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Chapter 8
Chapter 8 Selections
| Question | Answer |
|---|---|
| Functional strategy | developing and nurturing distinctive competence to maximize resource productivity |
| Market development | capture larger share of existing market with current products through market saturation and market penetration, develop new uses or new markets for current products |
| Product development | develop new products for existing markets, develop new products for new markets |
| Push | spend large amount of money on trade promotion to gain or hold shelf space in retail stores, includes discounts, special offers, advertising |
| Pull | money spent pulling the idea through the chain, building brand awareness so people ask for products, high level of advertising is beneficial to leading brands in the market (pull) |
| Brand extension | using successful brand name to market other products |
| Skim pricing | skim the cream from top demand curve with a higher price while the product is still new and competition is low |
| Penetration pricing | low price to dominate the industry, this is more effective than skim pricing to raise the operating profit in the long term |
| Dynamic pricing | prices vary depending on demand, market segment, market availability |
| Financial strategy | financial implications of corporate and business-level strategic options and identifies best financial course of action, competitive advantage through lower cost of funds and flexible ability to raise capital to support a business strategy |
| Leveraged buyout | company is acquired in a transaction financed largely by debt, usually obtained by a third party, such as insurance company or investment banker. Acquired company essentially ends up paying for its own acquisition |
| Technological leader | pioneer an innovation |
| Technological follower | imitating products of competitors |
| Mass production system | large number of low-cost, standard goods and services, narrowly defined repetitious tasks under close supervision, dominated until 1970s |
| Continuous improvement | Japanese firms, empowered cross-functional teams striving to constantly improve production processes, low-cost and high quality, managers are like coaches |
| Mass customization | people, processes, units, and technology reconfigure to give customers exactly what they want |
| Operations strategy | determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers. |
| Purchasing strategy | deals with obtaining the raw materials, parts, and supplies needed to perform the operations function. |
| multiple sourcing | purchasing company orders a part from several vendors |
| just-in-time | having the purchased parts arrive at the plant just when they are needed rather than keeping inventories. |
| parallel sourcing | two suppliers are the sole suppliers of two different parts, but they are also backup suppliers for each other’s parts. |
| Logistics Strategy | deals with the flow of products into and out of the manufacturing process. |
| HRM Strategy | whether a company should hire a large number of low-skilled employees for low pay, repetitive jobs, and are most likely quit after a short time or hire skilled employees with high pay and are cross-trained to participate in self-managing work teams. |
| 360-degree Appraisal | input is gathered from multiple sources, is now being used by more than 10% of U.S. corporations and has become one of the most popular and effective tools in developing employees and new managers |
| Information technology strategy | provide business units with competitive advantage. |
| Follow-the-sun management | project team members living in one country can pass their work to team members in another country in which the work day is just beginning. Thus, night shifts are no longer needed. |
| Outsourcing | purchasing from someone else a product or service that had been previously provided internally. |
| Offshoring | outsourcing of an activity or a function to a wholly owned company or an independent provider in another country. |
| Key to outsourcing | to purchase from outside only those activities that are not key to the company’s distinctive competencies. |
| Strategies to avoid | follow the leader, hit another home run, arms race, do everything, losing hand |
| Corporate Scenarios | pro forma (estimated future) balance sheets and income statements that forecast the effect each alternative strategy and its various programs will likely have on division and corporate return on investment. |
| Pro Forma | estimated future |
| Management's attitude toward risk | attractiveness of a particular strategic alternative is partially a function of the amount of risk it entails. |
| Risk | composed not only of the probability that the strategy will be effective but also of the amount of assets the corporation must allocate to that strategy and the length of time the assets will be unavailable for other uses. |
| Devil's Advocate | When this process is applied to strategic decision making, a devil’s advocate (who may be an individual or a group) is assigned to identify potential pitfalls and problems with a proposed alternative strategy in a formal presentation. |
| Dialectical Inquiry | combining two conflicting views (thesis and antithesis) into a synthesis, requires that two proposals using different assumptions be generated for each alternative strategy under consideration |
| Multiple Sourcing (why superior) | (1) it forces suppliers to compete for the business of an important buyer, thus reducing purchasing costs, and (2) if one supplier cannot deliver, another usually can, thus guaranteeing that parts and supplies are always on hand when needed. |
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