MGMT 478 Exam #1

Question 1

A stakeholder’s claim is ___ when it is perceived to be legally valid or appropriate.

Answer 1

legitimate

Question 2

___ is best described as an integrative management field that explores the initiatives taken by executives on behalf of owners involving utilization of resources to enhance performance of firms in their external environment.

Answer 2

strategic management

Question 3

the executives’ use of power and influence to direct the activities of others when pursuing an organization’s goals

Answer 3

strategic managment

Question 4

Even though many valuable, rare, and inimitable resources were generated at Xerox’s Palo Alto Research Center (PARC), the management at Xerox’s headquarters failed to gain a competitive advantage by exploiting the breakthroughs in computing software and hardware. What is the most likely implication of this example?

Answer 4

A firm must be effectively organized to capture value.

Question 5

Bargaining power of suppliers is high when…

Answer 5

Incumbent firms face supplier switching costs

Question 6

A company is best described as a _____ to an existing company if customers value the existing company’s product or service offering more when they are able to combine it with the other company’s product or service.

Answer 6

complementor

Question 7

___ refers to the process in which current options are limited by past decisions.

Answer 7

Path dependence

Question 8

___ refer to unique strengths embedded deep within a firm that allow it to differentiate
its products and services from those of its rivals.

Answer 8

Core competencies

Question 9

A SWOT analysis can be an effective management tool because it

Answer 9

Analyzes both a firm’s internal and external environments.

Question 10

The management of Wong Industries showed a commitment to ______ by increasing the salary of many female employees to meet its goal of having equal pay for women and men who perform comparable work.

Answer 10

organizational values

Question 11

Which of the following summarizes the difference between a firm’s vision and mission?

Answer 11

a vision states what a firm wants to accomplish, a mission states how a firm plans to accomplish this vision

Question 12

Limitations of resource based view and why they are a limitation

Answer 12

Unclear what a resource is exactly – unclear which resources firms should focus on
Static in Nature – doesn’t suggest that firms need to upgrade their resources
Unclear how to get VRIO resources – hard to give executives practical suggestions

Question 13

What are the five components of the Five Forces Analysis? How does conducting a Five Forces Analysis help us to understand the profit potential of an industry?

Answer 13

Threat of New Entrants
Bargaining Power of Buyers
Threat of Substitute Products or Services
Bargaining Power of Suppliers
Rivalry Among Existing Competitors

The higher the level of the forces, the lower the profit potential of an industry

Question 14

What is strategic leadership? Provide two reasons why strategic leadership is important.

Answer 14

Strategic leadership = Executive use of power and influence to direct the activities of others when pursuing organizational goals

Question 15

Why care about strategic leadership:

Answer 15

1) Significant compensation given to executives
2) Determine vision, mission, values
3) Carry out strategic management process
4) Impact firm-level outcomes, strategies

Question 16

list 5 entry barriers

Answer 16

Economies of scale
Network effects
Customer switching costs
Capital requirement
Advantages independent of size Government policy
Credible threat of retaliation
High existing competition

Question 17

The set of goal-directed and integrated actions a firm takes to gain and sustain superior performance relative to competitors.

Answer 17

strategy

Question 18

Enables a firm to achieve superior performance and sustainable competitive advantage relative to its competitors. It is the outcome of a strategic management process that consists of three elements: (1) a diagnosis of the competitive challenge; (2) a guiding policy to address the competitive challenge; and (3) a set of coherent actions to implement a firm’s guiding policy.

Answer 18

good strategy

Question 19

Superior performance relative to other competitors in the same industry or the industry average.

Answer 19

competitive advantage

Question 20

Outperforming competitors or the industry average over a prolonged period of time.

Answer 20

sustainable competitive advantage

Question 21

Underperformance relative to other competitors in the same industry or the industry average.

Answer 21

competitive disadvantage

Question 22

Performance of two or more firms at the same level.

Answer 22

competitive parity

Question 23

Occurs when companies with a good strategy are able to provide products or services to consumers at a price point that they can afford while keeping their costs in check, thus making a profit at the same time. Both parties benefit from this trade as each captures a part of the value created.

Answer 23

value creation

Question 24

Organizations, groups, and individuals that can affect or are affected by a firm’s actions.

Answer 24

stakeholder

Question 25

An approach to strategy formulation that considers all of the company's stakeholders, not just its shareholders. A core tenet of stakeholder strategy is that a single-minded focus on shareholders exposes a firm to undue risks.

Answer 25

stakeholder strategy

Question 26

A decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen.

Answer 26

stakeholder impact analysis

Question 27

A framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time.

Answer 27

corporate social responsibility

Question 28

AFI Strategy framework

Answer 28

getting started > external & internal analysis > formulation: business strategy > formulation: corporate strategy > Implementation

Question 29

attributes of stakeholders

Answer 29

power, legitimacy, urgency

Question 30

why focus on stakeholders and stakeholder management?

Answer 30

Important stakeholders can provide constraints or requirements based on information from their industry

Question 31

stakeholder impact analysis steps

Answer 31

1. Who are the stakeholders? 2. What are the stakeholder's interests and claims? 3. What opportunities and threats do our stakeholders present? 4. What economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders? 5. What should we do to effectively address the stakeholder concerns?

Question 32

Executives’ use of power and influence to direct the activities of others when pursuing an organization’s goals.

Answer 32

strategic leadership

Question 33

A conceptual framework that views organizational outcomes—strategic choices and performance levels—as reflections of the values of the members of the top management team.

Answer 33

upper-echolons theory

Question 34

The part of the strategic management process that concerns the choice of strategy in terms of where and how to compete.

Answer 34

strategy formulation

Question 35

The part of the strategic management process that concerns the organization, coordination, and integration of how work gets done, or strategy execution.

Answer 35

strategy implementation

Question 36

Standalone divisions of a larger conglomerate, each with their own profit-and-loss responsibility.

Answer 36

strategic business units

Question 37

A statement that captures an organization's purpose and aspiration. It spells out what the organization ultimately wants to accomplish.

Answer 37

vision

Question 38

A stretch goal that pervades the entire organization with a sense of purpose.

Answer 38

strategic intent

Question 39

Description of what an organization actually does—the products and services it plans to provide, and the markets in which it will compete.

Answer 39

mission

Question 40

Statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations.

Answer 40

core values statement

Question 41

Ethical standards and norms that govern the behavior of individuals within a firm or organization.

Answer 41

organizational core values

Question 42

Method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage.

Answer 42

strategic management process

Question 43

A rational, data-driven strategy process through which top management attempts to program future success.

Answer 43

top-down strategic planning

Question 44

Strategy planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses.

Answer 44

scenario planning

Question 45

Incidents that describe highly improbable but high-impact events.

Answer 45

black swan events

Question 46

The strategic option that top managers decide most closely matches the current reality and which is then executed.

Answer 46

dominant strategic plan

Question 47

Strategy process in which organizational structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top management. Strategic initiatives can bubble up from deep within the organization through autonomous actions, serendipity, and resource allocation process.

Answer 47

strategy as planned emergence

Question 48

combination of intended and emergent strategy

Answer 48

realized strategy

Question 49

Any unplanned strategic initiative bubbling up from the bottom of the organization.

Answer 49

emergent strategy

Question 50

Any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

Answer 50

strategic initiative

Question 51

Strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations.

Answer 51

autonomous actions

Question 52

The way a firm allocates its resources based on predetermined policies, which can be critical in shaping its realized strategy.

Answer 52

resource allocation process

Question 53

overall plan or direction of an organization in pursuit of its long-term objectives. It includes defining the company's mission, vision, values, and goals, identifying the markets and products it will focus on, the competitive advantages, and the resources and capabilities it needs to achieve its objectives

Answer 53

corporate strategy

Question 54

sum of the strategic planning and implementation activities that set and steer the direction of an individual business unit

Answer 54

business level strategy

Question 55

put in place at the operational level of an organization and will facilitate the corporate (or business) level strategy implementation.

Answer 55

functional strategy

Question 56

a person or group of people who direct and control an organization from its highest level.

Answer 56

TMT (top management team)

Question 57

Constraints such as time or the brain’s inability to process large amounts of data that prevent us from appropriately processing and evaluating each piece of information we encounter.

Answer 57

cognitive limitations

Question 58

Obstacles in thinking that lead to systematic errors in our decision making and interfere with our rational thinking.

Answer 58

cognitive biases

Question 59

A cognitive bias that highlights people’s tendency to overestimate their ability to control events.

Answer 59

illusion of control

Question 60

A cognitive bias in which an individual or a group faces increasingly negative feedback regarding the likely outcome from a decision, but nevertheless continues to invest resources and time in that decision, often exceeding the earlier commitments.

Answer 60

escalating commitment

Question 61

A cognitive bias in which individuals tend to search for and interpret information in a way that supports their prior beliefs. Regardless of facts and data presented, individuals will stick with their prior hypothesis.

Answer 61

confirmation bias

Question 62

A cognitive bias in which conclusions are based on small samples, or even from one memorable case or anecdote.

Answer 62

representativeness bias

Question 63

A situation in which opinions coalesce around a leader without individuals critically evaluating and challenging that leader’s opinions and assumptions.

Answer 63

groupthink

Question 64

PESTEL

Answer 64

political, economic, sociocultural, technology, environmental, legal

Question 65

Occurs when the production or consumption of goods and services imposes costs on or provides benefits to others, but the prices of the goods and services do not capture these costs and benefits.

Answer 65

externalities

Question 66

Firm performance attributed to the structure of the industry in which the firm competes.

Answer 66

industry effects

Question 67

A firm’s strategic profile based on the difference between value creation and cost (V − C).

Answer 67

strategic positioning

Question 68

framework that identifies five forces that determine the profit potential of an industry and shape a firm’s competitive strategy.

Answer 68

five forces model

Question 69

five forces

Answer 69

threat of entry power of suppliers power of buyers threat of substitutes rivalry among existing competitors

Question 70

The risk that potential competitors will enter an industry.

Answer 70

threat of entry

Question 71

The positive impacts that one user of a product or service has on other users of that product or service.

Answer 71

network effects

Question 72

Obstacles that discourage or prevent entry into an industry.

Answer 72

entry barriers

Question 73

The obstacles that interfere with a firm's ability to leave an industry.

Answer 73

exit barriers

Question 74

Decisions that are costly, have a long-term impact, and are difficult to reverse. Contrast with tactical decisions, which are short-term and can be easily reversed.

Answer 74

strategic commitments

Question 75

A product, service, or competency that adds value to the original product offering when the two are used in tandem.

Answer 75

complements

Question 76

many small firms, a commodity product, ease of entry, little or no ability for each firm to raise its prices. companies in similar size and resources

Answer 76

perfect competitions

Question 77

many firms, some pricing power, differentiated product, medium entry barriers

Answer 77

monopolistic competition

Question 78

few (large) firms some pricing power differentiated products high entry barriers

Answer 78

oligopoly

Question 79

one firm considerable pricing power unique product very high entry barriers

Answer 79

monopoly

Question 80

A process whereby formerly unrelated industries begin to satisfy the same customer need.

Answer 80

convergence

Question 81

horizonatl mergers and acquisitions make more profitable than fragmented industries

Answer 81

consolidation

Question 82

The set of companies that pursue a similar strategy within a specific industry.

Answer 82

strategic groups

Question 83

Valuable, rare or costly to imitate, firm itself must be organized to capture the value of the resources

Answer 83

VRIO criteria

Question 84

Barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

Answer 84

isolating mechanisms

Question 85

A firm’s ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage.

Answer 85

dynamic capabilities

Question 86

The internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value.

Answer 86

value chain analysis

Question 87

The conceptualization of a firm as a network of interconnected activities.

Answer 87

strategic activity systems

Question 88

A framework that explains differences in firm performance within the same industry

Answer 88

strategic group model