Important Short Questions and Answers: Strategic Issues

1. Differentiate between product innovation and process innovation?

Product innovation is the development of products that are new to the world or have superior attributes to existing products. Process innovation it the development of a new process for producing products and delivering them to customers. Product innovation creates value by creating new products that customers perceive as more desirable this increasing the company‘s pricing option. Process innovation often allows a company to create more value by lowering production costs.

2. What is bench marking?

The process of measuring the company against the products. Practices and services of some of its most efficient global competitors.

3. What is technological Myopia?

When a company gets blinded by the wizardry of a new technology and fails to examine whether there is customer demand for the product, it is called Technological Myopia.

4. What is Product Proliferation?

Companies having broad product lines produce a range of products aimed at different in abet segment. Sometimes to reduce the threat of entry, they expand the range of products they make to fill a wide variety of riches. This creates a barrier to entry because potential competitors now find it harder to break into an industry in which all the riches are filled. This strategy of pursuing a broad product line to Deter entry is known as product proliferation.

5. What is Location Economics?

Location economics are the economic benefits that arise from performing a value creation activity in the optimal location for that activity wherever in the world that might be.

6. What is licensing?

It is specialized from of licensing in which the franchisee not only sells intangible property to the franchisee but also insists that the franchises agree to abide by strict rules as to how it does business. The franchiser will also assist the franchisee to run the business on an ongoing basis and receives a royally payment.

7. What is a wholly owned subsidiary?

Wholly owned subsidiary is one in which the parent company owns 100 present of the subsidiary stock. To establish a wholly owned subsidiary in a foreign market. A company can either set up a completely now operation in that country or acquire an established host country company and use it to promote its products in the host market.

8. What is Full Integration?

A company achieves Full integration when it produces all of a particular input needed for its process or disposes all of its output through its own operation.

9. What is Taper Integration?

Taper Integration occurs when a company buys from independent suppliers in addition to company owned suppliers or disposes of its output through independent outlets in addition to company owned outlets.

10. What is Diversification?

It is the process of adding new businesses to the company that are district from its established operations. A diversified or multi business company is one that is involved in two or more district industries.

11. What is Economics of Scope?

That cost reductions associated with sharing resources across businesses.

12. What is bureaucratic cost?

The cost increases that arise in large complex organizations due to managerial in efficiencies. This is a function of 9i) no. of businesses in a company‘s follows (ii) the extent of co-ordination required among the different businesses of the company in order to realize value from a diversification strategy.

13. What is bidding strategy?

The strategy adopted by the acquirer to reduce the price it must pay for the acquisition candidate. Hence the most effective thing an acquirer can do is make only friendly takeover bids.

14. What is mean by Management buyout (MBO) Selling of a business Unit to its management.

15.            What do you mean by stakeholder?

Stakeholders are individuals of or groups with interest claim, or stake in the company in what it does and in how well it performs. They include stock holders, creditors, employees, customers the communities and the general public.

16. What are the different types of stakeholders?

Internal stakeholders are stakeholders and employees including executive officers, other managers and board members.

17. What are External stakeholders? External stakeholders are all other individuals and group that have some claim on the company. Typically this group comprises customers, suppliers, on editors, governments unions, local communities, and the general public.

18. What is PIMS?

It means profit impact on marketing strategy. 19. What is Standardization?

It refers to the degree to which a company specifies decision making and coordination processes so that employee behavior becomes predictable.