1. How does strategy formulation differ for a small versus large organization? For a for-profit versus a nonprofit organization? Strategy formulation is basically the same for both small and large organizations. However, for small firms, there is a lack of strategic management knowledge for the business owners and a lack of sufficient capital to exploit external opportunities. 2. Give recent examples of market penetration, market development, and product development. Market penetration means selling more products to existing markets. McDonald’s is spending millions on its “Shrek the Third” promotions aimed at convincing consumers it offers healthy items. Market development means selling an existing product to a new market. Burger King opened its first restaurant in Japan in 2007. Product development means seeking increased sales by improving present products or services or developing new ones. An example of this is Google introducing “Google Presents” to compete with Microsoft’s Powerpoint. 3. Give recent examples of forward integration, backward integration, and horizontal integration. Forward integration means gaining ownership or increased control over distributors or retailers. For instance, Southwest Airlines just began selling tickets through Galileo. Backward integration means seeking ownership or increased control of a firm’s suppliers. An example is Hilton Hotels acquiring a large furniture manufacturer. Horizontal integration means seeking of or increased control over a firm’s competitors. An example, Huntington Bancshares and Sky Financial Group in Ohio merged. 4. Give recent examples of related and unrelated diversification. Examples of related diversification- AT&T acquisition of BellSouth in 2007 (represented AT&T’s entry into internet video service. Seagate Technology pursued related diversification when it acquired EVault. It moved the company from disk drives to data-storage services. Examples of unrelated diversification- Honeywell International, best known for its thermostats and aircraft engines, began producing flat screen televisions in 2007. Another example is the growing number of hospitals that have the mini-malls (banks, bookstores, coffee shops, drugstores, and retail stores. Previously, they only offered gifts shops and cafeterias.
5. Give recent examples of joint venture, retrenchment, divestiture, and liquidation. Joint venture occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity. An example is when Burger King and Hungry Jacks in Australia formed a conceptual agreement in hopes to beat out McDonalds. Retrenchment means regrouping through cost and asset reduction to reverse declining sales and profit. An example is when the Discovery Channel closed its 103 mall based and stand alone stores to focus on the Internet; laid off twenty five percent of its workforce. Divestiture is selling a division or part of an organization. Whirlpool sold Hoover floor care business to Techtronic Industries. Liquidation means selling all of a company’s assets, in parts, for their tangible worth. An example is Me Charters, whom sold all of its assets and stopped doing business.
6. Do you think hostile takeovers are unethical? Why or why not? Personally, I think that hostile takeovers are ethical. If a company is strong it won’t face a hostile takeover. However, if it is weak, the shareholders and customers of that company may benefit from the new organization. Majority of the employees and managers will benefit, too,
7. What are the major advantages and disadvantages of diversification? Some of the disadvantages of diversification are: risky, costly, it requires excellent management skills, and it requires an elaborate control system. Some of the advantages of diversification are: it allows a firm to spread risks and resources in more than one area, it allows a firm to pursue special opportunities in diverse areas, and it allows a firm to balance counter seasonal sales yearly.
8. What are the major advantages and disadvantages of an integrative strategy? An example of an integrative-type strategy is that it allows a firm to offer products and services at lower prices. A disadvantage of integrative-type strategies is that firms can be trapped if their basic industry falters.
9. How does strategic management differ in profit and nonprofit organizations? When compared to profit firms, nonprofit organizations may be totally dependent on outside sources of financing and they often function in a monopolistic environment, and produce a product or service that offers little or no performance measurability.
10. Why is it not advisable to pursue too many strategies at once? When too many strategies are pursued at once there will be fewer resources and they’re already limited.