Chapter 4Winning Markets Through Strategic Planning, Implementation, and Control

True/False Questions
1. Most large companies consist of four organizational levels - the corporate, division, subdivision, and product levels. False (moderate) p. 58 2. Defining the corporate mission is the first step to corporate strategy. True (moderate) p. 59 3. A clear, thoughtful mission statement provides competitors with a shared sense of purpose, direction, and opportunity. False (moderate) p. 60 4. A strategic business unit (SBU) has its own set of competitors. True (moderate) p. 61 5. Dogs in the BCG Matrix are weak market share businesses in low growth markets. True (easy) p. 62 6. SBUs that are plotted in the high-market-attractiveness/strong-business-strength cell indicate opportunities for divestiture or harvest activities. False (moderate) p. 63 7. Critiques of portfolio models, such as the BCG or GE model, say they may lead a firm to overemphasize market share growth, or lead to neglecting current businesses. True (moderate) p. 64 8. SWOT stands for the analysis of Strengths, Weaknesses, Organizations, and Threats. False (moderate) p. 65 9. A key to analyzing a market opportunity is to ask the question, Can the company deliver the benefits better than any actual or potential competitor? True (easy) p. 66 10. Porters three generic strategies are: overall cost leadership, differentiation, and focus. True (moderate) p. 67 11. McKinsey&Companys 7-S framework includes 7 different strategies for corporations to succeed. False (moderate) p. 68 12. According to Peter Drucker, it is more important to do things right than it is to do the right thing. False (moderate) p. 69 13. The marketing process consists of analyzing marketing opportunities, researching and selecting target markets, designing marketing strategies, planning marketing programs, and organizing, implementing, and controlling the marketing effort. True (moderate) p. 70 14. The first section of the marketing plan is the current marketing situation. False (moderate) p. 71 15. A company does not need to update its marketing plan once it is a good one and everyone has signed off on it. False (moderate) p. 72

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16. The brand management structure for organizing the marketing department can lead to conflict and frustration when product managers are not given enough authority to carry out their responsibilities effectively. True (easy) p. 73 17. In a market management organization, companies organize to understand and deal with individual customers rather than with the mass market. False (difficult) p. 74 18. Research has shown that companies with a customer focus were nearly 7 percent more productive than their competition. True (moderate) p. 75 19. Measuring profitability by product, customer, and territory is called the Efficiency Control type of marketing control. False (moderate) p. 77 20. A customer performance scorecard records how well the company is doing on such measures as new customers, lost customers, and target market awareness. True (moderate) p. 79

Multiple Choice Questions

21. Which is not an important organizational level in large corporations? a.) corporate b.) division c.) subdivision (moderate) p. 58 d.) business unit e.) product 22. Within large firms, the _________ level is responsible to establish a plan covering the allocation of funds to each business unit within its area. a.) corporate b.) headquarters c.) division (difficult) p. 58 d.) business unit e.) product 23. The _________ marketing plan lays out the target markets and the value proposition that will be offered, based on analysis of the best market opportunities. a.) strategic (moderate) p. 58 b.) division c.) tactical d.) guerilla e.) corporate 24. Which of the following is not considered a part of corporate planning? a.) defining the corporate mission b.) establishing strategic business units c.) assigning resources to each unit d.) measuring stakeholder response to marketing programs (moderate) p. 59 e.) planning new businesses, downsizing, or terminating older businesses

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25. The classic Drucker questions, What is our business? and Who is our customer? are part of which corporate planning activity? a.) defining the corporate mission (easy) p. 59 b.) establishing strategic business units c.) assigning resources to each unit d.) measuring stakeholder response to marketing programs e.) planning new businesses, downsizing, or terminating older 26. Bill wants to create a mission statement for his breakfast restaurant, which is located near the outlet of a busy New York subway station. Which question is not on Peter Druckers list of classic question that help businesses define their missions? a.) What is our business? b.) Who is our customer? c.) What is the value to the customer? d.) What should our business be? e.) Why do we do what we do? (moderate) pp. 59-60 27. The _____________ refers to the number of channel levels from raw materials to final product and distribution in which a company will participate. a.) industry scope b.) products and applications scope c.) competence scope d.) vertical scope (moderate) p. 60 e.) geographical scope 28. Mission Brands strives to be the best provider of outdoor-related consumer products in the American southwest is a mission statement that focuses mainly on Missions _________________. a.) industry scope b.) vertical scope c.) geometrical scope d.) vertical scope e.) geographical scope (moderate) p. 60 29. A strategic business unit that has the highest relative market share and is in a low growth rate market is termed a _________________. a.) cash cow (easy) p. 61-62 b.) hard heart c.) falling star d.) half moon e.) four-leaf clover 30. The purpose of identifying the companys strategic business units is to _________________. a.) help managers keep the company mission separated from each product line b.) develop separate strategies and assign appropriate funding to the entire business portfolio (moderate) p. 61 c.) use the companys stars to fund the dogs d.) get question marks to grow into cash cows e.) separate the business lines for accounting purposes

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31. If a _______ SBU is dragging down the companys profits, selling the SBU may be the prescribed strategy. a.) star b.) starchild c.) dog (moderate) p. 62 d.) cash sow e.) cash cow 32. The ____________ strategy is appropriate when there is a need for short-term cash flow, regardless of long-term effect. a.) building b.) holding c.) passing along d.) harvesting (moderate) p. 62 e.) divesting 33. The ___________ strategy is appropriate for strong cash cows if they are to continue to yield large positive cash flows. a.) build b.) hold (difficult) p. 62 c.) milk d.) harvest e.) divest 34. The GE matrix is divided into __________ cells. a.) two b.) four c.) nine (easy) p. 63 d.) sixteen e.) twenty-five 35. The GE Business Portfolio model advises that if a strategic business unit in the weak-businessstrength/low-market-attractiveness cell, the corporation should _________________. a.) protect position b.) invest to build c.) build selectively d.) divest (moderate) p. 63 e.) protect and refocus 36. One of the reasons the portfolio process should be used with caution is that the process _________________. a.) could help managers think more strategically b.) might improve communication between business units and the corporation c.) helps identify important issues d.) may lead to too much emphasis on market share growth (moderate) p. 64 e.) strengthens investment in more promising SBUs

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37. Cannondale is a master bike-making company that sought to expand its sales by leveraging their talents with the use of aluminum frame tubing. They ended up developing and marketing a line of innovative aluminum-framed motocross bikes. This is an example of which type of diversification? a.) new products with technological synergies, marketed to different customers (difficult) p. 64 b.) new products with marketing synergies, marketed to different customers c.) new products that are technologically unrelated to current ones, marketed to current customers d.) new and unrelated products, marketed to different customers e.) more of the same products, marketed to the same customers 38. Cannondale Corporation introduced a line of motocross bikes that shared the aluminum frame skills of the company. The new motocross products have been well received by the critics, but have sold poorly. This failure in the marketplace may be due to a lack of ___________ to aid in Cannondales expansion attempt. a.) technological synergies b.) marketing synergies (difficult) p. 64 c.) technologically related production capabilities d.) related products in the companys lines e.) more of the same products 39. When Vivendi, then a water and utilities management company, began to buy entertainment companies, such as Universal, this was an example of which kind of diversification growth strategy? a.) new products with technological synergies, marketed to different customers b.) new products with marketing synergies, marketed to different customers c.) new products that are technologically unrelated to current ones, marketed to current customers d.) new and unrelated products, marketed to different customers (moderate) p. 65 e.) more of the same products, marketed to the same customers 40. External environment analysis includes monitoring all the following except _________________. a.) the political-legal influences b.) demographics in the relevant marketplace c.) competitors d.) suppliers e.) company strengths in marketing and finance (moderate) p. 65 41. A companys competitors are considered a part of its a.) macroenvironmental forces b.) strength and weaknesses analysis c.) microenvironment actors (moderate) p. 65 d.) 4Cs planning e.) internal environment 42. Which of the following comes earliest in the Business Strategic-Planning Process? a.) goal formulation b.) SWOT analysis (difficult) p. 65 c.) strategy formulation d.) program formulation e.) feedback and control function

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43. A ____________ is an area of buyer need in which the company can perform profitably. a.) marketing threat b.) marketing analysis c.) marketing goal d.) marketing opportunity (moderate) p. 66 e.) marketing benefit 44. A marketing opportunity analysis (MOA) asks all of the following question except: a.) Can the benefits be articulated to the target market? b.) Can the media be used to define the relevant consumer? (moderate) p. 66 c.) Can the target market be located and effectively reached? d.) Can the company deliver better than competitors? e.) Will the rate of return satisfy company objectives? 45. Once a SWOT has been performed, the company must set goals and consider trade-offs. Which of the following is a trade-off that must be considered in goal formulation? a.) how to arrange the goals hierarchically b.) how to correctly state the goal quantitatively and qualitatively c.) whether the goal can be realistically carried out d.) making sure the goal is consistent e.) balancing long- and short-term goals (moderate) p. 66 46. Wal-Mart focuses like a laser on the constant lowering of prices as their main attraction to consumers. This is an example of which of Porters generic strategies? a.) overall cost leadership (moderate) p. 67 b.) differentiation c.) leadership in service d.) focus e.) leadership in quality 47. If a firm desires to attain technological leadership as one of its strategic goals, it will need to formulate a program that includes all of the following except _________________. a.) strengthening their R&D efforts b.) gathering technological intelligence c.) developing leading edge products d.) using advertising to communicate the companys mission (moderate) p. 67 e.) training a technical sales force 48. In the McKinsey&Company 7-S framework for business success, how employees think and behave is termed the _________ S. a.) strategy b.) structure c.) style (moderate) p. 68 d.) skills e.) staff

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49. In the McKinsey 7-S framework for business success, there are hardware and software parts of the model. Which of the following represents part of the hardware? a.) systems (easy) p. 68 b.) style c.) skills d.) staff e.) shared values 50. Peter Drucker notes that a company might lose some efficiency, but gain some effectiveness, if it chooses to _________________. a.) right things that are wrong b.) do the right thing (difficult) p. 69 c.) risk being wrong d.) do things right e.) do unto others 51. Which sequence allows for marketing to happen throughout the value creation and delivery process? a.) make the product - sell the product b.) sell the product - make the product c.) choose the value - provide the value - communicate the value (moderate) p. 69 d.) communicate the value - provide the value - value the outcome e.) make and sell the product - make a profit 52. The problem with the traditional approach to the value-delivery processthat the firm makes something and then sells itis that _________________. a.) marketing starts too early in this process b.) defining value is too difficult in this model c.) the make-it/sell-it model causes capacity problems when correctly implemented d.) marketing is only involved in the second half of the process (moderate) p. 70 e.) (there is not a problem with this view) 53. The __________ consists of analyzing opportunities, researching and selecting target markets, designing strategies, planning programs, and organizing and implementing these efforts. a.) marketing plan b.) marketing effort c.) marketing process (moderate) p. 70 d.) marketing analysis e.) marketing delivery 54. The first section in a marketing plan is the ______ section. a.) current marketing situation b.) executive summary (easy) p. 71 c.) opportunity and issue analysis d.) objectives e.) financial projections

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55. The final step of the marketing process is _________________. a.) managing the marketing efforts (moderate) pp. 70-71 b.) planning marketing programs c.) analyzing market opportunities d.) developing marketing strategies e.) researching the consumer segments 56. The Action Programs section of the marketing plan should answer all of the following except: a.) What will be done? b.) When will it be done? c.) Which segment will it focus on? (moderate) p. 72 d.) Who will do it? e.) How will progress be measured? 57. Managing the marketing process is made more difficult by the proliferation of media options for consumers. This adds to the phenomenon of _________________. a.) globalization b.) deregulation c.) technological advances d.) telecommunications advances e.) market fragmentation (difficult) p. 72 58. Which is not a part of the brand managers job? a.) product planning and competitive strategy b.) annual marketing plans and sales forecasts c.) working with ad agencies d.) stimulating support among sales reps e.) initiating product attitude change (moderate) p. 73 59. Which of the following is an advantage of the brand management organization system? a.) It leads to unclear authority lines, sparking creative solutions. b.) It allows the manager to concentrate their efforts on only one product or line. (difficult) p. 73 c.) Brand managers are given all the authority and resources they need to do their jobs well. d.) Brand managers are free to focus on market share rather than deal with customer relationships. e.) Managers are allowed to become specialists in the brand rather than becoming functional specialists. 60. A _________ supervises several market managers, who in turn draw upon functional services as needed. a.) markets manager (moderate) p. 74 b.) customer manager c.) lead manager d.) lead market manager e.) brand asset management team

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61. All of the following are alternatives to the brand management model except _________________. a.) switch to product teams b.) use a brand asset management team (BAMT) c.) assign two or more products to each remaining manager d.) introduce category management e.) divest the brand to other strategic business units (moderate) p. 74 62. Alfrey International ships about 20 percent of its production to firms in Guadalajara, Mexico. Internally, Jefe Mitchell takes care of all the necessary paperwork for this process. This is an example of a(n) ___________ global organization. a.) export department (moderate) p. 75 b.) import division c.) international division d.) worldwide operations e.) world-is-our-oyster opportunity 63. Which of the following is not something a CEO must do to create a market- and customer-focused company? a.) convince senior management to be more customer-focused b.) get outside help and guidance c.) shift resources from other functional divisions (moderate) p. 75 d.) install a modern marketing planning system e.) establish an annual marketing excellence recognition program 64. Bonoma has identified four sets of skills for implementing marketing programs. Which of the answers below is not a part of Bonomas implementation skills? a.) the ability to determine what went wrong b.) the ability to determine whether problems occurred in the marketing function, the marketing program, or the marketing policy c.) the ability to budget resources, organize effectively, and motivate others d.) the ability to challenge the status quo (moderate) p. 76 e.) the ability to evaluate results 65. Strategy addresses the what and _______ of marketing activities. a.) who b.) why (moderate) p. 76 c.) where d.) when e.) how 66. The purpose of strategic control is to examine whether the company is pursuing its best opportunities with respect to markets, products, and channels. Which of the approaches below is a part of this? a.) sales analysis b.) profitability by territory c.) sales to expense ratios d.) marketing excellence review (moderate) p. 77 e.) efficiency of sales force

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67. The purpose of ___________ control is to examine whether the planned results are being achieved. a.) profitability b.) efficiency c.) strategic d.) implementation e.) annual-plan (moderate) p. 77 68. Rae-Dawn wants to see how her company is doing relative to the competition. Which marketing metric should she use? a.) sales analysis b.) market-share analysis (moderate) p. 78 c.) marketing expense-to-sales analysis d.) financial analysis e.) market-based scorecard analysis 69. A ___________ records how well the company is doing on such customer-based measures as new customers, dissatisfied customers, lost customers, target market awareness and preference, and relative quality issues. a.) sales analysis scorecard b.) market-share performance scorecard c.) customer performance scorecard (moderate) p. 79 d.) financial analysis scorecard e.) one-to-one consumer scorecard 70. Which of the following is not examined in a marketing audit? a.) the macro- and task environments b.) marketing strategy c.) firm profitability (moderate) p. 80 d.) marketing productivity e.) the 4 Ps

Essay Questions
a.) Blanche du Bois has been charged with heading up a committee to create a strategic plan for the School of Communication at a Midwestern state university. She knows she must begin by defining the corporate mission. Give her advice on what questions need to be asked by the committee, then answered in the mission statement. (difficult) p. 59-60 72. Draw, label, and explain the Boston Consulting Group (BCG) growth-share matrix. What are the benefits and possible drawbacks of using portfolio models? Answer: Everyone should be able to get the basic model down on paper, and the better students will see how it works and why. The axes should be labeled (vertical = market growth rate; horizontal = relative market share). SBUs that are dogs should be carefully considered, particularly if they are a drag on profits. They are candidates for divestiture or harvest. Question marks require cash from other sources and it needs to be decided whether this cash-in is going to grow the SBU into a more promising star. Stars are in growing industries and have the highest market share in their competitive group. Since growth wont last forever, the hope is that a star will maintain its market share until shifting into a

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cash cow. Stars need resources to keep up with growth. Cash cows have great value because they provide cash to help out in other parts of the portfolio. Benefits of portfolio approaches? They help management think strategically, and to better understand the economics of a portfolio of businesses; They also allow for improvement of plan quality, and better communication between corporate and SBU leaders; They help identify weaker and stronger units, thus allowing better decisions about resource allocation. The cautions? They may lead to an overemphasis on market share and growth, versus watching over current businesses and profits. They are easy to manipulate based on the inputs. They do not allow for measurement of synergies between the business units. (moderate) pp. 61-64 73. Fatima sees a number of unfilled needs in her hometown and would like to start a business to take care of those needs at a profit. Help Fatima, by explaining the questions she should ask about each of her ideas to determine the attractiveness and success probability, before risking her investment. Use the Market Opportunity Analysis model. Answer: The five questions in the MOA help determine the attractiveness and the probability of success for business ideas or opportunities. In Fatimas case, the questions should be: a.) Can the benefits involved in Fatimas ideas be adequately explained to her defined target market? b.) Can Fatimas target markets be located and reached using cost-effective media and trade channels? c.) Does Fatima have access to the capabilities and resources she will need to deliver the desired customer benefits? d.) Can Fatima deliver the benefits better than existing or potential competitors? e.) Will the financial return be better than other opportunities for Fatimas intended investment? (easy) p. 66

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Mini-Cases
Mini-Case 4-1 A group of frustrated students is writing up a business plan to create a second bowling alley to compete with a run-down, busy, existing competitor in their small college town. The existing alleys are old, the building smelly, and the wait is always a long one. The students want to have clean restrooms, a bar (of course), a food area, a place for a dj/live music and dancing, as well as the traditional lanes for bowling. All these areas will be managed with a separate profit/loss statement. The students want to compete on the basis of having modern facilities and forward-thinking management. 74. Refer to Mini-Case 4-1. What would be a good mission statement for this proposed venture? a.) Lumberjack Lanes - we do bowling right! b.) Lumberjack Lanes wants to compete with its cross-town rival by having a better facility. c.) Lumberjack Lanes provides high quality, bowling and bowling-related entertainment to the greater Corvallis community. (moderate) p. 59 d.) Lumberjack Lanes strives to serve its customers with the freshest food and drink, the hottest dance music, and the cleanest lanes in town. e.) Lumberjack Lanes - Try Us, Youll Like Us! 75. Refer to Mini-Case 4-1. The Lumberjack Lanes portfolio of businesses include all the following except _________________. a.) food services b.) restrooms (easy) pp. 60-61 c.) beverage services d.) bowling e.) dancing/music 76. Refer to Mini-Case 4-1. The group is proposing that the alleys compete on which of Porters generic strategies? a.) SWOT b.) cost-leadership c.) differentiation (moderate) p. 67 d.) hybrid e.) focus Mini-Case 4-2 LiveTrack (TM) has invented technology to track range cattle in real-time using GPS technology. They have been funded by venture capitalists and are finishing the testing phase. They are ready to go to market, but their backers want more specificity in the implementation and control sections. Inventor and CEO Timo Nelson agrees and tells them hell meet with the group in a week. 77. Refer to Mini-Case 4-2. Bonoma writes that there are four sets of skills needed at the implementation stage of a project. As Timo pulls out his old marketing text, he sees he must mention all of the following skill sets in his plan except which? a.) diagnostic skills b.) the ability to discern at which level the problem is occurring c.) implementation skills d.) the ability to justify costs (moderate) p. 76 e.) the ability to evaluate results

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78. Refer to Mini-Case 4-2. Timo must consider the four types of control that he will need to exercise in making LiveTrack (TM) a profitable reality for himself and his investors. In particular, the investors are interested in where the product will make the most money. This is included in the __________ type of control. a.) annual-plan b.) profitability (moderate) p. 77 c.) regional plan d.) efficiency e.) strategic 79. Refer to Mini-Case 4-2. The venture capital group would like to make sure the target customers return to LiveTrack (TM) after their first purchase, and also that they tell their rancher friends, as well. This should be tracked as carefully as the animals, they say, so Timo agrees to put in a customerperformance scorecard. The scorecard should measure each of the following except _________________. a.) dissatisfied customers b.) lost customers c.) target market awareness d.) relative service quality e.) location of customers (moderate) p. 79

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