Chapter 1

Question 1

What is a strategy?

Answer 1

A set of related actions that managers take to increase their company performance

Question 2

What is strategic leadership?

Answer 2

Creating competitive advantage through effective management of the strategy making process

Question 3

What is strategy formulation?

Answer 3

Selecting strategies based on analysis of an organization’s external and internal evnironment

Question 4

What is strategy implementation?

Answer 4

Putting strategy into action

Question 5

What is risk capital?

Answer 5

Equity capital invested with no guarantee that stockholders will recoup their cash or earn a decent return

Question 6

What is the goal of profit-making companies?

Answer 6

Maximizing shareholer value

Question 7

What is shareholder’s value?

Answer 7

Return that shareholders earn from purchasing shares in the company

Question 8

What is profitability?

Answer 8

The return a company makes on the capital invested in the enterprise

Question 9

What is profit growth?

Answer 9

The increase in net profit overtime

Question 10

What is a sustained competitive advantage?

Answer 10

A company’s strategies enable it to maintain its competitive advantage (above-average profitability) for a number of years

Question 11

What is a business model?

Answer 11

The conception of how strategies should work together as a whole to enable the company to achieve its competitive advantage

Question 12

3 type of managers?

Answer 12

General managers, functional managers, and multidivisional managers

Question 13

What is a general manager?

Answer 13

A manager who bear the responsibility for the overall performance of the company or for one of its major self-contained subunits or division

Question 14

What is a functional manager?

Answer 14

A manager responsible for supervising a particular function (task, activity, or operation: accounting, marketing, R&D, etc)

Question 15

What is a multidivisional manager?

Answer 15

A company that competes in several different businesses and has create separate self-contained division to manage each

Question 16

What are the 3 level of strategic management?

Answer 16

Corporate level (CEO, Board of Directors, corporate staff), Business level (Divisional managers and staffs), Functional level (functional managers)

Question 17

What is a business unit?

Answer 17

A self-contained division that provides a product or service for a particular market

Question 18

What is scenario planning?

Answer 18

Creating plan based on a “What if” scenario

Question 19

What is cognitive bias?

Answer 19

Systematic errors that occur in decision making from the way people process information

Question 20

What is a prior hypothesis bias?

Answer 20

A cognitive bias decision making occur when someone who have strong prior view/beliefs tend to make decision on the basis of these beliefs despite evidence otherwise

Question 21

What is an escalating commitment?

Answer 21

When decision maker invest even more resources to a failing ideas due to have invested too much (sunk cost)

Question 22

What is reasoning by analogy?

Answer 22

Use of simple analogy to understand complex ideas

Question 23

What is a representative?

Answer 23

Tendency to generalize from a small sample

Question 24

What is illusion of control?

Answer 24

Tendency to overestimate one’s ability to control events

Question 25

What is availability error?

Answer 25

Tendency to estimate the probability of an outcome based on how easy is it to imagine

Question 26

What is devil advocacy?

Answer 26

Technique to identify all considerations that can disqualify the idea

Question 27

What is a dialectic inquiry?

Answer 27

Generation of a plan / thesis and a counterplan that reflect plausible but conflicting action

Question 28

What is an outside view?

Answer 28

Identification of past successful or failed strategic initiatives to determine the probability to work in the future

Question 29

What is Ghemawat’s 4 threats model?

Answer 29

It’s 4 threat to the sustainability of competitive advantage. Consist of: imitation, substitution, holdup, and slack