Strategic Management Midterm Questions and Definitions

Ultra-low cost

A model in which basic service is provided at a low cost and extra items are sold at a premium.

Recession

A slowdown in a nation's economy

Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. This is known as Burger Bomb's ______.

strategy

Laggards (16%)

the last adopters, who distrust new products

environmental scanning

the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends

Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?

theory of bounded rationality

Razor-Razor-Blade Business Model

the initial product is often sold at a loss or given away for free in order to drive demand for complementary goods

late majority

the last group of buyers to enter a new product market; when they do, the product has achieved its full market potential

Stakeholders

the people whose interests are affected by an organization's activities

Legal Analysis

the process of applying the law to specific facts

Johnson et al

*If the parasites are causing deformities then the treatments with higher parasite numbers will lead to increased deformities *Data supports the hypothesis that Ribeiroia (but not Alaria) infection causes deformities in this tree frog population

vision strategy

- Financial Perspective - Internal Business Process Perspective - Learning and Growth Perspective - Customer Perspective

TABLES

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LEARNING REVIEW QUESTIONS

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MAJOR CONCEPTS TO UNDERSTAND AND BE ABLE TO APPLY

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Values business

-Subjective and related to choice -Used to develop norms -Provides guidance to organizations -Differs across cultures and firms

5 Stages of Decline

1-Hubris born of success,2-undisciplined pursuit of more, 3- denial of risk and peril, 4-grasping for solutions, 5-capitulation of irrelevance or death

sociocultural analysis

1. Power Distance 2. Uncertainty Avoidance 3. Individualism 4. Masculinity 5. Time Orientation

Board of Directors Responsibilities

1. Setting corporate strategy, overall direction, mission, or vision 2. Hiring and firing the CEO and top management 3. Controlling, monitoring, or supervising top management 4. Reviewing and approving the use of resources 5. Caring for shareholder interests

strategic groups

A set of companies that pursue a similar strategy in a specific industry

groupthink

A situation in which group members seek unanimous agreement despite their individual doubts

product innovation

A type of innovation that occurs when a business either creates or improves a product

What tactic did Amazon use when entering the book selling space and introducing the Kindle?

Amazon used disruption

How does strategic management help an organization cope with changes in its external and internal environments?

As you might expect, external analysis is also very important in the context of strategic management. When evaluating your organization's goals and resources, you absolutely need to look at the surrounding business environment.In the context of strategic management, internal analysis is crucial for a few reasons. Your organization might be spending too much in some areas due to internal inefficiencies, or, alternatively, your organization could be leaving money on the table. The only way to reveal these things — and get a true understanding of how resources are being used in your organization — is by means of internal analysis.

3 Jim Collins Buzzwords

BHAG, Level 5 leadership, 5 stages of decline

BHAG

Big hairy audacious goals that are clear and compelling and need little explanation

How can one use breakeven analysis to help evaluate an investment or pricing decision?

Break-even analysis tells you how many units of a product must be sold to cover the fixed and variable costs of production. The break-even point is considered a measure of the margin of safety. Break-even analysis is used broadly, from stock and options trading to corporate budgeting for various projects.

Blue Ocean Strategy

Business-level strategy that successfully combines differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs.

technological analysis

Consider: -present and future state of technology -competing technologies to present technologies -innovation potential -customer use of technology/speed of technology transfer/rates of obsolescence -legislation on technology

Tedlow, "Leaders in Denial"

Denial has involved many other issues as well, from ignoring external forces such as technological innovation and demographic change to overestimating a company's own capabilities and resources.

What does a manager do with information gained through an external analysis?

External analyses can help businesses adapt to change and streamline their current products to fit the needs of their customer base better. Regardless of whether you are a business owner or finance professional, conducting an external analysis can help guide your company to success

How does one do an external analysis?

External analysis means examining the industry environment of a company, including factors such as competitive structure, competitive position, dynamics, and history. On a macro scale, external analysis includes macroeconomic, global, political, social, demographic, and technological analysis.

True or false: The best measure of competitive advantage can be found in the performance of specific departments.

False: the criteria reflecting overall business unit performance provide the best measure of competitive advantage

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

Shakeout Stage

Growth has slowed Intense competition Increasing Industry overcapacity Declining profitability Increased cut costing Increased failures

shareholders

Investors who purchase shares of stock in a corporation.

Which of the following reduces profit margins for air carriers?

Large corporate customers contracting with the U.S. airline industry

Blackberry's Rise and Fall

Let's think about the rapid progress in mobile computing. BlackBerry, once an undisputed leader in the smartphone industry, did not recognize or act upon the changes in the external environment early enough. Consumer preferences changed quickly once the iPhone and later the iPad were introduced. Professionals brought their own Apple or other devices to work instead of using company-issued BlackBerries. Although the Canadian technology company made a valiant effort to make up lost ground with its new BlackBerry 10 operating system and several new models, it was too late.

Agency Model

Producer relies on an agent or retailer to sell the product. At a predetermined percentage commission Producer may also control the retail price.

Bundling Model

Products or services for which demand is negatively correlated at a discount

Increases in the value of a product or service that result from a corresponding increase in the number of users are known as ___.

network effects

External Stakeholders

people or groups in the organization's external environment that are affected by it

Level 5 leadership

Self effecting, quiet, reserved motivators who inspire standards, not personality

What explains the reasons that oftentimes stakeholders in the same organization have different goals?

Stakeholders may have different goals because of their natural inclination of where they see the organization heading, this can be mitigated if the organization has clearly defined goals and strategic leadership that keeps the entire organization on the same page

A(n) ____ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.

Strategic

What coordinating role does the strategic management process play?

Strategic Control processes ensure that the actions required to achieve strategic goals are carried out, and checks to ensure that these actions are having the required impact on the organisation.

What does strategic leadership involve?

Strategic leadership is a practice in which executives, using different styles of management, develop a vision for their organization that enables it to adapt to or remain competitive in a changing economic and technological climate.

What's the difference between a strategic plan and an operating budget?

Strategic planning is a long-term process, usually addressing issues relevant to a time frame of at least a year. An operating budget tends to cover a shorter period of time, such as less than a year.

Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?

power

When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______.

powerful

Wholesale Model

prices are determined by the retailer

As a consequence of the rapid development of business models, ______ may breach existing rules of commerce.

producers

A firm that successfully leverages network effects can ___

push its industry into the growth stage

Which of the following performance dimensions matter in judging the effectiveness of a firm's strategy? (Check all that apply.)

quantitative and qualitative

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

razor-razor blade

Triple Bottom Line

recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth

Which of the following statements about legal factors as an external force is true?

regulatory changes tend to affect entire industries at once

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

rivalry

A strategy-planning activity in which top management envisions various what-if scenarios to anticipate plausible futures in order to derive strategic responses is known as ______ planning

scenario

SG&A

selling, general, and administrative expenses

Simons: Stress Test Strategy

set priorities, focus on priorities, creative tension, adapt strategy

the crossing-the-chasm framework

shows how each stage of the industry life cycle is dominated by a different customer group

maturity stage

stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them

introduction stage

stage of the product life cycle when innovators start buying the product

decline stage

stage of the product life cycle when sales decline and the product eventually exits the market

growth stage

stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category

contribution margin

The amount remaining from sales revenues after all variable expenses have been deducted. Sales - Variable Costs

cost of goods sold

the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies

Political Analysis

the attempt to describe (to answer the what questions) and then to explain politics (to answer the why and how questions)

Technology Enthusiasts

the customer segment in the introductory stage of the industry life cycle

strategy implementation

the process of putting strategies into action

Strategy is _____

the set of actions a firm takes to achieve a competitive advantage

strategy

the set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors

Both strategy formulation and strategy implementation are aspects of ______.

the strategy process

Ecological Analysis

The examination of issues and problems at different levels of the human ecosystem, ranging from the individual to macrosystems (e.g., cultures or societies).

How do the roles of vision, mission, and values affect strategy-setting?

The fundamental purpose of strategic planning is to align a company's mission with its vision. Without mission and vision, the plan exists in a vacuum, as the mission is the starting point for planning, the vision is the destination, and the strategic plan is the roadmap that helps you navigate from one to the other.

early adopters

those who adopt an innovation early in the diffusion process but after the innovators

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

threat of substitutes

Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in?

top-down strategic planning

Upper-echelons theory views organizational outcomes as a reflection of the values of the ______.

top-management team

Sociocultural factors are constantly in flux and also differ across groups.

true

competitive disadvantage

underperformance relative to other competitors in the same industry or the industry average

pay as you go model

users pay for only the services they consume

In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.

vision

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

vision

What are the major elements of a strategic plan?

vision, mission, SWOT analysis, core values, goals, objectives, and action plans

Which of the following makes it more likely that producers will breach existing rules of commerce when responding to rapid developments in business models?

when the business models are disruptive

Strategy formulation concerns the choice of strategy in terms of ______ to compete.

where and how

True or false: The freemium business model can be considered an evolutionary variation on the razor--razor-blade model.

True: the base product is provided free, and the firm relies on usage to make money

According to the ______, effective leadership is the outcome of certain intrinsic talents as well as education. Multiple choice question.

Upper-echelons theory

variable vs. fixed costs

Variable Costs: -costs that change, in total, in direct proportion to changes in activity level ex. direct materials Fixed Costs: -costs that stay the same regardless of activity ex. rent

Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?

Vision

What are the key elements included in a strategic plan?

Vision Statement. Mission Statement. Core Values. SWOT Analysis. Long-Term Goals. Yearly Objectives. Action Plans.

What is the typical result of cognitive limitations?

We choose the option that is "good enough" and satisfies immediate needs.

Corporate Social Responsibility (CSR)

a business's concern for society's welfare

process innovation

a change in the way a product or service is conceived, manufactured, or disseminated

market share

a company's product sales as a percentage of total sales for that industry

competitive parity

a firm's strategy of setting prices that are similar to those of major competitors

According to Michael Porter, the profit potential of an industry is ______.

a function of five forces related to competition

Inflation

a general increase in prices and fall in the purchasing value of money.

strategic management

a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals

economies of scale

a proportionate saving in costs gained by an increased level of production.

break-even analysis

a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

confirmation bias

a tendency to search for information that confirms one's preconceptions

Which of the following are examples of sociocultural factors?

a. A growing number of U.S. consumers have become more health-conscious about what they eat. b. The growth of the Hispanic population.

Which statements about creating and implementing an effective business model are true? Multiple select question. a. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. b. Firms must use a blueprint to come up with strategies for how the firms will compete in the market. c. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. d. Firms that wish to be truly innovative and original must avoid using a blueprint, which might be limiting.

a. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. c. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals.

Which of the following industries use a subscription model? (Check all that apply.) Multiple select question. a. Magazines b. Cellphone providers c. Car rental d. Internet providers

a. Magazines b. Cellphone providers d. Internet providers

Which of the following are ways that powerful suppliers are a threat to firms? Multiple select question. a. They can reduce the industry's profit potential. b. They can force the cost of production to increase. c. They can force the cost of production to decrease. d. They can drive away the consumer market directly.

a. They can reduce the industry's profit potential. b. They can force the cost of production to increase.

Which of the following are aims of stakeholder strategy? (Select all that apply.) Multiple select question. a. To manage various stakeholders effectively b. To persuade internal stakeholders to cede control to external stakeholders c. To reduce the number of stakeholders of a firm d. To gain and sustain competitive advantage

a. To manage various stakeholders effectively d. To gain and sustain competitive advantage

Stakeholder impact analysis is a decision tool that helps a company do which of the following? (Check all that apply.) a. Act as a good corporate citizen b. Achieve a competitive advantage c. Describe the role of functional managers in strategy formulation d. Decide where to compete

a. act as a good corporate citizen b. achieve a competitive advantage

Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.) Multiple select question. a. expenditures on research and development b. cost structure c. product and service offerings d. expenditures on advertising and HR

a. expenditures on research and development b. cost structure c. product and service offerings

What are the three aspects of mapping strategic groups? Multiple select question. a. graphing the firms in the strategic group and indicating each firm's market share b. choosing two key dimensions for the horizontal and vertical axes c. identifying the most important strategic dimensions d. calculating the shareholder value of the two firms selected

a. graphing the firms in the strategic group and indicating each firm's market share b. choosing two key dimensions for the horizontal and vertical axes c. identifying the most important strategic dimensions

What should a successful vision do for an organization? (Check all that apply.) Multiple select question. a. It should inspire employees. b. It should describe the products and services it plans to provide. c. It should make employees feel that their work is important. d. It should ensure that employees understand their job duties.

a. it should inspire employees c. it should make employees feel that their work is important

Managers implement the blueprint of their business model through which of the following? (Check all that apply.) Multiple select question. a. processes b. voice memos c. culture d. structures

a. processes c. culture d. structures

Which of the following are factors in a firm's legal environment? (Check all that apply.) Multiple select question. a. regulations b. innovative technology c. demographic trends d. laws e. mandates

a. regulations d. laws e. mandates

Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.) Multiple select question. a. research and development b. profit motive c. customer service d. distribution channels e. market segments

a. research and development c. customer service d. distribution channels e. market segments

The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.) Multiple select question. a. the power of buyers and suppliers b. the barriers to entry c. the threat of substitutes d. the threat of entry

a. the power of buyers and suppliers c. the threat of substitutes d. the threat of entry

competitive advantage

an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices

sustainable competitive advantage

an advantage that cannot be copied by the competition

contribution

an individual efforts in a common set purpose

Under a wholesale model, RETAILERS (not the wholesalers) sell goods for ______.

any price they want

Which of the following are characteristics of the companies in a strategic group? (Check all that apply.) Multiple select question. a. The companies do not seek a competitive advantage. b. The companies pursue similar strategies. c. The companies differ in important dimensions from companies in other strategic groups. d. The companies form part of a specific industry.

b. The companies pursue similar strategies. c. The companies differ in important dimensions from companies in other strategic groups. d. The companies form part of a specific industry.

Which of the following contribute to consumer buying power? Multiple select question. a. moderately high barriers to entry b. low switching costs c. high levels of product differentiation d. real time, accurate price comparisons

b. low switching costs d. real time, accurate price comparisons

barriers to entry

business practices or conditions that make it difficult for new firms to enter the market

The power of ______ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality.

buyers

Production costs can increase when _____

buyers demand higher quality and more service

Industry Dynamics

changes in competitors, sales and profits in an industry over time

During the decline stage of the industry life cycle, product innovation efforts ______.

come to a halt

switching costs

costs that make customers reluctant to switch to another product or service

What must a firm do after diagnosing its specific competitive challenge?

create an effective guiding policy

Successfully transitioning from one stage of the industry life cycle to the next is referred to as ______.

crossing the chasm

Demand declines most rapidly in the ______ stage of the industry life cycle.

decline

capital requirements

describe the "price of the entry ticket" into a new industry

What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?

devil's advocacy

subscription model

e-commerce sites sell digital products or services to customers

internal stakeholders

employees, owners, board of directors

True or false: When a user values two products equally, they are negatively correlated.

false- negative correlation means that the user values one product more than the other

Strategic Evaluation

financial measurement, innovation, employee satisfaction & engagement, monitoring and gauging strategic impact of macro trends

Stakeholder impact analysis is a _____-step process that allows managers to better understand and address stakeholders' needs.

five

Michael Porter

focused on the importance of country factors to explain a nation's dominance in the production and export of certain products

External Analysis

focuses on factors such as characteristics of the firm's customers, market segments, positioning strategies, and competitors

Economic Analysis

focuses on what is the best decision for a company's profits

strategic intent

focuses organizational energies on achieving a compelling goal

Everybody can use the basic version of Dropbox for free, but needs to pay for premium services. Dropbox operates on a ______ business model.

freemium

Premium services cost money with complementary basic services, is a description of which type of business model?

freemium

The pay-as-you-go model is ______.

gaining momentum

Which are the four steps of the innovation process?

idea, imitation, innovation, invention

scenario planning

identifies alternative future scenarios and makes plans to deal with each

mission strategy

identify the purpose of organization and select strategies to pursue this mission

Black Swan Events

incidents that describe highly improbable but high-impact events

network effects

increases in the value of a product to each user, including existing users, as the total number of users rises

mobility barriers

industry-specific factors that separate one strategic group from another

Which of the following statements about scenario planning is true?

it starts with the top-down approach

Which of the following tend to result from strong competitive rivalry?

limits to the industry's profit potential

PESTEL Analysis

Political Economic Social Technological Environmental Legal

Discuss the relationship between stakeholder strategy and sustainable competitive advantage?

•Stakeholders are individuals or groups that have a claim or interest in the performance and continued survival of the firm. They make specific contributions for which they expect rewards in return.• Internal stakeholders include stockholders, employees (for instance, executives, managers, and workers), and board members. •External stakeholders include customers, suppliers, alliance partners, creditors, unions, communities, and governments at various levels.•Several recent black swan events eroded the public's trust in business as an institution and in free -market capitalism as an economic system. •The effective management of stakeholders—the organization, groups, or individuals that can materially affect or are affected by the action of a firm—is necessary to ensure the continued survival of the firm and to sustain any competitive advantage.

"The Five Forces Competitive Analysis Checklist"

1. define the relevant industry 2. identify the key players in each of the five forces and attempt to group them into different categories 3. determine the underlying drivers of each force 4. assess the overall industry structure

Which statement describes the long tail?

A large amount of revenue derived from a small number of units among almost unlimited choices

Porter's Five Forces Model

A model for analyzing the competitive forces within the environment in which a company operates, to assess the potential for profitability in an industry.

Which statements about creating and implementing an effective business model are true? Multiple select question. a. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. b. Firms must use a blueprint to come up with strategies for how the firms will compete in the market. c. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. d. Firms that wish to be truly innovative and original must avoid using a blueprint, which might be limiting.

a. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. c. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure.

Freemium

subscriptions that provide some content for free but require a monthly subscription to take advantage of all the site has to offer

What industry trends and external, internal, and competitive factors are facing the fast food industry today or a favorite industry with which you are familiar?

Low Wages, Few Benefits for WorkersThe fast-food industry hires around 3.5 million workers and pays minimum wage to a higher percentage of its employees than any other industry in the U.S. The only group that earns a lower hourly rate is migrant farm workers.

What are the factors that determine the level of competitive rivalry?

Market saturation. ... Slow market growth. ... High overhead. ... Lack of differentiation. ... Low switching costs. ... Supply and demand. ... Business diversity. ... Strategic planning.

What is and what should be the relationship between an organization's mission and its strategy?

Mission is a general statement of how you will achieve your vision. Strategies are a series of ways of using the mission to achieve the vision. Goals are statements of what needs to be accomplished to implement the strategy.

Value Creation

Performing activities that increase the value of goods or services to consumers

What are the strategic implications of different stages in the industry life cycle?

A product's life cycle is its progress from when it is created to when it is discontinued. There are four stages in the cycle, which are development, growth, maturity, and decline. The product life cycle helps business owners manage sales, determine prices, predict profitability, and compete with other businesses.

Starbucks CEO, Kevin Johnson, "I'm not Howard Schultz"

In January 2008, Howard Schultz came out of an eight-year retirement to once again take the reins as CEO of Starbucks. His mission was to re-create what had made Starbucks so special from the start. Upon his return, he immediately launched several strategic initiatives to turn the company around. Just a month after coming back, Schultz ordered more than 7,000 Starbucks stores across the United States to close for one day, so baristas could relearn the perfect way to prepare coffee. The company lost over $6 million in revenue that day, which heightened investor jitters. The financial hit and investor anxiety notwithstanding, Schultz knew it was critical for Starbucks employees to relearn what made the Starbucks experience so unique- he saw this as the key to restoring its corporate culture. Howard Schultz is not a founder of Starbucks, he is the one who created the company as we know it today. Schultz hopes that this second retirement from the company that he built from the ground up will be his last. In the meantime, new CEO Kevin Johnson, who transitioned from Microsoft, faces several challenges-in particular, how to maintain Starbucks' core competencies and how to achieve future growth-both domestically and internationally. The maturing sales of the more than 14,000 U.S.-based stores is one of the biggest challenges facing Johnson today.

Jim Collins

Level 5 Leadership: Their ambition is first and foremost for the institution, not themselves. Paradoxical blend of personal humility and professional will. They set up successors for even greater success.

What is the five forces model and how is it used?

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy.

strategic formulation

The development of a set of corporate, business, and functional strategies that allow an organization to accomplish its mission and achieve its goals

sociocultural forces

The influences in a society and its culture(s) that change people's attitudes, beliefs, norms, customs, and lifestyles

How Dollar Shave Club Disrupted Gillette

To sustain this advantage over time, Gillette followed up with incremental innovations, mainly by adding additional razor blades to the razor, all the way from one blade to six. As a resul of this innovation pattern over time, one of Gillette's newest razors, the Fusion ProGlide with Flexball technology, a razor handle that features a swiveling ball hinge, costs $11.49 (and $12.59 for a battery-operated one) per razor. This created a situation where Gillette exposed itself to low-cost disruption. One key is that the high-end, highly priced offering of the market leader is not only overshooting what the market demands, but also often priced too high. One wonders if a person really does need six blades on one razor, or wants to pay over $10 for one cartridge. Seeing this opening provided by Gillette's focus on the high-endyhigh-margin business of the market. Dollar Shave Club established a low-cost alternative to invade Gillette's market from the bottom up. With an $8,000 budget and the help of a hilarious promotional video that went viral with over 25 million views, the entrepreneur Michael Dubin launched Dollar Shave Club, an ecommerce startup that delivers razors by mail. After the promotional video was uploaded on YouTube in March 2012, some 12.000 people signed up for Dollar Shave membership within the first 48 hours. It also raised more than $20 million in venture capital funding from prominent firms such as Kleiner Perkins Caufield & Byers and Andreessen Horowitz, among others. Dollar Shave Club followed up with advertising on regular television in addition to its online campaigns and has expanded its product lines with the introduction of additional personal grooming products.

Which of the following are questions that managers are likely to ask when beginning the strategic management process? Multiple select question. a. Is our vision product- or customer-oriented? b. What do we ultimately hope to achieve? c. What are our values? d. How can we achieve our goals? e. What is our profit?

b. What do we ultimately hope to achieve? c. What are our values? d. How can we achieve our goals?

Which of the following are ways in which the power of buyers affects producers? Multiple select question. a. by reducing economies of scale b. by obtaining price discounts c. by requesting more service d. by demanding higher quality

b. by obtaining price discounts c. by requesting more service d. by demanding higher quality

The business model used by telecommunication companies when they provide a basic cell phone at no charge when the customer signs a two-year contract is a combination of which of the following types of business models? (Check all that apply.) Multiple select question. a. freemium b. subscription c. pay-as-you-go d. razor--razor-blade

b. subscription d. razor-razor-blade

The pressures that industry suppliers can exert on an industry's profit potential, is also called the ______.

bargaining power of suppliers

A firm uses the ______ business model when it sells a set of products that have different levels of demand for a price less than their total combined prices.

bundling

The external forces called technological factors ______.

capture the application of knowledge to create new processes and product

Combining the razor-razor-blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their ______ rate, or the proportion of subscribers who leave, down.

churn

When implementing the razor-razor-blade strategy, companies make their profit from:

complementary goods

Economic Forces

consist of the general economic conditions and trends - unemployment, inflation, interest rates, economic growth - that may affect an organization's performance

A(n) _____ strategy is the outcome of a rational and structured, top-down strategic plan.

intended

senior management

makes long-range strategic decisions about products and services as well as ensures financial performance of the firm

A ____ outlines what an organization does, while a vision outlines what the organization wants to do.

mission

In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.

mobility barrier

technological forces

new developments in methods for transforming resources into goods or services

exit barriers

obstacles that determine how easily a firm can leave an industry

A firm's attempts to manage the web of relationships between internal and external stakeholders in order to create value is known as ______.

stakeholder strategy

Demographics

statistical data relating to the population and particular groups within it.

Effective guiding policy is supported by and stays consistent through the use of ______.

strategic commitments

The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.

substitues

environmental uncertainty

the degree of change and complexity in an organization's environment

Industry Life Cycle

the five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time

Which business model evolved from the razor—razor-blade model and involves a firm providing a base product for free, then finding ways to monetize the usage?

the freemium business model