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MADM 760 - Wyatt - Ch 8-9
Terms in this set (66)
represent the lowest strategy tier.
T/F: The link between functional and business strategies is clear in all cases.
T/F: The business strategy usually dictates what must be done within the various functions.
T/F: Business strategies are usually developed by top executives in the business unit while functional strategies are typically crafted by departmental managers who are responsible for implementing them.
T/F: Business units that compete with the low-cost generic strategy produce basic, relatively undifferentiated outputs and often offer high prices.
T/F: Business units that compete with the low-cost generic strategy produce basic, relatively undifferentiated
outputs and often offer low prices.
T/F: Low-cost businesses spend more on promotion and often emphasize price.
T/F: Differentiated businesses highlight the uniqueness of their products or services.
This business tends to minimize financial costs and often defer expansion if the cost of capital is too high.
This business tends to fund initiatives associated with quality improvements and expansion even when the cost of capital is relatively high.
This ratio Indicates how much of the current liabilities the current assets can cover; ordinarily 2:1 or better is desirable.
This ratio indicates how rapidly a business can come up with cash on short notice. Not relevant for firms where inventory is almost immediately convertible to cash. AKA: Acid Test or Liquidity Test
This ratio Indicates the percentage that borrowed funds are utilized to finance the assets of the firm.
This ratio Indicates the percentage of funds provided by creditors as compared with owners.
This ratio Indicates the percentage of funds provided by long-term creditors as compared with owners.
the reduction in per-unit costs that occurs as an organization gains over time. Reductions can come through organizational learning, economies of scale, or capital-labor substitutions.
occurs when employees become more efficient when they perform the same task many times.
refers to the reductions in per-unit costs as volume increases.
Economies of Scale
Refers to an organization's ability to substitute labor for capital, or vice versa as volume increases, depending on which combination minimizes costs and/or maximizes effectiveness.
An effort to eliminate operations that are unnecessary or add little value to the final product.
Business Process Reengineering
In production, low-cost businesses emphasize cost reductions via the _________
Refers to the totality of features and characteristics of a product or service that bear on its ability to satisfy customer needs
TQM (Total Quality Management)
refers to efforts directed towards improvements or innovations in the quality or uniqueness of a company's outputs.
seeks to reduce operational costs and make them more efficient.
T/F: R&D is most important in rapidly changing industries where production modifications are most often required to remain competitive.
Differentiators usually invest more in _________ R&D, whereas cost leaders usually invest more in _________ R&D.
T/F: Low-cost businesses procure supplies and raw materials at the lowest possible price consistent with a quality standard.
Differentiated businesses may be willing to pay more for raw materials if they help differentiate the final product or service.
the sum of the capabilities of individuals in an organization, and is a source of competitive advantage.
people and their skills and abilities represent the only resource that cannot readily be reproduced by a firm's competitors.
Emphasis on R&D is seen in which industry lifecycle phase?
Emphasis on marketing is seen in which industry lifecycle phase?
Emphasis on production is seen in which industry lifecycle phase?
Emphasis on finance is seen in which industry lifecycle phase?
An inventory system, popularized by the Japanese, in which suppliers deliver parts just at the time they are needed by the buying organization to use in its production process.
Just In Time (JIT)
T/F: Because functional strategies should be designed to support corporate and business strategies, they should not be considered until corporate and business strategies have been formulated.
The most appropriate means of securing funds likely depends on the corporate and business strategies being pursued.
The reduction in per-unit costs that occurs as an organization gains experience producing a product or service is known as economies of scale. Economies of scale is one of the contributing factors to the experience curve.
The purchasing department in a low-cost business should always purchase raw materials at the lowest possible cost.
The HR department in a low-cost business should always attempt to hire managers and workers at pay rates below those of their competitors.
A key characteristic of an effective IS is its ability to serve and help integrate the other functional areas of the business.
Functional strategies should_______
be integrated across the business unit
support the business strategy
support the corporate strategy
identifies the distance between a firm's current position and its desired position with regard to an internal weakness.
T/F: A firm should take action to close the gap, especially when it leaves a firm vulnerable to external threats.
Describes the activities that comprise the economic performance and capabilities of the firm. It helps a firm analyze its strengths and weaknesses, and understand how they might translate into competitive advantage or disadvantage.
The mechanism through which individuals in an organization coordinates efforts along one or more resources to solve a particular problem.
Three sources of organizational strengths and weaknesses are _______
Human Resources, Organizational Resources, Physical Resources
The experience, capabilities, knowledge, skills, and judgment of all the firm's employees.
The firm's systems and processes, including its strategies at various levels, structure, and culture.
Plant and equipment, geographic locations, access to raw materials, distribution network, and technology.
helps strategic managers evaluate the competitive quality of the resources controlled by the organization on the basis of four progressive characteristics
Can the resource be employed to exploit an opportunity or neutralize an external threat?
Is the resource controlled by a relatively small number of individuals or firms?
Can other firms easily imitate or acquire the resource?
Is the firm poised to exploit the resource?
Factors associated with the firm such as a poor financial position, an ineffective marketing strategy, or a strong brand image are internal factors and therefore must be classified as ____________
Strength or Weaknesses
factors outside the firm such as demographic changes, competitive threats, or recent legislation are external factors and therefore must be classified as ______
opportunities or threats
represent the application of macroenvironmental forces to a specific organization.
emanate from the SW/OT matrix and represent specific courses of action that the organization may choose to pursue.
"Offensive" alternatives, utilize a strength to address an opportunity.
"Defensive" alternatives, eliminate or minimize a weakness in order to minimize the effect of a threat.
Utilize a strength to minimize the effect of a threat.
Shore up a weakness to enable the organization to take advantage of an opportunity. may be offensive or defensive
A growth strategy contingent on inventing or discovering a new industry or industry segment that creates new demand.
Blue Ocean Strategy
The tool that enables executives to position an organization to take advantage of particular opportunities in the environment while avoiding or minimizing environmental threats is called_______
The description of activities that comprise the economic performance and capabilities of the firm is known as_______
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