MAN4894 Midterm Study Guide
collaborative machines
a new breed of robots that work alongside people
backward integration
a strategy of seeking ownership or increased control of a firm's suppliers
assumptions
Best present estimates of the impact of major external factors, over which the manager has little if any control, but which may exert a significant impact on performance or the ability to achieve desired results.
shift company profits to the United States from countries with low corporate tax rates
Mergers and acquisitions are created for all of the following reasons EXCEPT to
true
Most organizations simultaneously pursue a combination of two or more strategies.
higher
When the products being purchased are standard or undifferentiated, it results in ________ bargaining power of consumers.
divisional
Which level of strategy is most likely NOT present in small firms?
organizing
Which management function includes breaking tasks into jobs, combining jobs to form departments, and delegating authority?
emotions
Which of the following are NOT mentioned as an example of cultural products?
backward integration
Which of these strategies is effective when the number of suppliers is small and the number of competitors is large?
joint venture
Which strategy would be most appropriate when the distinctive competencies of two or more firms complement each other especially well?
false
While interesting, organizational culture does not significantly affect business decisions.
true
Wild guesses should never be made in formulating strategies.
true
Without reasonable assumptions, the strategy-formulation process could not proceed effectively.
identifying industry executives who could be hired by the firm
________ is NOT a basic mission of a competitive intelligence program.
managing by crisis
a form of reacting, letting events dictate the what and when of management decisions
variable costs
a key variable in breakeven analysis which includes costs such as labor and materials
fixed costs (FC)
a key variable in breakeven analysis which includes costs such as plant, equipment, stores, advertising, and land
organizational culture
a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaption and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel
product development
a strategy that seeks increased sales by improving or modifying present products or services
porter's five forces model
a widely used approach for developing strategies in many industries;
resource based view (RBV)
approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage
bankruptcy
can allow a firm to avoid major debt obligations and to void union contracts
management information systems (MIS)
collects, codes, synthesizes, and presents information
functions of finance/accounting
comprised of 3 decisions; investment decision, financing decision, and dividend decision
dividend decisions
concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock
empirical indicators
considered rare, hard to imitate, and not easily substitutable; enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage
functions of management
consist of five basic activities; planning, organizing, motivating, staffing and controlling
product/operations function
consists of all those activities that transform input into goods and services
true
consumer power is high when products are standard and undifferentiated
physical resources, human resources, and organizational resources
contend that organizational performance will primarily be determined by internal resources that can be grouped into three all encompassing categories of
process, capacity, inventory, workforce and quality
decisions within a product/operations function include:
benchmarking
determines best practices
financing decisions
determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital
external forces
economic forces, social, cultural, demographic, and natural environment forces, political, governmenta, and legal forces, technological forces, and competitive forces
actionable responses
has strategic implications ans suggestive of potential strategies to capitalize on or compensate for
competitive profile matrix (CPM)
identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position
hostile takeover
if the merger or acquisition is not desired by both firms
financial objectives
include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on
cultural products
include values, beliefs, rites, rituals, ceremonies, myths, stories, legends, sagas, language, metaphors, symbols, folktales, and heroes and heroines
product and service planning
includes activities such as test marketing, product and brand positioning, devising warranties, packaging, determining product options, features, styles, and quality, deleting old products, and providing for customer service
selling
includes many marketing activities such as advertising, sales promotion, publicity, personal selling, sales force management, customer relations, and dealer relations
true
Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.
false
Public enterprises generally cannot diversify into unrelated businesses or merge with other firms.
strategic objectives
includes things such as a larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improves products to market ahead of rivals and so on
market development
introducing present products or services into new geographic areas
functions of marketing
seven basic functions; customer analysis, selling products and services, product and service planning, pricing, distribution, marketing research, and cost/benefit analysis
unpublished and published
sources of external information
research and development (R&D)
spending money to enhance existing products or services and or create new and improved products
vertical integration
strategies that allow a firm to gain control over distributors and suppliers
controlling
strategy evaluation; function of management which includes all activities undertaken to ensure that actual operations conform to planned operations
planning
strategy formulation; the essential bridge between the present and the future that increases the likelihood of achieving desired results
staffing or human resource management (HR)
strategy implementation; includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees as well as managing union relations
motivating
strategy implementation; the process of influencing people to accomplish specific objectives
market penetration
strategy seeks to increase market share for present products or services in present markets through greater marketing efforts
distinctive competencies
strengths that cannot be easily matched or imitated by competitors
internal factor evaluation matrix (IFE)
summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas
investment decision or capital budgeting
the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization
first mover advantages
the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms
customer analysis
the examination and evaluation of customer needs, desires, and wants
capacity utilization
the extent to which a manufacturing plant's output reaches its potential output
managing by hope
the future is laden with uncertainty and that if we try and do not succeed, then we hope our second (or third) attempt will succeed
global interdependence
the increase of this makes it imperative that firms consider the possible impact of political variable on the formulation and implementation of competitive strategies
rivalry among competing firms
the most powerful of the five forces
financial ratio analysis
the most widely used method for determining an organization's strengths and weaknesses in the investment, financing, and dividend areas
breakeven point (BE)
the quantity of units that a firm must sell in order for its total revenues to equal its total costs
marketing research
the systematic gathering, recording, and analyzing of data about problems relating to the marketing goods and services
unrelated diversification
their value chains are so dissimilar that no competitively valuable cross-business relationships exist
related diversification
their value chains possess competitively valuable cross-business strategic fits
managing by subjectives
there is no general plan for which way to go and what to do; just do the best you can to accomplish what you think should be done
chapter 7, chapter 9, chapter 11, chapter 12, and chapter 13
these are the five major bankruptcy types
pricing
these five major stakeholders consumers, governments, suppliers, distributors, and competitors affect this
cost leadership
type 1 (low cost) and type 2 (best value); emphasizes producing standardized products at a low per-unit cost for consumers who are price sensitive
differentiation
type 3; a strategy aimed at producing products and services considered unique to the industry and directed at consumers who are relatively price insensitive
focus
type 4 (low cost) and type 5 (best value); means producing products and services that fulfill the needs of small groups of consumers
integration strategies
vertical and horizontal actions by firms are broadly referred to as
secondary buyouts
when private-equity firms buy companies from other private-equity firms
managing by extrapolation
"if it ain't broke, don't fix it"; keep on doing the same things in the same ways because things are going well
competitive profile matrix scores
1 is a major weakness, 2 is minor weakness, 3 is a minor strength, and 4 is a major strength
2050
20% of the population will be over 65 by the year
true
A limitation of financial ratios is the fact that they are based on accounting data.
ritual
A standardized set of behaviors used to manage anxieties is called a
competitive intelligence
A systematic and ethical process for gathering and analyzing information about the competition's activities and general trends to further a business' own goals is called
higher exports and lower imports
A weak dollar means
true
According to William King, a task force of managers from different units of the organization should be charged with determining the 20 most important strengths and weaknesses that should influence the future of the organization.
false
Allocating resources is one of the five basic activities (functions) performed by managers.
false
An external audit focuses on identifying and evaluating trends and events within the control of management.
symbol
Any object, act, event, quality, or relation used to convey meaning is known as a
false
Bargaining power of consumers is usually the most powerful of Porter's five competitive forces.
false
By 2050, the Census Bureau projects that the number of Americans age 100 and older will dramatically decrease.
all of the above
Changes in which of the following can significantly affect firms?
false
Chapter 13 bancruptcy is similar to Chapter 11, but available only to large corporations.
true
Constructing an Internal Factor Evaluation Matrix is a summary step when conducting an internal strategic-management audit.
false
Corporate intelligence is the name for a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals.
true
During the 2015 Super Bowl, a 30-second advertisement cost over $4 million.
false
Erosion of the U.S. manufacturing base is reflected in the sharp increase in labor union membership in the last decade.
actionable
External audits attempt to identify key variables that offer ________ responses.
true
First mover advantages refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.
true
For a resource to be valuable it must be rare, hard to imitate, and easily substitutable.
true
In 2014-2016, companies are aggressively boosting their dividends paid to shareholders.
true
In order to exploit common use of a well-known brand name, most companies favor related diversification strategies.
2075
It is predicted that the United States will have no racial or ethnic majorities by the year
true
Linkages between a firm's culture and strategies often determine success.
true
Major competitors' strengths may represent key threats.
true
Market penetration, market development, and product development are intensive strategies.
true
No organization can afford to pursue all the strategies that might benefit them.
dividend recapitalizations
PE firms and other firms borrow money simply to fund dividend payouts to themselves
true
Political issues and stances impact strategic decisions.
false
Research and Development (R&D) Management is focused on managing inputs, transformations, and outputs that vary across industries and markets.
true
Strategic objectives include larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.
false
The United States has been more active than other nations in protectionist measures and has engaged in many "Buy American" policies.
true
The controlling function of management is especially important for effective strategy evaluation.
dividing a firm's operations into specific activities or business processes
The initial step to implementing value chain analysis is
value chain analysis (VCA)
The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called
organizational resources
The three all-encompassing internal resource categories used in the resource-based view are physical resources, human resources, and
leverage ratio
The times-interest-earned ratio would be classified as a(n)
reshoring
U.S. companies planning to move some of their manufacturing back to the United States
when technological change is fast paced and competition revolves around rapidly evolving product features
Under which condition would a differentiation strategy be especially effective?
growth
What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry?
horizontal integration
What refers to a strategy of seeking ownership of, or increased control over a firm's competitors?
true
When an acquisition or merger is not desired by both parties, it is called a hostile takeover.
political
When an industry relies heavily on government contracts, which forecasts can be the most important part of an external audit?
outsourcing
When companies are hired by other companies to take over functional operations such as human resources, information systems, payroll, accounting, or customer service, this is called
a secondary buyout
When the private equity (PE) firm Clayton, Dubilier & Rice bought David's Bridal from the PE firm Leonard Green & Partner LP this was an example of
merger
When two organizations of about equal size unite to form one enterprise, which of these occurs?
increase
Whenever new firms can easily enter a particular industry, the intensity of competitiveness among firms tends to
customer profiling
________ can reveal the demographic characteristics of an organization's customers.
lower exports and higher imports
a strong dollar means
industrial organization view
advocates that external factors are more important than internal factors in a firm for gaining and sustaining competitive advantage
external factor evaluation matrix (EFE)
allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information
business analytics
an MIS technique that involves using software to mine huge volumes of data to help executives make decisions
benchmarking
an analytical tool used to determine whether a firm's value chain analysis is competitive compared to those of rivals and thus conducive to winning in the marketplace
franchising
an effective means of implementing forward integration whereby a franchisee purchases the right to own one or more stores/restaurants of a chain firm
data mining
analyzing huge volumes of information in order to determine trends and garner information to make decision making more effective
generic strategies
cost leadership, differentiation, and focus
forecasts
educated assumptions about the future; none of these are perfect
synergy
exists when everyone pulls together as a team that knows what it wants to achieve
long term objectives
expected results within a 2 to 5 year timeframe
environmental scanning or industry analysis
external strategic management audit
external audit
focuses on identifying and evaluating trends and events beyond the control of a single firm, such as increased foreign competition, population shifts to coastal areas of the United States, an aging society, and taxing Internet sales
forward integration
gaining ownership or increased control over distributors or retailers
friendly merger
if the merger or acquisition is desired by both firms
cost/benefit analysis
involves assessing the costs, benefits, and risks associated with marketing decisions
core competence
is a VCA that a firm performs especially well
EFE matrix steps
list 20 key external factors, weight from 0 to 1, rate effectiveness from 1 to 4, multiply weight and sum weighted scores
nature of long term objectives
provide direction, allow synergy, assist in evaluation, establish priorities, reduce uncertainty, minimize conflicts, stimulate exertion, and aid in both the allocation of resources and the design of jobs
combination strategy
pursuing two or more strategies
organizing
strategy implementation; to achieve coordinated effort by defining task and authority relationships
divesture
selling a division or part of an organization
liquidation
selling all of a company's assets, in parts, for their tangible worth
intensive strategies
market penetration, market development, and product development are sometimes referred to as
chief information officer (CIO)
more like a manager who manages the firm's relationships with stakeholders
chief technology officer (CTO)
more like a technician focused on technical issues such as data acquisition, data processing, decision-support systems, and software and hardware acquisition
leveraged buyout (LBO)
occurs when a corporation's shareholders are bought (hence buyout) by the company's management and other private investors using borrowed funds (hence leverage)
acquisition
occurs when a large organization purchases (acquires) a smaller firm or vice versa
retrenchment
occurs when an organization regroups through cost and asset reduction to reverse delining sales and profits; sometimes called turnaround or reogranizational strategy
merger
occurs when two organizations of about equal size unite to form one enterprise
test marketing
one of the most effective product and service planning techniques that allow an organization to test alternative marketing plans and to forecast future sales of new products
desired characteristics of outcomes
quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable and congruent across departments
management information system (MIS)
receives raw material from both the external and internal evaluation of an organization
de-integration
reducing the pursuit of backward integration; instead of owning suppliers, companies negotiate with several outside suppliers
diversification strategies
related diversification and unrelated diversification are two general types of
long term objectives
represent the results expected from pursuing certain strategies
internal audit
requires gathering, assimilating, and prioritizing information about the firm's management, marketing, finance and accounting, production and operations, R&D, and MIS operations to reveal the firm's most important strengths and most severe weaknesses
