WPC 480 Chapter 1

Core competencies are capabilities that serve as a source of competitive advantage for a firm against its rivals. Which of these is the strongest core competency that Equal Exchange could leverage to gain a competitive edge?

Fair trade focus

Above-average returns

are returns in excess of what an investor expects to earn from other investments with a similar amount of risk

Organizational culture is the:

complex set of ideologies, symbols, and core values that are shared throughout a firm that influence how the firm conducts business

Hypercompetition

describes competition that is excessive such that it creates inherent instability and necessitates constant disruptive change for firms in the competitive landscape.

competitive advantage

A firm has a competitive advantage when it implements a strategy that creates superior value for customers and that competitors are unable to duplicate or find it too costly to try to imitate.

Which of the following represents a product market stakeholder?

A local pipefitters union dealing with a plumbing contractor

Which of the following could be a part of the analysis stage of the strategic management process?

A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers

Which of the following describes a company that has delivered above-average returns to its investors?

A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets

Resources

are inputs into a firm's production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers

The strategic management process at Lululemon has been severely compromised with drops in stocks, negative media stories, and changes in leadership. Which part of the A-S-P process should Lululemon reconsider if it wants to truly understand the root of its challenges and determine the best path to stay ahead of emerging competitors?

Analyses

After a series of controversies, the leadership team at Lululemon is faced with serious pressure from which stakeholder group?

Capital market stakeholders

Equal Exchange has a unique way of managing and making company decisions. Each employee has Class A voting stock and a vote at the table. Each employee has only one vote, from the CEO to a new employee. Based on this arrangement, what aspect of its business model does Equal Exchange prioritize?

Corporate governance

According to Hitt et al., which of the following would be considered an important step in the A-S-P strategic management process?

Defining the company's corporate mission and major corporate goals

The competitive landscape of the women's athletic apparel market is widening with Lululemon at the forefront. A hyper-competition is rising in this industry. The current influx could be due to what?

Globalization

Below are several statements from companies. Which of these is a vision statement?

Habitat for Humanity: A world where everyone has a decent place to live.

Christopher is the CEO of a company. Recently, he scheduled a meeting with a challenging objective—to discuss with a team of his employees a project that is failing. It is costing a lot of investment in time and money and does not appear to have any return on investment in sight. Which of the following approaches would demonstrate successful strategic leadership?

He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.

Equal Exchange has a variety of products in a market that is extremely saturated with big brands and organizations that control a majority of the market share. How would you describe Equal Exchange's competitive landscape?

Hypercompetitive

Considering the I/O Model of Above-Average Returns, why would Lululemon be interested in competing in the women's athletic apparel market?

Industry trends suggest above-average growth

Strategic competitiveness

Is achieved when a firm successfully formulates and implements a value creating strategy

strategy

Is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.

Companies must be aware of technological advances within their industry and make strategic management decisions that take into account perpetual innovation and disruptive technologies. Which of the following is an example of a company that did not respond strategically to technological changes?

Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology.

Marquis is the international operations manager for an athletic clothing line. As part of his responsibilities, he regularly tours the factories of the company's suppliers. He recently took a tour of one of the most efficient plants that delivers low-cost clothing. This gives his company a greater profit margin. However, on the tour, he noticed an 8-year-old child operating one of the machines. Which of the following best describes how Marquis should report back to his CEO about the plant tour?

Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values.

Stock prices at Lululemon dropped after a recall on millions of its yoga pants. The recall was the root cause of the decline as women complained about the material used to make the pants. The company experienced bad publicity and a reduction in sales. Which of these stakeholder groups did the company fail to satisfy?

Product market stakeholders

Strategic leaders

are people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission.

The main focus behind why Equal Exchange is in business is to help out the small farmers and be fair to their needs. This is exemplified by the slogan: "Small Farmers, Big Change." Who is Equal Exchange's main focus and target group to satisfy?

Product market stakeholders

Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of the following correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company?

Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds.

Which element of strategic planning represents the greatest challenge for Equal Exchange?

Strategic competitiveness

What aspect of business will need to be evaluated for Equal Exchange to determine how it can increase its strategic competiveness and earn above average returns?

Strategic management

Equal Exchange is known for its commitment to fair trade standards. The firm oftentimes exceeds the traditional standards of suppliers to ensure it adheres to its standards. Equal Exchange successfully achieves this goal by utilizing its core competencies. What aspect of the strategic management process results in this success?

Strategy

Which of the following could be a definition of strategic competitiveness?

The ability of a firm to outperform its rivals by forming and executing a strategy that creates value for its stakeholders

Which of the following represents a core competency for Alibaba as presented in the opening case in the chapter?

The company's diversification of web services tailored to the Chinese market directly, which has resulted in transactions that account for more than 2 percent of China's GD

Average returns

are returns equal to those an investor expects to earn from other investments with a similar amount of risk.

A multidivisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the I/O model to develop its strategy. Which of the following decisions is consistent with this model?

The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand.

Which of the following is an example of a disruptive technology?

The introduction of Global Positioning System (GPS) technology, which is used in standalone and handheld navigation tools, smartphone apps, and in-car navigation systems

Which of the following represents a criticism of the industrial organization (I/O) model of above-average returns?

The model assumes that most firms operating in an industry have similar valuable resources that are mobile across companies, which is not necessarily true.

Which of the following is an example of the mobility of strategies and resources across firms in the mobile network industry, one of the assumptions of the industrial organization (I/O) model of above-average returns?

The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

Equal Exchange's ambition is "... to change the way food is grown, bought, and sold around the world." What can this quote best be described as?

Vision

A local community arts nonprofit organization is seeking to expand its programming and is considering putting just one new program in place this year. It may choose painting workshops, youth summer camps, a musical performing arts series, or classes for seniors. The organization's most committed volunteer is a kindergarten art teacher who has offered to be the leader of whichever new program the organization implements. If the nonprofit is utilizing the resource-based model of above-average returns, in which of the following ways should it expand its programming?

Youth summer camps because the organization should use the knowledge of its passionate volunteer to its greatest advantage

Michael is the CEO of a manufacturer with plants in three countries. He currently has a product line that is manufactured only in the company's U.S. plant. That product has experienced a steady increase in its export sales to Europe over the last three years. The international sales director is recommending that the company expand manufacturing capabilities at the European plant to include this product line. Michael and his management team must consider whether to pursue this strategy. This is:

a decision that would benefit from using the entire strategic management process.

In the resource-based model of above-average returns, differences in company performance can be attributed to the:

a. unique capabilities and resources of the company

Firms use the strategic management process to

achieve strategic competitiveness and earn above-average returns

Every organization has groups of people that it must establish and manage relationships with to be successful. These groups include:

all of these

Core competencies

are capabilities that serve as a source of competitive advantage for a firm over its rivals

In the resource-based model of above-average returns, a core competency is something that

gives a company an edge over the competition, something that the company possesses that its competitors do not have, and something that is too difficult or costly for competitors to copy or produce an alternative.

Vision

is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve.

Strategic flexibility

is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment.

Risk

is an investor's uncertainty about the economic gains or losses that will result from a particular investment.

global economy

is one in which goods, services, people, skills, and ideas move freely across geographic borders.

capability

is the capacity for a set of resources to perform a task or an activity in an integrative manner.

strategic management process

is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.

According to the video, Lululemon founder Chip Wilson voiced disapproval of the Board of Directors. Wilson's threats to remove the Board will have a direct effect on:

organizational Culture.

Equal Exchange's leaders are careful about the employees they choose to hire because of the power individuals can hold. Each employee has a Class A voting stock. Leaders ensure that the employee candidates hold the same values and recognize the importance of Equal Exchange's mission. After a year of probation, the company leaders vote on the new employee based on how he or she fits into the:

organizational culture.

Strategic leaders:

promote exploratory and exploitative learning, as well as innovation.

Logan is an entrepreneur and president of his own company that makes a new software product that manages benefits administration for large multinational corporations. His start-up company grew quickly to a team of about 25. A new federal law recently passed by Congress will cause small-business owners to invest in software like his to manage employee healthcare. Logan announces that the company will be investing in training for employees to better understand small-business owners and research and development (R&D) to create a small-business version of the software. This is an example of:

promoting exploratory and exploitative learning, as well as innovation as a strategic leader.

The industrial organization (I/O) model of above-average returns:

puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.

Organizational culture

refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business.

Capital market stakeholders are most satisfied when a company's:

returns align with the amount of risk they incurred by investing in a company or lending the company money

Stakeholders

s are the individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance.

A vision statement differs from a mission statement in that it

speaks in broad terms of what the company ultimately would like to achieve

mission

specifies the businesses in which the firm intends to compete and the customers it intends to serve

For a strategic action to be successful, Equal Exchange will need to determine which individuals it will ask to participate in the strategic management process so that the process will align with the company's mission and vision. For a successful process, Equal Exchange will need to identify its:

strategic leaders.

Hypercompetition describes a competitive landscape in which:

the industry is constantly changing with global competition and innovative competitors.

The strategic management process is the:

way that businesses formulate initiatives to create superior value for customers, then implement those initiatives to out-perform competitors.

A mission statement can describe:

what the company does in terms of its customers and their needs and what core competencies it utilizes to meet those needs.