Strategic Management Ch. 1 & 2
Nuke It is a major manufacturer of microwave ovens. Which of the following statements will best inspire the organization with a shared vision for Nuke It?
At Nuke It, employees at all levels are motivated to make the best microwave ovens on the market.
Which statement best describes escalating commitment?
Individuals acting as decision makers continue to support and invest in a project despite feedback indicating that it will fail.
Which statement best describes the confirmation bias?
Individuals search only for information that confirms their existing beliefs and ignore evidence that contradicts those beliefs.
Which statement best describes the cognitive bias known as reason by analogy?
Individuals use simple examples to explain complex problems, even though the ideas in question may be very different from each other.
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 ______.
competitive advantage
Underperformance relative to other firms in the same industry or the industry average results in a(n) ________ for a firm.
competitive disadvantage
Which framework helps firms to identify their economic, legal, ethical, and philanthropic obligations to society?
corporate social responsibility ( CSR )
While creating its AFI strategy framework, Gordon's Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?
corporate strategy
When identifying stakeholders, a firm should focus on those stakeholders that _____
currently have, or could potentially have, a material effect on the firm
A ______ vision statement defines a company by describing its interest in developing solutions to consumer problems.
customer-oriented
According to the Level-5 Pyramid, a Level-4 leader is also referred to as a(n) ______.
effective leader
The story concerning the discovery of Starbucks' Frappuccino is an example of a(n) ______ strategy, or an unplanned strategic initiative that originated at the bottom and moved to the top.
emergent
A common cognitive bias is ______, which is when decision makers continue to support and invest in a project, even after receiving feedback indicating that it is likely to fail.
escalating commitment
A ___ outlines what an organization does, while a vision outlines what the organization wants to do.
mission
After creating a vision as part of the strategic management process, a firm must next establish a(n) ______.
mission
Among the various types of responsibilities a business firm has, which are specifically considered to be economic responsibilities?
repaying debts to creditors giving investors a return on invested capital
When young start-up entrepreneurs make claims like, "We will be the Uber of X, where X is any other category than ride hailing" or "We will be the Airbnb of Y, where Y is any other category than hospitality services" they are best illustrating which of the following cognitive biases?
representative bias
____ planning is a strategy-planning activity in which top management envisions various what-if scenarios to anticipate plausible futures in order to derive strategic responses.
scenario
EverMart Inc. is a large company that sells a variety of products such as cosmetics, jewelry, frozen foods, navigation electronics, and airplanes. Apart from this, the company also has a strong presence in the service industry through its chain of dance studios, casinos, and nightclubs. Each of its product divisions operates as an individual business and is responsible for its own profits and losses. Thus, these product divisions under EverMart can be referred to as
strategic business units
Effective guiding policy is supported by and stays consistent through the use of ______
strategic commitments
What are autonomous actions?
strategic initiatives that lower-level employees undertake of their own volition, often in response to unanticipated events
Which of the following are characteristics of the strategic plan that makes up an intended strategy?
top down, Rational, Structured
Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in?
top- down strategic planning
In the external analysis phase of the AFI strategy framework, managers should ask,
"How do external forces affect our strategy and competitive advantage?"
All of the following are sources of strategic initiatives except ______.
(consumer demand) autonomous actions serendipity RAP
Which of the following statements is true of the social responsibilities of a business?
A firm's ethical responsibilities go beyond its legal responsibilities.
Which statement about strategies is true?
A statement of desire on its own often leads to goal conflict.
The ________ is a model that links strategy analysis, strategy formulation, and strategy implementation, which together helps managers plan and implement a strategy that can improve performance and result in competitive advantage.
AFI strategy framework
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
Why is employee involvement crucial when developing an inspiring vision and mission?
Because employees may develop helpful strategic initiatives. Because belief in the vision and mission statements motivates employees.
Upper management at ComfyShoe Inc., a manufacturer of insoles for shoes, wants to work on improving the product lines it already has without taking on other challenges at this time. Which of the following vision statements reflects that goal?
ComfyShoe Inc. wants to be the best manufacturer of insoles in the industry.
Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week; this is the industry average. We can conclude that since he has a positive net income, he also has a competitive parity in the industry.
Correct—competitive parity is achieved by generating average returns, relative to competition in a given industry.
What must a firm do after diagnosing its specific competitive challenge?
Create an effective guiding policy
Which of the following statements is true of customer-oriented visions?
Customer-oriented visions identify how a customer need will be met.
Carlos is the manager of a graphic design firm, and he relies on a top-down strategic management approach to maintain tight control over the activities of his employees. the company has recently started to lose market share to its more innovative competitors, and carlos wants to encourage his employees to start contributing to the strategy formulation process to make the company more competitive. which of the following steps should carlos take?
Designate Friday afternoons as time for employees to pursue outside interests loosely related to the business.
Which of the following elements of the pyramid of corporate social responsibility are required by society?
Economic responsibilities Legal responsibilities
What does the Frappuccino story illustrate about the strategic management process?
Emergent strategies can be very successful.
Understanding the Resource Allocation Process (RAP) will have large effects on shaping a firm's realized strategy. Which of the following is an example of such an allocation of resources?
Intel's rule to "maximize margin-per-wafer-start
What should a successful vision do for an organization?
It should make employees feel that their work is important It should inspire employees.
Which of the following statements should ideally reflect a firm's strategy for competitive advantage?
Our aim is to create superior customer value while controlling costs.
Which of the following statements is correct?
Strategic initiatives can be the result of top-down planning or a bottom-up process.
What are the approaches that can be utilized when strategizing for competitive advantage?
Strategic planning Scenario planning Strategy as planned emergence
Which of the following statements regarding tasks in the AFI strategy framework is true?
The tasks are very interdependent.
What is strategic leadership?
The use of influence and power by executives to direct the activities of individuals while pursuing an organization's goals
In which of the following situations can a firm providing goods and services gain a competitive advantage?
Their offerings are of similar quality to competitors' offerings but can be sold at lower prices due to lower costs. Their offerings provide more value for consumers than competitors' offerings.
What distinguishes a Level-5 leader from other levels of leaders?
They create enduring greatness.
Which of the following are aims of stakeholder strategy?
To manage various stakeholders effectively To gain and sustain competitive advantage
True or false: Smart strategic leaders devise ways to make sure that their employees feel invested in the firm's vision.
True
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.
What is the typical result of cognitive limitations?
We choose the option that is "good enough" and satisfies immediate needs.
Which of the following are questions that managers are likely to ask when beginning the strategic management process?
What are our values? What do we ultimately hope to achieve? How can we achieve our goals?
________ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.
________ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.
Which of the following best describes an illusion of control?
a belief that a strategic plan will address any scenario
A stakeholder has ______ when its needs are within the bounds of the law or are otherwise relevant to the firm.
a legitimate claim
Which of the following is an element of good strategy?
a set of coherent actions to implement the firm's guiding policy
Based on its long dominance as a coffeehouse chain, Starbucks has ______.
a sustainable competitive advantage
To which types of organizations can we apply the principles of strategic management?
all types of organizations
What is the first step in the AFI strategy framework?
analysis
Organizational values help individuals make choices that are
both ethical and effective in advancing a company's goals.
Which of the following leads to systematic errors in decision making and hinders rational thinking?
cognitive biases
If Modern Furniture LLC obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies?
comparing the return to the return on invested capital obtained by other firms in the industry
Which cognitive bias refers to people's tendency to seek out information that aligns with their existing beliefs?
confirmation bias
Which of the following legal developments allow business to function as an institution?
contract enforcement property rights
A(n) ______ is a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission.
core values statement
In the strategy process, questions concerning WHERE to compete, such as the industry or market, is referred to as ______ strategy.
corporate
Strategic leadership pertains to the use of power and influence by ________ to direct the activities of others when pursuing an organization's goals.
corporate executives
A company with a ______ vision statement tends to be more flexible and more likely to succeed.
customer- oriented
In the final step of the stakeholder impact analysis, a firm
decides a course of action to address the stakeholders' concerns.
The first step to gain and sustain a competitive advantage is to
define a firm's vision, mission, and values.
What is the primary focus of a customer-oriented vision statement?
developing goods and services that solve consumer problems
Which of the four corporate social responsibilities is considered first and foremost for business enterprises?
economic
What are the categories of expectations that society has of the business enterprise as described in the CSR framework?
economic legal ethical philanthropic
According to the Level-5 pyramid, which level of leadership has the fewest members? Multiple choice question.
executives
Green and Good Inc., a multinational company, relies on its media partner OmniSignal to regularly advertise its offers, sales, and new products. OmniSignal is invested in this relationship because it generates most of its revenue from advertising Green and Good's products. In this scenario, OmniSignal is Green and Good Inc.'s
external stakeholder
According to Daniel Kahneman and Amos Tversky, System 1 is analytical, logical, and deliberate.
false
emergent is planned
false
In the ______ step of a stakeholder impact analysis, firms identify those stakeholders that currently have, or potentially can have, a material effect on the company.
first
Stakeholder impact analysis is a _____-step process that allows managers to better understand and address stakeholders' needs.
five
In the _____ step of the stakeholder impact analysis, firms identify their various social responsibilities to stakeholders.
fourth
What is the overall purpose of strategic management?
gain competitive advantage
The best example of a firm's external stakeholder is a(n)
government agency that regulates the prices of products manufactured by the firm.
Jennie is the CEO of an information technology company. Based on the data that her researchers have compiled, she feels confident that her strategic plan for the company will be successful in the future, regardless of what happens. Based on this information, it seems that Jennie ______.
has an illusion of control
MoreCash Inc. is a major financial services corporation. With the CEO of MoreCash Inc. preparing to retire, several top managers are vying for the position. Jared considers himself to be a leading candidate. He not only has advanced degrees from business schools and more than a decade of experience working for MoreCash Inc., but he also has personally ensured that his division has exceeded its performance benchmarks over the past three years, even though many of his employees are dissatisfied because they feel they are stagnating in their jobs. According to the Level-5 leadership pyramid, why has Jared failed to exhibit the qualities of a Level-5 leader?
he is not able to help others reach their full potential
The Level-5 leadership pyramid is a conceptual framework that shows ______.
how leaders develop
After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to
identify stakeholders' interests and claims.
Strategy ______ concerns the organization, coordination, and integration of how work gets done.
implementation
Due to several black swan events in the past, the
implicit trust relationship between the corporate world and society at large has deteriorated.
The stakeholders of a firm are ______.
individuals or groups that can affect and are affected by the actions of the firm
In the second step of the stakeholder impact analysis, managers need to identify and understand stakeholders' ______.
interests and claims
A competitive advantage _____.
is assessed relative to other competitors in the industry
Alan has been an employee with StartsInc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Alan has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Alan has reached so far?
level 4
Which level of strategic leader presents a convincing vision and mission that helps groups improve their performance?
level 4
What are cognitive biases?
obstacles in thinking that result in systematic errors in decision making and hinder rational thinking
The third step of stakeholder impact analysis requires managers to identify the ______ presented by internal and external stakeholders.
opportunities and threats
Match the element of the pyramid of corporate social responsibility (on the left) with its explanation (on the right).
philanthropic responsibilities- corporate citizenship ethical responsibilities- do what is right, just and fair legal responsibilities- laws and regulations are society's codified ethics; define minimum acceptable standard economic responsibilities- gain and sustain competitive advantage
Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?
power
Strategic positioning allows managers to ______.
provide customers value while controlling costs
Yellow Ride Service is a new entrant to the taxi industry. It has achieved success by staking out a unique position in the industry. How did Yellow Ride Service mostly likely achieve this position?
providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors
The executives of a computer software company developed an intended strategy to make the company more competitive. The company's ultimate ______ strategy contained elements not only of the intended strategy but also unplanned elements from a(n) ______ strategy.
realized; emergent
What cognitive bias involves using simple examples to make sense out of complex problems, even though the things being compared may be very different on a deeper level?
reason by analogy
The concept, or framework, of corporate social ___ guides firms in identifying and addressing their economic, legal, ethical, and philanthropic obligations to society.
responsibility
Bob is exploring multiple suppliers in order to find the best price. However, instead of calling all eight potential suppliers, he only reaches out to the first three and bases his selection on those instead of contacting all suppliers. Bob's action best describes the concept of
satisfying
In the ______ step of the stakeholder impact analysis the firm identifies their stakeholders' interests and claims according to the power, legitimacy, and urgency framework.
second
Which of following practices of a firm satisfies its ethical responsibilities?
selling vaccines at a subsidized price in a less developed country even though this results in reduced shareholder returns
Larry, the owner of small hotel resort, would like to advertise his hotel in major American newspapers and magazines as a part of his larger strategy. However, he doesn't have enough money to do so. One day, he meets Todd, the owner of a group of newspapers and magazines, who offers him advertising space in his publications on the condition that Larry provide him with a free stay at the hotel. This is an example of which of the following?
serendipity
______ describe(s) random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives.
serendipity
Top-down strategic planning as an approach to the strategic management process will be most effective when the
size of the firm is large
A customer-oriented vision statement focuses employees to think about how best to
solve a problem for a consumer
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
The groups or individuals who can impact or be impacted by a firm's actions are known as ______.
stakeholders
The former CEO of Sam's Club, a division with its own profit-and-loss responsibility, Rosalind Brewer, reported to Walmart's CEO, C. Douglas McMillon, who as corporate executive oversees Walmart's entire operations. Sam's Club, therefore, is a ________ of Walmart.
strategic business unit
Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?
strategy analysis
Which of the following is the least formal approach to setting the strategy process?
strategy as planned emergence
In ________, a firm frames a guiding policy to address the competitive challenge.
strategy formulation
in a nutshell, strategy is the art and science of ___
success and failure
A competitive advantage that lasts for a long period of time is said to be ______.
sustainable
Which of the following is the conceptual framework developed by Jim Collins that describes the progression of leadership through distinct, sequential levels?
the Level-5 leadership pyramid
What is System 1 of the brain according to Daniel Kahneman and Amos Tverksy?
the brain's default mode
Which of the following was a key motivator for participants in the Occupy movement of 2011?
the issue of income disparity
strategy is ___
the set of actions a firm takes to achieve a competitive advantage
Both strategy formulation and strategy implementation are aspects of ______.
the strategy process
In strategic management, strategists engage in three pillars. Which of the following is not one of these three pillars?
the unification of major goals and objectives
According to upper-echelons theory, the way strategic leaders of a firm interpret a situation is influenced by which of the following?
the values and experiences of the firm's leaders
Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?
theory of bounded rationality
In the ______ step of the stakeholder impact analysis, the firm identifies the opportunities and threats that stakeholders present to the firm.
third
The Founder of Teach for America, Wendy Kopp, wants to make teaching an attractive option for promising young professionals. Identify the phrase that represents the vision she developed for Teach for America.
to give all children in the United States the opportunity to attain an excellent education
True or false: Firms should obey all the laws, including but not limited to labor, consumer protection, and the environment.
true
Suzi Lau Apparels Inc. (SLA) had been outsourcing its production to less-developed countries in order to reduce its cost of production. With the emergence of its competitor, Linda Inc., SLA lost its competitive advantage. Linda had its production units in its home country that allowed the company to bring out the latest trends to the market earlier than SLA. Also, SLA frequently suffered due to political instability and lack of intellectual property laws in the outsourced countries. Thus, parts of SLA's strategies became obsolete and it had to relocate its production. What are such obsolete strategies referred to as in the planned emergence model?
unrealized strategy
If parts of a firm's intended strategy fall by the wayside, it is referred to as
unrealized strategy.
According to the ______, effective leadership is the outcome of certain intrinsic talents as well as education.
upper-echelons theory
In the strategic management process, which basic principle must be defined first?
vision
Place in order from first to last the steps in the devil's advocacy decision framework. (Place the first step at the top.)
team 1 formulates a course of action team 2 questions the assumptions fo and critiques the proposed course of action team 1 revises the proposed course of action based on the input from team 2 team 2 questions the assumptions of and critiques the revised course of action, and team 1 makes additional revisions team 1 and team 2 agree upon a course of action
Strategy formulation concerns the choice of strategy in terms of ______ to compete.
where and how
Which of the following are addressed during corporate strategy formulation?
which market to compete in, which geographic location to compete in, which industry to compete in
Place the five steps of the stakeholder impact analysis in order, with the first step at the top.
who are our stakeholders what are our stakeholders intersts what opportuities and threats do our stakeholders present what economic, legal, ethical and philanthropic responsibilities do we have to our stakeholders what should we do to effectively address the stakeholder concerns?
Burger Bomb has been outperforming other burger restaurants in recent years. This indicates that Burger Bomb has which of the following?
A competitive advantage
Which of the following statements about scenario planning is true?
It starts with a top-down approach.
Maria is the Chief Operating Officer of the start-up Apps4U. In which of the following scenarios does Maria exhibit strategic leadership?
Maria schedules a meeting with the manager of the marketing department and overcomes his skepticism about a new campaign aimed at customers in the 55+ age group. Over the next three months, AppPalace gains 250,000 new users in that group.
Which of the following scenarios best illustrates a good stakeholder strategy?
Nowadays Corp. distributes only 40 percent of its annual profit after taxes to shareholders, while the remaining is invested for further research and distributed among employees and the local community.
________ are considered the ethical standards and norms that govern the behavior of individuals within a firm.
Organizational core values
The Bright Bulb light bulb company produces a line of LED bulbs that customers consider very similar to competitors' LED bulbs. Which of the following conditions must be true for Bright Bulb to have a competitive advantage?
The bulbs must have a lower cost than competitors' bulbs.
Which of the following strategies best illustrates a generic business strategy?
a decision to niche market the jewelry sold by a company while the apparel division under the same company sells its products through mass marketing
Which of the following elements comprise strategic management?
analysis implementation formilation
Which term refers to strategic initiatives that lower-level employees undertake of their own volition, typically in response to unanticipated events?
autonomous actions
What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?
devil's advocacy
Sam, owner of Sam's Hand Sanitizer Inc., is in the middle of the strategy formulation stage. He has already allocated a substantial amount of money that covered his employees' salaries from the prior year (sunk costs) but has failed to see any positive outcomes. Given the money he has already spent, he feels as if he needs to recover those costs and pushes forward even though the outcome seems dim. This best illustrates the concept of
escalating commitment.
Industrial Drills, a company that manufactures industrial tools, incurs higher costs because of its refusal to outsource its manufacturing to countries where labor costs are lower. This reflects Industrial Drills' ________ responsibility.
ethical
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 core values statement provides information to employees regarding the company's ______.
ethics and morals
True or false: A statement such as, "We will be the biggest company in the world," is an example of strategy.
false
A(n) __________ strategy is the outcome of a rational and structured, top-down strategic plan.
intended
Research about how CEOs spend their days suggests that CEOs spend most of their time ______.
interacting with others
Studies show that CEOs spend the majority of their time ______.
meeting people- face to face
Top-down strategy is derived from ______.
military strategy
What type of vision statement focuses on the good or service provided?
product- orientated
A ______ vision statement defines a business by describing the goods or services it produces or offers.
product-oriented
As the CEO of a conglomerate, Sarah Cane exhibited her strong commitment toward the company's core value that customers' well-being is more important than profit when she convinced the board of directors to liquidate the company's pesticide subsidiary. The pesticide brand sold by her company was a major revenue earner in lesser-developed nations, but studies indicate that it is a carcinogen. Eva persuaded the board that the company had to be responsible toward society. In this scenario, Sarah has demonstrated
strategic leadership
________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.
strategic management
Andrew's Home Center has created a unique situation for itself in its industry that allows the company to not only provide excellent value to its customers but also control its costs. This is known as ______.
strategic positioning
Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. This is known as Burger Bomb's ______.
strategy
Through ________, a firm puts its guiding policy into practice by employing a set of coherent actions.
strategy implementation
Strategy Implementation primarily involves which of the following?
the organization, coordination, and integration of how work gets done
In order to determine if Home Depot has a competitive advantage, we must compare Home Depot's performance to ______.
the performance of other firms in its industry
Which of the following topics should be considered during the analysis phase of the AFI framework?
the role of strategic leadership and the strategy process the firm's internal strengths and resources the external environment and associated challenges the firm's business model and competitive advantages
During strategy implementation, managers primarily focus on deciding the
type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice.
The CEO of EveryCar was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable, low-maintenance vehicles that could be bought by low-income households. Which of the following does this example demonstrate?
upper-echelons theory
Which of the following are the three important stakeholder attributes managers must pay particular attention to during stakeholder impact analysis?
urgency power legitimacy
In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.
vision
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
vision