Chapter 8--Strategy Formulation and ExecutionChapter 8--Strategy Formulation and ExecutionStudent: ___________________________________________________________________________1.Research has shown that strategic thinking and planning positively affect a firm's performance and financial success.TrueFalse2.Strategic thinking is more important -profit businesses than for non-profit organizations.TrueFalse3.Top managers and chief executives have the final responsibility for strategic planning.TrueFalse4.Front-line managers have the final responsibility for strategic planning.TrueFalse5.Competitive advantage refers to the set of decisions and actions used to formulate and implement strategies.TrueFalse6.The interaction of Production and Sales working together to produce profit greater than the total of both working separately is an example of synergy.TrueFalse7.Core competence is the plan of action that prescribes resource allocation and other activities for dealing with the environment.TrueFalse8.The combination of benefits received and costs paid by the customer refers to value.TrueFalse9.Corporate-level strategy pertains to the organization as a whole.TrueFalse10.The "How do we compete?" question concerns functional-level strategy.TrueFalse11.The three levels of strategy are business, corporate, and global.TrueFalse12.Strategic partnerships are the current trend, rather than mergers and acquisitions.TrueFalse13.In a turbulent business climate, managers should focus on strategic stability rather than flexibility.TrueFalse14.Strategy implementation involves the planning and decision making that lead to the establishment of the firm's goals.TrueFalse15.Scenario - SS.comFaced with rapidly growing business, Swift Stocks, Inc., a global brokerage company with the largest market share, recently announced that it has established an on-line stock investment and trading subsidiary, SS.com, where investors can trade stocks at the lowest rates in the industry. The .com subsidiary has less than one percent market share but it faces a very high business growth rate. In the brokerage industry the competition is fierce and all players are cutting their on-line commission rates. Swift Stock is following which strategy, according to Porter, through the .com subsidiary?a.Stabilityb.Cost leadershipc.Focusd.Differentiatione.Retrenchment16._____ is the set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.________________________________________17.The plan of action that prescribes resource allocation and other activities for dealing with the environment and helping the organization attain its goals is called a(n) _____.________________________________________18.A business activity that an organization does particularly well relative to its competition is known as a(n) _____.________________________________________19.For the social networking site Facebook, technological know-how and an aggressive and innovative culture are significant strengths to include in its SWOT analysis.TrueFalse20.Threats are characteristics of the internal environment that may prevent the organization from achieving its strategic goals.TrueFalse21.The task environment sectors are the most relevant to strategic behavior and include the behavior of competitors, customers, suppliers, and the labor supply.TrueFalse22.Opportunities are characteristics of the internal environment that have the potential to help the organization achieve or exceed its strategic goals.TrueFalse23.The mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage for the corporation pertains to portfolio strategy.TrueFalse24.An SBU stands for Star Business Unit.TrueFalse25.The BCG (Boston Consulting Group) matrix evaluates SBUs with respect to their business growth rate and geographical location.TrueFalse26.The question mark exists in a new, rapidly growing industry but has only a small market share, according to the BCG Matrix.TrueFalse27.According to the BCG Matrix, the cash cow has a large market share in a rapidly growing industry.TrueFalse28.The dog, according to the BCG Matrix, is a poor performer.TrueFalse29.Unrelated diversification occurs when an organization expands into a totally new line of business.TrueFalse30.Diversification is a strategy of moving into new lines of business.TrueFalse31.Vertical integration means a firm expands into businesses that either produce the supplies needed to make products or that distribute and sell those products to customers.TrueFalse32.Differentiation, cost leadership, and focus are three of Porter's competitive strategies.TrueFalse33.Cost leadership is a type of competitive strategy with which the organization seeks to distinguish its products or services from that of competitors.TrueFalse34.Organization's with a focus strategy concentrate on a specific regional market or buyer group.TrueFalse35.A director of finance would most likely be interested in executing functional level strategies.TrueFalse36.Business-level strategies include all of the major functions, including finance, research and development, marketing, and manufacturing.TrueFalse37.The world-wide standardization of product design and advertising refers to globalization.TrueFalse38.The transnational strategy handles markets independently for each country.TrueFalse39.With a multidomestic strategy, a company will achieve the globalization or standardization of marketing and production approaches.TrueFalse40.A transnational strategy seeks to achieve both global integration and national responsiveness.TrueFalse41.A transnational strategy combines degrees of both global standardization and national responsiveness.TrueFalse42.Communication is one of the most important methods for effective strategy execution.TrueFalse43.For successful execution, alignment of everyone in the organization must occur.TrueFalse44.In order to protect an organizations mission, the human resource functions are removed from strategic goals.TrueFalse45.In strategy implementation, leadership is the ability to influence people to adopt the new behaviors needed.TrueFalse46.To remain competitive, companies should develop strategies that focus on core competencies, providing synergy, and creating value for _____.A.customersB.suppliersC.stockholdersD.employeesE.board members47.The set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals is known as:A.strategy formulation.B.strategic planning.C.strategic management.D.strategy implementation.E.strategy evaluation.48.The plan of action that prescribes resource allocation and other activities for dealing with the environment and helping the organization attain its goals is known as a(n) _____.A.goalB.objectiveC.missionD.visionE.strategy49.Which of the following is a business activity that an organization does especially well relative to its competition?A.StrategyB.SynergyC.Cash cowD.Core competenceE.Multidomestic50.The condition that exists when the organization's parts interact to produce a joint effect that is greater than the sum of the parts acting alone is known as:A.core competence.B.synergy.C.value creation.D.business-level strategy.E.multidomestic strategy.51.When properly managed, _____ can create additional value with existing resources, providing a big boost to the bottom line.A.synergyB.competitorsC.government contactsD.command structureE.cooperation among customers52._____ can be defined as the combination of benefits received and costs paid by the customer.A.Organizational benefitsB.ValueC.Cost-benefit diversityD.SynergyE.Core competence53.After Sunshine Systems merged with RTD Enterprises, company executives noticed that due to increased employee collaboration between the two units, costs were down and revenues increased within both areas. This is an example of what business phenomenon?A.Strategy executionB.Portfolio strategyC.Core competencyD.SynergyE.Delivering value54.When AT&T decided to buy Media One, a cable company, it was pursuing a(n) _____ strategy.A.functional-levelB.internal growthC.multi-domesticD.corporate-levelE.business-level55._____ level strategy pertains to the major functional departments within the business unit.A.OperationalB.CorporateC.NationalD.BusinessE.Functional56.When Philip-Morris, the tobacco giant, bought Kraft, Inc., it was pursuing a _____.A.corporate-level strategyB.business-level strategyC.functional-level strategyD.multidomestic strategyE.retrenchment strategy57.Which of the following pertains to the organization as a whole?A.Business-level strategyB.Functional-level strategyC.Corporate-level strategyD.Operational-level strategyE.Competitive-level strategy58.Sears' decision to sell off much of its financial services division is an example of a:A.corporate-level strategy.B.business-level strategy.C.functional-level strategy.D.growth strategy.E.stability strategy.59.A corporate-level strategy is concerned with the question:A.what business are we in?B.how do we compete?C.how do we support our chosen strategy?D.where do we market our products?E.should we promote from within?60.When Coca-Cola introduced Surge, a new citrus soft-drink, what type of strategy was being pursued?A.Functional-level strategyB.Multi-domestic strategyC.Corporate-level strategyD.Retrenchment strategyE.Business-level strategy61.Ford's decision to completely redesign its Ford Taurus can be classified as a:A.corporate level strategy.B.business level strategy.C.functional level strategy.D.retrenchment strategy.E.stability strategy.62.Janessa is the CEO of a privately-held software company. In defining corporate-level strategies, which of the following questions would she most likely be concerned with?A.How do we compete?B.What business are we in?C.How does marketing support the business?D.How can we maximize profits?E.How can we make manufacturing processes more efficient?63.Decisions regarding the proper amount of advertising for a particular good or service are related to:A.corporate-level strategies.B.functional-level strategies.C.tactical-level strategies.D.business-level strategies.E.retrenchment strategies.64.Which of these questions is central to a functional-level strategy?A.What business are we in?B.How do we compete?C.How do we support our chosen strategy?D.What business do we buy?E.Where to market our products?65.Which of the following lists the strategic management process in proper order?A.Formulate strategy; Evaluate strategy; Perform SWOT analysis; Define new mission/goals; Execute strategy; Control strategy.B.Perform SWOT analysis; Evaluate current mission/goals; Formulate strategy; Execute strategy; Define new mission/goals.C.Evaluate current mission/goals; Define new mission/goals; Formulate strategy; Execute strategy; Perform SWOT analysis .D.Evaluate current mission/goals; Perform SWOT analysis; Define new mission/goals; Formulate strategy; Execute strategy.E.Define new mission/goals; Execute strategy; Formulate strategy; Evaluate new mission/goals; Perform SWOT analysis.66._____ refers to the use of managerial tools to direct resources toward the achievement of strategic goals.A.Strategy formulationB.Strategy coordinationC.Strategy executionD.Strategy controlE.Strategy planning67.Which of the following refers to the planning and decision making that lead to the establishment of the organization's goals and of a specific strategic plan?A.Strategy formulationB.Strategy implementationC.Strategy coordinationD.Strategy controlE.SWOT68.Fred has been assigned to conduct a SWOT analysis for his organization, Acme, Inc. As part of this assignment, Fred will:A.conduct an external wage survey.B.search for the strengths, weaknesses, opportunities, and threats that impact his firm.C.choose a grand strategy for his firm.D.do a cost/benefit analysis.E.develop a mission.69.Techniques used to monitor external environments include:A.hiring scanning organizations.B.hiring the competitive intelligence professionals.C.government reports.D.professional journals.E.all of these.70.Classy Clay has extremely creative employees who, in the opinion of the organization, keep the company ahead of the competition. The creativity of these employees would be classified as a(n) _____.A.internal weaknessB.external opportunityC.external strengthD.internal strengthE.neutral factor71.Paramount, Inc. is particularly concerned about pending legislation in Congress that would further regulate their organization. This legislation would be classified as a(n) _____.A.external opportunityB.internal strengthC.external threatD.external weaknessE.congressional chaos72.Sherri has been asked to participate on a cross-functional task force that is charged with performing an audit checklist for her advertising firm. The task force will analyze organizational strengths and weaknesses as they apply to the firm. Sherris task is to analyze management quality, staff quality, degree of centralization, and organizational charts. This level of analysis pertains to which area of the audit?A.Management and organizationB.MarketingC.Human resourcesD.Research and developmentE.Production73.Where does the information about opportunities and threats comes from?A.An analysis of the organization's internal environmentB.A department by department study of the organizationC.Scanning the external environmentsD.Employee grievancesE.Financial ratios of the organization74.What type of organizational unit has a unique business mission, product line, competitors, and markets relative to other units in the same corporation?A.Product unitB.Functional unitC.Strategic business unitD.Operational unitE.Business consulting group unit75.How business units and product lines fit together in a logical way is the essence of:A.business-level strategy.B.portfolio strategy.C.competitive strategy.D.financial strategy.E.functional strategy.76.Gatekeep Utilities is a subsidiary of GW Enterprises. Gatekeep has a mission and product line that is unique from GW. Gatekeeps competitors are also very different from those of its parent, and the subsidiary markets to a very different group of customers. As such, Gatekeep can be described as a(n) _____.A.product unitB.functional unitC.operational unitD.strategic business unitE.boston consulting group unit77.The BCG matrix organizes along which of the following dimensions?A.Market share and profitB.Sales and market shareC.Business growth rate and market shareD.Business growth rate and profitE.Sales and profits78.Double Click, Inc. has a number of strategic business units. Their hand-held computer unit has a large market share in this rapidly growing industry. Their hand-held computer business would be classified as:A.a dog.B.a star.C.a question mark.D.a cash cow.E.stuck in the middle.79.Which of these is true about the cash cow?A.It generates tremendous profits in a rapidly growing industry.B.It has a small market share in a rapidly growing industry.C.It has a small market share in a slow growth industry.D.It has a large market share in a slow growth industry.E.It is generally a dead business that should be divested.80.The star has a:A.large market share in a rapidly growing industry.B.large market share in a slow growth industry.C.small market share in a rapidly growing industry.D.small share of a slow growth market.E.moderate market share in a slow growth industry.81.Which of the following portfolio categories is made up of poor performers who command only a small share of a slow growth market?A.StarB.Cash cowC.Question markD.DogE.Cat82.The question mark has a:A.large market share in a rapidly growing industry.B.large market share in a slow growth industry.C.small market share in a rapidly growing industry.D.small share of a slow growth market.E.moderate market share in a slow growth industry.83.Which of these is true about the dog division?A.It has a large market share in a rapidly growing industry.B.It has a large market share in a slow growth industry.C.It has a small market share in a rapidly growing industry.D.It has a small share of a slow growth market.E.It has a moderate market share in a rapidly growing industry.84.Gillette operates numerous strategic business units. Most of its units in the personal care division have low market share but high business growth. These units are classified as _____.A.dogsB.question marksC.starsD.cash cowsE.none of these85.According to the BCG Matrix, which of the following exists in a mature, slow-growth industry, but is a dominant business in the industry, with a large market share?A.Question markB.AsteriskC.DogD.StarE.Cash cow86.When an organization expands into a totally new line of business, it is implementing a strategy of:A.Related diversificationB.Unrelated diversificationC.Cross-functional diversificationD.Product line diversificationE.Industry diversification87.Semway, a regional bank, recently announced that it would soon begin offering financial planning services. This is an example of which of these?A.Related diversificationB.Unrelated diversificationC.Cross-functional diversificationD.Product line diversificationE.Industry diversification88.The purpose of _____ is to expand the firms business operations to produce new kinds of valuable products and services?A.retrenchmentB.diversificationC.liquidationD.cash cowE.internal growth89.Which of the following strategies refers to moving into a new business that is related to the company's existing business activities?A.Horizontal integrationB.Vertical integrationC.Unrelated diversificationD.Related diversificationE.Strategic partnership90.All of the following are Porter's competitive forces except:A.differentiation.B.bargaining power of buyers.C.bargaining power of suppliers.D.threat of substitute products.E.potential new entrants.91.Which of the following is NOT one of Porter's competitive forces?A.Potential new entrantsB.Bargaining power of suppliersC.Bargaining power of stockholdersD.Bargaining power of customersE.Rivalry among competitors92.Which of the following strategies involve an attempt to distinguish the firm's products or services from others in the industry?A.Cost leadershipB.DifferentiationC.FocusD.Internal growthE.Liquidation93.Which strategy can be profitable for an organization when customers are loyal and willing to pay high prices?A.FocusB.GlobalizationC.Overall cost leadershipD.DifferentiationE.Liquidation94.The _____ strategy involves seeking efficient facilities, cutting costs and using tight cost controls to be more efficient than competitors.A.cost leadershipB.differentiationC.focusD.internal growthE.liquidation95.The human resource department at Paula's Powerwheels is implementing a number of functional level strategies. These strategies include focusing on ways to retain and develop a stable work force and ways to improve efficiency in the organization. These functional-level strategies are consistent with which of the following strategies?A.Cost leadershipB.DifferentiationC.New product developmentD.New market developmentE.Divestiture96.With a(n) _____ strategy, the organization concentrates on a specific regional market or buyer group.A.cost leadershipB.differentiationC.focusD.internal growthE.liquidation97.Mingles, Inc. concentrates its efforts on its target market of 18 to 25 year olds. It is using a(n) _____ strategy.A.focusB.differentiationC.cost leadershipD.multidomesticE.universal strategy98.General Products Inc. is a small clothing designer and manufacturer located in the United States. A vast majority of the companys revenues comes from U.S. sales, although about ten percent of the companys revenue come from sales to Canada. General Products Inc. can best be described as using which global corporate strategy? A.Globalization strategyB.Multidomestic strategyC.Export strategyD.Transnational strategyE.Domestic strategy99.FLY Industries is a global conglomerate company headquartered in the United States that does business in over fifty countries. The company seeks to balance global efficiencies and local responsiveness by hiring locally as well as from home. It can best be described as using which global corporate strategy? A.Globalization strategyB.Multidomestic strategyC.Export strategyD.Transnational strategyE.Domestic strategy100.If ABC International has standardized its product line throughout the world it is pursuing a:A.multidomestic strategy.B.retrenchment strategy.C.diversity strategy.D.globalization strategy.E.liquidation strategy.101.The assumption that a single global market exists would lead to a:A.globalization strategy.B.multidomestic strategy.C.diversity strategy.D.domestic strategy.E.liquidation strategy.102.Which of the following strategies would be appropriate when the need for both national responsiveness and global integration is low?A.GlobalizationB.MultidomesticC.ExportD.TransnationalE.Import103._____ refers to the modification of product design and advertising strategies to suit the specific needs of individual countries.A.Domestic strategyB.Global strategyC.Transnational strategyD.Multidomestic strategyE.Market design strategy104.Which of the following refers to a strategy that combines global coordination to attain efficiency with flexibility to meet specific needs in various countries?A.Domestic strategyB.Global strategyC.Transnational strategyD.Multidomestic strategyE.Region design strategy105.Some people argue that _____ is the most difficult and most important part of strategic management.A.SWOT analysisB.strategic formationC.strategic executionD.strategic analysisE.strategy evaluation106.Persuasion, motivation, and changes in cultures and values are examples of which of the dimensions used to implement strategy?A.LeadershipB.Structural designC.Human resourcesD.Information and control systemsE.Compensation107.Which of the following is NOT one of the tools used for putting strategy into action?A.Visible leadershipB.DiversificationC.Human ResourcesD.CommunicationE.Clear roles and accountability108.People need to understand how their individual actions can contribute to achieving an organizational strategy. This can be accomplished by delegating authority, creating teams, and defining roles. These actions are part of which tool for putting strategy into action?A.Visible leadershipB.Candid communicationC.Human resourcesD.Clear roles and accountabilityE.Bargaining power of employees109.The _____ function recruits selects, trains, transfers, promotes, and lays off employees to achieve strategic goals.A.productionB.leadershipC.information and control systemsD.structural designE.human resource110.Scenario - Theresa TeutulTheresa Teutul was an executive with Digital Industries, a leading manufacturer of color televisions. She recognized that the color television market in the late 1970's was facing significant challenges. After two decades of highly successful development and marketing, the sales of color televisions had slowed and replacing older color television sets largely created her market. Using the logic of the BCG grid, Theresa should recognize that her strategic business unit was in which quadrant?a.Starb.Cash Cowc.Question Markd.Doge.None of these111.Scenario - Theresa TeutulTheresa Teutul was an executive with Digital Industries, a leading manufacturer of color televisions. She recognized that the color television market in the late 1970's was facing significant challenges. After two decades of highly successful development and marketing, the sales of color televisions had slowed and replacing older color television sets largely created her market. The strategy that the BCG matrix suggests that Theresa should take for this SBU is:a.invest and grow.b.liquidate while still profitable.c.ask her astrologer for advice.d.keep the SBU healthy and use its excess earnings to invest in other SBU's.e.divestiture.112.Scenario - SS.comFaced with rapidly growing business, Swift Stocks, Inc., a global brokerage company with the largest market share, recently announced that it has established an on-line stock investment and trading subsidiary, SS.com, where investors can trade stocks at the lowest rates in the industry. The .com subsidiary has less than one percent market share but it faces a very high business growth rate. In the brokerage industry the competition is fierce and all players are cutting their on-line commission rates. Swift Stock's traditional brokerage business could be classified as a _____.a.cash cowb.dogc.stard.question marke.stuck in the middle business113.Scenario - SS.comFaced with rapidly growing business, Swift Stocks, Inc., a global brokerage company with the largest market share, recently announced that it has established an on-line stock investment and trading subsidiary, SS.com, where investors can trade stocks at the lowest rates in the industry. The .com subsidiary has less than one percent market share but it faces a very high business growth rate. In the brokerage industry the competition is fierce and all players are cutting their on-line commission rates. SS.com subsidiary for Swift Stocks can be classified as a _____.a.cash cowb.dogc.stard.question marke.stuck in the middle business114.Scenario - SS.comFaced with rapidly growing business, Swift Stocks, Inc., a global brokerage company with the largest market share, recently announced that it has established an on-line stock investment and trading subsidiary, SS.com, where investors can trade stocks at the lowest rates in the industry. The .com subsidiary has less than one percent market share but it faces a very high business growth rate. In the brokerage industry the competition is fierce and all players are cutting their on-line commission rates. If Swift Stock's traditional brokerage business were to face a declining business growth, it may need to be reclassified as a _____.a.cash cowb.dogc.stard.question marke.dead business115.When organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone, _____ occurs.________________________________________116.The question What business are we in? concerns the _____ strategy.________________________________________117.The question How do we compete? concerns _____ strategy.________________________________________118.The question How do we support the business-level competitive strategy? concerns _____ strategy.________________________________________119._____ includes the planning and decision making that lead to the establishment of the firm's goals and the development of a specific strategic plan.________________________________________120.The use of managerial and organizational tools to direct resources toward accomplishing strategic results is known as _____.________________________________________121._____ is a type of corporate-level strategy that pertains to the organization's mix of strategic business units.________________________________________122.In the BCG matrix, the dog has _____ market share and _____ business growth rate.________________________________________123.In the BCG matrix, the star has a(n) _____ market share in a rapidly growing industry.________________________________________124.The acquisition of a business that is related to current product lines or that takes the corporation into new areas is called _____.________________________________________125.The _____ strategy involves an attempt to distinguish the firm's products or services from others in the industry.________________________________________126.With a(n) _____ strategy, the organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors.________________________________________127.With a(n) _____ strategy, the organization concentrates on a specific regional market or buyer group.________________________________________128.The standardization of product design and advertising strategies throughout the world is called _____.________________________________________129.When an organization chooses a(n) _____ strategy, it means that business decisions such as product design are made on a country-by-country basis.________________________________________130.A(n) _____ strategy seeks to achieve both global integration and national responsiveness.________________________________________131.The ability to influence people to adopt the new behaviors needed for strategy implementation is called _____.________________________________________132.It is argued that _____ is the most difficult and most important part of strategic management.________________________________________133.List the four components of a SWOT analysis.134.List the three global corporate strategies.135.In order for companies to remain competitive, their strategies must focus on three things. Describe these three focuses.136.Compare and contrast the three levels of strategy in an organization.137.Differentiate between strategy formulation and strategy implementation.138.Briefly describe the Boston Consulting Group matrix, including its dimensions, quadrants, and strategic recommendations.139.Briefly discuss Porter's three competitive strategies.140.Name and describe the three types of global strategies.141.Briefly describe the tools for putting strategy into action.Chapter 8--Strategy Formulation and Execution Key1.TRUE2.FALSE3.TRUE4.FALSE5.FALSE6.TRUE7.FALSE8.TRUE9.TRUE10.FALSE11.FALSE12.TRUE13.FALSE14.FALSE15.b16.Strategic management17.strategy18.core competence19.TRUE20.FALSE21.TRUE22.FALSE23.TRUE24.FALSE25.FALSE26.TRUE27.FALSE28.TRUE29.TRUE30.TRUE31.TRUE32.TRUE33.FALSE34.TRUE35.TRUE36.FALSE37.TRUE38.FALSE39.FALSE40.TRUE41.TRUE42.TRUE43.TRUE44.FALSE45.TRUE46.A47.C48.E49.D50.B51.A52.B53.D54.D55.E56.A57.C58.A59.A60.E61.B62.B63.D64.C65.D66.C67.A68.B69.E70.D71.C72.A73.C74.C75.B76.D77.C78.B79.D80.A81.D82.C83.D84.B85.E86.B87.A88.B89.D90.A91.C92.B93.D94.A95.A96.C97.A98.C99.B100.D101.A102.C103.D104.C105.C106.A107.B108.D109.E110.b111.d112.c113.d114.a115.synergy116.corporate-level117.business-level118.functional-level119.Strategy formulation120.strategy execution121.Portfolio strategy122.low; low123.large124.diversification125.differentiation126.cost leadership127.focus128.globalization129.multidomestic130.transnational131.leadership132.strategic execution133.A SWOT includes strengths, weaknesses, opportunities, and threats.134.Globalization strategy, transnational strategy, and multidomestic strategy.135.The three focuses are core competencies, synergy, and value creation. Core competence is something the organization does very well in comparison to its competitors. A core competence represents a competitive advantage because the company acquires expertise that competitors do not have. Synergy occurs when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone. The organization may attain a special advantage with respect to cost, market power, technology, or management skill. Value creation should be at the heart of strategy. Value is the combination of benefits received and costs paid by the customer. Managers help their companies create value by devising strategies that exploit core competencies and attain synergy.136.There are three levels of strategy in an organization: corporate-level, business-level, and functional-level. Corporate-level strategies involve the whole organization. This level of strategy is most concerned with answering the question: "What business are we in?" These types of decisions often involve issues of growth, retrenchment, and/or joint ventures. Business-level strategies are concerned with the question "How do we compete?" They focus on how the individual business unit competes within its industry. They may involve such issues as advertising, product changes, and new-product development. Functional-level strategies are concerned with the question of "How do we support the business-level strategy?" Involving all of the organization's major functions, these types of strategies link the functional unit with the strategic business unit.137.Strategy formulation includes the planning and decision making that lead to the establishment of the firm's goals and the development of a specific strategic plan. Also, it includes assessing the external environment and internal problems and integrating the results into goals and strategies. Strategy implementation uses managerial and organizational tools to direct resources toward accomplishing strategic results.138.The two dimensions of the matrix are business growth rate and market share. When growth is high and share is high, the SBU has the best situation and is called a star. When growth is low and share is high, the SBU is known as a cash cow. When growth is high but share is low, the SBU is a question mark. In the fourth quadrant, growth and share are both low. This is the worst situation, and the SBU is a dog. The strategic recommendations are: (1) invest in stars; (2) milk the cash cow; (3) invest in question marks to create stars or divest the question marks; and (4) divest the dogs.139.Porter identified three competitive strategies: differentiation, cost leadership, and focus. A differentiation strategy involves the organization attempting to distinguish its product or service from those of its competition. Advertising, product features, and customer service are some of the ways an organization can successfully differentiate. A cost leadership strategy is based on the organization achieving a low-cost position relative to the competition. A company may achieve a cost leadership through the operation of efficient facilities, cutting costs, or maintaining tight cost control. When a company uses a differentiation or a cost leadership strategy in a particular market or buyer group, they are employing a focus strategy. This strategy allows the organization to concentrate on a narrow market niche.140.The three types of global strategies are globalization, multidomestic, and transnational. Globalization means that a company's product design and advertising strategies are standardized throughout the world. This approach is based on the assumption that a single global market exists for many consumer and industrial products. The theory is that people everywhere want to buy the same products and live the same way. Multidomestic strategies believe that competition in each country is handled independently of industry competition in other countries. Thus, marketing, advertising, and product design is encouraged to be modified and adapted to the specific needs of each country the company is present in. Many companies reject the idea of a single global market. Transnational strategies seek to achieve both global integration and national responsiveness. A true transnational strategy is difficult to achieve, because one goal requires close global coordination while the other goal required local flexibility. However, many industries are finding that, although increased competition means they must achieve global efficiency, growing pressure to meet local needs demands national responsiveness.141.The tools for putting strategy into action include visible leadership, clear roles and accountability, human resources, and candid communication. Visible leadership is used to motivate people, shape culture and values, and model desired behaviors Clear roles and accountability include delegating authority and responsibility, creating teams, and defining roles Human resource tools include recruiting employees, providing training, and managing transfers and promotions Candid communication is used to open lines of communication and to encourage honesty and debate