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Exam 10: Managing Strategically

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Question 31

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Your old friend Ariel Eskenazi is the owner and general manager of Megabyte Centre, a computer reseller and systems integrator located in Panama City, Panama. Since leaving IBM Canada to start a business in his home country, Ariel has watched his company grow steadily, due in large part to the business partnerships he's established over the years with large foreign computer and software firms, such as Goldstar and Microsoft. These relationships have helped his company win considerable market share in Panama, as well as in other parts of Latin America. However, in recent years, there has been a huge influx of foreign capital into Panama. For example, several large Asian firms have established subsidiaries in Panama to launch their North American operations. Tourism is also on the rise, and dozens of new hotels have been built in the metropolitan area over the past three years. As a result, demand for Megabyte's products and services has increased dramatically, but so has the level and diversity of its competition. While Megabyte's customer base has remained fairly loyal, many longtime customers are beginning to demand price concessions and enhanced service levels in return for their continued business. Ariel has recently learned that several of his former suppliers and business partners are considering establishing their own local sales offices in Panama City to sell direct to market rather than distributing through Megabyte. Ariel knows you are very knowledgeable about competitive strategy and asks for your advice. You begin by telling him a little about Michael Porter's competitive strategies framework. -The rapid industry growth rate and increasing growth of other existing businesses relate to which one of Michael Porter's five forces?

A) threat of substitutes
B) threat of new entrants
C) bargaining power of buyers
D) intensity of current rivalry

E) A) and B)
F) All of the above

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Question 32

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In horizontal integration,the organization attempts to gain control of its inputs by becoming its own supplier.

A) True
B) False

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Question 33

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Carly's general manager has just given her a big assignment: develop three different potential strategies the business could use to maintain its competitive advantage. Its computer business was slowly losing market share to competitors, and everyone realized that something needed to be done. Carly glanced through the article by Michael Porter that her manager had provided. According to Porter, there were three different types of strategies to choose from. Carly began wondering if there was a way they could make their computers cheaper so they could be sold at a lower price. If they could reduce the price by $100 per machine, they would become the industry price leader. Carly wondered if they could find any lower-priced suppliers for the more expensive computer components. She knew that their computers were particularly appealing to small business owners due, in part, to price. They were able to offer the lower price because their computers were not as powerful or fast as some machines; but they did contain all the basic word processing, database, and spreadsheet applications required by the typical small business owner. This combination of program capabilities, lack of product frills, and good reputation for quality had worked successfully for them in the past. Now Carly wondered if they would be better off looking at a smaller segment of the market, such as small businesses with accounts receivable billings that could fully utilize the database capabilities. She knew this strategy would cut their market potential by 50 percent, but maybe targeting a smaller market niche would lead to better results in the long-term. Carly began compiling her report for Friday's meeting. -The competitive strategy based on developing the market for small businesses that require large databases to process their accounts receivable billings is called ________.

When athletic sportswear manufacturer Nike decided to open its own chain of retail stores,it was pursuing which corporate strategy?

One method of implementing a growth strategy is by increasing production capacity.

Bella Vista Clothing targets teenaged girls with a range of affordable ready-to-wear clothing.The company is opening two new outlets,as sales have been excellent.Which of the following represents a strength for the company?

Terri has been asked to review her company's strategy in the cosmetics industry. Top management wants to ensure that they are aware of emerging trends and changes. Terri began reviewing a list of factors in her mind. Recently, there has been some negative publicity about cosmetics testing on animals; an industry practice that has become very controversial and increasingly unacceptable to consumers. The laboratory animals at Terri's company are well treated, but they are still used to test new products. On a positive note, industry-wide sales are up 10 percent. Women are buying more cosmetics in general, which is good news for the company. Another positive factor is their personnel. They have many good people working in the company, particularly in research and development where the expertise is exceptional. The only other negative factor noted by Terri was that last year's advertising campaign had not achieved the desired results. Something needed to be done in that department. Terri began to compile her report. -The failure of the advertising campaign would be classified as a(n) ________.

Imagine that you are the president of Clubhouse Gourmet, a successful chain of fast-food restaurants with 60 locations across Canada. The success you have experienced in the last five years has you considering various options about what to do next with the business. Should you continue to expand the business at the current rate? Or perhaps open new and different restaurants? What should you do? -Recently,you also purchased a small company that produces computer imaging software for medical applications.The business is profitable and growing,but the technological unknowns make it risky.According to the BGC matrix,it would be considered a ________.

Terri has been asked to review her company's strategy in the cosmetics industry. Top management wants to ensure that they are aware of emerging trends and changes. Terri began reviewing a list of factors in her mind. Recently, there has been some negative publicity about cosmetics testing on animals; an industry practice that has become very controversial and increasingly unacceptable to consumers. The laboratory animals at Terri's company are well treated, but they are still used to test new products. On a positive note, industry-wide sales are up 10 percent. Women are buying more cosmetics in general, which is good news for the company. Another positive factor is their personnel. They have many good people working in the company, particularly in research and development where the expertise is exceptional. The only other negative factor noted by Terri was that last year's advertising campaign had not achieved the desired results. Something needed to be done in that department. Terri began to compile her report. -The exceptional expertise in research and development would be considered a(n) ________.

One of the components of the mission statement should be the organization's competitive advantage.

________ are positive trends in external environmental factors,while ________ are negative trends.

A ________ is a strategic design for how a company intends to profit from its strategies,work processes,and work activities.

Terri has been asked to review her company's strategy in the cosmetics industry. Top management wants to ensure that they are aware of emerging trends and changes. Terri began reviewing a list of factors in her mind. Recently, there has been some negative publicity about cosmetics testing on animals; an industry practice that has become very controversial and increasingly unacceptable to consumers. The laboratory animals at Terri's company are well treated, but they are still used to test new products. On a positive note, industry-wide sales are up 10 percent. Women are buying more cosmetics in general, which is good news for the company. Another positive factor is their personnel. They have many good people working in the company, particularly in research and development where the expertise is exceptional. The only other negative factor noted by Terri was that last year's advertising campaign had not achieved the desired results. Something needed to be done in that department. Terri began to compile her report. -The quality of the company's personnel would be considered a(n) ________.

The Jim Pattison Group has grown by acquiring firms in diverse industries.Today,Jim Pattison owns food retail chains,car dealerships,radio stations,a fishing company,a sign company,a packaging company,and several museum-themed tourist attractions.Jim Pattison has pursued a strategy of ________.

Discuss how managers can formulate e-business strategies that contribute to the development of a sustainable competitive advantage in today's environment.

According to Michael Porter's competitive strategies framework,the cost leadership strategy results in exceptionally high-quality products at the lowest cost in the industry.

When L'Oréal acquired The Body Shop,it carried out ________.

At which step of the strategic management process do managers try to find out what the competition is doing and what pending legislation might affect the organization?

When Kimberly-Clark Corporation merged with Scott Paper Company to form the world's largest producer of tissue paper,they were pursuing which growth strategy?

According to our textbook,effective customer service strategies involve giving the customer what they want,effective communication,and ________.