Strategic Management Exam 2

geographic divisional structure

A form of organizational structure in which jobs and activities are grouped on the basis of geographic location—for example, northeast region, Midwest region, and far west region.

matrix structure

A form of organizational structure that combines the functional and product divisional structures.

Product Divisional Structure

A form of organizational structure whereby the organization's activities are divided into self-contained entities, each responsible for producing, distributing, and selling its own products.

employee stock ownership plane (ESOP)

A formal program that transfers shares of stock to a company's employees.

blue ocean strategy

A growth strategy contingent on inventing or discovering a new industry or industry segment that creates new demand.

The agency problem

A situation in which a firms' top managers (i.e., the "agents" of the firms' owners) do not act in the best interests of the shareholders.

multidivisional structure

A structural form with two or more divisions based on products (a product divisional structure) or geography (a geographic divisional structure); also called an M-form.

Leveraged Buyout (LBO)

A takeover in which the acquiring party borrows funds to purchase a firm.

VRINO (value, rarity, imitability, nonsubstitutability, and organization) framework

A tool for assessing the competitive quality of a firm's resources by examining value, rarity, imitability, nonsubstitutability, and organization.

SLSC (strategy-level-strategy-complexity) matrix

A tool for evaluating strategic alternatives that considers the organizational level of the alternative and the degree of strategic complexity

value chain

A useful tool for analyzing a firm's strengths and weaknesses and understanding how they might translate into a competitive advantage or disadvantage. The value chain describes the activities that comprise the economic performance and capabilities of the firm

profit center

A well-defined organizational unit headed by a manager accountable for its revenues and expenditures.

Opportunities and threats should emanate from the analysis of macroenvironmental and industry forces. True or False

True Opportunities and threats are developed from the analysis previously performed on the macroenvironment and the industry.

Corporate restructuring can be voluntary or involuntary. TrueFalse

True Progressive firms restructure voluntarily when it becomes clear that a change is necessary, ideally before performance declines are substantial. However, firms that do not manage for value may eventually be forced by outsiders to restructure involuntarily, a process that is usually more costly.

Corporate restructuring seeks to improve efficiency and performance through such actions as realigning divisions in the firm, reducing the amount of cash under the discretion of senior executives, and acquiring or divesting business units. True or False

True This is the definition of the term corporate restructuring

Horizontal structures have fewer managerial levels than vertical structures TrueFalse

True This is the definition of the term horizontal structures.

Offshoring refers to the relocation of some or all of a firm's manufacturing or other business activities to another country, usually to reduce costs. T or F

True.

The first step in crafting a strategy is the SWOT analysis. True or False

True. The first step in crafting a strategy, a SWOT analysis, can enable the firm to position itself to take advantage of particular opportunities in the environment while avoiding or minimizing environmental threats.

capabilites

a firm's skills at coordinating and leveraging resources to create value(often called strategic capabilites)

functional structure

a form of organizational structure whereby each subunit of the organization engaged in firm wide activites related to a particular function such as marketing, finance, HR

downsizing

a means of organizational restructuring that eliminates part or all of one or more hierarchical levels from the organization and pushes decision making down

horizontal structure

a organizational structure with fewer hierarchies, designed to improve efficiency by reducing layers of bureaucracy

ethical relativisim

a perspective on ethics whereby right and wrong are based on accepted norms in culture

objectivisim

a philosophical perspective espoused by Ayn Rand in her famous novel Atlas Shrugged. Objectivism emphasizes an objective reality understood by logic and reason, and focuses on individual freedom and property rights. Capitalism is the economic system that follows because it respects the rights of individuals to pursue their own self-interests by trading freely with others. Rand emphasized that personal fulfillment can only be derived from an informed, long-term perspective on self-interests.

stakeholders

individuals or groups who are affected by or can influence an organizations operations

SWOT

strengths, weaknesses, opportunities, threats

Social Responsibility

the expectation that business firms should serve both society and the financial interest of shareholders

organizational structure

the formal means by which work is coordinated in an organization

triple bottom line

the notion that firms must maintain and improve social and ecological performance in addition to the economic performance

span of control

the number of employees who report directly to a manager

diversification

the process of acquiring companies to increase a firm's size

mobile commerce

transactions conducted anywhere, anytime. wireless

moral hazard

when parties in an arrangement do not share equally in the risks and benefits

organizational resources

The firm's systems and processes, including its strategies at various levels, structure, and culture

adverse selection

The inability of shareholders to identify the precise competencies and personal attributes of top managers when they are hired.

takeover

The purchase of a controlling quantity of shares in a firm by an individual, a group of investors, or another organization. Takeovers may be friendly or unfriendly.

Business-to-consumer (B2C)

The segment of electronic commerce whereby businesses utilize the Internet to solicit transactions from consumers, also known as e-tailing.

Business-to-business (B2B)

The segment of electronic commerce whereby businesses utilize the Internet to solicit transactions from each other.

business-to-government (B2G)

The segment of electronic commerce whereby businesses utilize the Internet to solicit transactions from government entities.

Consumer-to-business (C2B)

The segment of electronic commerce whereby consumers utilize the Internet to solicit transactions from businesses.

Consumer-to-consumer (C2C)

The segment of electronic commerce whereby consumers utilize the Internet to solicit transactions from each other.

organizational culture

The shared values and patterns of belief and behavior that are accepted and practiced by the members of a particular organization.

clicks and bricks

The simultaneous application of both electronic ("clicks") and traditional ("bricks") forms of commerce.

Sustainable Strategic Management (SSM)

The strategies and related processes that promote superior performance from both market and environmental perspectives.

physical resources

An organization's plant and equipment, geographic locations, access to raw materials, distribution network, and technology.

simple structure

An organizational form whereby each employee often performs multiple tasks, and the owner/manager is involved in all aspects of the business

e tailing

Another term for B2C.

Corporate Restructuring

A change in the organization's structure to improve efficiency and firm performance, including such activities as realigning divisions in the firm, reducing the amount of cash under the discretion of senior executives, and acquiring or divesting business units.

The description of activities that comprise the economic performance and capabilities of the firm is known as A. the value chain. B. process innovation. C. quality assessment. D. none of the above

A. The value chain describes activities that comprise the economic performance and capabilities of the firm.

Which of the following structures tends to be the most centralized? A. functional structure B. product divisional C. geographic divisional structure D. matrix structure

A. functional structure

The formal means by which work is coordinated in an organization is called the __________. A. organizational structure B. organizational culture C. organizational dynamic D. none of the above

A. organizational structure

vertical growth

An increase in the length of the organization's hierarchical chain of command.

. The tool that enables an organization to position itself to take advantage of particular opportunities in the environment while avoiding or minimizing environmental threats is called A. PEST analysis. B. SWOT analysis. C. TQM analysis. D. none of the above

B. The SWOT analysis enables a firm to position itself to take advantage of particular opportunities in the environment while avoiding or minimizing environmental threats.

Which of the following could not be an example of a weakness? A. product quality. B. fierce competition. C. human resources. D. All of the above could be weaknesses.

B. Fierce competition comes from outside of the organization and would be a threat, not a weakness.

The ethical perspective that suggests that organizational decisions should be made in accordance with pre-established rules or guidelines is known as A. The self-interest view. B. The justice view. C. The rights view. D. The integrative social contracts view.

B. The justice view

The notion of a profit center is consistent with which form of organizational structure? A. functional structure B. product divisional C. geographic divisional structure D. matrix structure

B. product divisional

An individual's responsibility to make business decisions that are legal, honest, moral, and fair is known as A. social responsibility. B. the social imperative. C. managerial ethics. D. all of the above.

C. An individual's responsibility to make business decisions that are legal, honest, moral, and fair is known as managerial ethics. Social responsibility refers to the expectation that business firms should serve both society and the financial interests of the shareholders.

An increase in the breadth of an organization's structure is known as __________. A. centralization B. decentralization C. horizontal growth D. vertical growth

C. horizontal growth

gap analysis

Identifying the distance between a firm's current position and its desired position with regard to an internal weakness. All things equal, it is desirable to take action to close the gap, especially when the gap leaves a firm vulnerable to external threats in its environment.

To sustain competitive advantage, firms must acquire or develop resources that are A. difficult for competitors to imitate. B. long-lasting. C. difficult for competitors to acquire on the market. D. all of the above

D. A firm must utilize resources that are long lasting and not easily acquired by rivals through imitation, transfer, or replication if the firm is to sustain competitive advantage.

. Leveraged buyouts can A. strap the company with a large amount of debt. B. serve as a system of checks and balances. C. lead to the sale of company assets. D. all of the above

D. Although LBOs may serve as a system of checks and balances, they can also strap the company with so much debt that assets must be sold to reduce the debt load.

Physical resources include: A. production facilities. B. plant locations. C. production capacity D. all of the above

D. Physical resources include currency of technology, quality and sophistication of the distribution network, production capacity, access to suppliers, and favorable locations.

Which of the following is not an example of a stakeholder? A. customers B. suppliers C. employees D. none of the above

D. Stakeholders include any groups that have a "stake" in the success of the organization.

The assessment of strategies and related processes that promote superior performance from both market and environmental perspectives is known as A. Corporate social responsibility. B. Managerial ethics. C. Management decision-making effectiveness. D. None of the above

D. The assessment of strategies and related processes that promote superior performance from both market and environmental perspectives is known as sustainable strategic management (SSM).

The reason for the firm's existence is known as A. the vision. B. organizational goals. C. organizational objectives. D. none of the above

D. The reason for the firm's existence is known as the mission.

Which type of alternative is always defensive in nature? A. strength-opportunity. B. strength-threat. C. weakness-opportunity. D. weakness-threat.

D. Weakness-threat alternatives are always defensive in nature. Strength-opportunity alternatives are always offensive. Other alternatives can be either offensive or defensive.

Which form of organizational structure is actually a combination of two other forms? A. functional structure B. product divisional C. geographic divisional structure D. matrix structure

D. matrix structure

Which of the following structures tends to be the most decentralized? A. functional structure B. product divisional C. geographic divisional structure D. matrix structure

D. matrix structure

The value chain is an analytical technique for identifying organizational opportunities and threats. True or False

False The value chain is a useful tool for analyzing a firm's strengths and weaknesses and understanding how they might translate into competitive advantage or disadvantage.

A flat organization is composed of many hierarchical levels and narrow spans of control. TrueFalse

False A tall organization is composed of many hierarchical levels and narrow spans of control

In general, a functional structure tends to be most appropriate for differentiated businesses. TrueFalse

False In general, a functional structure tends to be most appropriate for defenders and low-cost businesses.

Choosing the "no change" strategy and thereby recommending that the current strategy be continued is the least risky option. T or F

False. Choosing not to institute any strategic changes can be more risky than recommending major changes in the strategy, depending on the situation.

Another name for an opportunity is an alternative. True or False

False. Opportunities represent the application of macroenvironmental forces to a specific organization, whereas alternatives emanate from the SW/OT matrix and represent specific courses of action that the organization may choose to pursue.

A factor can be both an opportunity and a strength. True or False

False. Only external factors can be opportunities and/or threats, whereas only internal factors can be strengths and/or weaknesses.

Most organizations can be classified as either ethical or unethical. A. True B. False

False. Ethics is an individual phenomenon; managers and other employees can be ethical or unethical.

If a firm is able to consistently earn above-average profits, it is effectively balancing the goals of its stakeholders. A. True B. False

False. Profitability is only one stakeholder goal.

The agency problem refers to the balancing act a firm must exhibit when attempting to satisfy the myriad of governmental agencies. A. True B. False

False. The agency problem refers to a situation in which a firm's managers (i.e., the owners' agents) fail to act in the best interests of the shareholders.

The integrative social contracts view of ethics suggests that decisions should be based on religious convictions. A. True B. False

False. The integrative social contracts view of ethics suggests that decisions should be based on existing norms of behavior, including cultural, community, or industry factors.

Goals are specific and often quantified versions of objectives A. True B. False

False.Objectives are specific and often quantified versions of goals.

Progressive firms restructure only when firm performance declines. TrueFalse

FalseProgressive firms restructure when it becomes clear that a change is necessary—ideally before performance declines

What are the key advantages and disadvantages of outsourcing and offshoring? Should these practices be regulated? Why or why not?

Issues like outsourcing and offshoring rep-resent practical ethical and CSR concerns In sum, outsourcing and offshoring offer intriguing options to strategic managers. In an increasingly competitive global marketplace, firms must take steps to minimize costs and improve efficiency. These steps may not be taken without political or buyer repercussions in the home market

What is the difference between social responsibility and managerial ethics? Why is this distinction important?

It is important to remember that managerial ethics pertains to individual, not corporate, behavior. Whereas ethics concerns individual behavior, CSR con-siders appropriate firm activities. While ethical management is an obvious imperative, competing conceptualizations of ethics can make it difficult to distinguish between ethical and unethical behavior in some instances.

What is and 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. Objectives are specific actions and timelines for achieving the goal.

justice view of ethics

Perspective suggesting that all decisions will be made in accordance with established rules or guidelines.

utilitarian view of ethics

Perspective suggesting that anticipated outcomes and consequences should be the only considerations when evaluating an ethical dilemma.

integrative social contracts view of ethics

Perspective suggesting that decisions should be based on existing norms of behavior, including cultural, community, or industry factors.

self-interest view of ethics

Perspective suggesting the benefits of the decision maker should be the primary consideration when weighing a decision.

religious view of ethics

Perspective that evaluates organizational decisions on the basis of personal or religious convictions.

human resources

The experience, capabilities, knowledge, skills, and judgment of the firm's employees.

Why do stakeholders in the same organization often have different goals? Would it not be best if they shared the same goals? Explain

Stakeholders can be : shareholders, managers, employees, suppliers, general public, customers, etc. For example, shareholders are generally interested in maximum profitability, whereas creditors are more concerned with long-term survival so that their loans will be repaid. Meanwhile, customers desire the lowest possible prices, even if offering them would result in losses for the firm. How-ever, top managers should be concerned not only with the shareholders' primary objective of profits, but also with those of other stakeholders, whose efforts may be required to maintain a healthy organization over the long run.

horizontal growth

an increase in the breadth of an organizations structure

managerial ethics

an individuals responsability to make business decisions that are legal, honest, moral, and fair

tall organization

an organization characterized by many hierarchical levels and a narrow span of control

decentralization

an organizational decision making approach in which most strategic and operating decisions are made by managers at the business unit level

centralization

an organizational decision making approach whereby most strategic and operating decisions are made by managers at the top of the organizational structure

flat organization

an organizational structure with few or no levels of middle management between top managers and those reporting to them. wide span of control

outsourcing

contracting out a firm's noncore, nonrevenue producing activitesto other organizations primarily to reduce costs

difference in goals vs. objectives

goals : desired general ends towards which efforts are directed objectives: specific, verifiable and often quantified versions of a goal

right view of ethics

perspective that evaluates organizational decisions on the extent to which they protect individual rights

off shoring

relocating some or all of a firms manufacturing or other business process to another country to reduce costs