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Discuss the two basic growth strategies.

Your Answer:

Growth strategies are the most widely pursued corporate directional strategies because they are designed to increase sales, profits, assets, or a combination of all three. Two basic growth strategies include CONCENTRATION growth and DIVERSIFICATION growth.  

Concentration includes vertical and horizontal growth.

Vertical Growth - can be achieved by taking over a function previously provided by a supplier or distributor.  The company, in effect, grows by making its own supplies and/or by distributing its own products.

Horizontal Growth - A firm can achieve horizontal growth by expanding its operations into other geographical locations and/or by increasing the range of products and services offered to current markets.

Diversification includes concentric and conglomerate.

Concentric diversification into a related industry may be a very appropriate corporate strategy when a firm has a strong competitive position but industry attractiveness is low.

Conglomerate diversification is when management realizes that the current industry is unattractive and that the firm lacks outstanding abilities or skills that it could easily transfer to related products or services in other industries.  

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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Define a retrenchment strategy. Discuss in detail three popular options.

Your Answer:

A retrenchment strategy is used when a company has a weak competitive position in some or all of its products lines resulting froom poor performance.  This creates pressure to improve performance.  Three options of retrenchment strategy are Turnaround Strategy, Captive Company Strategy, and Sell-Out Divestment Strategy.

Turnaround Strategy emphasizes the improvement of operations effieciency and is probably most appropriate when a corporation's problems are pervasive but not yet critical. Research shows that poorly performing firms in mature industries have been able to improve their performance by cutting costs and expenses and by selling assets.  

Captive Company Strategy involves giving up independence in exchange for security.  A company with a weak competitive position may not be able to engage in a full-blown turnaround strategy.

Sell-Out Divestment Strategy is when a company has a weak competitive position in an industry is unable either to pull itself up by its bootstraps or to find a customer to which it can become a captive company, it may have no choice but to sell out.  For this strategy to work management must still be able to obtain a good price for its shareholders and the employees can keep their jobs by selling the entire company to a another firm.

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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What is outsourcing? What are the seven major outsourcing errors that should be avoided?

Your Answer:

Outsourcing is purchasing from someone else a product or service that had been previously provided internally.  There are seven major outsourcing errors that should be avoided. 

1. Outsourcing activities that should not be outsourced: Companies failed to keep core activities in house.

2. Selecting the wrong vendor: Vendors were not trustworthy or lacked state-of-the-art processes.

3. Writing a poor contract: Companies failed to establish a balance of power in the relationship.

4. Overlooking personnel issues: Employees lost commitment to the firm.

5. Losing control over the outsourced activity: Qualified mangers failed to manage the outsourced activity.

6. Overlooking the hidden costs of outsourcing: Transaction costs overwhelmed other savings

7. Failing to plan an exit strategy: Companies failed to build reversibility class into the contract.

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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In a dynamic environment, using consensus to arrive at a strategic decision is not recommended. Why? What two techniques can strategic managers use to avoid the consensus trap?

Your Answer:

Consensus is when everyone agrees on one alternative, it isn't recommended in a dynamic environment because the best decisions are actually made when there is a lot of heated disagreement, and even conflict.  Two techniques that can help strategic mangers avoid the consensus trap include Devil’s Advocate and Dialectical Inquiry.   

Devil’s advocate occurs when a person or group identifies potential pitfalls and problems with a proposed alternative strategy in a formal presentation.   

Dialectical inquiry requires two proposals using different assumptions are generated for each alternative strategy under consideration. After advocates of each position present and debate the merits of their arguments before key decision makers, either one of the alternatives or a new compromise alternative is selected as the strategy to be implemented. 

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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Discuss the five stages of international development.

Your Answer:

Companies that operate internationally tend to evolve through five common stages.  These stages all support international development however, they do not have to happen in a sequencing of stages.  Additionally, any one corporation can be at different stages simultaneously, with different products in  different markets at different levels.  Companies may also leapfrog across stages to a global emphasis.  

The five stages of International Development are:

Stage 1- Domestic Company: exports some of its products through local dealers and distributors in the foreign countries.

Stage 2- Domestic company with export divisions: With Stage 1 success the company is able to establish its own sales company with offices in other countries to eliminate the middlemen and better control marketing.

Stage 3 - Primarily domestic company with international division: Success in earlier stages leads the company to establish manufacturing facilities in addition to sales and services offices in key countries.

Stage 4 - Multinational corporation with multidomestic emphasis: At this stage they are now a multinational corporation (MNC), the company increases its investments in other countries.  The company establishes a local operating division or company in the host country to better serve the market.

Stage 5 - MNC with global emphasis: The most successful MNCs move into this stage in which they have the worldwide human resources, R&D, and financing strategies. 

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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What is executive succession? Discuss the hiring of insiders versus outsiders.

Your Answer:

Executive succession is the process of replacing a key top manager.  A company that usually promotes from within, usually grooms a particular candidate to take over.  They usually have higher performance than those that hire someone from the outside or hold a competition between internal candidates.  

Succession planning involves encouraging boards to help the CEO create a succession plan, identifying succession candidates below the top layer, measuring internal candidates against external candidates to ensure the development of a comprehensive set of skills, and providing appropriate financial incentives.  Prosperous firms will tend to look outside if they have no obvious internal candidates. Firms in trouble tend to hire outsiders.  It is the best way to force a change in strategy who has no connection to the current strategy.  

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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List the guidelines proposed for successful downsizing.

Your Answer:

The guidelines proposed for successful downsizing include:

· Eliminating unnecessary work instead of making across-the-board cuts: This involves spending the time to research where the money is going, and eliminate the task, not the workers.

· Contract out work that others can do cheaper: Mailroom and printing services could be outsourced to include payroll and accounts payable may be cheaper to pay someone else than to continue internally.

· Plan for long-run efficiencies: Don’t eliminate all postponable expenses, such as maintenance, R&D,, and advertising, in the hope that the environment will become more supportive.  Continue to hire, grown and develop, particularly focusing on critical areas.

· Communicate the reasons for actions: Tell employees not only why the company is downsizing, but also what the company is trying to achieve.  

· Invest in the remaining employees: Draft new job specifications, performance standards, appraisal techniques, and compensation packages.  Additional training is needed to ensure that everyone has the proper skills to deal with their expanded jobs and responsibilities.  

Develop value-added jobs to balance out job elimination: When no other jobs are available for the people effected by the downsizing to move to, management must consider other staffing alternatives.  

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

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Discuss the benchmarking process and the steps involved in the process.

Your Answer:

Benchmarking is the continual process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders. Benchmarking, an increasingly popular program, is based on the concept that it makes no sense to reinvent something that someone else is already using.  

The process usually involves the following steps: 

1. Identify the area of process to be examined.  It should have competitive advantage.

2. Find behavioral and output measures of the area or process and obtain measurements.

3. Select an accessible set of competitors and best in class companies against which to benchmark.  These may very often be companies tht are in completely different industries, but preform similar activities.

4. Calculate the differences among the company’s performance measurements and those of the best-in-class company and determine why the differences exist.

5. Develop a tactical program to close the performance gaps.

6. Implement the programs and then compare the new resulting new measurements with those of the best-in-class companies.

Benchmarking is usually produces the best results in companies that are well managed. Poor performing companies tend to be overwhelmed by the discrepancy between their performance and the benchmark.

Wheelan, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic Management and Business Policy (14th ed.). Upper Saddles River, New Jersey: Pearson Education, Inc.

Quiz Score: 200 out of 200

This quiz score has been manually adjusted by +200.0 points.