Chapter 1

Question 1

Strategy

Answer 1

The firm’s theory on how to gain competitive advantages.

• Based on assumptions and hypotheses about the way competition in the industry is likely to evolve and how the evolution can be exploited to earn a profit

Question 2

The strategic management process exist of

Answer 2

Mission -> objectives -> internal & external anaylsis -> strategic choice -> strategy implementation -> competitive advantage

Question 3

Economic value texist of

Answer 3

Total perceived benefits - total costs

Question 4

A frim’s mission is

Answer 4

a long term purpose
Defines what a firm aspires to be in the long run and what it wants to avoid in the mantime
often written in mission statements

Question 5

A mission can cause 3 auctions:

Answer 5

1. Not affect firm performance:
   a. algemene omschrijvingen van het bedrijf.
   b. veel mensen vragen zich dan ook of het waarden toevoegt.
2. improve firm performance
   a) Vissionairy firms leveren weldegelijk winst op. Bedrijven die dit uit het oog zijn verloren, maken minder winst.

3) hurt firm performance. als het niet past bij de branche of de economische problemen waar het bedrijf tegen aanloopt

Question 6

Objectives

Answer 6

Specific measurable targets that a firm can use to evaluate the extent to which it is realizing its mission:
- High quality objectives -> connected to a firm’s mission. Easily measured & tracked.

Question 7

External analysis identify the…

Answer 7

critical threats and opportunities in the competitive environment

Question 8

Internal analysis…

Answer 8

help the firm identifying its organizational strengths and weaknesses
Makes the firms understand which resources and capabilities will help to achieve competitive advantage and which will not

Question 9

Strategic choice

Answer 9

1) business-level strategies

2) corporate-level strategies

Question 10

Common business-level strategies are

Answer 10

Cost leadership & product differentation

Question 11

Common Corporate-level strategies are

Answer 11

Diversification
Vertical integration
Strategic alliance
Merger
Acquisition
Global strategies

Question 12

Three important elements of organizational policies and practices are

Answer 12

A) formal organizational structure
B) formal and informal management control systems
C) Employee compensation policies

Question 13

Accounting measures

Answer 13

Firm's published profit & loss and balance sheet statement
1_ profitability ratios
2_ Liquidity ratios
3_ Leverage ratios
4_ Activity ratios

Question 14

Economic measures of competitive advantage

Answer 14

A firm’s level return to its cost of capital instead of to the average level of return in de industry (accountancy does)

Question 15

Debt is

Answer 15

capital form banks and bondholders

Question 16

Equity is

Answer 16

Capital from individuals and institutions that buy stocks

Question 17

WACC

Answer 17

Weighted average cost of capital

debt % cost of debt + % of a firms total capital

Question 18

5 steps of strategy

Answer 18

1. Intended 2. Deliberate 3. realized strategy

in between
4. nonrealized 5. emergent