MGMT 3013 Strategic Management: Study Guide
Superior performance allows a company to benefit society by implementing which of the following strategies?
imitate the features of the most popular products of competitors on the market reinvest some of its profits and grow, providing more employment and career opportunities sell more advertising space substitute less-expensive components to keep costs low
Because the Internet lowers barriers to entry in most industries, it
increases the threat of new entrants.
German truck and trailer manufacturer, Schmitz Cargobull, mainly serves customers that are operators of truck or trailer fleets. What sets the company apart is its expertise in telematics (the integrated application of telecommunications data) to monitor the current state of any Schmitz Cargobull-produced trailer. This is an example of using ________ to enhance customer value and increase ________ position.
information technology; competitive
Scenario planning is a useful technique for firms competing in industries characterized by ________ and ________.
unpredictability; change
Scenario planning is a useful technique for firms competing in industries characterized by ________ and ________.
unpredictability; change high profit margins; stability low profit margins; stability predictability; stability
Inbound logistics include which of the following?
warehousing and inventory control
Gerber Products Co. brands their baby food which gives them a resource that is potentially intimitable because re-creating brand loyalty is likely to be a time-consuming process competitors would find difficult to expedite. This is an example of using ________ conditions to build protection in the baby food market.
path dependent
Understand the difference between tangible resources, intangible resources, and capabilities. Be able to identify examples of each of these.
- Tangible= Assets that can be seen, touched, quantified. Physical assets, financial assets, technology assets, organizational assets.- Intangible= Difficult to account for/imitate, often embedded in unique routines and practices. Human resources, innovation resources, reputational resources.- Organizational Capabilities= competencies of skills that a firm employs to transform inputs to outputs. Combine tangible and intangible to achieve desired results; excellent customer service, innovative products and service, flexibility in manufacturing process, ability to hire, motivate, retain human capital
What three management tasks are required to successfully create and implement strategy?
1. Analysis: strategic goals (vision, mission, objects), internal and external environment. 2. Decisions (strategy formulation): Industries to compete in, how to compete. 3. Actions (Strategy implementation): Resource allocation, organization design
How do the interrelationships of activities within the firm and with key outside stakeholders create value?
2 Levels: Interrelationships among activities within the firm. Relationships among activities within the firm and other stakeholders that are part of the firms expanded value chain.-Collaborative and strategic relationships between value chain activities with the firm or between the firm involves exchange of resources that can contribute success to the firm.
Groupon offers online coupons for bargains at local shops and restaurants. Which of the following is a reason that rivals are limiting Groupon's growth?
Its core capability is easily imitated. There are few equivalent capabilities. Its core capability is not easily imitated. Not many firms possess the same capability.
What is the purpose of stakeholder impact analysis? What steps make up this process?
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. Step 1: Identify Stakeholders Who are our stakeholders? Step 2: Identify stakeholder's interests What are our stakeholder's interest and claims? Step 3: Identify opportunities and threats What opportunities and threats do our stakeholders present Step 4: Identify social responsibilities What are our economic, legal, ethical, and philanthropic responsibilities stakeholders? Step 5: Address stakeholder concerns What should we do to effectively address the stakeholder concerns?
Juan wants to open his own hot dog restaurant but doesn't know anything about business. He needs help determining who his competition is, how he should craft his strategy to compete and how he'll implement his strategy to achieve a competitive advantage. He's hired you to help him get started. As a result, you will probably use which of the following?
AFI strategy framework
Which is a model that links strategy analysis, strategy formulation, and strategy implementation, thereby helping managers plan and implement a good strategy?
AFI strategy framework
Juan wants to open his own hot dog restaurant but doesn't know anything about business. He needs help determining who his competition is, how he should craft his strategy to compete and how he'll implement his strategy to achieve a competitive advantage. He's hired you to help him get started. As a result, you will probably use which of the following?
AFI strategy framework Red Queen effect competitive benchmarking Stakeholder Impact analysis
Understand the value chain and value chain analysis. What are the primary activities in the value chain? What are support activities?
Analyzes the sequential process of value-creating activities. Primary activities: sequential activities of the value chain that refer to the physical creation of the product or service, its sale and transfer to the buyer, and its service after sale, including inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities: activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities, including procurement, technology development, human resource management, and general administration.
________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
Behavior modification Strategy Credo Competency management
What is the AFI framework?
Explains and predicts difference in firm performance Helps managers formulate and implement a strategy than can result in superior performance Effectively managing the strategy process is the result of the following Analysis (A) Formulation (F) Implementation (I)
What do competitive disadvantage and competitive parity mean?
Competitive disadvantage Underperformance relative to other competitors in the same industry or the industry average. A firm that continuously underperforms its rivals or the industry average has a competitive disadvantage Competitive parity Performance of two or more firms at the same level. Two or more firms than perform at the save level have competitive parity.
Understand the difference between substitutes and complements.
Complements: products and services that have an impact on the value of a firm's own product and service. Substitutes: Comes from different industries, against competitors (using a bike in the substitute of a car)
What characteristics make a resource valuable? Rare? Inimitable? Non-substitutable?
Core competences- Provide a firm with potential for sustainable competitive advantage1. Valuable: in formulation and implementing strategies to improve efficiency or effectiveness2. Rare: or uncommon, difficult to exploit3. Difficult to imitate: or copy due to physical uniqueness, path dependency, casual ambiguity, or social complexity4. Difficult to substitute: with strategically equivalent resources or capabilities
Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week, which is about the same as the income of a close competitor. As a result, we can conclude that the two businesses also have a competitive parity in the industry.
Correct—competitive advantage is achieved through profitability alone. Correct—competitive advantage is achieved since Bill's Auto & Airplane Repair shop has a positive net income. Correct—competitive parity is a performance of two or more firms at the same level. Incorrect—Bill's Auto & Airplane Repair shop more than likely has a sustained competitive advantage because the business is diversified.
Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week, which is about the same as the income of a close competitor. As a result, we can conclude that the two businesses also have a competitive parity in the industry.
Correct—competitive parity is a performance of two or more firms at the same level.
Groupon offers online coupons for bargains at local shops and restaurants. Which of the following is a reason that rivals are limiting Groupon's growth?
Its core capability is easily imitated.
________ tracks the evolution of environmental trends, sequences of events, or streams of activities.
Environmental monitoring
________ tracks the evolution of environmental trends, sequences of events, or streams of activities.
Environmental surveying Environmental scanning Competitive intelligence Environmental monitoring
What are the six areas of the general environment that should be analyzed in an external assessment? Be able to identify examples from each of these six areas that might impact the strategy of a firm.
Factors that have a broad influence across industries and firms, hard to predict and difficult to control.- Demographic, sociocultural, political/legal, technological, economic, global Demographic -aging population -Rising affluence -Changing ethnic composition -Geographic distribution of population -greater disparities in income levels Sociocultural -More women in the workforce -increase in temporary workers -greater concern for fitness -Greater concern for environment -Postponement of family formation Political legal -tort reform -Americans with disabilities act -deregulation of utility and other industries -increase in federally mandated minimum wages -taxation Technological -Genetic engineering -3D printing -pollution/global warming -AI -nontechnology -big data analytic Economic -interest rate -unemployment -consumer price index -trends in GDP Global -global trade -currency exchange rates -emergence of the Indian and Chinese economies
Understand financial ratios, and how they can help to understand performance of the firm. What comparisons are necessary to assess firm performance?
Financial Ratio Analysis: Balance sheet, income statement, market valuation, historical comparison with industry names, comparison with key competitors5 Types1. Short-term solvency or liquidity2. Long-term solvency measure3. Asset turnover management4. Profitability5. Market Value
The financial perspective of the balanced scorecard answers which of the following questions?
How do we look to shareholders?
What is meant by the balanced scorecard? What four perspectives are incorporated into the balanced scorecard?
Integrates multiple perspective in assessing firm performance- How do customers see us? (customer perspective)- What must we excel at? (internal perspective)- Can we continue to improve and create value (innovation and learning perspective)- How do we look to shareholders? (financial perspective)
What is scenario analysis? How is it used in strategy formulation?
More in-depth approach to forecasting, detailed assessments of societal trends, economics, politics... Seeks to explore possible developments that may be connected to the past. How might trends affect an issue?
What are the characteristics of resources that can provide the basis for competitive advantage?
Resource-based view: 2 activities (internal analysis of firm and external analysis of industry)-Can lead to competitive advantage if: valuable, rare, hard to duplicate. Tangible, intangible resources, and organizational capabilities are combines
What are strategic groups? How are they useful in understanding competitive dynamics in an industry
Set of firms emphasizing similar strategic dimensions and similar strategies. More competition within the strategic group because; similar market position, similar products, similar strategic actions.
What are stakeholders? How are they distinguished from stockholders? What are internal stakeholders? What are external stakeholders?
Stakeholders Organizations, groups, and individuals that can affect or are affected by a firm's actions. Stakeholder and difference Shareholder A stakeholder is anyone who is impacted by a company or organization's decisions, regardless of whether they have ownership in that company. Shareholders are those who have partial ownership of a company because they have bought stock in it. All shareholders are stakeholders, but not all stakeholders are shareholders. Internal stakeholders Include stockholders, employees (for instance, executives, managers, and workers), and board members External Stakeholders Include customers, suppliers, alliance partners, creditors, unions, communities, government at various levels, and the media.
________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.
Strategic management
________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
Strategy
In the resource-based view of the firm, examples of tangible resources include
financial resources, physical resources, and technological resources.
What is strategy and what three elements make it up?
Strategy The set of goal-directed and integrated actions a firm takes to gain and sustain superior performance relative to competitors Good Strategy 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. 1. A diagnosis: to identify the competitive challenge. Diagnosis includes analyzing the firm's external and internal environments. 2. A guiding policy to address the competitive challenge through strategy formulation. The guiding policy lays the foundation to craft a firms corporate, business, and functional strategy. 3. A set of coherent action to implement the firm's guiding policy
What is competitive advantage? What must a firm do to create one?
Superior performance relative to other competitors in the same industry or the industry average. -is relative, not absolute. -To obtain a competitive advantage, a firm must either create more value for customers while keeping to its cost comparable to competitors, or it must provide value equivalent to its competitors' but at a lower cost Creating and maintaining competitive advantage can be achieved through operational effectiveness, performing similar activities better than competitors and keeping strategy by performing differentiating activities from competitors.
________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.
Supply chain management Integrated technology management Strategic management Inventory management
Understand the factors that determine whether and Know the key elements of the IO Model. (Industry definitions, General environment, and 5 forces model).
The I/O (Industrial Organization) Model adopts an external perspective to explain that forces outside of the organization represent the dominate influences on a firm's strategic actions.The general environment is composed of dimensions in the broader society that influence an industry and the firms within it.The industry environment is the set of factors that directly influences a firm and its competitive actions and responses: the threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competing firms.The demographic segment is concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distributionThe economic environment refers to the nature and direction of the economy in which a firm competes or may compete.The political/legal segment is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies.The sociocultural segment is concerned with a society's attitudes and cultural values.The technological segment includes the institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials.The global segment includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets.The sustainable physical environment segment refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to those changes with the intent of creating a sustainable environment.
Why is managing stakeholders important?
The effective management of stakeholders. It is necessary to ensure the firm's continued survival and to sustain any competitive advantage. These goals are achieved through stakeholders strategy.
Which of the following provides an example of what AFI strategy framework is used for?
Using AFI, the Quest Auto firm was able to implement a strategy that produced high-quality cars more efficiently and thereby reduced costs.
Which of the following provides an example of what AFI strategy framework is used for?
Using AFI, the Quest Auto firm was able to implement a strategy that produced high-quality cars more efficiently and thereby reduced costs. Using AFI, the Fine Dine Restaurant Group was able to improve employee benefits and thereby increase employee loyalty. Using AFI, the Mossimo Apparel Company was able to implement a strategy that allowed them to give more money to charities and thereby gain good press. Using AFI, the Pure Tea Group was able to reduce the pollution it caused while processing tea and thereby receive an award.
Understand the concept of value and how value it's created within an organization.
Value= amount buyers are willing to pay for the firm's firms product and services. Value received>cost of production.
The financial perspective of the balanced scorecard answers which of the following questions?
What must we excel at? Can we continue to improve and create value? How do we look to shareholders? How do customers see us?
What is a SWOT analysis? How is it used?
a framework for analyzing a company's internal and external environments and that stands for strengths, weaknesses, opportunities, and threats. It provides "raw material"-a basic listing of conditions both inside and surrounding your company The general idea of SWOT analysis is than a firm's strategy must 1. Build on its strengths 2. Remedy the weaknesses or work around them 3. Take advantage of the opportunities presented by the environment 4. Protect the firm from threats It forces managers to consider both internal and external factors simultaneously It emphasis identifying opportunities and threats makes firms act proactively rather than reactively Raises awareness about the role of strategy in creating a match between the environmental conditions and the firm's internal strengths and weaknesses Its conceptual simplicity achieved without sacrificing analytical rigor
Understand Porter's Five Forces. What are the key objectives of a Five Forces analysis? What factors impact the intensity of impact of each of the five forces?
a tool for examining the industry-level competitive environment, especially the ability of firms in that industry to set prices and minimize costs. Threat of new entrants, power of suppliers, power of buyers, threat of substitutes, intensity among competitors 1. The threat of new entrants 2. The bargaining power of buyers 3. The bargaining power of suppliers 4. The threat of substitutes products and service 5. The intensity of rivalry among competitors in an industry
Two of the key inputs to developing forecasts discussed in the text are
assessing internal strengths and environmental scanning. environmental scanning and competitive intelligence. environmental scanning and a SWOT analysis. environmental scanning and stakeholder identification.
Which of the following is not an example of corporate competitive intelligence?
banks tracking home loans airlines changing hundreds of fares daily in response to competitor tactics consumers comparing product offers online car manufacturers offering sales incentives based on rival offers
Harley-Davidson markets motorcycles, clothes, toys, and restaurants. It uses its strong ________, which is ________.
brand image; an intangible resource
Harley-Davidson markets motorcycles, clothes, toys, and restaurants. It uses its strong ________, which is ________.
brand image; an intangible resource financial position; an intangible resource technological resources; an intangible resource brand image; a tangible resource
Which of the following three important stakeholder attributes should managers pay special close attention to in order to better understand stakeholder impact analysis?
competitive advantage, economic value, and time power, legitimacy, and urgency grace under pressure, financial control, and reward power shareholder rights plan, board representation and CEO influence
Which of the following is not an example of corporate competitive intelligence?
consumers comparing product offers online
The goal of a good strategy is focused primarily on
creating superior value while containing costs.
The goal of a good strategy is focused primarily on
creating superior value while containing costs. making as much money as possible. employing lean manufacturing and Six Sigma. encouraging investors to buy more shares of the firm.
Because the Internet lowers barriers to entry in most industries, it
decreases the threat of new entrants. makes it easier to build customer loyalty. increases supplier power. increases the threat of new entrants.
The aging of the population, changes in ethnic composition, and effects of the millennial generation are ________ changes.
demographic
Strategic groups consist of a group of
firms within an industry that follows similar strategies.
For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes?
easy for competitors to substitute
What is environmental forecasting? How might forecasting impact the development of strategies for the firm?
environmental forecasting the development of plausible projections about the direction, scope, speed, and intensity of environmental change. It's purpose is it predict change. Development of plausible projections about the direction, scope, speed, and intensity of environmental change. Underestimating uncertainty can cause no protection from threats and opportunities will be missed.
Understand what is meant by environmental scanning, monitoring, competitive intelligence: How are these tools used in assessing the external environment?
environmental scanning surveillance of a firm's external environment to predict environmental changes and detect changes already under way. environmental monitoring a firm's analysis of the external environment that tracks the evolution of environmental trends, sequences of events, or streams of activities. competitive intelligence a firm's activities of collecting and interpreting data on competitors, defining and understanding the industry, and identifying competitors' strengths and weaknesses.
Two of the key inputs to developing forecasts discussed in the text are
environmental scanning and competitive intelligence.
Strategic groups consist of a group of
executives drawn from different companies within an industry that makes decisions on industry standards. firms within an industry that decides to collude rather than compete with each other so that they can increase their profits. top executives that makes strategies for a company. firms within an industry that follows similar strategies.
In the resource-based view of the firm, examples of tangible resources include
financial resources, human resources, and firm competencies. financial resources, physical resources, and the capacity to combine intangible resources. financial resources, physical resources, and technological resources. outstanding customer service, innovativeness of products, and reputation.
German truck and trailer manufacturer, Schmitz Cargobull, mainly serves customers that are operators of truck or trailer fleets. What sets the company apart is its expertise in telematics (the integrated application of telecommunications data) to monitor the current state of any Schmitz Cargobull-produced trailer. This is an example of using ________ to enhance customer value and increase ________ position.
information technology; competitive operations; marketing sales; competitive human resources; marketing
Campbell Soup uses electronic networks to improve the efficiency of outbound logistics. These networks also helped Campbell Soup manage the ordering of raw materials more efficiently, improve its production scheduling, and help its customers better manage their inbound logistics operations. This is an example of
interrelationships among activities outside of the firm. relationships among activities within the firm and with other stakeholders that are part of the expanded value chain of the firm. relationships among activities outside of the firm. interrelationships among activities within the firm.
Buyer power will be greater when
it is concentrated or when a buyer group purchases large volumes relative to seller sales.
Which of the following would be an entry barrier?
large economies of scale
Which of the following would be an entry barrier?
low capital requirements large economies of scale easy access to raw materials low switching costs
The aging of the population, changes in ethnic composition, and effects of the millennial generation are ________ changes.
macroeconomic sociocultural global demographic
Gerber Products Co. brands their baby food which gives them a resource that is potentially intimitable because re-creating brand loyalty is likely to be a time-consuming process competitors would find difficult to expedite. This is an example of using ________ conditions to build protection in the baby food market.
path dependent social complex causal ambiguity physical uniqueness
Which of the following three important stakeholder attributes should managers pay special close attention to in order to better understand stakeholder impact analysis?
power, legitimacy, and urgency
Advertising is a ________ activity. Supply of replacement parts is a ________ activity.
primary; primary
Advertising is a ________ activity. Supply of replacement parts is a ________ activity.
primary; primary support; secondary primary; support support; primary
For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes?
rare easy for competitors to substitute difficult for competitors to imitate valuable
Which is considered a force in the five-forces model?
recent technological innovation increased deregulation in an industry rivalry among competing firms the threat of government intervention
Superior performance allows a company to benefit society by implementing which of the following strategies?
reinvest some of its profits and grow, providing more employment and career opportunities
Campbell Soup uses electronic networks to improve the efficiency of outbound logistics. These networks also helped Campbell Soup manage the ordering of raw materials more efficiently, improve its production scheduling, and help its customers better manage their inbound logistics operations. This is an example of
relationships among activities within the firm and with other stakeholders that are part of the expanded value chain of the firm.
Inbound logistics include which of the following?
repair and parts supply warehousing and inventory control machining and packaging promotion and packaging
Which is considered a force in the five-forces model?
rivalry among competing firms
Medical monitoring through wearable devices has been approved by the U.S. Food and Drug Administration for offers from Apple. This is an important development of which factor of the general environment?
sociocultural economic demographic technological
John is a bit confused about the difference between stakeholders and stockholders. You meet with John and inform him that the main difference is that
stakeholders are both internal and external to the firm while stockholders are considered external to the firm. stakeholders are considered internal to the firm while stockholders are external to the firm. stakeholders can be both internal and external while stockholders own shares of a firm and are classified as internal to the firm. stakeholders are external to the firm while stockholders are considered internal to the firm.
John is a bit confused about the difference between stakeholders and stockholders. You meet with John and inform him that the main difference is that
stakeholders can be both internal and external while stockholders own shares of a firm and are classified as internal to the firm.
What does "sustainable competitive advantage? mean?
sustainable competitive advantage Outperforming competitors or the industry average over a prolonged period of time. A firm than is able to outperform competitors for prolonged periods of time has a competitive advantage
Medical monitoring through wearable devices has been approved by the U.S. Food and Drug Administration for offers from Apple. This is an important development of which factor of the general environment?
technological
Which is a model that links strategy analysis, strategy formulation, and strategy implementation, thereby helping managers plan and implement a good strategy?
the Four Ps AFI strategy framework corporate social responsibility stakeholder impact analysis
What is meant by perceptual acuity? Why is this important?
the ability to sense what is coming before the fog clears. is the ability to know for certain what will happen in the future. Aware of internal & external environments, it is important for strategic leaders. Detecting early warning signals, keeping pace with changes in the external environment can sustain competitive advantage.
All of the following are important elements of the political and legal segment of the general environment except
the deregulation of utilities. increases in the federally mandated minimum wage. the increased use of Internet technology. the Americans with Disabilities Act (ADA).
All of the following are important elements of the political and legal segment of the general environment except
the increased use of Internet technology.
Buyer power will be greater when
the industry product is very important to the quality of the buyer end products or services. there are high switching costs. the products purchased are highly differentiated. it is concentrated or when a buyer group purchases large volumes relative to seller sales.
The resource-based view (RBV) of the firm combines the following two perspectives:
the internal analysis of the firm and the external analysis of the industry and competitive environment.
The resource-based view (RBV) of the firm combines the following two perspectives:
the internal analysis of the firm and the external analysis of the industry and competitive environment. the primary and support activities of the firm. the industry and the competitive environment. the interrelationships among the primary activities of the firm and corporate management.
What is the purpose of strategy?
to maximize an organization's strengths and to minimize the strengths of the competitors