Essay Questions Flashcards
Define strategic management. Identify any 5 of the 9 critical tasks of strategic management.
Definition: The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives
Nine tasks:
- Formulate the company’s missions
- Conduct an internal analysis
- Assess the external environment – competitive and general contexts
- Analyze the company’s options by matching its resources with the external environment
- Identify the most desirable options in light of the mission
- Select a set of long term objectives and grand strategies that will achieve the most desirable options
- Develop annual objs and short term strategies that are compatible with long term objs and grand strategies
- Implement the strategic choices
- Evaluate the success of the strategic process for future decision making
Describe how strategic decisions differ from other decisions that managers make.
- Strategic decisions are 5 year decisions
- Reflects a company’s awareness of the main elements of competition
- Used to interact in a competitive environment
- Large scale and future oriented
- Cant operate the machinery but have the 20,000 foot view
Be able to define 4 of the 6 dimensions of strategic decisions.
- Strategic issues require top-management team decisions
- Strategic issues require large amounts of the firm’s resources
- Strategic issues often affect the firm’s long-term prosperity
- Strategic issues are future oriented
- Strategic issues usually have multifunctional or multibusiness consequences
- Strategic issues require considering the firm’s external environments
Describe the 3 levels of strategy in an organization. Provide 2 examples of decisions each level makes.
- Corporate level – board of directors, CEO and administration. Coming up with corporate strategy and philosophy. Concerned with the dividen policy. Greater risk and longer term horizons
- Business level – business and corporate managers. Long term objs and grand strategy. On plant location decisions and market segmentation
- Functional level – product, geographic. Short term strategy and annual objs. Implment the overall strategy. Action oriented operations
What forces determine how much formality is needed in strategic management? What three modes are available? Example?
- Organizational Size
- Predominant Management Styles
- Complexity of Environment
- Production Process
- Problems in the Firm
- Purpose of the Planning System
- Stage of Firm’s Development
- Entrepreneurial mode - most small firms, informal and intuitive
- Planning mode - most large firms, comprehensive and very formal
- Adaptive mode – most medium size firms, hopeful to be large, getting there incrementally
Example of a formal strategic mgmt. is all bureaucracies, MVA
- What are the implications of viewing strategic management as a process?
It allows for a flow of information through interrelated stages of analysis toward the achievement of some goal
When a mission statement is redefined or revised, what components should be present (remember the 12 components)? 4C 3P 2G S T Q
- Customer-market
- Consumers
- Concern for Public Image
- Concern for Survival
- Product-service
- Profitability
- Philosophy
- Geographic Domain
- Growth
- Self-concept
- Technology
- Quality
What 3 economic goals guide the strategic direction of almost every business? Which is most important?
Survival MOST IMPORTANT
Profitability
Growth
You ever jerk off into a sock?
Who’s to say.
What are the newest trends in mission components?
• Sensitivity to customer wants “The customer is our top priority” Importance of consumer satisfaction Importance of customer service • Quality “Quality is job one!” The work of W. Edwards Deming and J.M. Juran Malcolm Baldridge Awards
- List 5 major responsibilities of the board of directors?
a. Establish and update mission
b. Elect top officers & CEO
c. Establish compensation for top officers
d. Determine amount & timing of dividends
e. Set broad company policy
f. Set objectives and authorize managers to implement long-term strategy
g. Mandate company’s legal and ethics compliance
- Define agency theory. Explain how agency problems occur.
Agency theory is a set of ideas on organizational control based on the belief that the separation of the ownership from management creates the potential for the wishes of owners to be ignored
Occur because:
- Moral hazard problem: Executives are often free to pursue their own interests because of the disproportionate access they have to company information.
- Adverse selection: is an agency problem caused by the limited ability of stockholders to determine the competencies and priorities of executives at hire.
- What solutions are available to the agency problem?
- Owners pay executives a premium for their service to increase loyalty
- Executives receive back-loaded compensation.
- Creating teams of executives across different units of a corporation can help to focus performance measures on organizational rather than personal goals.
What is the importance of the stakeholder approach to social responsibility?
The firm must recognize the importance of the rights to their claimants. This could include outside stakeholders that are affected by the firms actions.
Briefly describe the 4 types of social responsibilities that managers can consider.
LEED
- Legal – the firm’s obligations to comply with the laws that regulate business activities
- Economic – the duty of managers, as agents of the company owners, to maximize stockholder wealth
- Ethical – the company’s notion of right and proper business behavior.
- Discretionary – voluntarily assumed by a business organization.
Define corporate social responsibility (CSR). What are the 2 categories of Stakeholders (ie. internal and external)? Give examples of each.
CSR - the idea that business has a duty to serve society in general as well as the financial interests of stockholders
Internal – stockholders and employees
External – customers, suppliers, competitors
Better to view CSR as a component in the decision making process of a business that must determine how to maximize profits
What is a social audit? Once completed what would you use the audit for?
- an attempt to measure a company’s actual social performance against its social objectives.
Name the 5 principles of successful collaborative social initiatives.
- Identify a Long-Term Durable Mission
- Contribute “What We Do”*
* This is the most important principle - Contribute Specialized Services to a Large-Scale Undertaking
- Weigh Government’s Influence
- Assemble and Value the Total Package of Benefits
- Briefly describe the 3 fundamental ethical approaches (from your textbook) that managers should consider.
Utilitarian – the greater good, benefits the most people
Moral rights – a goal to maintain the fundamental rights and privileges of individuals and groups.
Social justice - based on equity, fairness, and impartiality in the distribution of rewards and costs among individuals and groups.
- Describe the 3 interrelated subcategories that constitute the external environment.
RIO
- Remote environment – Economic, social, political, technological, and ecological factors that originate beyond, and usually irrespective of, any single firm’s operating situation.
- Industry environment – entry barriers, supplier power, buyer power, substitute availability, competitive rivalry
- Operating environment – competitors, creditors, customers, labor, supplies
- Identify and briefly describe the different factors comprising the remote environment.
(STEEP)
- Social: beliefs and values, attitudes and opinions, lifestyles
- Technological: anticipating and estimating environmental and competitive changes
- Economic: prime interest rates, inflation, unemployment
- Ecological: relationships between human beings and other living things
- Political: tax programs, min wage legislation, antitrust laws
- List and describe 3 profound social changes in recent years.
- Entry of large numbers of women into the labor market
- Accelerating interest of consumers and employees in quality-of-life issues
- Shift in the age distribution of the population
- Explain the 5 force model of industry analysis as described by Porter. Give an example of each force.
Analyzes the competition for a business
- Determinants of rivalry – industry growth
- Determinants of buyer power – buyer volume
- Determinants of substitution threat – buyer propensity to substitute
- Determinants of supplier power – differentiation of inputs
- Determinants of entry – economies of scale
- List and explain the 5 factors in the operating environment (ie. Competitive position, customer profiles, suppliers, creditors, human resources).
Competitive Position- assessing external enviroment
Customer Profiles- Description of the customer, gives information which aids in strategic deicison making
Suppliers- Entities you rely on to provide a resource to your business, have a good relationship
Creditors-those who have a financial interest in the success of the company
Human Resources-personel for a business or entity.
