Ch. 2 Learning Review Questions

Question 1

Define competitive advantage and explain why it’s important.

Answer 1

It sets a company apart from others. The company can do something that others don’t and refers to:

• leverage a company has over others (distinct capabilities)
• ensures survival and long-term success
• it’s the purpose of strategic managment
• requires understanding and capitalizing on the environment

Question 2

Describe the different perspectives on competitive advantage.

Answer 2

1. I/O or Industry view (external focused)
2. Resource-based view (internal focused)
3. Guerrilla view (dynamic and short-lived)

Question 3

Explain what makes a resource unique.

Answer 3

• it adds value
• it’s rare
• it’s hard to imitate
• it’s exploitable

Question 4

Describe the three major driving forces of the business environment.

Answer 4

1. information
2. technology
3. glabalization

Question 5

Explain the four major implications of these driving forces.

Answer 5

1. continual change
2. reduced need fro physical assets
3. vanishing distance & compressed time
4. vulnerability

Question 6

Discuss the three critical factors for succeeding in the business environment.

Answer 6

1. embrace change
2. creativity & innovation capabilities
3. be a world-class company

Question 7

Discuss organizational vision and mission statements

Answer 7

Vision statement

• built on foundational values and beliefs
• elaborates organizational purpose
• brief summary of what the organization does
• specifies broad goals

Mission statement
- statement of what the company does and hopes to accomplish. Can be specific to different departments’ goals and objectives. It should align with the vision statement.

Question 8

Define corporate social responsibility.

hint: interrelatedness

Answer 8

Obligation of organizational decision makers to make decisions that take into account the interrelatedness of the business and society.

Question 9

Explain who stakeholders are and why they’re important to managing strategically.

Answer 9

• shareholders
• government
• customers
• societal action groups
• employees
• communities
• suppliers
• trade associations
• political action groups

Stakeholders are affected by the organization and also affect the organization. They have a wide range and varying needs and conflicting expectations. Strategic management is important to find a balanced outcome for all parties.

Question 10

Discuss why ethics are important to strategic decision makers.

Answer 10

Because it allows them to recognize the ethical implications of strategic decisions and actions. It guides strategic decision makers in what is right and wrong.