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In the context of strategic thinking, which of the following is a difference between for-profit organizations and nonprofit organizations?
Unlike nonprofit organizations, for-profit organizations focus on gaining competitive advantage in the marketplace.
In for-profit firms, strategic planning typically pertains to competitive actions in the marketplace. In nonprofit organizations such as the American Red Cross or the Salvation Army, strategic planning pertains to events in the external environment.
Soleks is a footwear company. Its target customers are people who prefer to shop in small stores with a limited selection of high-quality footwear. To cater to its customers, the company opens shops in upscale locations and stocks them accordingly. In this scenario, which of the following is Soleks trying to do?
Achieve a competitive advantage
In this scenario, Soleks is trying to achieve a competitive advantage by providing a distinctive edge for meeting customer or client needs in the marketplace. Competitive advantage refers to what sets the organization apart from others and provides it with a distinctive edge in the marketplace.
Zeus Phones has launched a new cell phone model to keep up with the global "selfie" trend, which involves taking pictures of oneself. The phone has a 13 megapixel front camera with a wide angle lens to include the maximum number of faces. It also includes a timer and a beautification feature to enhance facial features. The selfie phone has now become the latest rage in the cell phone market and has won awards for its unique design. This scenario is illustrative of Zeus Phones's _____.
core competency
Zeus Phones has achieved core competence with the launch of the cell phone model with a specialized front camera. A core competence represents a competitive advantage because a company acquires expertise that competitors do not have.
In spite of the numerous pizza outlets in Chicago, Pete's Fast Pizza has zoomed past its counterparts in terms of popularity and sales due to its practice of adding a complimentary calzone and drink to each of its orders. In the context of strategy formulation, which of the following does this unique practice by Pete's Fast Pizza illustrate?
Value creation
The unique practice of adding a complimentary calzone and drink to each of its orders by Pete's Fast Pizza is illustrative of value creation. The free calzone and drink add to the customers' perception of value. Value can be defined as the combination of benefits received and costs paid.
In the context of SWOT analysis, in which SWOT stands for strengths, weaknesses, opportunities, and threats, an organization's growing global product demand and plant modernization are its:
opportunities.
In the context of SWOT analysis, an organization's growing global product demand and plant modernization are its opportunities. Opportunities are characteristics of the external environment that have the potential to help an organization achieve or exceed its strategic goals.
Onyx Stores has a chain of supermarkets in over 40 cities in the U.S. The individual supermarkets generate enough revenue for the organization to open another 20 supermarkets at other locations in some of the cities. In the context of the matrix developed by the Boston Consulting Group (BCG matrix), Onyx Stores can be classified as a _____.
Star
In the context of the matrix developed by the Boston Consulting Group (BCG matrix), Onyx Stores can be classified as a star. The star has a large market share in a rapidly growing industry. It is important because it has additional growth potential, and profits should be plowed into this business as investment for future growth and profits.
In the context of the BCG matrix, which is named for the Boston Consulting Group that developed it, which of the following dimensions are associated with the cash cow?
High market share and low growth rate
The BCG matrix organizes businesses along two dimensions—business growth rate and market share. The cash cow exists in a mature, slow-growth industry but is a dominant business in the industry, with a large market share. See 8-4: Formulating Corporate-Level Strategy
In the context of the BCG matrix that is named for the Boston Consulting Group, which developed it, which of the following statements is true of the question mark?
The question mark has a small market share in a new, rapidly growing industry.
The question mark exists in a new, rapidly growing industry, but has only a small market share. The question mark business is risky: It could become a star, or it could fail.
Hamza runs a small restaurant in the city. For the last few months, Hamza has been noticing a dip in the number of diners at the restaurant. Hamza decides to renovate the place and make it more appealing to attract a larger crowd. However, the number of diners remains low. Additionally, the number of take-outs begin to diminish as well. In the context of the BCG matrix (named for the Boston Consulting Group that developed it), Hamza's restaurant can be classified as a(n) _____.
Dog
In the context of the BCG matrix (named for the Boston Consulting Group that developed it), Hamza's restaurant can be classified as a dog. The dog is a poor performer. It has only a small share of a slow-growth market. The dog provides little profit for the corporation and may be targeted for divestment or liquidation if turnaround is not possible.
A well-established cosmetics company decides to launch a chain of beauty salons across the country. In order to attract a large clientele, these salons will offer premium beauty services and membership benefits. In the context of strategy formulation, this launch is an example of:
related diversification.
The launch of a nationwide chain of beauty salons by the cosmetics company is an example of related diversification. When the new business is related to a company's existing business activities, the organization is implementing a strategy of related diversification.
Joos-Up is an old food products company that produces fruit juices, jellies, jams, and other such products. It has recently decided to move into the electrical and power fixtures manufacturing sector. In the context of strategy formulation, which of the following does Joos-Up's move illustrate?
Unrelated diversification.
Joos-Up's move into the electrical and power fixtures manufacturing sector is an example of unrelated diversification. Unrelated diversification occurs when an organization expands into a totally new line of business, such as when food company Sara Lee Corporation moved into the intimate apparel business. With unrelated diversification, the company's lines of business aren't logically associated with one another.
A global burger chain has tailored its logo, menu, ingredients, and advertisements to the tastes and preferences of the people in the various locations of its outlets. This customization means that the burger chain has adopted a(n) _____.
multidomestic strategy
The global burger chain's customization means that it has adopted a multidomestic strategy. Thus, a multinational company is present in many countries, but it encourages marketing, advertising, and product design to be modified and adapted to the specific needs of each country.
Executives acquire information about opportunities and threats to their organization from a variety of reports, including budgets, financial ratios, profit and loss statements, and surveys of employee attitudes and satisfaction.
False
Managers obtain external information about opportunities and threats to their organization from a variety of sources, including customers, government reports, professional journals, suppliers, bankers, friends in other organizations, consultants, and association meetings. See 8-3: The Strategic Management Process
In the context of Porter's five competitive forces, rivalry among competitors is influenced by potential new entrants, the bargaining power of buyers and suppliers, the threat of substitutes, as well as by cost and product differentiation.
True
In the context of Porter's five competitive forces, rivalry among competitors is influenced by potential new entrants, the bargaining power of buyers and suppliers, the threat of substitutes, as well as by cost and product differentiation. With the leveling force of the Internet and information technology, it has become more difficult for many companies to find ways to distinguish themselves from their competitors, which intensifies rivalry. See 8-5: Formulating Business-Level Strategy
______________ occurs when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone.
Synergy
Strategy necessarily changes over time to fit environmental conditions, but to achieve competitive advantage, companies develop strategies that incorporate the elements of targeting specific customers, focusing on core competencies, providing synergy, and creating value. When organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone, synergy occurs. See "What Is Strategic Management?"
____________ is a recent trend and creates opportunities for more meaningful participation by employees in strategy formulation and execution.
Crowdsourcing
Crowdsourcing strategy, or "social strategy setting," as it is sometimes called, is a recent trend and creates opportunities for more meaningful participation by employees in strategy formulation and execution. By opening up the process of strategy formulation to all employees, crowdsourcing adds diversity of thought, gets top executives closer to understanding the implications of their choices, and helps to avoid limited-perspective biases of top managers. See "The Strategic Management Process" from chapter 8 for more information.
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