycle
d) The external environment
5. An organization's external environment consists of the general or macro environment and:
a) The internal environment
b)The competitive environment
c) The specific environment
d) The micro-environment
6.The term 'corporate strategy' concerns strategy and strategic decisions
a) In the private sector only.
b)Developed by the senior management in an organization.
c) In certain types of organizations.
d) At all levels in an organization.
7. A key characteristic of strategic decisions is:
a)They are normally definite decisions about the future of the organization.
b) They identify specific areas of strategic interest for the management of an organization.
c) They result in better organizational performance.
d) They are likely to be concerned with, or affect, the long-term direction of an organization.
8. It is possible to identify different levels of strategy in an organization, these are:
a) Corporate and functional.
b) Corporate and Business
c) Strategic and tactical.
d) Corporate; strategic business unit; operational.
9. An organisation's mission can be defined as:
a) The overriding purpose in line with the values or expectations of stakeholders.
b) The overriding purpose regardless of the values or expectations of stakeholders.
c) The organisation's business plan.
d) The desired future state of the organisation.
10. Strategic choices require an understanding of:
a) the business environment, the competition and the strategic capability of the organisation.
b) The key drivers of change.
c) The organisational strengths and weaknesses.
d) The underlying bases for future strategy at business unit and corporate levels; the options for developing strategy in terms of directions and methods of development.
11. In Porter's Five Forces, the 'threat of new entrants' relates to:
a)Substitutes
b)Switching costs
c) Buyer power
d) Barriers to entry
12. Brandenburg and Nalebuff added a sixth force to Porter's Five Forces. It is known as:
a) Seller power
b) Complementors
c) Substitutes
d)Government regulation
13.Barriers to entry into an industry are likely to be high if:
a) Switching costs are low
b) Differentiation is low
c) Access to distribution channels is high
d) Requirement for economies of scale is high
14. Buyer power is high if:
a) They have little information
b) The buyer requires a high quality product for their own production
c) Differentiation is low
d) Switching costs are low
15. Competitive rivalry will be high if:
a)There are a few strong players in the industry
b) There is a high degree of differentiation
c) The industry is in its infancy
d) The industry is fragmented
16.A strategic group can be defined as:
a)A group of key resources and competences that are necessary to achieve competitive advantage
b)A group of customers that have similar characteristics
c) An industry recipe
d) A group of firms in an industry following the same or a similar strategy
17. The key activities in the strategic management process are:
a) Analysis, formulation, review
b) Analysis, implementation, review
c) Formulation, analysis, implementation
d) Analysis, formulation, implementation
18. Strategy analysis is also referred to as:
a)Strategy diagnosis
b) Rational analysis
c) Situation analysis
d) SWOT analysis
19. Strategy formulation takes place at two levels. These are:
a)Conscious and sub-conscious
b)Implicit and explicit
c)Values and operational
d)Corporate and business
20. The Policies of an organization derive from its:
a)Purpose
b) Vision
c) Objectives
d) Strategy
21. The statement of an organization's aspirations can be found in the organization's:
a)Policies
b)Mission
c)Strategy
d)Vision
22. A substitute product or service is:
a)A new entrant into the industry
b)A competitor's product or service
c)A less attractive way of meeting the same need
d) An alternative way of meeting the same need
23. Cross-functional teams are:
a) The representative voice of senior management.
b) A small group of specialists who collaborate on a task force.
c) A small group of people who come together to resolve business unit issues.
d) A small group of people from different departments who are mutually accountable to a common set of performance goals.
24.The business unit strategy has three major components:
a)business mission, department mission, and daily plans
b)competencies, abilities, and problem statements
c)marketing, advertising and pricing objectives
d)mission, business unit goals, and competencies
25.Disney is in the business of:
a)Building theme parks.
b)Designing new imaginative characters.
c)Making money.
d)Creating entertainment, fun and fantasy.
26.A useful framework used to assess a company's investments/divisions is called:
a)corporate insight analysis
b)company productivity analysis
c)SBU knowledge analysis
d)business portfolio analysis
27.Cash cows are SBU's that typically generate:
a)large awareness levels but few sales
b)paper losses in the long run
c)problems for product managers
d)large amounts of cash
28.Business unit competencies should be distinctive enough to provide
a)clear understanding of who you want to lead the company
b)opportunity to compete on a productivity basis
c)additional strategic mission
d)competitive advantage
29.TQM is a strategy that is designed to change the quality of a product to satisfy customer needs by using the concept of
a)reverse brainstorming
b)brainstorming
c)product life cycle analysis
d) benchmarking
30. Firms may view growth opportunities in these terms:
a) New markets and current and new products b)
b) New markets and new products
c)Current markets and current products
d) Current and new markets, and current and new products
31.The strategic marketing process is how an organization allocates its marketing mix resources to reach its:
a)target markets
b)area of expertise c)competition
d)stated business ideas
32.An effective short-hand summary of the situation analysis is a:
a)SWOT analysis
b)SBU analysis
c)BCG analysis
d)Competition analysis
33. In the strategic marketing process, once you get results you go into the:
a)control phase
b)marketing plan
c)planning phase
d)marketing program
34.Ansoff had four market-product strategies to expand sales. They included (1) market penetration, (2) product development, (3) market development and:
a)diversification
b)current customer retention
c)distribution enhancement
d)product simplification
35.Aggregating prospective buyers into groups is called:
a)market segmentation
b)BCG matrix analysis
c)grouping
d)market categorization
36.One key to effective implementation is setting:
a)schedule of events
b)milestones
c)good managers in motion
d)goals
37.When actual performance results are better than what the plan called for, managers should:
a)Find creative ways to exploit the situation.
b)Issue more stock options to employees.
c)Increase prices.
d)Ignore it.
38. Value for shareholders of a firm is measured by:
a)stock performance and profitability
b)sales revenue
c)satisfactory employee targets
d)profitable year-end balance sheet
9.The _____ for PepsiCo is "We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of quality."
a)mission
b)organizational code of conduct
c)functional code
d)benefits statement
40.A firm can acknowledge the critical importance of its _____, by having explicit goals that state its intention to improve work conditions by adding more lighting and providing the workers with more and better safety equipment.
a)employee welfare
b)market share
c)sales revenue
d)satisfaction
