Strategic Management - Test 1

Organizational core values are the ___________ that govern the behavior of individuals within a firm or organization

Ethical standards and norms

Strategic leadership pertains to the use of power and influence by _______ to direct the activities of other when pursuing an organization's goals

Executives

Understand the difference between industry and firm effects

Industry effects: firm performance attributes to the structure of the industry Firm effects: results of firms performance from actions taken to managers

____________ is described as decreases in cost per unit as output increases

Economies of scale

Be able to identify and understand what it means to have a sustainable competitive advantage

A firm that is able to outperform its competitors or the industry average over a prolonged period of time

What is a drawback of the SWOT analysis

A strength can also be a weakness, an opportunity can also be a threat

Know the main reasons for success of Beats Headphones

Coolness factor & celebrity endorsed the brand

Be able to identify the 7 popular business models and how they work

• Razor-razor-blades • Subscription • Pay-as-you-go • Freemium • Wholesale • Agency • Bundling

Understand the definition of resource immobility

A firm has resources that tend to be sticky and do not more easily from firm to firm

Understand the definition of resource heterogeneity

A firm is a bundle of resources and capabilities that differ across firms

Understand economies of scale and the graph on page 194 of the text

As output increases, cost per unit decreases

Understand what it means to have competitive parity

Average capabilities in a particular area as compared to others in your industry

_______ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.

Economic value created

Know and understand the graph on page 84 of text

Basically as you move through the different industry competitive structures from many small firms to fewer large firms, the profit and industry features change in each. Greater profits, the fewer the competitors.

Unexpected events that are highly improbable but lead to changes can best be described as a ________

Black swan event

Samsung and Google cooperate as competitors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of:

Competition

A firm that achieves superior performance relative to other firms in the same industry or the industry average has a

Competitive Advantage

Underperformance relative to other firms in the same industry or the industry average results in a ________ for a firm

Competitive Disadvantage

Summarize the difference between corporate strategy and business strategy

Corporate strategy - concerns questions relating to where to compete as to industry, markets and geography Business strategy - concerns the question of how to compete. Three generic business strategies are available: cost leadership, differentiation or value innovation

Nexteer automotive is leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high-quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped Nexteer Automotive sustain its competitive advantage?

Costly to imitate

Which competitively important assets are typically excluded from a firm's balance sheet?

Customer experience

What is better for firms to keep their vision statements customer-oriented rather than product-oriented?

Customer-oriented visions tend to be more flexible when adapting to changing environments

Attempts by McDonald's, Burger King, and Wendy's to steal customers from one another include frequent discounting tactics such as dollar menus. Such competitive actions are indicative of what type of competition.

Cutthroat competition

In a firm's external environment, _____ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

Demographic trends

Companies in the same strategic group are ________ to each other

Direct competitors

According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were _______.

Direct imitation

In the pyramid of corporate social responsibility, ___________ responsibilities are the foundational building block

Economic

EnviroFit, Inc. had a mission to become the leading producer of environmentally friendly blue jeans, an emerging and in-demand category in the apparel industry. Its strategy involved leveraging a network of organic cotton farmers and suppliers of environmentally responsible synthetic materials to create a product that is durable, attractive, affordable, and 100% recyclable. However, because it did not upgrade its outdated production facilities, EnviroFit could not assemble its products at a low-enough cost to offer the jeans at a price that was attractive to customers. EnviroFit strategy failed Because?

It was not backed up with strategic commitments

Husqvarna initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20%. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?

Learning-curve effect

What is a drawback of Porter's five forces model?

Managers cannot determine the changing speed of an industry or the rate of innovation

How did Marriott use economies of scope to achieve greater economic value than its competitors

Marriott lowered its cost structure by sharing its production assets over a several types of hotels, which increased its menu and this its differentiated appeal

__________ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale

Minimum efficient scale

Know and understand what it means to follow a differentiation strategy

Offering different value not available from other companies, even thought it might not be at the lowest cost

_______ are best described as the value of the best forgone alternative use of the resources employed.

Opportunity cost

The ___________ allows the scanning, monitoring and evaluating of changes an trends in a firm's macro environment

PESTEL model

Know and understand the difference between Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly

Perfect Competition: Consumers make purchase decisions on price bc commodity products offerings are more or less identical. -Many small firms -Commodity product -Ease of entry -Little/no ability for each firm to raise prices (price takers) Monopolistic Competition: Firms now offer products/services with unique features. -Many firms -Some pricing power -Differentiated product -Medium entry barriers Oligopoly: Analyzed using game theory, attempts to predict strategic behaviors by assuming moves and reactions of competitors. -Few (large) firms; firms are independent -Some pricing power -Differentiated product -High entry barriers Monopoly: The one firm is the industry. -One firm -Considerable pricing power -Unique product -Very high entry barriers

_________ precisely indicates how much of a firm's sales is converted into profits

Return on revenue

A manager is using an analysis that will allow her to effectively leverage the company's internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats. In this scenario, which managerial tools is the manager employing?

SWOT analysis

Know and understand what it means to follow a focused-differentiation strategy

Same as cost-leadership strategy except competitive scope is narrower

Both Mars Technology and Venus Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Saturn Technologies charges a higher price than Granite Inc. does, but it still sells a higher number of phones. What does this imply?

Saturn technologies creates more economic value than Granite Inc. does

The executives at White Couture Inc. are developing strategic plans to address plausible future situation like ride in the prices of cotton and synthetic fabrics by 30 percent, appreciation in the value of the dollar, increase in the cost of labor by 40 percent, and increase in demand for the company's products. By doing so, the company will be well prepared with its planned responses if any of these situation occurs in the future. Thus White Couture is employing ____________ as the approach to the development of strategy

Scenario planning

Know and understand what it means to follow a cost-leadership strategy

Seeks to create the same or similar value for customers by offering lower cost than competitors

An observer may conclude that the organizational culture of Zappos, an online retailer for shoes and clothing, might be the basis for its competitive advantage. However, reverse social engineering to crack Zappos' code of success might be much more difficult for a company trying to exactly imitate its strategy. Thus, the source of Zappos competitive advantage is said to be?

Socially complex

___ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Strategic Management

Sam's Club is a _______ of Walmart

Strategic business unit (SBU)

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

Strategic trade-offs

The production head at the AGP Paint Company would frequently stay back after office hours and experiment with new color combinations even though this was part of the new product development team's job. As a result of these experiments, he came up with two new interior paint colors, foggy morning and mint julep. The new colors proved popular among test groups, and quickly became some of AGP's best selling products. Which of the following strategies does this scenario best illustrate?

Strategy of planned emergence

Identify the phrase that represents the vision Wendy Kopp developed for Teach for America

TFA Vision: One day, all children in this nation will have the opportunity to attain an excellent education

Know the difference between tangible resources and intangible resources

Tangible: physically can touch. Ex: buildings, furniture, machinery Intangible: cannot feel or see. Ex: trademarks, patents, copyrights

Which frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

The balanced scorecard model

What is likely to happen due to horizontal messages mergers between competitors such as Delta and Northwest Airlines?

The overall industry profitability will increase

Summarize the difference between a firm's vision and mission

The vision statement focuses on tomorrow and what the organization wants to become. The mission statement focuses on today and what the organization does

Be able to identify when a company is following Blue Ocean Strategy

They combine differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs in these two distinct strategic positions

What is an assumption that top-down strategic planning rests on?

Top down strategic planning is where all strategic intelligence and decision-making responsibilities are concentrated in the office of the CEO. Information flows in only one direction the formulation of strategy is separate from implementation. The assumption is rests on is that we can predict the future from the past.

Know how to calculate consumer surplus

Total amount customer is willing and able to pay minus what they actually pay

Know how to describe market cap

Total money value of a company's total outstanding shares at any given point in time

Know and be able to apply the VRIO framework

Valuable, Rare, Imitate, Organized Theoretical framework that explains and predicts firm-level competitive advantage

Be able to identify a person on the Level-5 pyramid (pg. 35)

a. Level 1: Highly capable individual i. Makes productive contributions through motivation, talent, knowledge, and skills. b. Level 2: Contributing Team Member . Uses high level of individual capability to work effectively with others in order to achieve team objectives. c. Level 3: Competent Manager . Is efficient and effective in organizing resources to accomplish stated goals and objectives. Does things right. d. Level 4: Effective Leader . Presents compelling vision and mission to guide groups toward superior performance. Does the right things. e. Level 5: Executive . Builds enduring greatness through a combination of willpower and humility. *all great companies are led by level 5 executives- Sheryl Sandberg of Facebook is an example.

The interaction between a firm and it's diverse internal and external stakeholders is best described as an ___________

exchange relationship

The principle behind the triple-bottom line is that

profit, people, planet