Business Management Capstone Questions with Verified Solutions (Rated A+)

Business Management Capstone Questions with Verified Solutions (Rated A+) Cost Leadership - Answers Emphasizes producing standardized products at a low per-unit cost for consumers who are price-sensitive Type 1: Low-Cost Strategy (at the lowest price available on the market) Type 2: Best-Value Strategy (best price available on the market) How to: a) economies of scale, b) experience curve, c) lower input costs, d) first mover advantage, e) capacity utilization Differentiation - Answers A strategy aimed at producing products and services considered unique industrywide and directed at consumers who are relatively price-insensitive POP (point of parity) POD (point of difference) Focus or Niche - Answers Producing products or services that fulfill the needs of a small group of consumers BCG Matrix - Answers Graph with the vertical axis the "industry growth rate" and the horizontal axis "Market share." Four quadrants, the first (top right) "Question Marks" (High industry growth rate, low market share - category booming, but your falling behind). Quadrant 2 (top left) "Stars" (has high industry growth rate and high market share). Quadrant 3 (bottom left) "Cash Cow" (Industry growth rate low, market share high - ex. Jello, which is also a Eponym, like Kleenex). Quadrant 4 (bottom right) "Dog" (Low industry growth rate and low market share - like Blockbuster, VHS's) Vertical Integration (3 Types) Integration strategies - Answers Backward Integration: Seeking ownership or increased control of a firm's suppliers, such as a manufacturer acquiring its raw material source firms. (Campbell's soup buying the company that makes the cans for their soup) (this lowers cost, eliminates supplier power, and improves forecasting) Forward Integration: Involves gaining ownership or increased control over distributors or retailers, such as a manufacturer opening its own chain of stores. (Nike) (Retain profits, distributors expensive, grow industries) Horizontal Integration: Acquiring a rival firm. (Macy's buying Marshall Fields) (Give them market share, economies of scale) Financial Objectives - Answers Include desired results growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on. Strategic Objectives - Answers Desired results such as a larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improved products to market ahead of rivals. Market Penetration (intensive strategy) - Answers Increasing market share for present products or services in present markets through greater marketing efforts. Increase market share, increase usage rate. Strategic Alliances - Answers agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies between mergers and acquisitions and organic growth. Diversification - Answers Related Diversification Unrelated Diversification Acquisitions and Mergers - Answers Merger: occurs when two organizations of about equal size unite to form one enterprise Acquisition: occurs when a large organization purchases (acquires) a smaller firm, or vice versa Joint Ventures - Answers A popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity Related Diversification (diversification strategy) - Answers Adding new but related products or services (ex. Toys 'R' us developed a new Wi-Fi tablet computer for children) Unrelated Diversification (diversification strategy) - Answers Adding new, unrelated products or services (ex. IKEA opening a chain of motels in Europe) Market Development (intensive strategy) - Answers Introducing present products or services into anew geographic area (ex. China Petrochemical purchased three Canadian oil companies, Daylight Energy, Tanganyika Oil, and Syncrude Canada) Product Development (intensive strategy) - Answers Seeking increased sales by improving present products or services or developing new ones (ex. GE building a new composite material jet engines, whereas rival Pratt & Whitney is developing newly designed jet engines) Retrenchment (defensive strategy) - Answers Regrouping through cost and asset reduction to reverse declining sales and profit (ex. Callaway Golf cut 12 percent of its workforce; Deutsche Bank AG cut 1,000 jobs from its investment bank segment) Divestiture (defensive strategy) - Answers Selling a division or part of an organization (ex. Dean Foods selling off WhiteWave-Alpro organic dairy business) (Defensive strategy) Liquidation (defensive strategy) - Answers Selling all of a company's assets,, in parts, for their tangible worth Outsourcing - Answers Farm out, which adds certain value chain, the company can perform it better and can save money Restructuring - Answers modifying the firm's chain of command and reporting channels to improve efficiency and effectiveness. (Downsizing - make smaller, rightsizing - getting them to the right size, delayering - need to take a layer out) Re-engineering - Answers Change the way work is carried out. Changing the processes that are involved (process management, processes innovation, process redesign) (ex. eliminating steps, and enabled the brands to get the product out quicker) (improve process making it more efficient and effective) Functional Structure - Answers A type of organizational design that groups tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems Division Structure - Answers Organizational design is based on having various profit centers or segments by geographic area, by product or service, by customer, or by process. With a individual structure, functional activities are performed both centrally and in each separate division