MGNT 428 CHAPTER 1

Which of the following are the relationships that a firm has with stakeholders?

- Stakeholders can affect the firm's actions. - The actions of the firm can affect stakeholders.

The expectations that society has toward business, in contrast to what society requires, result in which of the following elements of the pyramid of corporate social responsibility?

- ethical responsibilities - philanthropic responsibilities

A firm that successfully executes a strategy benefits society by

- reinvesting profits and increasing employment - creating value

In the external analysis phase of the AFI strategy framework, managers should ask,

"How do external forces affect our strategy and competitive advantage?"

Stakeholder impact analysis is a decision tool that helps a company do which of the following?

- Act as a good corporate citizen - Achieve a competitive advantage

Which of the following topics should be considered during the analysis phase of the AFI framework?

- the external environment and associated challenges - the role of strategic leadership and the strategy process - the firm's business model and competitive advantages - the firm's internal strengths and resources

Stakeholders

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

Which statement is true about pricing strategies, internet strategies, alliance strategies, and brand strategies?

They may be a necessary part of a firm's initiatives to support its competitive strategies

Ethical Responsibility

a company's social responsibility to do what is right, just, and fair

Legal Responsibility

a company's social responsibility to obey society's laws and regulations

When a firm implements a strategy that leads to superior performance relative to other companies in the same industry, it is said to have achieved

a competitive advantage

When a stakeholder has power of a company it is

able to influence the company to do something it would otherwise not do

Strategic Management

an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage

Firms should identify a _____ so that employees can determine if they are making progress in addressing it.

clear competitive challenge

Economic Responsibility

gain and sustain competitive advantage

Using a(n) ______ strategy formulation, managers examine where and how the firm should compete around the world.

global

A competitive advantage

is assessed relative to other competitors in the industry

Managers have ______ resources in their quest for competitive advantage.

limited

Strategic Positioning allows managers to

provide customers value while controlling costs

Stakeholder strategy argues that focusing only on the needs of ______ places the firm at risk of failure.

shareholders

A firm's attempts to manage the web of relationships between internal and external stakeholders in order to create value is known as

stakeholder strategy

Effective guiding policy is supported by and stays consistent through the use of

strategic commitments

Effective guiding policy is supported by and stays consistent through the use of

strategic responsibilities

A competitive advantage that lasts for a long period of time is said to be

sustainable

Stakeholder Impact Analysis

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

Stakeholder Strategy

An integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage

What must a firm do after diagnosing its specific competitive challenge?

Create an effective guiding policy

Good Strategy

Enables a firm to achieve superior performance and sustainable competitive advantage relative to its competitors. It is based on 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.

What is the overall purpose of strategic management?

Gain competitive advantage

External Stakeholders

Include customers, suppliers, alliance partners, creditors, unions, communities, governments at various levels, and the media.

Internal Stakeholders

Include employees (executives, managers, and workers), stockholders, and board members.

Value Creation

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.

Sustainable competitive advantage

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

Steps in Stakeholder Impact Analysis

1. Who are our stakeholders? 2. What are our stakeholders' 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?

Corporate Social Responsibility (CSR)

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

Analysis, Formulation, Implementation (AFI) Strategy Framework

A model that links three interdependent strategic management tasks—analyze, formulate, and implement—that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage.

Strategy

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

Which statement about strategies is true?

A statement of desire on its own often leads to goal conflict

Philanthropic Responsibility

Be a good corporate citizen. Contribute resources to the community; improve the quality of life.

Competitive parity

Performance of two or more firms at the same level

Competitive Advantage

Superior performance relative to other competitors in the same industry or the industry average. Competitive advantage is always relative, not absolute. To assess competitive advantage, we compare firm performance to a benchmark—that is, either the performance of other firms in the same industry or an industry average.

Competitive disadvantage

Underperformance relative to other competitors in the same industry or the industry average. For example, a 15 percent return on invested capital may sound like superior firm performance. In the consulting industry, though, where the average return on invested capital is often above 20 percent, such a return puts a firm at a competitive disadvantage.

A(n) ______ occurs when a firm performs below the industry average or is outperformed by its competitors.

competitive disadvantage

Why should a firm define a clear competitive challenge?

so that employees can assess their progress toward addressing it

Managers often have to make decisions between two conflicting strategic options, otherwise known as

trade-offs

Competitive parity occurs when

two or more firms achieve the same performance results