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Chapter 07 - Long-Term Objectives and Strategies
7-1
whole or part.
Questions for Discussion
1. Identify firms in the business community nearest to your college or university that you believe
Depending on the area the student comes from, there may or may not be examples of firms
2. Identify firms in your business community that appear to rely principally on 1 of the 15 grand
As indicated in the answer to Question 1 above, it may be easier to find examples of firms
should guide the students to use the proper classification procedure in this exercise.
3. Write a long-term objective for your school of business that exhibits the five qualities of long-
term objectives described in this chapter.
4. Distinguish between the following pairs of grand strategies:
a. Horizontal and vertical acquisition
difference between horizontal and vertical integration.
b. Conglomerate and concentric diversification
Concentric diversification involves the acquisition of businesses that are related to the
with existing businesses.
c. Product development and innovation
Product development involves the substantial modification of existing products or the creation
Chapter 07 - Long-Term Objectives and Strategies
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whole or part.
d. Joint venture and strategic alliance
When firms lack a necessary component for success in a particular competitive environment,
they overcome this obstacle by forming a separate company (called the joint venture) that is
Chapter 07 - Long-Term Objectives and Strategies
7-3
whole or part.
5. Rank each of the 15 grand strategy options discussed in this chapter on the following three
scales:
High ---------------------------------------Low
Cost
High ---------------------------------------Low
Risk of failure
High----------------------------------------Low
Potential for exceptional growth
Concentrated growth: low on all 3
Market development: moderately high on all 3
This rating may be subjective and the instructor should force the students to justify their
rating.
6. Identify firms that use one of the eight specific options shown in Exhibit 7.3 under the grand
strategies of concentration, market development, and product development.
Concentration
pictures through the Internet to entice
people to buy computers
Market development
refrigerator deodorizer
Product development
Developing new product features: Tylenol PM
Chapter 07 - Long-Term Objectives and Strategies
7-4
whole or part.
