Chapter 1

Question 1

What makes a successful strategy?

Answer 1

1) Simple, consistent, long-term goals
2) Profound understanding of the competitive environment
3) Objective appraisal of resources
4) Effective implementation

Question 2

What is the definition of strategy?

Answer 2

A plan, method or series of actions designed to achieve a specific goal or effect.

Question 3

Who is Alfred Chandler?

Answer 3

A business historian who contributed to business history and strategy

Question 4

Who is Kenneth Andrews?

Answer 4

A business manager who contributed to the field of business strategy

Question 5

What is the evolution of strategic management?

Answer 5

1) Financial Budgeting
2) Corporate Planning
3) Emergence of Strategic Management
4) The Quest for Competitive Advantage
$) Adapting to Turbulence

Question 6

How does a company achieve a rate of return above the cost of capital? i.e how do we make money?

Answer 6

1) Industry attractiveness (which industry should we be in)
2) Competitive advantage (how should we compete)

Question 7

Which one is corporate and business strategy?

1) Industry
2) Competitive Advantage

Answer 7

Industry is corporate strategy
Competitive Advantage is business strategy

Question 8

What is strategy as positioning?

Answer 8

Competing for the present

Question 9

What is strategy as direction?

Answer 9

Preparing for the future

Question 10

What two questions does strategy as positioning answer?

Answer 10

1) Where are we competing?
2) How are we competing?

Question 11

What does “where we are competing” entail?

Answer 11

Vertical scope
Geographical scope
Product scope

Question 12

Vertical scope

Answer 12

The range of activities or functions that a business chooses to integrate within its organisation instead of outsourcing or relying on external parties

Question 13

Product scope

Answer 13

The range or diversity of products or services that a business offers or intends to offer its consumers.

Question 14

Geographical scope

Answer 14

Geographic areas or regions where a business conducts its operations or serves its consumers.

Question 15

What does “how are we competing” entail?

Answer 15

What is the basis of our competitive advantage?

Question 16

What is the basis of our competitive advantage?

Answer 16

What are our strengths, what is the extent of our advantage and what makes us unique from our competitors?

Question 17

What three questions does strategy as direction answer?

Answer 17

1) What do we want to become?
2) What do we want to achieve?
3) How will we get there?

Question 18

What does “what do we want to become” entail?

Answer 18

Vision statement

Question 19

What does “what do we want to achieve” entail?

Answer 19

Mission statement

Question 20

What does “how will we get there” entail?

Answer 20

1) Guidelines for development
2) Priorities for capital expenditures, R&D
3) Growth modes: organic, M&A, alliances

Question 21

Strategy Hierarchy

Answer 21

1) Corporate Strategy
2) Business Strategy
3) Functional Area Strategies
4) Operating Strategies

Question 22

Corporate Strategy

Answer 22

A multibusiness strategy that refers to the overarching plan and set of decisions made by the top management of a company to achieve long-term goals. It is a high-level strategy that provides direction and guidance for the entire company and sets out what a company wants to become and how a company is to achieve their goals.

Question 23

Business Strategy

Answer 23

1) How to strengthen market position and gain competitive advantage
2) Actions to build competitive capabilities of single businesses
3) Monitoring and aligning lower-level strategies

Question 24

Functional Area Strategies

Answer 24

1) Add relevant details to the how’s of the business strategy
2) Provide a game plan for managing activities in ways that support the business strategy

Question 25

Operating Strategies

Answer 25

1) Add detail and completeness to the business and functional strategies
2) Provide a game plan for managing specific operating activities with strategic significance

Question 26

Mission Statement

Answer 26

1) Provides a concise statement of why the organisation exists and what it is to achieve
2) Defines and illustrates the values and philosophy of the organisation
3) Describe how the organisation will serve those affected by its work

Question 27

Vision Statement

Answer 27

1) “What we want to be”
2) Should stretch the resources and capabilities of the firm
3) Should inspire people in the organisation to achieve things they never thought possible
4) Should unite people in the firm to work towards one common goal

Question 28

Strategic Planning vs. Strategic Thinking

Answer 28

Planning cannot generate strategies. But given viable strategies, it can program them; it can make them operational.

Question 29

Strategic Programming involves:

Answer 29

1) Codification
2) Elaboration
3) Conversion of strategies

Question 30

Strategy as Decision Support

Answer 30

Improves the quality of decision making

Question 31

Strategy as a Coordinating Device

Answer 31

Creates consistency and unity

Question 32

Strategy as Target

Answer 32

Improves performance by setting high aspirations

Question 33

Strategy as Animation and Orientation

Answer 33

Motivates and mobilises

Question 34

Why are companies increasingly accepting responsibilities that extend well beyond the immediate interest of shareholders?

Answer 34

1) For ethical reasons
2) For reasons of self interest
3) Sustainability
4) Reputation
5) License to operate

Question 35

What was Milton Friedman’s view of CSR?

Answer 35

1) Unethical and undesirable:
2) Unethical because management spent shareholders’ money on projects and causes that were not approved of by owners
3) Undesirable because corporate executives made decisions by determining what the interests of society were