Business Strategy Test 1

economic conditions (local to worldwide)

1st E in PESTEL

environmental factors (the natural environment)

2nd E in PESTEL

A

A company achieves a competitive advantage when: A. It provides buyers with superior value compared to rival sellers or offers the same value at a lower cost. B. It has a profitable business model. C. It is able to maximize shareholder wealth. D. It is consistently able to achieve both its strategic and financial objectives. E. Its strategy and its business model are well-matched and in sync.

B

A company's strategic plan: A. details key objectives and the strategy for achieving them. B. lays out its future direction and business purpose, performance targets and strategy. C. identifies the company's strategy and management's specific, detailed plans for implementation. D. consists of a company's strategic vision, strategic objectives, strategic intent, and strategy. E. summarizes the company's strategic vision, a strategy, and a business model.

C

A company's strategy concerns: a. The market focus and plans for offering a more appealing product than rivals. b. How it plans to make money in its chosen business. c. Management's action plan for outperforming competitors and achieving superior profitability. d. The long-term direction that management believes the company should pursue. e. Whether it is employing an aggressive offense to gain market share or a conservative defense to protect its market position.

E

A company's strategy evolves over time as a consequence of: A. The need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations. B. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy. C. The need to abandon some strategy features that are no longer working well. D. The need to respond to the newly initiated actions and competitive moves of rival firms. E. All of these.

D

Which one of the following is NOT one of the five basic tasks of the strategy-making, strategy-executing process? A. Developing a strategic vision of where the company needs to head and what its future business makeup will be. B. Setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve. C. Crafting a strategy to achieve the objectives and get the company where it wants to go. D. Developing a profitable business model. E. Executing the chosen strategy efficiently and effectively.

E

With the aid of a strategic group map, one can: A. identify easily the entry and exit barriers for each strategic group. B. pinpoint precisely which firms are in profitable strategic groups and which are not. C. identify which competitive forces are strong and which are weak. D. measure accurately whether across-group rivalry is stronger than within-group rivalry, and vice versa. E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.

strategic management principle

a company's vision and mission, as well as its objectives, strategy, and approach to strategy execution are never final; managing strategy is an ongoing process

competitive advantage test

can it help the firm achieve a significant & sustainable competitive advantage?

performance test

can it produce good performance as measured by the firms profitability/financial strength, competitive strengths & market standing?

mission statement

describes the firm's current business & purpose, focuses on describing the firm's business, NOT on making a profit, uses specific language to give the firm its own unique identity (what, why, who)

strategic fit test

does it exhibit dynamic fit with the external & internal aspects of the firms overall situation?

discourages employees, push employees to do unethical or illegal things

downsides to stretch objectives

1. What are the driving forces 2. Whether they make the industry more/less attractive 3. What strategy changes are needed to prepare for the impact

driving forces analysis

PESTEL Analysis

focuses on principal components of strategic significance in the macro-environment

financial objectives

lagging indicators that communicate top management's goals for financial performance, are focused internally on the firm's operations and activities

strategic objectives

leading indicators that are the firm's goals related to marketing standing & competitive position, are focused externally on competition vis a vis the firm's rivals

broad, firm has no control

macroenvironment

strategic vision

managements future aspirations for the firm to its stakeholders, provides direction, sets out the strategic soundness, uses specific language to set the firm apart from its rivals

balanced scorecard

measures firms optimal performance by placing a balanced emphasis on achieving both financial and strategic objectives and tracking both measures of financial performance and measures of whether a firm is strengthening its competitiveness and market position

(1) vision, mission, and core values (2) strategic financial objectives (3) chosen strategy

strategic plan

key success factors (KSFs)

strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities that are necessary for competitive success by any and all firms in an industry

strategic group mapping

technique for displaying the different market or competitive positions that rival firms occupy in the industry

core values

the beliefs, traits, and behavioral norms that employees are expected to display in conducting the firm's business and in pursuing its strategic vision and mission

value proposition

the greater the value provided and the lower the price, the more attractive it is to customers (V-P)

executing the strategy

the hardest task of the strategy process

profit formula

the lower the costs for a given customer value proposition, the greater the ability of the business model to be a money maker (and probably that a competitor will try to mimic)

driving forces

the major underlying causes of change in industry and competitive conditions

competitive advantage test, strategic fit test, performance test

the three tests of a good strategy (want to pass all three)

value proposition (create value) and profit formula (generate revenues sufficient to cover cost)

two parts of a business model

political factors

P in PESTEL

sociocultural forces

S in PESTEL

E

Every corporation should have a strong independent board of directors that: A. is well informed about the company's performance and exercises their fiduciary duty to protect shareholders responsibly. B. guides management in choosing a strategic direction and to make independent judgments about the validity and wisdom of managements proposed strategic actions. C. evaluates the leadership skills of the CEO and other senior executives promote management actions the board believes are inappropriate or unduly risky. D. has the courage to curb management actions deemed inappropriate or unduly risky, curtails insight and advice to management. E. All of these.

B

In identifying an industry's key success factors, strategists should: A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. D. consider what it will take to overtake the company with the industry's overall best strategy. E. focus their attention on what it will take to capitalize on the impacts of the industry's driving forces.

E

In which one of the following instances is rivalry among competing sellers NOT more intense? A. When certain competitors are dissatisfied with their market position and make moves to bolster their standing B. When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly acquired competitors into stronger market contenders C. When competitors are fairly equal in size and capability D. When the products of rivals are weakly differentiated, buyer switching costs are low, and market demand is growing slowly E.When there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

B

Information regarding the four components of the framework for Competitor Analysis can NOT: A. be gleaned from company press releases. B. gathered from rivals internal proprietary strategic information. C. assembled from website data (especially management reports and presentations given to financial analysts). D. observed from public information (especially annual reports and 10K financial reports). E. garnered from competitive intelligent departments assigned the task to monitor rivals.

legal/regulatory conditions

L in PESTEL

technological factors

T in PESTEL

E

The 5 Forces model does not include: A. Rivalry- Competing Sellers B. Suppliers & Buyers C. New Entrants D. Substitutes E. Foreign competition

E

The managerial purpose of setting objectives includes: A. converting the strategic vision into specific performance targets—results and outcomes the organization wants to achieve. B. using the objectives as yardsticks for tracking the company's progress and performance. C. challenging and helping stretch the organization to perform at its full potential and deliver the best possible results. D. pushing company personnel to be more inventive and to exhibit more urgency in improving the company's financial performance and business position. E. All of these.

B

The primary difference between a company's mission statement and the vision is that: A. the mission explains why it is essential to make a profit, whereas the strategic vision explains how the company will be a moneymaker. B. a mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going and why." C. a mission deals with how to please customers, whereas a strategic vision deals with how to please shareholders. D. a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there?" E. a mission statement addresses "how we are trying to make a profit today," while a strategic vision concerns "how will we make money in the markets of tomorrow?"

D

The task of driving forces analysis is to: A. develop a comprehensive list of all the potential causes of changing industry conditions. B. predict which new driving forces will emerge next. C. determine which one of the five competitive forces is the biggest driver of industry change. D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces. E. learn what the industry key success factors are and how they might change in the future.

more inventive, increase urgency for improving financial performance and competitive position, focuses firm on its actions

benefits of stretch objectives