Chapter 1

Question 1

Mission

Answer 1

Broadly defined but enduring statement of purpose that identifies the scope of an organization’s operations and it’s offerings to the various stakeholders.

Question 2

Strategy

Answer 2

Refers to top management’s plans to develop and sustain competitive advantage so that organization’s mission is fulfilled.

Question 3

Competitive Advantage

Answer 3

State whereby a firm’s successful strategies cannot be easily duplicated by it’s competitors. Maintaining a sustained competitive advantage over time can be challenging.

Question 4

Business Model

Answer 4

Explains how the organization seeks to earn a profit by selling it’s goods.

Question 5

Progressive Firms

Answer 5

Devise innovative business models that extract revenue and ultimately profits from sources not identified by competitors.

Question 6

Name the Five Characteristics of a successful strategy.

Answer 6

1. Understand the competitive environment.
2. Understand how resources translate into strengths and weaknesses.
3. The strategy is consistent with the mission and goals of the organization.
4. Plans for putting the strategy into action are designed before it is implemented.
   Possible future changes (i.e., strategic control) are evaluated before the strategy is adopted.

Question 7

Intended Strategy

Answer 7

What management originally plans

Question 8

Realized Strategy

Answer 8

What management actually implements

Question 9

Industrial Organization

Answer 9

a branch of microeconomics, emphasizes the influence of the industry environment on the firm

Question 10

Resource-based theory

Answer 10

views performance primarily as a function of a firm’s ability to utilize its resources and emphasize the development of a distinctive competence

Question 11

Contingency theory

Answer 11

represents a middle ground perspective that views organizational performance as the joint outcome of environmental forces and the firm’s strategic actions.

Question 12

Corporate Governance

Answer 12

refers to the board of directors, institutional investors (e.g., pension and retirement funds, mutual funds, banks, insurance companies, among other money

Question 13

Blockholders

Answer 13

Large shareholders, who monitor firm strategies to ensure effective management.

Question 14

Board of Directors

Answer 14

Officials elected by shareholders who are responsible for monitoring activities in the organization. Evaluating top management’s strategic proposals. Establishing brand direction, selecting and determining the comp

Question 15

CEO Duality

Answer 15

When the ceo also servies as the chairman of the board, represents a potential conflict of interest.

Question 16

Sarbanes-Oxley Act (2002)

Answer 16

Covers public firms in the united states. Requires that both the ceo and cfo certify every report that contains company financial statements.

Question 17

1-4 Characteristics of Strategic Decisions

Answer 17

Based on a systematic, comprehensive analysis of internal and external factors.
Long-term and future-oriented—usually several years to a decade or longer.
Seek to capitalize on favorable situations outside the organization.
Involve choices and trade-offs.
Strategic decisions are typically made by a top management team, although the CEO alone is usually held responsible.

Question 18

1-5 Global Imperative

Answer 18

Most firms are involved globally to some extent.
The basis for global involvement is comparative advantage, the idea that certain products may be produced more cheaply or at a higher quality in particular countries due to cost or technology advantages.

Question 19

Industry

Answer 19

Each business operates among a group of rivals that produce competing products or services
known as an industry