Midterm Flashcards
Although strategic management is defined in various perspectives, which definition most accurately defines the overall theory?
As decisions facing a business are strategic rather than tactical, they have which of the following dimensions?
The decision making hierarchy of a large corporation typically contains 3 levels. List each level from highest to lowest.
The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives.
Require top management decisions, Require large amounts of firm’s resources, Often affect firm’s long term prosperity, future-oriented, Usually have multifunctional or multibusiness consequences, Consider firm’s external environment.
Corporate, Business, Functional.
The corporate headquarters of Sears Holding Company spent $60 million to automate 6,900 clerical jobs by installing 28,000 computerized cash registers at its 868 stores in the U.S. Although this move eliminated many functional-level jobs, top management believed that reducing annual operating expenses by at least $50 million was crucial to competitive survival. This implemented action would be performed by which organizational level?
In Michael Porter’s What Is Strategy? (2000) he speaks about operational effectiveness and how it is not a source of competitive advantage. Why is this true?
In Michael Porter’s What Is Strategy? (2000), he discusses Southwest Airlines and how they created a low-cost strategy compared to their competitors. How has this occurred?
Functional
Productivity frontier decreases or reduces, the more benchmarking they perform the more advantage they have. Operational effectiveness fails at enabling firms to perform better.
Staked out a unique and valuable strategic positioning based on a tailored set of several activities.
According to Michael Porter’s What is Strategy, a valuable position that will attract imitation by incumbents, who are likely to copy it, will do so in which ways?
Which of the following best describes a company mission?
What are the key components of the strategic management model?
Staked out a unique and valuable strategic positioning based on a tailored set of several activities. Keep your own strategy but duplicate it(strattling).
A broadly framed but enduring statement of a firm’s intent. The unique purpose that sets a company apart from others of its type and identifies the scope of its operations in product, market, and technology terms.
Internal analysis, short term objectives, long term objectives.
Viewing strategic management as a process, what are the important implications of the employing the model?
As a business grows or is forced by competitive pressures to alter its product, market, or technology, redefining the company mission may be necessary; therefore identifying the mission statement components may be critical. Which of the following are components to the mission statement?
Mission statements should reflect the public’s expectations, because it makes achievement of the firm’s goals more likely. This mission statement component is most likely referred to as which of the following?
A change in anyone component will affect several or all of the components, feedback from institutionalization, review and evaluation in early stages of a process is a necessity, the overall process needs to regard it as a dynamic system.
Customer market, concern for survival, product or service.
Concern for public image.
What are the duties of the Board of Directors within an organization?
Whenever there is a separation of owners (principals) and the managers (agents) of a firm, the potential exists for the wishes of the owners to be ignored. This fact, and the recognition that agents are expensive, established the basis for a set of complex but helpful ideas known as which of the following?
What are some of the problems that can result from agency relationships between corporate stockholders and company’s executives?
Establish and update mission, Elect top officers and CEO, Establish compensation for top officers, Determine amount and timing of dividends, Set broad company policy, Set objectives and authorize managers to implement long-term strategy, Mandate company’s legal and ethics compliance.
Agency Theory
Executives pursue growth in company size rather than earnings, Executives attempt to diversify their corporate risk, Executives avoid healthy risk, Managers act to optimize their personal payoffs, Executives protect their status.
In defining or redefining the company mission, strategic managers must recognize the legitimate rights of the firm’s claimants. Such claimants would include which of the following groups?
When a firm attempts to incorporate the interests of stakeholders into its mission statement, broad generalizations are insufficient. Which step(s) need to be taken to incorporate the interest of the claimants?
To better understand the nature and range of social responsibilities, which type of responsibilities should strategic managers consider?
Stakeholders, society, customers, employees.
Identification of stakeholders, Understanding stakeholders’ specific claims vis-à-vis the firm, Reconciliation of these claims and assignment of priorities, Coordination of the claims with other elements of the company mission.
Discretionary, legal, ethical, economic.
Corporate social responsibility (CSR) is best defined as:
A host of external factors influence a firm’s choice of direction and action and, ultimately, its organizational structure and internal processes. These factors, which constitute the external environment, can be divided into three interrelated subcategories. Which of the following represent those external environment?
ABC Construction, LLC, is in the business of new construction homes in the Las Vegas market. During the past few years, inflation rates have caused mortgage interest rates to increase. As such, overall demand for new home construction has shown signs of slowing down. When assessing the external environment, which category would this belong to?
The idea that business has a duty to serve society in general as well as the financial interests of stockholders.
remote, industry, operating.
Remote.
The Federal Communications Commission (FCC) ruled that local phone companies had to continue to lease their lines to the long-distance carriers at what the locals said was below costs. At the same time, the FCC ruled that the local companies were not required to lease their broadband lines to national carriers. This is an example of what type of factor that influences the remote environment?
Michael E. Porter propelled the concept of industry environment into strategic thought and business planning by explaining the five forces that shape competition in an industry. Identify and explain the power associate with each of the five forces.
What are major sources of barriers to entry?
Political
Substitutes, buyers, suppliers, competition, new entry.
Costs, new costs.
How is product differentiation a source of a barrier to entry?
What best describes economies of scale?
Suppliers can exert bargaining power on participants in an industry by raising prices or reducing the quality of purchased goods and services. Under which conditions is a supplier group the most powerful?
Overcome loyalty.
increase volume to bring cost down.
Dominated by a few companies and more concentrated by the industry itself. Product is unique or at least differentiated or additional building and switching costs. Industry is not an important customer of the supplier group.
Customers can force down prices, demand higher quality or more service and play competitors off against each other – all at the expense of industry profits. Under which conditions is a buyer group the most powerful?
The producers of fiberglass insulation alternates, including cellulose and rock wood are bound to become an even stronger force once the current round of plant additions by fiberglass insulation produces has boosted capacity enough to meet demand. This threat is an example of which primary five forces?
What are some common mistakes by management when they attempt to identify competition?
Products it purchases from the industry are standard or undifferentiated.
Substitutes.
Overemphasizing current or known competitors, while ignoring potential new entrants. Overemphasizing large competitors while ignoring small. , Assuming competitors behaviors won’t change.
What is the best definition of globalization?
Why do firms globalize?
When firms expand globally, they are faced with numerous complexities which are driven by at least five factors. What are these five factors?
The strategy of pursuing opportunities anywhere in the world that enable a form to optimize its business functions in the countries in which it operates.
U.S. firms can reap benefits from industries and technologies developed abroad, Direct penetration of foreign markets can drain vital cash flows from a foreign competitor’s domestic operations, The resulting lost opportunities, reduced income, and limited production can impair the competitor’s ability to invade U.S. markets.
Factor that isn’t is sharing common customs and currencies.
A multidomestic industry is one in which competition is essentially segmented from country to country. Factors that increase the degree to which an industry is multidomestic include which of the following?
A global industry is one in which competition crosses national borders. A firm in a global industry must maximize its capabilities through a worldwide strategy. What are the factors that make for the creation of a global industry?
Strategies for firms that are attempting to move toward globalization can be categorized by the degree of complexity of each foreign market being considered and by the diversity in a company’s product line. When a firm extends their company in the foreign market by establishing a separately, wholly owned, located strategic business unit directly responsible for fulfilling the operational duties assigned to it by corporate management is best described as which global competitive strategy?
Need for customized products to meet taste or preference of local customers, distributions channels unique to each country, fragmentation of the industry with many competitors in each national market.
- Economies of scale in the functional activities of firms in the industry
- The presence in the industry of predominantly global firms that expect consistency of products and services across markets
- A low level of trade regulation and of regulation regarding foreign direction investment
Foreign Branching
SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. It is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s:
Southland Log Homes’ southeastern plant locations provide both transportation and raw material costs advantages along with ideal proximity to the United States. Using the SWOT analysis, this is an example of which SWOT component?
You’re a business owner and the entrance of new competitors, slow market growth, increased bargaining power of key buyers or suppliers, technological changes, and new or revised regulation could represent is an example of which SWOT component?
Internal resources and its external situation
Strength
Threat
Although the SWOT analysis has been a framework of choice among many managers for a long time, due to its simplicity and its portrayal of the essence of sound strategy formulation, there continues to be limitations of the analysis. What are some of the limitations associated with SWOT analysis?
The term value chain is best described as what?
The Value Chain Analysis (VCA) takes a process point of view to which the business is divided into sets of activities that occur within the business, starting with the inputs a firm receives and finishing with the firm’s products and after-sales service to customers. VCA divides activities within a firm into two broad categories – those that are involved in the physical creation of the product and those that allow those activities to take place on an ongoing basis. Which activities are included in each category?
- A SWOT analysis can overemphasize internal strengths and downplay external threats
- A SWOT analysis can be static and can risk ignoring changing circumstances
- A strength is not necessarily a source of competitive advantage
A way of looking at a business as a chain of activities that transform inputs into outputs that customers value
Primary
The Value Chain Analysis attempts to do what?
The Resource Based View (RBV) is a method of analyzing and identifying a firm’s strategic advantages based on examining its distinct combination of assets, skills, capabilities and intangibles as an organization. The RBV applies a set of guidelines to determine which of those resources represent strengths or weaknesses. These guidelines derive from the idea that resources are more valuable when they:
To achieve long-term prosperity, strategic planners commonly establish long-term objectives that address which areas of the business?
Understand how a business creates customer value by examining the contributions of different activities within the business
Critical to fulfilling a customers need better than that of a firms competitors, resource or a skill that is scarce, durable.
Profitability, , Productivity, Employee Development
