BMGT 481 EXAM 1

beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

what does good strategy execution require?

A team effort with all managers having strategy executing responsibility in their areas of authority, and making all employees active participants in the strategy execution process

Form 20-F

An extensive annual report, including financial statements, from non US companies

financial performance elements

BS, IS, Satatement of cash flows

the financial four

Profit, equity and share value management Debt management Cash management Asset management

TMT Strategic Management Activities

SWOT, strategic intent, strategy formulation, strategy implementation, strategy management

stewardship theory

TMTs are competent stewards of a company, corporate boards are management assistants

agency theory

TMTs are prone to self serving tendencies, corporate boards are essential to protect investors

hostile acquisition

The target firm's management does not want to be acquired.

interlocking directorates

When the members of a company's board of directors also serve on the board of other companies

benchmarking

a method of comparing how well your firm is performing compared to a competitor

In formulating an action agenda to implement and execute a new or different strategy, the place for managers to begin is with:

a probing assessment of what the org must do differently and better to carry out the strategy successfully

passive corporate board

act like no one is in the boardroom to make decisions

strategy is reflected in..

actions rather than promises

industry

all the businesses that make one kind of product or provide one kind of service

SEC (Securities and Exchange Commission)

an independent federal agency that oversees the exchange of securities to protect investors

contingency strategies

are alternative strategic plans to match the conditions highlighted in scenario models

scenario models

are sets of potential environmental conditions that range from very likely to very unlikely

why is creating and executing strategy top priority for management?

bc how well a company performs and the degree of mkt success it enjoys directly attribute to the caliber of its strategy an the proficiency of the execution

Nominating Comittee

board makes recommendations for senior mgmt and board positions

compensation commitee

board members review compensation and benefit levels of TMT

audit companies

boards select company auditors and reviews financial performance with mgmt

competitive pressures stemming from substitute products are weaker when

buyers do not believe sub products have equal or better features and buyers cost of switching to subs are relatively high

mission statement

clarifies where the firm will focus its attention and highlights its core value and beliefs (what the firm does)

the world economy is globalizing at an accelerated pace because...

companies are racing to build stronger comp positions in the mkts of more countries

acquisitons can be

contiguous (similar), related diversification(not the same but similar/related), unrelated diversification (looking for new venture)

vertical merger

coupling of customer and a supplier

satisfaction chain

customers, employers, investors (shareholders and creditors)

ethical principles as they apply to the conduct of personal ethical business decisions

deal primarily with the firms duty to comply with legal req and conform to the ethical norms of society

management abilities

decision discipline, elimination of bias, ability to visualize POVs, scenario planning, critical thinking

which of the following is true about merger and acquisitions strategies is true?

despite many successes, M&As do not always produce the hoped outcomes

General External Environment

economy, technology, sociocultural, political/legal factors

the most common building blocks for a companys orgs structure

functional or departmental structure that includes process, geographic, product or customer groups performing one or more major processing steps along the value chain

the external environment includes

general and competitibe

effective strategies for competencies

general, competitive, resources, leadership

corporate governance of a firm consists of...

governing body (leadership, processes, customs, policies, procedures)

What are SIC & NAICS codes?

govt codes to identify industries; standard industrial classification (SIC), north american industrial classification system

Licensing Arrangement

greatest individuality

Crafting and executing strategy are top-priority managerial tasks because

how well a company performs and the degree of mkt success it enjoys are directly attributable to the caliber of its strategy and the proficiency with such strategy is executed

Gloablization

increasing interconnectedness of different parts of the world

corporate boards

individuals elected by shareholders to oversee strategies, performance and behaviors of corporate mgmt

the principal managerial component of the strategy execution process includes...

instituting policies and procedures that facilitate strategy execution and tying rewards and incentives to the achievement of strategic and financial targets

when does a company achieve a sustainable comp advantage ?

it provides buyers with lasting reasons to prefer its products or services over those of competitiors

A company achieves sustainable competitive advantage when

it provides buyers with lasting reasons to prefer its products or services over those of competitors

the internal environment includes

leadership and resources

conglomerate level strategies (2)

leverage value creation (licensing agreements, joint venture, etc), uniqueness (acquire firms that offer unique skills, systems, etc), synergy (shared knowledge, OS, facilities, contact networks

management skills of persuasion

logos, pathos, ethos

business level strategies (1)

low cost value leadership (aimed at mass mkts), differentiation(unique product/service), niche mkt

strategy consists of...

management, combines planning, decision making and actions, strategies can be offensive/defensive

joint ventures

more closely aligns the 2 firms

cross holding arrangements (CHAs)

most complex, each company takes equity share

acquisitions

one firm buys another and gain control

horizontal merger

one firm mergers with another that produces and sells a similar product in the same geographic area

qualitative performance

organizational citizenship and strategic positioning

what makes the managerial task of executing strategy so challenging and demanding

people management skills req the resistance to change that has to be overcome, and the perseverance necessary to launch initiatives

When strategies fail, it is often because of

poor execution of the strategy.

Why is benchmarking important?

potent tool for improving a company's own internal activities that is based on learning how other companies perform them and borrowing the "best practices"

tipping point

price premium can exceed a customer perception of value in the product/service

CEO discretion moderators

proactive BOD proactive CFO

value creationi

process of producing or providing a product/service that is beneficial to all in the satisfaction chaon

a strategic vision for a company

provides a panoramic view of where we are going and convincing rationale for why this makes good business sense for the firm

what does strategic vision provide for companies?

provides a panoramic vision of "where we are goin" and a convincing rationale for why this makes good business sense

DEF 14A (Proxy Statement)

provides shareholders with important info needed to make informed decisions about matters that are to be presented at an annual or special stockholder meeting

basic research

pursuit of knowledge just to know

RAAR

recurrent above avg returns; ability to sustain its competitive adv

formal relationships

relationships between 2 or more companies with mutual sets of goals

key elements of financial statement reporting

report of management auditors report management discussion financial statements selected financial data

The approach to identifying the items needed to be placed on management's action agenda of the strategy execution plan always involves

senior management's judgement about how to proceed in the light of prevailing circumstances

vision statement

should be inspiring and highlights a firms aspirations and values (what the firm wants to be)

stock price with beta of 1

stock moves with the market

stock with a beta of less than 1

stock price does not fluctuate as much as the mkt

stock with a beta of greater than 1

stock price fluctuates greater than the mkt as a whole

the governing body consists of...

stockholders, board of directors, management

cost leadership

strategic approach to building a comp adv such as being known for low prices

differentiation

strategic approach to building a comp adv through distinctive/desirable features/products

Narrow Market Niche

strategic approach to building comp adv through satisfying the needs of a micro market

value producing resources + capable leadership

strategic competencies

the important leadership trait in strategy execution process is...

strong, confident sense of what to do and how to do it

Management skills

technical, organizational, diagnostic, communications, implementation, interpersonal, persuasion

what is the objective of a well crafted strategy?

temporary comp success and profits in the short run, but the lasting success that can support growth and secure a firms future

the school of ethical universalism maintains

that the most fundamental conceptions of right and wrong are universal and apply to members of all societies, companies and businesspeople

what does business ethics concern?

the application of general ethical principles to the actions and decisions of companies and the conduct of their personnel

mergers

the combining of companies

conglomerate merger

the joining of firms in completely unrelated industries

which of the following statements about a comanys strategy is true?

the objective of a well crafted strategy is not merely temporary competitive success and profits in the short run but rather the sorts of lasting sucesss

EDGAR (Electronic Data Gathering, Analysis, and Retrieval)

the primary system for submission by companies and others who required by law to file info with the SEC

applied research

the pursuit of knowledge with precise intention

industry life cycle

the stages of introduction, growth, maturity, and decline that typically occur over the life of an industry

stock with a negative beta

the stock price fluctuates inversely to the mkt as a whole

strategic managers...

think, plan and act

why do companies decide to enter a foreign mkt?

to capture economies of scale in product development, manufacturing or mkting

which of the following is typically the strategic impetus for forward vertical integration

to gain better access to end users and better mkt visibility

board members are elected for how many terms

typically 2-3 years

competitive pressure stemming from substituite products are...

weaker when buyers do not believe substitute products have equal or better features

friendly (or invited) acquisition

welcomed takeover by the target firm

strategic competencies

what a firm can do profitably, what a firm can do extremely well and what distinguishes it from others

barriers to entry

when company changes strategy and attempts to enter a new mkt and there are barriers to overcome

when is it not a single business strategy?

when firms actuations include efforts to build competitively valuable partnerships and strategic alliances with other enterprises within its industry

one of the biggest strategic challenges to competing in the international arena includes...

whether to offer a standardized product or a customized product offering in each different country mkt

Board Reconfiguration

women, professional expertise, average age, committee membership changes, inside/outside director ratio, board size, CEO tenure, duality, board interlocks

will strategic moves by competitions affect our firm and strategies

yes they will affect our strategies as they are our competition

Motivators for strategic alliances or cooperative arrangements?

- expedite the development of promising new technologies or products - bring personal and expertise tg - to acquire or improve mkt access - help win race againsts rivals for global mkt leadership

which issues are helpful in identifying the components of single business firms strategy

- initiatives build competitive advantage -efforts to expand or narrow geographic coverage - the companys key functional strategies - the companys resource strengths and weaknesses

Beta is used in the capital asset model (CAPM)

- it is used to describe the relationship between systemic risk and expected ROA - it is used as a method for pricing risky securities and for generating estimates of the expected ROA

strategic objectives of M&As

- rev growth - new knowledge and innovative energies - reduced costs through synergy - stronger BS - greater visibility to customers - expanded leverage with suppliers - transitioning into new lines of business

managerial actions to develop core competencies and competitive capabilities internally generally take 1/2 forms

- strengthening the firms base of KSAs - coordinating and integrating the efforts of various groups/depts

the 2 best signs of a good strategy are..

- the company meeting/beating its performance targets - if the performing value chain activities operate in a manner that is helpful to companywide operating excellence

specific techniques for implementing and reinforcing differentiation strategy include

-emphasize importance of quality at meetings -holding special trainings -budgeting appropriately -purchase equipment from quality sources -pleasing consumers -emphasize customer relations

competing in the mktplace on the basis of a competitive adv involves...

-giving the buyer what they perceive as superior value compared to the offering of rivals -giving buyers the same value but at a lower cost

TMTS are expected to be

-intelligent, knowledgeable, critical thinkers -strategists -motivating leaders and capable managers -ethical in all dealings, decisions and actions -determined to protect the firms reputation -unselfish

performance objective ladder

1. initial competitive advantage 2. sustainable competitive advantage 3. sustained comp adv (RAAR)

how many board members is the general minimum?

9