Strategic Management FINAL REVIEW

What are the most fundamental questions in strategy?

Why do firms succeed or fail and why do firms have varying levels of performance

Which of the following is a result of the Sarbanes Oxley Act?

- Senior managers must now sign off or the financial statements of publicly held corporations.

Total Sales for a small business were $120,000 the first year, but then sales decreased to $96,000 the second year. What percentage decrease is that?

20%

Which of the following is true of the demographic sector of the general environment?

The demographic sector includes the kind of information the US Census Bureau gathers such as gender, age, and income level.

Gathering information about competitors can be useful when doing a SWOT analysis, but there is an ethic aspect to consider. What is our textbook position on this?

There is a fine line between what's ethical and unethical and having good judgment is important

A substitute:

Threat of alternative industry providers

What is the key question for corporate strategies?

What businesses do we want to compete in?

Which of the following is true of the resource

based view of competitive advantage? -It concludes that firm profitability is determined by the amount and nature of the firm's resources. / Its major recommendation is to develop unique resources and distinctive capabilities.

An organization should have different:

missions for divisions or departments

Which of the following is NOT one of the characteristics of a world class organization listed in our text?

-A strong balance sheet with low debt

Adjust net income to get cash from operations. ABC Company had a net income of $40,000 last year. Depreciation expenses were $4,000. Also, because of increase sales, accounts receivable increased by $3000 and inventory increased by $1000, but these were the only changes in current assets or current liabilities. What is ABC's cash from operations?

40,000 (40000+4000-3000=40000

In 2005 JKL Company had total revenues of $1.0 million, a net income of $100,000, and average total amount of $2,0 million. What was its return on assets (ROA) for the year?

5%

JKL services Company had total revenues of $1.4 million, a net income 2005, and total assets of $2.8million. What was its return on assets (ROA)?

5% ROA=net income /total assets X100

Imagine that you bought a stock on January 1for $40 per share, and held it until the end of the year. During this year the stock price fell to a low of $35, went to a high of $65, and but closed at $60 per share on December 31. The stock paid no dividends. What was your percent return from owning this stock for the year?

50%

One of Porter's 5 Forces of industry environment is alternative industry providers or "substitute" products. But what is a substitute product for Budweiser beer?

A bottle of wine

What was Milton's Friedman's perspective on corporate social responsibility?

A corporation's ONLY social responsibility is to maximize shareholder returns.

Which of the following is NOT one of the basic activities of strategic management.

Capitalization or funding

Which of the following is true of the economic sector of the general environment?

Changes in economic trends have different effects on different industries.

What are the three main types of strategies?

Corporate, competitive and functional

Why is strategic management important?

It appears to make a difference as how well organizations perform.

Which of the following is true of the way strategic management is actually done?

It's a continual cycle that may not always follow a normal sequence.

What is value chain analysis?

It's a systematic way of examining all the organization's functional activities and how well they create customer value.

What is an internal audit?

It's a thorough assessment of six organizational functional areas.

Distinctive organizational capabilities

Valuable to customers, aren't easily imitable, and can be used in a variety of ways.

Which of the following is true of the sociocultural sector of the general environment?

Values and attitudes are important factors in the sociocultural sector.

What is the key question for functional strategies?

What resources do we have?

One of Porter's Five Forces of industry environment is existing competitors. But when is rivalry among existing competitors likely to be high?

When fixed costs in the industry are very high but variable cost are low / When there are many small competitors in the industry / When the industry (or market) is growing slowly or perhaps even shrinking.

One of Porter's Five Forces of industry environment is possible competitors or new entrants. But when are these likely to be a significant threat?

When the industry is not subject to much government regulation. / When the economies of scale in the industry are low

One of Porter's Five Forces of industry environment is consumers and buyers. But when are these likely to be a significant threat?

When the products sold in the market are standardized. / When buyers are large and they purchase in large volume. / When the buyers could make the product themselves

One of Porter's Five Forces of industry environment is resource providers or suppliers. But when are these likely to be a significant threat?

When the suppliers could produce the product you are making themselves. /When the suppliers is producing a differentiated product / When there are only few suppliers.

Which of the following is true of the political legal sector of the general environment?

-An example of a significant development in this sector in the Sarbanes-Oxley Act.

One of Porter's Five Forces of the industry environment is alternative industry providers or substitute products. But what is a substitute product for a Coca Cola ?

-An orange juice

What are the 4 support activities of the value chain ?

1. Purchasing 2. Research & Design 3 Human Resource management 4 Organizational processes

Porter's 5 forces

1. new entrants 2. current competitors 3. buyers 4. suppliers 5. substitute products

six key dimensions of effective strategic leadership

1. purpose & vision - short, inspiring, doesn't change 2. build and maintain core competencies - strengths & weaknesses 3. human capital - hire, develop, and retain the right people 4. organizational controls -rules guidelines, procedures 5. organizational culture - create or sustain organizations "personality" 6. ethical practices

what are the four components of an effective organizational vision?

1. the vision is built on core values & beliefs 2. elaborates purpose for organization 3.include a brief summary of organizational roles 4. specify broad goals

Total Sales for a small business were $120,000 the first year, but then sales decreased to $100,000 the second year. What percentage decrease is that?

16.7%

Total sales for a small business were $120,000 the first year, but then sales decreased to $100,000 the second year. What percentage decrease is that?

16.7%

Total sales for a small business were $80,000 the first year, but then sales increased to $104,000 the second year. What percentage increase is that?

30% change/start = 24/80=30

Which of the following is true of the strategic management process?

A structured, systematic approach appears to work best.

What's the difference between an organization's vision and its mission?

A vision provides an overall picture of where the organization is going, while a mission statement is a description of what specific organizational units do. /An organization should have a single vision but can have different missions for different divisions or departments.

Adjust net income to get cash from operations.

ABC Company had a net income of $60,000 last year. Depreciation expenses were $5,000. Also, because of one slow selling product, inventory by $2,000, but this was the only change in non-cash current assets or current liabilities. What is ABC's cash from operations? -$63,000 (60000+5000-2000=63000

Which of the following is NOT one of the sectors of a general environment?

Active competitors.

Our text describes three critical success factors for success in our new business environment. Which of the following are among those?

Being a world class organization. / Creative and innovative capabilities. /ability to embrace change or global organization

Which of the following is the focus of value chain analysis?

Customer value

This chapter 5 begins with a review of functional strategies. Including those that focus on products, which can be ether goods or services. What are the three main task associated with the product?

Design, production and marketing

What is strategy formulation?

Developing a plan and then choosing appropriate strategies

Which of the following leads most directly to a competitive advantage?

Distinctive organizational capabilities

Sectors of the general environment

Economic / Demographics / Socio-cultural /Political Legal / Technological

What does the term "situation analysis" mean?

Evaluating the organizational context, the external environment, and the original environment.

What's the last step in strategic management process?

Evaluating the outcomes of strategies and how they've been implemented.

Porter said that competitive advantage can come from what?

Having the lowest costs or some desirable difference from competitors

What is the key question for competitive strategies?

How are we going to compete?

Which of the following are among the support activities of the value chain?

Human resource management / Research and development / Purchasing

What are the two phases of a capabilities assessment?

Identifying distinctive capabilities and developing these capabilities.

Why is doing an internal analysis important?

In order to identify an organization's strengths and weakness

Statement of cash Flow: Last year DEF Corporation bought new equipment costing $70,000. It paid for the new equipment by selling old equipment for $10,000, by issuing $40,000 in corporate bonds, and by taking out a bank loan for $20,000. It paid no dividends at all, but its net income was $10,000. Which of the following shows the net totals for investment activities and financing activities on their statement of cash flows?

Investing= (60,000) cash used, financing ($60,000)cash provided

What is strategy evaluation?

Involves evaluating both the outcomes of the strategies and how they've been implemented.

Situation analysis

Involves scanning and evaluating the current organizational context, external environment, and organizational environment

Which of the following is true of the industrial organization (I/O) view of competitive advantage?

It concludes that firm probability is determined by the characteristics of the industry and the firm's position in the industry / It's major recommendation is to choose an attractive industry, and then position yourself well within that industry./ Its focus is external

Which of the following is true of the guerrilla view of competitive advantage?

It concludes that profitability is determined by the ability to change and surprise competitors. / It concludes that all competitive advantage is temporary. / Its major recommendation is to repeatedly disrupt the competitive situation and surprise competitors.

The opening case to chapter 4 is about Avon Products. How has Avon's performance has been recently?

It has been poor because of operational inefficiencies and an inability to execute strategies.

Which of the following is true of a "competitive advantage"?

It means that an organization does something better than other organizations, or that it does something that others can't.

The opening case to Chapter one is about Zynga, a video games company. How is Zynga's strategy different from that of more traditional video game companies?

It offers free games, analyzes the playing data to see what aspects of the game people find most attractive, and then changes those aspects.

Which of the following is true of an organizations vision?

It should specify a purpose for the organization.

Which of the following is an important characteristic of strategic management?

Its interdisciplinary-it encompasses all the functional areas of the organization. / It involves the future direction of the organization. / It has both external and internal focus.

The opening case to Chapter 2 is about Kodak. According to the case, what company has claimed that it invented the world's first digital camera in 1975?

Kodak

Which of the following are among the primary activities of the value chain?

Logistics / Operations / Marketing and sales / Customer service

Our text identifies four criteria for determining whether an activity is a strength and weakness. Which of the following are among those?

Looking at past performance trends. / Comparing the organization against competitors. / Comparing performance against specific organizational goals and targets. / Professional opinions of strategic decision makers or consultants.

Which of the following is true of the technological sector of the general environment?

Many organizational work processes have recently been changed significantly by technology. / Apart from computerization and other advances in information technology, there have been few significant changes in the technological sector over roughly the past decade.

Which of the following is an important part of a definition of strategy?

Matching internal strengths to external opportunities. / Goals and goal directed actions.

One of Porter's 5 Forces of industry environment is alternative industry providers or "substitute" products. But what is a substitute product for a Toyota car?

Motorcycle

What is the first step identifying organizational capabilities?

Preparing a current product- market profile.

What is the first step in identifying distinctive organizational capabilities?

Preparing a current product-market profile.

Functional concern

Product, support system and people

What is strategy implementation?

Putting various strategies into action

Which of the following is the best definition of organizational capabilities?

Routines and processes that transform resources into products.

According to the business roundtable, what is the primary duty of the BOD

Select a CEO and to oversee the CEO and senior Management.

The opening case to chapter 4 is about Avon Products, which hired Andrea Jung as its CEO in 1999. Which of the following is true of Andrea Jung?

She was the first woman ever to run Avon.

What are distinctive organizational capabilities?

Special unique capabilities that are rare and hard to imitate and can be used in a variety of ways

Which of the following is true of a firms stakeholders?

Stakeholders include customers, suppliers and even communities.

What is the goal of the International Monetary Fund (IMF)?

Technical assistance to establish and maintain financial stability and strengthen economies.

All organizations are open systems. But what does it mean?

That they interact with and respond to their environment.

Which of the following best describes the role of today's board of directors (BODs) in strategic management?

The BOD often initiates strategies and oversees their implementation.

The opening case to Chapter 2 is about Kodak. What was the "knockout punch" that damaged Kodak's business irreparably?

The appearance of the first cellphone /camera in 1994.

Which of the following is among the challenges of external analysis mentioned in our text?

The external environment is changing so rapidly that it's hard to keep up with./ Forecast and predictions are often inaccurate. / External analysis is time consuming / hard to keep up with rapid change/ can't always predict future / time consuming

Our text describes three driving forces in the new business environment. Which of the following are among these?

The information revolution/ technology / globalization

On a recent trip to Houston you noticed that gasoline prices for unleaded regular vary quite a bit. You saw the following prices at different gas station: $3.39, $3.21, $3.09, $3.42,$3.19, $3.17, $2.99. What are the mean and median gasoline price from your observation?

The mean is about $3.21 and the median is $3.19

Which of the following is true of environmental dynamism and complexity?

The most uncertain environment is one that is both dynamic and complex.

Which of the following is true of the primary and support activities of the value chain?

The primary activities wouldn't be possible without the support activities.

Which of the following id true of organizational resources?

They include financial, physical, human intangible and structural-cultural resources.

Which of the following is true of organizational resources?

They include financial, physical, human, intangible and structural-cultural resources.

Distinctive organizational capabilities distinguish an organization from its competitors. Which of the following is true distinctive organizational capabilities?

They must to customer value and offer real benefits to customers. / They must be difficult for competitors to imitate. / They must contribute to customer value and offer real benefits to customers

Which of the following is true of organizational capabilities?

They result from combining resources

What's the goal of the World Trade Organization (WTO)?

To help organizations conduct business by enacting trade agreements.

What's the goal of the World Bank?

To promote long-term economic development and poverty reductions

The opening case to Chapter 5 is about Toyota. What conclusion does that case come to?

Toyota is quite good at both production and research and development.

Which of the following is among the benefits of an external analysis mentioned in our text?

allows managers to be proactive / allows managers to deal with a dynamic environment / does not affect strategy or performance

Porter's generic competitive strategies

cost leadership / differentiation / focus

What is a world class organization

focus on continual learning and improvement / a flexible organizational structure / a creative HRM system (can it recruit, hire and retain the people it needs) / an egalitarian climate / significant technological support (does it make technology useful to its people) / a strong customer focus / Strategic decision makers take actions to help it be the best in the world at what it does./ strong customer focus / human resource management / technological support