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Scenario A: Climber Inc., a mountain bicycle manufacturer, has been in the bicycle
industry for a year now. The CEO wishes to better the company. He starts by looking at the
sales records of the year that they have been in business and notices that the company's
sales have been declining at a steady pace for the past six months and that at present
they are selling only half as many bicycles as they want to. In an attempt to increase sales,
he either wants to bring down the prices of his bicycles or expand the company by opening
a new branch in another area. The CEO shares his views with the sales manager and
finance managers. Together they decide that reducing the prices would definitely increase
sales, although the profits would come down. They also conclude that opening a new
branch would only increase expenses. They conclude that they will reduce the prices of
the bicycles. The plan is implemented and the CEO keeps a record of the sales every
month to make sure the change is effective.
96.
Which of the following steps in the basic planning process do the managers of Climber Inc.
perform by deciding to reduce prices?
97.
Which of the following steps in the basic planning process does the CEO perform by
checking the past years sales records?
98.
Which of the following steps in formal planning process is the CEO performing when he
debates between opening a new branch and reducing the prices?
4-100
99.
Which of the following steps in the basic planning process does the CEO perform when he
closely watches the sales structures in the next six months?
4-101
100.
When the managers were discussing that a change in location would be more expensive
and that reducing prices would definitely increase sales, they were
Scenario B: Decora Corp. is a housewares manufacturing company. The company's basic
purpose is "to be the place where everyone wants to shop." The management states that
the company's long-term strategic intent is "to build an empire in the housewares industry,
setting the trend for people to have fashionable and affordable household goods, easily
available, wherever they may be."
101.
In Scenario B, Decora's long-term intent—to build an empire in the housewares industry,
setting the trend for people to have fashionable and affordable household goods, easily
available, wherever they may be—is an example of a(n) _____.
102.
In Scenario B, Decora's basic purpose—to be the place where everyone wants to shop—is
an example of a(n) _____.
Learning Objective: 04-02 Describe how strategic planning should be integrated with tactical and operational planning.
Topic: Levels of Planning
Scenario C: Greener Maids Inc., a housecleaning services firm, has completed a SWOT
analysis as part of its ongoing strategic planning process. Management has uncovered the
following information through extensive research:
1. New regulations have been passed limiting the number of hours per week the
company's employees can work without receiving benefits.
2. Greener Maids is a company that uses environmentally friendly products; its
competitors do not.
3. More and more homeowners are concerned about the environment; it is expected that
this trend will continue for decades.
4. Compared to its competitors, its management team is by far the best in the industry.
5. It has fallen behind in staff training over the last few years.
6. The company has adequate financial resources to invest in its operations.
7. The percentage of people hiring cleaning services has fallen off due to a difficult
recession.
103.
Based on Scenario C, which of the following findings is a strength for Greener Maids?
4-104
104.
Based on Scenario C, which of the following findings is a weakness for Greener Maids?
4-105
105.
Based on Scenario C, which of the following findings presents an opportunity for Greener
Maids?
4-106
106.
Based on Scenario C, which of the following findings is likely to present a threat for
Greener Maids?
Scenario D: A global cosmetics company called Eden Beauty is considering its corporate
strategy. Several members of its board of directors believe they have the "perfect" strategy
for the company. Dan believes that the best option is for Eden Beauty to stay on its
current track of offering only organic cosmetics to customers who like organic products.
Marta wants the company to expand by purchasing the manufacturing plants that produce
the Eden Beauty products. Another director, Hector, wants to build the company by adding
related products, such as skin care and perfume, to be sold alongside its current products.
Finally, the original owner of the company, Keiko, wants to expand the company by doing
something completely new, such as building restaurants or perhaps starting an
entertainment park.
107.
Which of the following corporate strategies is Dan advocating?
108.
Which of the following corporate strategies does Marta favor?
109.
Which of the following corporate strategies is Hector advocating?
110.
Which of the following corporate strategies is Keiko advocating?
4-109
Essay Questions
111.
Summarize the six basic steps in a formal planning process.
Answers will vary.
112.
List and describe the qualities of effective goals as captured in the acronym SMART.
Answers will vary.
4-110
113.
Discuss the three levels of planning. What are the characteristics of each in terms of
managerial level, level of detail, and time horizon?
Answers will vary.
114.
Explain what traditional strategic planning was and how it is different in today's business
environment.
Answers will vary.
115.
List out the six major components involved in the strategic management process.
Answers will vary.
4-111
116.
Write an essay on mission and strategic vision. Give an example of each.
Answers will vary.
117.
Explain the relationship of strategic goals to the mission and vision of an organization.
Answers will vary.
118.
List and explain any five activities involved in an external environmental analysis.
Answers will vary.
119.
List and explain the major components of internal environmental analysis.
Answers will vary.
120.
What are resources? Describe the two broad categories of resources, and give examples
of each.
Answers will vary.
121.
Describe and explain when a company's resources can be viewed as its core capabilities.
Answers will vary.
4-113
122.
Explain why the practice of benchmarking is of limited helpfulness.
Answers will vary.
123.
What is SWOT analysis? Give examples.
Answers will vary.
124.
Discuss the four basic corporate strategy alternatives. Under what circumstances are each
of the strategies utilized?
Answers will vary.
125.
Provide two examples of businesses that practice low-cost strategies and two examples of
businesses that practice differentiation strategies.
Answers will vary.
126.
List the six barriers to strategy implementation and the corresponding principles for
engaging and overcoming them.
Answers will vary.
