CH 1 - What is Strategy?

What is the first step in the AFI strategy network?

Analysis

Why are businesses with product-oriented vision statements more likely to fail than businesses with customer-oriented vision statements?

Because product-oriented companies have less flexibility to meet customer needs

In a(n) _________ strategy formulation, managers focus on deciding HOW the firm should compete.

Business

A statement of guiding principles that typically provides very specific ethical considerations is a(n) ___________.

Core values statement

A company with a __________ vision statement tends to be more flexible and more likely to succeed.

Customer-oriented

T/F: A statement such as, "We will be the biggest company in the world," is an example of strategy.

False

Managers have __________ resources in their quest for competitive advantage.

Limited

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

If employees need guidelines to determine how their employer expects them to behave in terms of ethical standards and norms, they should consult the firm's ______________.

Organizational core values

Andrew's Home Center has created a unique position for itself in its industry that allows the company to not only provide excellent value to its customers but also to control its costs. This is known as _____________.

Strategic positioning

In order to achieve and sustain competitive advantage, a company devises and adopts a set of goal-directed actions known collectively as a(n) ________________.

Strategy

Employees tend to adhere to organizational core values when _________.

The leaders of the organization also adhere to the values

Which of the following statements regarding tasks in the AFI strategy framework is true?

The tasks are very independent.

In the strategic management process, which basic principle must be defined first?

Vision

The element of a firm's strategy that summarizes the ultimate goal of the firm is known as the _____________.

Vision

A competitive advantage ____________.

is assessed relative to the other competitors in the industry

In a nutshell, strategy is the art and science of ______________.

success and failure

Which of the following factors would be examined in the External Analysis stage of the AFI strategy framework?

- Competitive forces - Strategic groups

Which of the following topics should be considered during the strategy analysis phase of the AFI framework?

- Firm's business model and competitive advantage - The role of strategic leadership and the strategy-making process - The external environment and associated challenges - The firm's internal strengths and resources

Which of the following are questions that managers are likely to ask when beginning the strategic management process?

- What are our values? - How can we achieve our goals? - What do we ultimately hope to achieve?

A well devised strategy helps a firm understand ______________.

- What to do - What not to do

What is a good strategy?

1. A diagnosis of the competitive challenge. - Analysis of external and internal environments 2. A guiding policy to address the competitive challenge. - Strategy formulation 3. A set of coherent actions to implement the firm's guiding policy. - Strategy implementation

Strategic management is the integrative management field that combines:

1. Analysis 2. Formulation 3. Implementation

A(n) ___________ occurs when a firm performs below the industry average or is outperformed by its competitors.

Competitive disadvantage

If a firm has a 10% return on invested capital while the industry average return on invested capital is 18%, the firm has a(n) ___________.

Competitive disadvantage

Michael's Deli is able to perform at the same level as its primary competitor. Michael's Deli has _________.

Competitive parity

Walmart and Nordstrom maintain very different strategic positions, one based on cost-leadership and the other based on differentiation through superior customer service. This is an example of ______________.

The trade-offs required by strategic positioning

A(n) _____________ can help employees feel that they are doing something worthwhile and are part of something importance and meaningful.

aspirational vision

A powerful strategic commitment assures _____________.

that steps are taken to achieve the mission

To gain a competitive advantage a firm needs to provide:

1. Goods or services consumers value more highly than those of its competitors 2. Goods or services similar to the competitors' at a lower price

Burger Bomb has been outperforming other burger restaurants for a decade. This indicates that Burger Bomb has which of the following?

A competitive advantage

Based on its long dominance as a coffeehouse chain, Starbucks has ___________.

A sustainable competitive advantage