chapter one

Question 1

Strategy

Answer 1

a firm theory on how to gain a competitive advantage

Question 2

Strategic management process

Answer 2

a sequential set of analyses that can increase the likelihood of firms choosing a strategy that generates competitive advantage

Question 3

mission

Answer 3

first step of strategic management process and is a firm’s long-term purpose

Question 4

Mission statement

Answer 4

a written statement defining what a firm aspires to be in the long run and what it wants to avoid in the meantime

Question 5

Visionary firms

Answer 5

firms who’s mission is central to all they do

Question 6

Examples of external analysis

Answer 6

• interest rates
  *demographics
  *social trends
  *technology

Question 6

External analysis

Answer 6

3rd step of smp identification and examination of the critical threats and opportunities in the firm’s competitive environment.

Question 6

Objectives

Answer 6

second step of strategic management process and are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission.

Question 7

examples of internal analysis

Answer 7

*human resource knowledge
*manufacturing abilities
*technology

Question 7

internal analysis

Answer 7

3rd step identification of a firm’s organizational strengths and weaknesses and of the resources and capabilities that are likely to be sources of competitive advantage.

Question 8

strategic choice

Answer 8

4th step of smp After defining its mission, and objectives, and completing external and internal analyses, a firm is prepared to make strategic choices for gaining a competitive advantage. These choices fall into two main categories: business and corporate level strategies

Question 9

Business level strategies

Answer 9

Focus on gaining a competitive edge in a specific market or industry. Key strategies include: cost leadership, product differentiation, flexibility, tacit collusion

Question 10

Cost Leadership

Answer 10

Achieving the lowest cost of production.

Question 11

• Product Differentiation:

Answer 11

Offering unique products or services.

Question 12

• Flexibility:

Answer 12

Adapting quickly to changes.

Question 13

• Tacit Collusion:

Answer 13

Cooperative behaviors in competitive settings

Question 14

corporate level strategies

Answer 14

Aim at gaining advantages across multiple markets or industries. Common strategies include:vertical integration, diversification, strategic alliances, mergers and acquisitions

Question 15

vertical integration

Answer 15

Controlling multiple stages of production or distribution.

Question 16

diversification

Answer 16

Expanding into new markets or products

Question 17

strategic alliances

Answer 17

Partnering with other firms

Question 18

mergers and acquisitions

Answer 18

Combining with or purchasing other firms

Question 19

The goal of the strategic choice is to select strategies that

Answer 19

1. Align with the firm’s mission.
2. Meet the firm’s objectives.
3. Leverage the firm’s strengths to capitalize on opportunities.
4. Counteract threats and avoid weaknesses.

Question 20

strategy implementation

Answer 20

5th step of smp a firm adopting organizational policies and practices that are consistent with its strategy.
* How strategies are carried out
* Who will do what

Question 21

implementing a strategy

Answer 21

1. Organizational Structure: The formal arrangement of roles and responsibilities within the firm.
2. Management Control Systems: Both formal and informal systems used to monitor and guide performance.
3. Employee Compensation Policies: How employees are rewarded for their performance.

Question 22

competitive advantage

Answer 22

a firm creates more economic value than rival firms

Question 23

economic value

Answer 23

is simply the difference between what customers are willing to pay for a firm’s products or services and the total cost of producing these products or services.

Question 24

temporary competitive advantage

Answer 24

competitive advantages that last a short time

Question 25

sustained competitive advantages

Answer 25

competitive advantages that last a long time

Question 26

competitive parity

Answer 26

when a firm creates the same economic value as its rivals

Question 27

competitive disadvantage

Answer 27

when a firm creates less economic value than its rivals

Question 28

temporary competitive disadvantage

Answer 28

competitive disadvantage that lasts a short time

Question 29

sustained competitive disadvantage

Answer 29

competitive disadvantage that lasts a long time

Question 30

what kind of impact can a mission have ?

Answer 30

none, positive, negative

Question 31

measuring competitive advantage 2 approaches

Answer 31

1. accounting measures
2. economic measures

Question 32

accounting measures

Answer 32

These use a firm’s financial statements (profit and loss, balance sheet) and are standardized for comparison. Ratios derived from these statements, such as profitability, liquidity, leverage, and activity ratios, help assess performance. Comparing a firm’s ratios to industry averages helps determine if it has a competitive advantage, parity, or disadvantage.

Question 33

economic measures

Answer 33

these focus on broader economic performance beyond just accounting data

Question 34

if you have a competitive advantage you have

Answer 34

above average accounting performance and above normal economic performance

Question 35

if you have competitive parity

Answer 35

you have average accounting performance and normal economic performance

Question 36

if you have competitive disadvantage then you have

Answer 36

below average accounting performance and below normal economic perfomance