Capstone: Exam I Review

The relationship between design and emergence in strategy making is best described as:

A process in which intended strategy is adapted as it is implemented

In using accounting ratios to appraise a firm's performance, it is helpful to use:

Benchmarks Trends in these ratios over the past 5 years or more Multiple indicators (all of these)

Profit maximization and value of the firm are two concepts which are:

Closely linked because profit maximization translates into maximizing a firm's value

The division of responsibility between corporate and business strategy is consistent with the following principle:

Corporate level strategy is the domain of headquarters executives; divisional managers are responsible for business strategies

The main difference between corporate level strategy and business level strategy is:

Corporate strategy defines the scope of a firm's activities, while business strategy focuses on how to beat the competition in specific product markets

Strategy improves decision making by:

Reducing the number of choices being considered Integrating and pooling the knowledge of different members of the firm Facilitating the use of analytic tools (all of these)

In strategic management, the expression "blue oceans" refers to:

The potential offered by uncontested market space.

A major impediment to the stakeholder view of the firm is:

The practical problem of taking account of multiple goals in strategic decision making OR the difficulties of quantifying the performance of the stakeholder-focused firm.

The two questions of "where" and "how" to compete define:

a firm's corporate and business strategies

The main reason for the transition from corporate planning to strategic management during the latter half of the 1970s was:

a more turbulent business environment that became increasingly difficult to predict.

The main difference between accounting measures of firm performance and stock market measures firm performance is:

accounting measures are backward looking; stock market measures are forward looking

Ryanair's strategic position is as Europe's lowest-cost airline may be attributed to:

an integrated, consistent set of activities designed to maximize productivity and minimize operating costs

To assess the adequacy of the return on capital employed (ROCE) that a firm earned in its most recent financial year, which of the following would not be an appropriate benchmark? a. the ROCE earned by the same firm in previous years b. the ROCE earned by competitors during the same period c. the firm's cost of equity capital d. the firm's weighted average cost of capital

c. the firm's cost of equity capital

When identifying a company's strategy, its statements of a strategy found in its public documents need to be:

checked against the company's decisions and actions

For both individuals and businesses, successful strategies are characterized by:

clear goals, understanding their competitive environment, awareness of internal strengths and weaknesses, and effective implementation

A conceptualization the firm as an "activity system" is a means of depicting:

consistency among a firm's activities

The primary distinction between corporate strategy and business strategy is:

corporate strategy is concerned with where the firm competes; business strategy is concerned with how it competes

Capturing the value for a firm requires that a firm:

creates value for customers, then appropriate some of that value as profit

Every business enterprise has a distinct purpose; however, common to all businesses is the goal of:

creating value

During the 21st century, the complexity of the challenges posed by disruptive, digital technologies and accelerating rates of change has encouraged companies to:

depend increasingly upon strategic alliances and other forms of collaboration.

The main problem of SWOT as a framework for strategy analysis is that:

distinguishing opportunities from threats and strengths from weaknesses is often difficult.

Strategy can help decision making by:

facilitating the use of analytical tools

The divergence between accounting profit and economic profit is likely to:

greater for capital-intensive firms than for labor-intensive firms.

The extent to which an organization's strategy is determined by decentralized emergence rather than by centralized design depends mainly upon:

how turbulent and unpredictable is the external environment of the organization

A description of a company's organizational purpose is called a ______?

mission statement

For the purposes of strategy analysis, it is convenient to view business strategy is primarily a quest for:

profit

To assess whether or not a firm is earning an adequate rate of profit, return on capital employed (ROCE) is a better indicator than return on sales because:

return on sales varies between industries according to their capital intensity

Strategic goals should be:

simple, consistent, and long-term

When the environment becomes more turbulent and unpredictable:

strategy becomes an increasingly important as a source of direction

Strategic fit refers to:

the consistency of a firm's strategy with its external and internal environments

Although firms may pursue a variety of goals, the assumption that primary goal of strategy is to maximize profits over the long term may be justified by:

the external pressures on firms for profitability that arises from (i) strong competition in product markets and (ii) the threat that firms that do not maximize profits will be acquired by forms that do.

Economic value is created when:

the price that the customer is willing to pay for a product exceeds the costs of the material inputs used to produce the product

Business strategy defines:

the way a firm competes in a particular industry or market the way a firm establishes a competitive advantage over its rivals within a specific industry or market (both of these)

Strategy has its origins in:

thought

The primary purpose of strategy is:

to achieve success

The main value of analytical approaches to strategy formulation is:

to provide understanding of strategic issues

During the 1990s, the focus of strategy analysis shifted:

to the role of resources and capabilities as a foundation for firm strategy.