Chapter 5 What Are The Common Functional Strategy Areas

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Answers to Questions in the Text

Chapter 5: Strategic and Operational

Planning

WORK APPLICATION SAMPLE ANSWERS

Most of the answers are actual student answers or based on student answers. You may give these

answers as part of your lecture before, after, or in place of getting student answers.

5–1. Give an example of a strategic objective and an operational objective from an organization

you work for or have worked for.

I worked for the Shawmut Bank in Boston, and one of its strategic objectives was to become the

5–2. Does a business you work for or have worked for have one or multiple lines of business? List

the line(s).

I worked as an intern for Honda in Connecticut, and I didn’t realize it had all the various lines of

5–3. Conduct a simple five-force competitive analysis for a company you work for or have worked

for. Use Exhibit 5–4 as an example.

I work part time for Springfield College.

1. Rivalry among competing sellers in the industry. The local rivalry includes

Springfield College, American International College, Western New England

5–4. List a couple of the major strengths and weaknesses of an organization you work for or have

worked for.

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Springfield College’s major strength is its small classes, which enable faculty to take a personal

5–5. State one or more goals of an organization you work for or have worked for.

5–6. Using the model for writing objectives, write one or more objectives for an organization you

work for or have worked for, making sure they meet the “must” criteria.

5–7. State the grand strategy for an organization you work for or have worked for.

I worked part time for Sims Drug Store, an independent pharmacy. The grand strategy was a stability

5–8. Identify any growth strategies used by an organization you work for or have worked for. Be

sure to identify the type of growth strategy and note if any mergers, acquisitions, joint ventures,

or strategic alliances were used.

In high school, I worked for an old, downtown movie theater that showed movies for $2 after the

5–9. Identify the adaptive strategy used by an organization you work for or have worked for. Be

sure to describe how it used the strategy.

I used to work for Friendly’s Ice Cream, which was sold to Hershey. When Hershey took over, it used

5–10. Identify one functional area of an organization you work for or have worked for. What was

its operational strategy?

I work for the Springfield College Police Department. The strategy is to have student patrol and

5–11. Give an example of a policy, a procedure, and a rule from an organization you work for or

have worked for.

I work at the New England Health Club.

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5–12. Give an example of a program you were involved in at work.

5–13. Describe a situation in which a contingency plan is appropriate. Explain the plan.

5–14. Review your time log to identify your three biggest time wasters. How can you cut down or

eliminate these time wasters?

1. Waiting for the machine to be set up. It takes three of us about an hour before

5–15. From the time management techniques listed in the Self-Assessment, choose the three most

important ones you should be using. Explain how you will implement each technique.

1. Get an early start on top-priority items. I need to stop procrastinating.

5–16. How would you assess your use of multitasking in your personal life? In your professional

life? How can you improve?

In my personal life, I multitask on a daily basis. When I get home from work, I usually watch TV or

REVIEW QUESTION ANSWERS

5–1. What are the five planning dimensions?

5–2. What are the two types of plans?

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The two types of plans are strategic plans and operational plans.

5–3. Is there a difference between a plan and a strategy?

5–4. Which planning levels and their strategies are part of strategic planning?

Corporate- and business-level planning and their strategies are part of strategic planning.

5–5. What are the steps in the strategic planning process?

The steps in the strategic planning process are (1) developing the mission, (2) analyzing the

5–6. What is the relationship between the mission statement and developing strategies?

5–7. Why is a company situation analysis part of the strategic planning process?

A company situation analysis is used at the business level to determine the strategic issues and

5–8. What is the “writing effective objectives” model?

5–9. What criteria should an objective meet?

An effective objective conforms to four “must” criteria: It expresses a single result that is specific and

5–10. What are the grand strategies?

The grand strategies are growth, stability, and turnaround and retrenchment.

5–11. What is the difference between a merger and an acquisition?

5–12. What are the adaptive strategies?

5–13. What is the relationship between grand strategies and adaptive strategies?

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5–14. What are the competitive strategies?

The competitive strategies are differentiation, cost leadership, and focus.

5–15. What are the common functional strategy areas?

5–16. What is the difference between standing plans and single-use plans?

Standing plans are policies, procedures, and rules developed for handling repetitive situations.

5–17. Explain the use of a time log.

5–18. List and briefly describe the three steps in the time management system.

The steps in the time management system are: (1) Plan each week by determining the objectives to

5–19. Explain what multitasking is and how to practice it effectively.

Multitasking is the practice or capability of handling more than one task at a time. Effective use of

COMMUNICATION SKILLS ANSWERS

5–1. Why are strategic and operational planning important?

Answers will vary, but students should realize the importance of planning. Planning includes four

5–2. Should all businesses have corporate, business, and functional strategies?

5–3. Should a mission statement be customer focused?

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Yes. The entire business, including the mission statement, should focus on customer value.

5–4. Should all businesses formally analyze the environment?

5–5. Should all businesses have a competitive advantage?

5–6. Is it ethical to copy other companies’ ideas through benchmarking?

5–7. Are both goals and objectives necessary for a business?

Yes. Businesses should start with general, broad targets and then translate these into measurable

terms.

5–8. Is it important to write objectives?

5–9. As a manager, would you use management by objectives (MBO)?

Answers will vary.

5–10. Which growth strategy would you say is the most successful?

5–11. Why would a business use a focus strategy rather than try to appeal to all customers?

Trying to be all things to all people often creates customer value for none of them. For example, how

focusing on one type of food, the restaurant will usually create greater customer value.

5–12. Give examples of functional departments other than those mentioned in the text.

APPLYING THE CONCEPT ANSWERS

Applying the Concept 5–1: Objectives

For each objective, state which “must” criterion is not met.

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A. single result

B. specific

C. measurable

D. target date

1. To sell 5% more hot dogs and 8% more soda at the game on January 15, 2017

A. Single result. The objective should contain only one product.

2. To increase sales in 2017

3. To be perceived as the best restaurant in the Valley by the end of 2017

4. To write objectives next week

D. Target date. It is more effective to set a specific date than to give a time span.

5. To double profits in China

Applying the Concept 5–2: Growth Strategies

Identify the type of growth strategy described by each statement.

A. concentration

B. related diversification

C. forward integration

D. unrelated diversification

E. backward integration

6. S. A. Diamond Mines starts to cut its stones into diamond shapes for jewelry.

7. Kentucky Fried Chicken (KFC) opens one of its fast-food restaurants in Vietnam.

A. Concentration. Opening another KFC is staying in the same line of business.

9. Boeing buys the small Shaw Custom Jets company.

10. 7 Up soda buys lemon and lime groves.

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11. Lenovo, a computer manufacturer, starts making printers.

12. Lowe’s buys a tool manufacturer to make its own brand–name tools.

E. Backward integration. This is going from retail back to manufacturing.

13. LinkedIn buys the Quality Inn hotel chain.

14. Verizon opens a new retail store in a mall.

15. Tesla starts opening its own dealerships to sell its cars.

C. Forward integration. This is going from manufacturing to retailing.

Applying the Concept 5–3: Adaptive Strategies

Identify the type of strategy represented in each statement.

A. prospecting

B. defending

C. analyzing

16. Taco Bell goes international by opening restaurants in China.

A. Prospecting. Going to new markets is aggressive growth.

17. HP pioneers a laptop-powered computer that can be folded up and put in your pocket.

18. Domino’s used this strategy after Pizza Hut started to copy delivering pizza.

B. Defending. Domino’s Pizza tried to keep its customers.

19. This is the primary strategy of industry leader P&G in the saturated U.S. personal and

family care products market.

20. When McDonald’s came out with a new Angus Burger to compete with Burger King’s

successful Angus Burgers, it was using this strategy.

Applying the Concept 5–4: Identifying Plans

Identify the type of plan exemplified by each statement.

A. policy

B. procedure

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C. rule

D. program

E. budget

21. At Ford, “Quality is job one.”

A. Policy. This is a general statement. No information is given on how to do a quality job.

22. President Barack Obama’s Affordable Care Act.

23. How much do you need to run your department next year?

24. A protective coat must be worn in the lab.

25. Forms for maternity or parental leave must be filled out, approved, and signed by the

supervisor, and submitted to the HR office one month in advance of the planned leave.

B. Procedure. It tells you how to proceed: (1) fill out the form, (2) have it approved and

JOIN THE DISCUSSION ANSWERS

Join the Discussion 5–1: Insider Trading

Insiders are people who have confidential information about upcoming events that will affect the

price of a stock. It is common for the price of a stock to go up when investors learn that the company

is negotiating a merger or acquisition of another company. Insiders are not supposed to buy or sell

any stock they have confidential information about or to tell anyone this information to avoid illegal

profit from stock dealing. This process, known as “tipping,” is illegal. However, many government

public officials have access to insider information and legally get rich from tipping.

1. If you were “tipped” by an insider, would you buy/sell the stock?

Answers vary

2. What are the implications of using insider information? Is anyone hurt by the practice? If yes,

who is hurt, and how are they hurt?

3. Without using insider information, some speculators try to predict which companies are likely

to merge or be acquired and buy stock options. This is a legal way of making money, but is it

ethical?

Lussier, Management Fundamentals, 7e

4. Is it ethical for government officials to use insider information to make money?