Chapter 2

Question 1

What is the first step of strategy formulation?

Answer 1

Developing a strategy vision that charts the company’s long-term direction, a mission statement that describes the cpompany’s business, and a set of core values to guide the pursuit of the strategy vision and mission.

Question 2

What two things does a company create during the first step?

Answer 2

Mission statement and core values

Question 3

What is the second step of strategy formulation?

Answer 3

Setting objectives for measuring the company’s performance and trackiong its progress in moving in the intended long-term direction

Question 4

What is the third step of the strategy formulation?

Answer 4

Crafting a strategy for advancing the company long the path to mangement’s envisioned future and achieving its performance objectives

Question 5

What is the fourth step of the strategy formulation process?

Answer 5

Implementing and executing the chosen strategy efficiently and effectively.

Question 6

What is the fifth strep?

Answer 6

Evaluationg and analyzing the external environment and the company’s internal situation and performance to identify corrective adjustments.

Question 7

If during the avalution stage, mangement decides the industry has changed in a sighnificant way that renders its vision obsolete, are referred to as

Answer 7

strategy inflection point.

Question 8

maps out where a company is headed, establishes strategic and financial targets, and outlines competeive moves and approaches for its goals

Answer 8

strategic plan.

Question 9

What does a strategic vision do?

Answer 9

shows top management’s view of “where we are going”—
the firm’s direction and its future product-marketcustomer-
technology focus to stakeholders.

Question 10

What is one defining characteristic of a strategic vision?

Answer 10

Is distinctive and specific to a particular organization.

Question 11

What do strategic visions avoid?

Answer 11

Avoids use of generic, innocuous, and uninspiring

language that could apply to most any firm.

Question 12

How does a strategic vision relate to the future?

Answer 12

Definitively states how the company’s leaders intend

to position the firm beyond where it is today.

Question 13

What are some things an engaging, inspiration vision does?

Answer 13

 Provides direction and energizes employees
 Makes the organization’s case for “where we are
going and why”
 Evokes positive support and excitement
 Enlists the commitment of company personnel to
engage in actions that move the company in its
intended direction

Question 14

Why a Sound, Well-Communicated

Strategic Vision Matters

Answer 14

1. It crystallizes senior executives’ own views about
   the firm’s long-term direction.
2. It reduces the risk of rudderless decision making
   by management at all levels.
3. It is a tool for winning the support of employees to
   help make the vision a reality.
4. It provides a beacon for lower-level managers in
   forming departmental missions.
5. It helps an organization prepare for the future.

Question 15

How do strategic visions and mission statements differ?

Answer 15

A strategic vision
concerns a firm’s
future business
The mission statement
of a firm focuses on its
present business
purpose—“who we are
and what we do”
path—“where we
are going”

Question 16

How does a well-conceived mission statement convey a covey a company’s purpose?

Answer 16

specifiic enough to the company its own identity.

Question 17

Ideally, a company mission statement is

sufficiently descriptive to:

Answer 17

 Identify the company’s products or services.
 Specify the buyer needs it seeks to satisfy.
 Specify the customer groups or markets it is
endeavoring to serve.
 Specify its approach to pleasing customers.
 Give the company its own identity.

Question 18

Provide guidance for desired actions and behaviors of

employees as they conduct the company’s business:

Answer 18

Values

Question 19

What is the managerial purpose of setting objectives?

Answer 19

convert the strategic vision into specific performance targets.

Question 20

Managerially Valuable Objectives are

Answer 20

 Are well-stated (clearly worded).
 Are challenging, yet achievable such that they stretch
the organization to perform at its full potential.
 Are quantifiable (measurable).
 Contain a specific deadline for achievement.

Question 21

What Kinds of Objectives to Set

Answer 21

Financial and Strategic

Question 22

Financial objectives

Answer 22

 Communicate targets for financial performance.
 Are lagging indicators that reflect past performance.
 Relate to revenue growth, profitability, and return on investment.

Question 23

 Strategic objectives

Answer 23

 Are related to a firm’s market standing and competitive vitality.
 Are leading indicators of a firm’s future financial performance
and business prospects.
 If achieved, indicate that a firm’s future financial performance will
be better than its current or past performance.

Question 24

• Short-term Objectives

Answer 24

 Are targets to be achieved soon (1-2 yrs).
 Represent milestones or stair steps for reaching longrange
performance.

Question 25

• Long-term Objectives

Answer 25

 Are targets to be achieved within 3 to 5 years

Question 26

Crafting a strategy means asking

Answer 26

how

Question 27

What are some of the how’s of strategy?

Answer 27

 how to attract and please customers
 how to compete against rivals
 how to position the firm in the marketplace and
capitalize on attractive opportunities to grow the
business
 how best to respond to changing economic and
market conditions
 how to manage each functional piece of the business
 how to achieve the firm’s performance targets