BUS 345 : strategic Management ch1
As the legal owners, _____ have the most legitimate claim on a company's profits
-Stakeholder
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
_____ is best described as 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
CSR - Corporate social responsibility
In the pyramid of corporate social responsibility, _____ responsibilities are the foundational building block.
Economic
Legal Responsibility
Laws and regulations are a society's codified ethics, embodying notions of right and wrong. They also establish the rules of the game.
__ set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
Strategy
. Stakeholder strategy
an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage.
Firms stakeholder strategy primarily allow the firm to
analyze and manage how various external and internal stakeholders interact to jointly create and trade value.
External Stakeholder
customers, suppliers, alliance partners, creditors, unions, communities, media, and governments at various levels.
Industry effects describe the underlying _____ structure of the industry
Economic - They attribute firm performance to the industry in which the firm competes
The amount of xylene that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment, and considered a legal offense. Consequently, CW Paints Corp. has vouched to make its products as safe as possible.
Economic responsibility toward its shareholder
The board at TriCom Manufacturing Corp. has decided to allocate 20 percent of the company's shares to its workforce, at a discounted price. Apart from being a valued investment, the plan will allow the employees to take personal responsibility for the firm's performance. Which of the following employee incentive schemes does this best illustrate?
Employee Stock ownership plan - These plans allow employees to purchase stock at a discounted rate or use company stock as an investment vehicle for retirement savings.
_____ provides a decision tool that enables a firm to act as a good corporate citizen by allowing its managers to recognize, prioritize, and address the needs of different groups of individuals who take personal interest in the firm's performance and survival.
Stakeholder impact analysis -help firms gain a competitive advantage while acting as a good corporate citizen
Stakeholder
Stakeholders have a vested claim or interest in the performance and continued survival of the firm. They can be organizations, groups, or individuals who can affect or be affected by a firm's actions.
The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. True?
StoreAll has a competitive advantage
__ is integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage. - enables an individual to view a firm in its entirety, think like a general manager to help position his or her firm for superior performance.
Strategic Management
Which of the following tasks in the AFI strategy framework involves putting the formulated strategy into practice through organizational structure, culture, and controls?
Strategy Implementation
According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified?
Strategy analysis -Strategic leadership and the strategy process: What roles do strategic leaders play? What are the firm's vision, mission, and values? What is the firm's process for creating strategy (how does strategy come about)?
Competitive Parity
Two or more firms perform at the same level have competitive parity. Therefore, a firm has competitive parity if it produces wall clocks at the same rate as its competitors.
Which of the following statements about a firm's stakeholders is true?
Within stakeholder groups there can be significant variation in the power a stakeholder may exert on a firm.
The interaction between a firm and its diverse internal and external stakeholders is best described as a(n
exchange relationship
Final stage of impact analysis
firm asks, "What should we do to effectively address any stakeholder concerns?"
Competitive Advantage
firm needs to provide either goods or services consumers value more highly than those of its competitors, or goods or services similar to the competitors' at a lower price
For a strategist, which of the following is not an implication of effective strategic management?
firms performance is determined by a set of independent factors, which include firms and industry effect
stakeholder strategy is an integrative approach to managing a diverse set of stakeholders effectively in order to
gain & sustain competitive advantage
A firm's economic responsibilities are primarily directed toward
gaining and sustaining competitive advantage, firm must obey the law & act ethically in their quest to gain & sustain competitive advantage
Ethical Responsibility
go beyond its legal responsibilities. They embody the full scope of expectations, norms, and values of its stakeholders. Managers are called upon to do what society deems just and fair.
Rachel owns a large portion of GM Cube Inc.'s stocks. However, she is not employed by the company. In this scenario, Rachel is the company's
internal stakeholder
Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?
strategy analysis
Strategic Positioning
to provide superior value and control its costs through strategic positioning
Step 3 In the stakeholder impact analysis
- "What opportunities and threats do our stakeholders present?" Since stakeholders have a claim on the company, opportunities and threats are two sides of the same coin.
Paying taxes to local government authorities from the annual revenues generated by a firm represents the firm's _____ responsibilities.
- Economic -
Strategy
- Grandiose statements of desire, on their own, are not strategy. - Strategy is as much about deciding what not to do, as it is about deciding what to do. - Strategy is about creating superior value, while containing the cost to create it.
Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.
Competitive Disadvantage - under performs relative to its rival or industry
Organic Food Inc., a multinational company, relies on its media partner Radio Plus to regularly advertise its offers, sales, and new products. Radio Plus is invested in this relationship because it generates most of its revenue from advertising Organic Food's products. In this scenario, Radio Plus is Organic Food Inc.'s
External Stakeholder
____ necessary part of a firms functional and global initiative to support its competitive advantage but not sufficient way to achieve competitive advantage
Operational effectiveness, competitive benchmarking, or other tactical tools
Javier, a retired CEO, invests capital in a start-up company that creates budgeting software. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Javier is the start-up company's
Stakeholder
Which of the following groups is considered to be the primary stakeholder for public-stock companies?
Supplier of capital - . If shareholders are not satisfied with returns to investment, they will sell the company's stock, leading to depreciation in the firm's market value.
Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years.
Sustainable competitive advantage
A company wants to determine how industry effects have affected its profitability. Which of the following elements should the company focus on?
barrier to entry and exit within the industry
Threadless leverages ___, a process in which a group of people voluntarily perform tasks that were traditionally being completed by a firm's employees. Company uses the wisdom of the crowds, resulting in decisions by many participants in an online forum that are often better than decisions made by a single individual
crowd sourcing
What are examples of Black Swan Events?
- Natural Disaster - death of a monarchy - managerial actions can affect the economic well-being of large numbers of people around the globe.
Activist Investor have more power over a firm than an individual investor
- buy or sell large number of shares at once - exercise block voting rights over individual investor - demand seat on company board
Economic Responsibility
- government expect firm to pay taxes & manage natural resource - Investor expect adequate return on investment - consumer expect safe product & service at appropriate price
After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to
- identify the stakeholders interest & claim - Managers need to specify and assess the interests and claims of the pertinent stakeholders using the power, legitimacy, and urgency criteria.
The society and the shareholders just expect, and do not mandatorily require, a firm to
- pay its workers a minimum living wage - Ethical and philanthropic responsibilities result from a society's expectations toward business. A firm's ethical responsibilities go beyond its legal responsibilities.
Which of the following would be considered a weak stakeholder strategy?
- putting shareholder interests above the interests of other stakeholders
A core tenet of stakeholder strategy is that a
- single minded focus on shareholder alone exposes a firm to undue risk that can threaten the very survival of the enterprise
In the United States, which of the following was born out of dissatisfaction with the capitalist system in 2011?
- the Occupy Movement. -Issues of income disparity, corporate ethics, corporate influence on governments, and ecological sustainability were key drivers.
For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?
- trying to be everything to everybody by combining different competitive strategies lead to a poor performance
Managers use AFI strategy framework primarily to
1) to explain and predict differences in firm performance, and 2 to help managers formulate and implement a strategy that results in superior performance.
Whats the most important to least important Corporate social responsibility
1. Economic 2. legal 3. Ethica 4. Philanthropic
The management of Five Square Corp. wants to reduce the separation between ownership (by shareholders) and control of the firm (by professional managers). Which of the following practices would best help the company do this?
Allowing Employees to purchase the stock of the company at discount rate
If SA Pharmaceuticals 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. advantage is always relative, not absolute.
he Scoop, Ltd. is a magazine publishing company whose average return on invested capital is approximately 5 percent. the industry average has been negative (-5 percent) for the last few years. In this scenario, The Scoop Ltd. has a
Competitive Advantage
Rapida Inc. and Click Inc. are two companies that have been manufacturing typewriters for almost 30 years. both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most likely have
Competitive Parity
State-level government agencies that check whether firms are meeting statutory safety measures in their production units are considered to be the firms'
External Stakeholder
PA Corp. demonstrates a good __ because it distributes only 70 percent of its annual profit after taxes to its shareholders, while the remaining is distributed among employees and the local community, and invested for further research.
Stakeholder strategy -single-minded focus on shareholders alone exposes a firm to undue risks that can undermine economic performance and can even threaten the very survival of the enterprise.
Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking?
The firms would eventually have no resources to invest in product and process improvements. - identical cost structure
Black Swan Event
are incidents that describe highly improbable but highly impactful events - eroded the public's trust in business as an institution and capitalism as an economic system.
Firm Effect
attribute firm performance to the actions managers take within a chosen industry. Managers' actions tend to be more important in determining firm performance than the forces exerted on the firm by its external environment.
Firm effect
deal with a manager's actions, such as the actions that managers take toward employees
Industry effect
deal with external circumstances, such as types of products and services offered.
Strategy Formulation
involve designing a business, corporate, & global strategy
Which of the following statements accurately describes corporate social responsibility (CSR)?
provides managers with a conceptual model that more completely describes a society's expectations and can guide strategic decision making more effectively
In stakeholder impact analysis, identifying the opportunities and threats presented by stakeholders is immediately followed by
recognizing the economic, legal, ethical, and philanthropic responsibilities of the firm to its stakeholders.
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
If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally
stake out a unique position within the industry -company must either perform the same activities as competitors in a way that is better for customers or perform different activities. Also, this company must provide an advantage for customers without trading the benefit with a disadvantage
A good ______ includes a guiding policy to address competitive challenges accomplished through strategy formulation, resulting in the firm's corporate, business, and functional strategies.
strategy formulation
Philanthropic Responsibility / Corporate citizenship
subsumed under the idea of corporate citizenship, reflecting the notion of voluntarily giving back to society.
Patterson Foods Inc. energy bar with competition. it ensured that these four varieties were low in calories and low in cost. With this innovation, outperformed its competitors. Patterson Foods Inc. maintained a _____ through its innovative strategy.
sustainable competitive advantage - with innovation
AFI 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.
The first step in stakeholder impact analysis involves
the firm focuses on stakeholders that currently have, or potentially can have, a material effect on a company. This prioritization identifies the most powerful stakeholders (both internal and external) and their needs.
Which of the following forces is most closely related to industry effects within the automobile industry?
the types of products and the services offered within the industry
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.
A strategist job is to
understand the complex web of exchange relationships among different stakeholders. By doing so, the firm can proactively shape the various relationships in order to maximize the joint value created, and manage the distribution of this larger pie in a fair and transparent manner.