Deck 6: Developing Strategic Alternatives

Question 1

By pursuing maintenance of scope strategies, management believes which of the following?

A)Investments in maintaining infrastructure will provide a competitive advantage in a stable industry.
B)Short-term gains in profitability and market share can be achieved by selectively eliminating product and service lines.
C)The past strategy has been appropriate and few changes are required in the target markets or the organization's products/services.
D)Maintaining a stable organizational structure will amplify the organization's ability to recognize emerging market opportunities.

Answer 1

C

Question 2

The three major methods of market entry are: purchase (e.g., acquisition), cooperation (e.g., joint venture), and market segmentation (e.g., cost leadership).

Answer 2

False

Question 3

What are the alternative strategies available to an organization included in the class of strategies known as adaptive strategies - expand, reduce, or
maintain scope?

Answer 3

Expansion of scope strategies include diversification, vertical integration, market development, product development, and penetration. Reduction of scope strategies decrease the size and scope of operations. Reduction of scope strategies include divestiture, liquidation, harvesting, and retrenchment. The two maintenance of scope strategies are enhancement and status quo.

Question 4

In a focused factory strategy, an organization:

A)Performs only one function in order to likely perform it better.
B)Concentrates on building competitive advantage by operating only one facility.
C)Diversifies its products and services.
D)None of the above.

Question 5

Which of the following is NOT part of strategy formulation?

A)Environmental analysis.
B)Development of strategic alternatives.
C)Evaluation of alternatives.
D)Strategic choice.

Question 6

Implementation strategies include objectives and plans for:

A)Directional and adaptive strategies.
B)Competitive strategies.
C)The organizational units to accomplish the strategies (managing strategic momentum).
D)Entering markets and exploiting brand preferences among customers.

Question 7

Divestiture is a contraction strategy in which an operating strategic service unit is sold off as a result of a decision to permanently and completely leave the market despite its current viability.

Question 8

The choice of a strategic alternative creates additional direction for an organization and subsequently shapes its internal systems.

Question 9

What is the linkage between strategic planning and decision making?

Question 10

Which of the following are positioning strategies?

A)Mergers and acquisitions.
B)Cost leadership and differentiation.
C)Defender, prospector, analyzer, and reactor.
D)Internal development, internal ventures, and reconfiguring the value chain.

Question 11

Strategies selected by the organization should address external issues, draw on competitive advantages, and:

A)Keep the organization within the parameters of the mission and values.
B)Move the organization toward the vision.
C)Make progress toward achieving one or more of the organization's strategic goals.
D)All of the above.

Question 12

What are the differences between the market entry strategies of acquisition, merger, and internal development?

Question 13

Why is it unlikely that a single strategy will be sufficient for an organization?

Question 14

Which of the following is a disadvantage of merger as market entry strategy?

A)New management team may be required.
B)Limits potential.
C)Initially must focus on a niche rather than entire market.
D)Takes a long time to merge cultures.

Question 15

Adaptive strategies involve decisions about whether an organization should expand, reduce, or maintain its scope.

Question 16

Which of the following is NOT an expansion of scope strategy?

A)Diversification.
B)Horizontal integration.
C)Vertical integration.
D)Market development.

Question 17

The strategy formulation decision logic provides a sequence for making the strategic decisions.

Question 18

Decisions concerning five categories of strategies - directional strategies, adaptive strategies, market entry strategies, competitive strategies, and implementation strategies - should be addressed how?

A)In any order and without regard to specificity.
B)Sequentially with each subsequent decision more specifically defining the activities of the organization.
C)Simultaneously with each decision being made independently of other decisions.
D)In the order of market entry strategies, competitive strategies, directional strategies, and implementation strategies with each subsequent decision more specifically defining the activities of the organization.

Question 19

Considering the ends/means chain, the ends refer to:

A)The nature of the competitive environment.
B)The scope of operations and specifically how the organization will expand, reduce, or maintain operations.
C)Service delivery strategies, value adding support strategies, and action plans.
D)Mission, vision, values, and strategic goals.

Question 20

Market development is an adaptive strategy that an organizational unit or division can use to enter new markets with present products or services.

Question 21

The strategies selected by the organization should address external issues, draw on competitive advantages or fix competitive disadvantages, keep the organization within the parameters of the mission and values, move the organization toward the vision, and make progress toward achieving one or
more of the organization's strategic goals.

Question 22

A major disadvantage of the positioning strategy of cost leadership is that prices will probably be high.

Question 23

Strategic posture is the way organizations behave within their market
segments or industry.

Question 24

Strategic planning is essentially decision making, deciding which strategy from among the many available alternatives the organization will pursue.

Question 25

In general, venture capital investments are used to become involved in the growth and development of a small organization that has the potential to
develop a new or innovative technology.

Question 26

In making decisions concerning the five categories of strategies (directional strategies, adaptive strategies, market entry strategies, competitive
strategies, and implementation strategies), the order in which the strategies are addressed is inconsequential since the strategies are mutually exclusive.

Question 27

Strategy formulation includes development of strategic alternatives, evaluation of alternatives, and strategic choice.

Question 28

Differentiation is a strategy to make the product or service different (or appear so in the mind of the buyer) from competitors' products or services.

Question 29

Purchase market entry strategies allow an organization to use its financial resources to enter a market quickly, thereby initiating the adaptive strategy.

Question 30

Combination strategies are often used, especially in larger complex organizations, because no single strategy alone may be sufficient.

Question 31

An organization that uses internal resources for entering a new market is deploying a development strategy.

Question 32

Market entry strategies are the means for accomplishing the ends of adaptive strategies.

Question 33

Cost leadership is an adaptive strategy for the expansion of an organization's scope.

Question 34

Competitive strategies are of two types: one that determines an organization's strategic posture and one that positions the organization vis- à-vis other organizations within the market.

Question 35

Market entry strategies are used for reduction of scope of an organization.

Question 36

Implementation strategies are developed to activate competitive strategies but do not serve this purpose for adaptive and market entry strategies.

Question 37

A major advantage of the differentiation positioning strategy is that it gives the organization greater control over pricing.

Question 38

Strategic alliances are special variants of venture capital investments in which several venture capital firms pool an investment in a single entity.

Question 39

Environmental analysis is an integral part of strategy formulation.