Question 1

Stages of the strategy- formulation framework

Accepted Answer

Stage 1: Input Stage
Stage 2: Matching Stage
Stage 3: Decision Stage

Question 2

Stage 1: Input Stage

Accepted Answer

Uses: EFE Matrix, IFE Matrix, CPM.
Purpose: Summarize key external opportunities/threats and internal strengths/weaknesses, plus competitors’ positions.
Output: Quantified “snapshot” of the firm’s situation to feed later stages.

Question 3

Stage 2: Matching Stage

Accepted Answer

Uses: SWOT, SPACE, BCG, IE, Grand Strategy Matrix.
Purpose: Match internal strengths/weaknesses with external opportunities/threats to generate feasible alternative strategies.
Output: A set of realistic strategic options.

Question 4

Stage 3: Decision Stage

Accepted Answer

Uses: QSPM (Quantitative Strategic Planning Matrix).
Purpose: Evaluate and prioritize the alternative strategies using numbers based on earlier analyses.
Output: The strategy (or strategies) the firm should actually pursue.

Question 5

SO strategies

Accepted Answer

use a firm’s internal strengths to take advantage of external opportunities.

Question 6

WO strategies

Accepted Answer

aim at improving internal weaknesses by taking advantage of external opportunities.

Question 7

ST strategies

Accepted Answer

use a firm’s strengths to avoid or reduce the impact of external threats.

Question 8

WT strategies

Accepted Answer

are defensive tactics directed at reducing internal weaknesses and avoiding external threats.

Question 9

Organizations commonly use three structures discussed in your text:

Accepted Answer

functional, divisional, and matrix.

Question 10

Functional

Accepted Answer

Advantages: simple and inexpensive; uses specialized expertise; needs less complex control; allows rapid decisions 
Disadvantages: accountability pushed to the top; weak delegation; limited career development; low morale; s

Question 11

Divisional

Accepted Answer

Advantages: clear accountability; strong local control; good career paths; encourages delegation; supports internal competition 
Disadvantages: costly; hard to keep uniformity across stores/products; needs elaborate controls;

Question 12

Matrix

Accepted Answer

Advantages: clear project objectives; people see project results; easy to end projects; efficient sharing of specialized resources.
Disadvantages: needs excellent communication; adds managerial cost; dual lines of authority and budgets

Question 13

Restructuring (often called downsizing)

Accepted Answer

is a retrenchment strategy where a firm intentionally reduces its size to cut costs and improve efficiency and effectiveness.

Question 14

Market segmentation:

Accepted Answer

Using demographic, geographic, psychographic, or behavioral characteristics of consumers to divide a market into distinct subsets of customers that differ from one another in product needs and buying habits.

Question 15

Product positioning

Accepted Answer

comes after segmentation and targeting. It means designing a marketing mix—product, price, promotion, and place—that offers unique value to a chosen target market.

Question 16

Why is projected financial analysis important relative to strategy implementation?

Accepted Answer

they show how recommended strategies will affect the firm’s finances before you actually implement them.

Question 17

Approaches to R&D

Accepted Answer

First mover
Fast follower

Question 18

Research and development (R&D)

Accepted Answer

is a key part of product planning, especially for firms using a product-development strategy.

Question 19

First mover

Accepted Answer

Spend heavily on R&D to be the first to develop radically new products.
Potential advantages: strong brand image, ability to set standards, temporary monopoly profits.
Risks: very high costs, high failure rates, and uncertainty

Question 20

Fast follower

Accepted Answer

Spend less on R&D by imitating, duplicating, or improving products after rivals introduce them.
Potential advantages: lower risk and cost, ability to learn from others’ mistakes.
Risks: always “behind,” and crowded markets with intense competition.

Question 21

Criteria to evaluate a strategy

Accepted Answer

Measurable and verifiable: 
Predictive, not just historical: 
Linked to objectives: 
Comparable: 
Economical and meaningful: 
Timely and appropriately frequent:

Question 22

Balanced Scorecard approach

Accepted Answer

is a strategy evaluation and control technique that helps firms avoid focusing only on financial results. It combines financial and nonfinancial measures to give a more complete picture of performance.

Question 23

Benchmarking

Accepted Answer

is a management and analytical tool used to see how competitive a firm’s value chain is compared with rivals.

Question 24

contingency plan

Accepted Answer

is an alternative plan that can be put into effect if key events do not occur as expected. Only high‑priority areas should have such plans, and they should be as simple as possible.

Question 25

“controls”

Accepted Answer

are systems and procedures—especially financial ones—that track how the organization is performing (revenues, costs, budgets, variances, etc.) and signal when actions are needed.

Question 26

“cultural differences” show up in two main ways:

Accepted Answer

Across countries (national culture)

Within and between organizations (organizational culture)

Question 27

triple-bottom-line”

Accepted Answer

Treat people (“People”)
Protect the environment (“Planet”)
Still remain profitable (“Profits”)

Question 28

Protectionism

Accepted Answer

is when a country uses policies to favor its own firms and workers over foreign competitors.

Question 29

“going public”

Accepted Answer

means that a private company starts selling shares of its ownership to the general public, usually through an initial public offering (IPO).

Question 30

five examples of finance and accounting decisions that may require policies:

Accepted Answer

Capital Structure Decisions:
Dividend Decisions: 
Asset Management:
Accounting Methods: 
Accounts Receivable Management:

Question 31

Capital Structure Decisions:

Accepted Answer

Policies can guide how a company raises capital, whether through debt, equity, or a combination, ensuring a balanced approach to financing.

Question 32

Dividend Decisions:

Accepted Answer

Establishing policies on dividend payouts can help maintain consistency and manage shareholder expectations, balancing between reinvestment and returns to shareholders.

Question 33

Asset Management:

Accepted Answer

Policies on whether to lease or buy fixed assets can provide a framework for making cost-effective and strategic decisions.

Question 34

Accounting Methods:

Accepted Answer

Choosing between accounting methods like LIFO, FIFO, or market-value approaches can be standardized through policies to ensure consistency in financial reporting.

Question 35

Accounts Receivable Management:

Accepted Answer

Policies can dictate terms for extending credit to customers, such as the time allowed for payment and any discounts offered, to manage cash flow effectively.

Question	Answer
Stages of the strategy- formulation framework	Stage 1: Input Stage Stage 2: Matching Stage Stage 3: Decision Stage
Stage 1: Input Stage	Uses: EFE Matrix, IFE Matrix, CPM. Purpose: Summarize key external opportunities/threats and internal strengths/weaknesses, plus competitors’ positions. Output: Quantified “snapshot” of the firm’s situation to feed later stages.
Stage 2: Matching Stage	Uses: SWOT, SPACE, BCG, IE, Grand Strategy Matrix. Purpose: Match internal strengths/weaknesses with external opportunities/threats to generate feasible alternative strategies. Output: A set of realistic strategic options.
Stage 3: Decision Stage	Uses: QSPM (Quantitative Strategic Planning Matrix). Purpose: Evaluate and prioritize the alternative strategies using numbers based on earlier analyses. Output: The strategy (or strategies) the firm should actually pursue.
SO strategies	use a firm’s internal strengths to take advantage of external opportunities.
WO strategies	aim at improving internal weaknesses by taking advantage of external opportunities.
ST strategies	use a firm’s strengths to avoid or reduce the impact of external threats.
WT strategies	are defensive tactics directed at reducing internal weaknesses and avoiding external threats.
Organizations commonly use three structures discussed in your text:	functional, divisional, and matrix.
Functional	Advantages: simple and inexpensive; uses specialized expertise; needs less complex control; allows rapid decisions Disadvantages: accountability pushed to the top; weak delegation; limited career development; low morale; s
Divisional	Advantages: clear accountability; strong local control; good career paths; encourages delegation; supports internal competition Disadvantages: costly; hard to keep uniformity across stores/products; needs elaborate controls;
Matrix	Advantages: clear project objectives; people see project results; easy to end projects; efficient sharing of specialized resources. Disadvantages: needs excellent communication; adds managerial cost; dual lines of authority and budgets
Restructuring (often called downsizing)	is a retrenchment strategy where a firm intentionally reduces its size to cut costs and improve efficiency and effectiveness.
Market segmentation:	Using demographic, geographic, psychographic, or behavioral characteristics of consumers to divide a market into distinct subsets of customers that differ from one another in product needs and buying habits.
Product positioning	comes after segmentation and targeting. It means designing a marketing mix—product, price, promotion, and place—that offers unique value to a chosen target market.
Why is projected financial analysis important relative to strategy implementation?	they show how recommended strategies will affect the firm’s finances before you actually implement them.
Approaches to R&D	First mover Fast follower
Research and development (R&D)	is a key part of product planning, especially for firms using a product-development strategy.
First mover	Spend heavily on R&D to be the first to develop radically new products. Potential advantages: strong brand image, ability to set standards, temporary monopoly profits. Risks: very high costs, high failure rates, and uncertainty
Fast follower	Spend less on R&D by imitating, duplicating, or improving products after rivals introduce them. Potential advantages: lower risk and cost, ability to learn from others’ mistakes. Risks: always “behind,” and crowded markets with intense competition.
Criteria to evaluate a strategy	Measurable and verifiable: Predictive, not just historical: Linked to objectives: Comparable: Economical and meaningful: Timely and appropriately frequent:
Balanced Scorecard approach	is a strategy evaluation and control technique that helps firms avoid focusing only on financial results. It combines financial and nonfinancial measures to give a more complete picture of performance.
Benchmarking	is a management and analytical tool used to see how competitive a firm’s value chain is compared with rivals.
contingency plan	is an alternative plan that can be put into effect if key events do not occur as expected. Only high‑priority areas should have such plans, and they should be as simple as possible.
“controls”	are systems and procedures—especially financial ones—that track how the organization is performing (revenues, costs, budgets, variances, etc.) and signal when actions are needed.
“cultural differences” show up in two main ways:	Across countries (national culture) Within and between organizations (organizational culture)
triple-bottom-line”	Treat people (“People”) Protect the environment (“Planet”) Still remain profitable (“Profits”)
Protectionism	is when a country uses policies to favor its own firms and workers over foreign competitors.
“going public”	means that a private company starts selling shares of its ownership to the general public, usually through an initial public offering (IPO).
five examples of finance and accounting decisions that may require policies:	Capital Structure Decisions: Dividend Decisions: Asset Management: Accounting Methods: Accounts Receivable Management:
Capital Structure Decisions:	Policies can guide how a company raises capital, whether through debt, equity, or a combination, ensuring a balanced approach to financing.
Dividend Decisions:	Establishing policies on dividend payouts can help maintain consistency and manage shareholder expectations, balancing between reinvestment and returns to shareholders.
Asset Management:	Policies on whether to lease or buy fixed assets can provide a framework for making cost-effective and strategic decisions.
Accounting Methods:	Choosing between accounting methods like LIFO, FIFO, or market-value approaches can be standardized through policies to ensure consistency in financial reporting.
Accounts Receivable Management:	Policies can dictate terms for extending credit to customers, such as the time allowed for payment and any discounts offered, to manage cash flow effectively.

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