Strategic Management LearnSmart Questions

The ratio of CEO pay to the average employee is:

300:1

Firm effects accounts for _____% of your profitability

55%

What should a successful vision do for an organization?

it should inspire employees and make them feel that their work is important

a mission outlines ________, while a vision outlines ________.

mission: what an organization does vision: what the organization wants to do

The online auction site eBay has more than 100 million active users, so buyers are more likely to find what they are looking for while sellers are more likely to find buyers for the items they are offering. This is an example of:

network effects

what is the formula to determine market capitalization?

number of outstanding shares x share price

What is the first step in the strategic management process?

outlining the vision, mission, and values

what is the most integrated alternative to vertical integration?

parent-subsidiary relationship

What are the phases of alliance management?

partner selection and alliance formation alliance design and governance post-formation alliance management

Price discounts, frequent new product releases with minor modifications, and intense promotional campaigns are all tactics indicative of an industry with __________ growth.

slow or negative

The cultures, norms, and values of the society in which a firm competes are considered __________ factors.

sociocultural

According to _______ theory, a firm exists within an interconnected network of constituencies, both within and outside the organization, and the firm is responsible to this constituencies.

stakeholder

Firm effects refer to:

the way in which the management affects the performance of a firm

To formulate an appropriate business-level strategy, managers must answer these questions:

who- which customers segments will we serve? what- customer needs, wishes, and desires will we satisfy? why- do we want to satisfy them? how- will we satisfy the needs?

What are each of the components on the CSR pyramid and what do they mean?

(from bottom to top) Economic: gain and sustain comp. adv. Legal: laws and regulations are societies codified ethics Ethical: do what is right, fair, and just Philanthropic: corporate citizenship

The most important cost drivers that managers can manipulate to keep their costs low are:

-cost of input factors -economies of scale -learning-curve effects -experience curve effects

What market conditions exist in an oligopoly?

-high barriers to entry -a few large firms -differentiated products

For a balanced scorecard to be effective, managers must do which of the following?

-manage objectives according to the balanced-scorecard approach -translate their strategy into measurable objectives -formulate an effective strategy for achieving competitive advantage

What are the four characteristics of a public stock company that make it an attractive corporate form?

-separation of ownership and control -limited liability for investors -legal personality -transferability of investor interests

What dimensions make up the triple bottom line?

-social -ecological -economic

What topics should be considered during the analysis phase of the AFI framework?

-the firms internal strengths and resources -the firms business model and comp. adv. -the role of strategic leadership and the strategy making process -the external environment and associated challeneges

The industry of a firm determine about ______% of its profitability.

20%

A term used to describe a highly unlikely event that has a significant impact on society:

Black swan event

When identifying stakeholders, a firm should focus only on those stakeholder that...

Currently have, or could potentially have, a material effect on the firm

True or False: The strategists job is to focus on shareholders only.

False

True or False: Twitters plan to charge advertisers to promote their goods to users is an example of an effective business strategy.

False. That is a description of Twitters business model, not their strategy. What twitter needs is an effective strategy to grow its user base and attract more advertisers

In what type of strategy formulation do managers examine where and how the firms should compete around the world?

Global

In the second step of the stakeholder impact analysis, managers need to identify and understand stakeholders' :

Interests and claims

The most likely result of failing to meet the needs of shareholders is that they will:

Sell the company's stock negatively affecting the firm's market value

What is a tool that managers can use to address the needs of stakeholders while maintaining competitive advantage?

Stakeholder impact analysis

In a nutshell, strategy is the art and science of:

Success and failure

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication?

The company will tend to be more flexible when adapting to changing environments.

How can firms build alliance management capability?

Through experiences over time

Diseconomies of scale usually occur when:

a firm gets too big

An intended strategy is the outcome of:

a rational and structure top-down strategic plan

when comp. adv. is assessed from an analysis of publicly available data, a firm measures it's:

accounting profitability

What are the three standard dimensions for measuring comp. adv.?

accounting profitability shareholder value economic value

Powerful strategic commitment assures that steps are taken to _______.

achieve the mission

Advantages based on brand loyalty, proprietary technology, preferential access to raw materials, and favorable geographic locations are examples of:

advantages independent of size

Why is employee involvement crucial when developing an inspiring vision and mission?

b/c employees may develop helpful strategic initiatives and because belief in the vision and mission statements motivates employees

Walmart producing private-label brands such as Equate health and beauty items and Parent's choice baby products, is an example of:

backward integration

When a local company moves upstream in the industry value chain into his suppliers' business, __________ occurs.

backward integration

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ___________ emerged as a consequence of the firm's resource allocation process.

bottom-up strategy

The minimum efficient scale (MES) indicates the level of output need to _____ the cost per unit as much as possible.

bring down (its the range of output needed to minimize the cost per unit as much as possible)

With a __________, firms describe how they turn strategy into action.

business model

When samsung and google cooperate as complimentors to compete against apple's strong position in the mobile device industry while at the same time becoming increasingly competitive with each other is referred to as:

co-opetition

If Tom would've paid $1000 but was able to pay $800, the $200 he saved is considered his:

consumer surplus

_________ is a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission.

core values statement

The mechanism used to guide a company toward meeting its strategic goals within the bounds of the law is knowns as:

corporate governance

a firm pursuing a successful _______ strategy will have a comp. adv. over a competitor that creates a product at equal cost but with a lower reservation price.

differentiation

Rivalry among existing competitors has a _________ relationship with the height of the industry's exit barriers.

direct

Which of the four corporate social responsibilities is considered first and foremost for business enterprises?

economic

The shared value creation framework encourages managers to focus on both _______ and ________ needs.

economic and social

The difference between the cost of producing a product and the price consumers are willing to pay for the product is known as:

economic value created

The sum of consumer surplus and producer surplus for a good or service equals:

economic value created

What has been found to be the ethical norms in business?

fairness reciprocity honesty

True or False: The only legal means of retaliation against new entrants is price competition.

false

An inspiring vision helps employees ______.

find meaning in their work

The goal of using the AFI framework is to create strategic plans that are _______.

flexible

when a firm covers a limited geographic area and is narrowly focused in terms of offerings (low level of diversification), a _____ structure is recommended.

functional

In order to implement a cost-leadership strategy effectively, a ______ structure is preferred in a firm.

functional and mechanistic

A product-oriented vision defines a business in terms of:

good or service provided

Organizational core values help companies answer what question?

how do we accomplish our goals?

Functional strategy answers what question?

how to implement business strategy

Spark electronics inc., One Digital inc., and Esco products corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from the same set of suppliers as china and sell the final product to customers with similar needs. Thus, the three companies together are part of a(n):

industry

McDonalds reliance on detailed instructions to ensure consistent quality and service worldwide is an example of _________ controls.

input

What are the 5 levels of leaders?

level 1 leader: highly capable individual level 2: contributing team member level 3: competent manager level 4: effective leader level 5: executive (highest)

In a _____, a single investor or group of investors buys, with the help of borrowed money, the outstanding shares of a publicly traded company in order to take it private

leverage buyout

Managers have _____ resources in their quest for a competitive advantage.

limited

The threat of entry is high when capital requirements are _____ in comparison to the expected returns.

low

If a company has 25 million shares outstanding, and each share is traded at $400, the _______ is $10 billion.

market capitalization

The main goal of a poison pill is to:

minimize the threat of hostile takeovers

what are key elements of organizational culture?

norms, artifacts, values

Restrictions imposed by the govt. such as export quotas on certain products, are a part of the ________ environment of the PESTEL framework.

political

In ________, the stockholders are the legal owners of the company who delegates decision-making authority to professional managers.

public stock companies

When a company offers video-game consoles at a steep discount, but charges customer high fees for games, they are operating on a _______ business model.

razor-blade

Af firm that successfully executes a strategy benefits society by:

reinvesting profits and increasing employment, as well as creating value

The subjectively determined maximum amount a customer would pay for a product is its _________.

reservation price

The money a shareholder spends for an equity share in a company is known as _________.

risk capital

As strategic commitments increase, _________ within an industry intensifies.

rivalry

The intensity with which companies in an industry jockey for market share and profitability is known as:

rivalry

The interests of inside directors usually align with those of:

senior management

In public stock companies, inside directors are appoint by ________ to _______.

shareholders to provide the board with necessary company information.

casual ambiguity and ______ make it difficult to imitate the cultures of successful firms.

social complexity

Long-term contracts, equity alliances, and joint ventures are all examples of?

strategic alliances

The expected competitive intensity is _______, when the other four forces are _____.

stronger;stronger

what did zappo's chose as its primary core value?

superior customer service

If a business considers changing vendors, but doing so would require that business alter product specifications, retrain employees, and/or modify existing processes, we would say the business is facing significant ________.

switching costs

When managers analyze a wide variety of internal and external performance metrics in order to balance financial and strategic goals, they often turn to a framework known as:

the balanced scorecard

How do complements affect a primary product or service?

the increase the demand for the primary product

Strategy implementation concerns...

the organization, coordination, and integration of how work gets done

Illusion of control describes..

the tendency of managers to overestimate their ability to manage events

Institutional investors have much more power over a firm than individual investors because:

they are able to buy and sell a much larger number of shares than individuals and they can exercise block-voting rights or otherwise influence the

What distinguished a level 5 leader from the other level leaders?

they create enduring greatness

When restrictive government policies do not exist or when industries become deregulated, ________ is high.

threat of entry

The _______ is the idea that products or services available from outside the given industry will come close to meet the needs of current customers.

threat of substitutes

What is the goal of an internal capital market?

to allocate capital more efficiently than would happen in an external capital market

_______ is a rational process through which executives attempt to program future success.

top-down strategic planning

_________ is a theoretical framework that helps explain and predict the boundaries of the firm.

transaction cost economics

True or False: high exit barriers lead to intense rivalry

true

A well-devised strategy helps a firm understand:

what to do and what not to do

What happens when a firm in an oligopoly cuts prices?

a price war is likely to result

The idea that a corporation is simply a collection of legal contracts is known as:

agency theory

A standalone division of a larger conglomerate, with its own profit and loss responsibility is called:

an SBU

What are the five steps to stakeholder impact analysis?

1. Who are our stakeholders 2. What are our stakeholder's interests? 3. What opportunities/threats do our stakeholders present? 4. What economic, legal, ethical, philanthropic, responsibilities do we have to our stakeholders? 5. What should we do to effectively address stakeholder concerns?

Customers, suppliers, creditors, unions, governments, are all known as:

External Stakeholders

An industry in which only one firm supplies the market is known as:

a monopoly

budgets and standard operating procedures are examples of _______ controls.

input

A firm's _____ is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy.

intended strategy

Research about how CEO's spend their days suggests that CEO's spend most of their time _________.

interacting with others

Evaluating the data collected from environmental analysis, the corporate executives of F&S Pharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate?

top-down strategic planning