BUSA 6600 (Chapter 2)
Which of the following statements best describes the difference between a vision and a mission?
A mission statement deals with "where we are going," whereas a strategic vision provides the critical answer to "who we are, what we do, and why we are here." A vision statement is usually quite brief, whereas the mission statement offers large and descriptive explanations of "who we are, what we do, and why we are here." 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." A mission statement deals with the values, corporate culture, and ethics of a company, whereas the strategic vision deals with the realization of strategies and goals. A mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going." [Correct] [Exp: The defining characteristic of a strategic vision is what it says about the company's future strategic course—"the direction we are headed and the shape of our business in the future." It is aspirational. In contrast, a mission statement describes the enterprise's present business and purpose—"who we are, what we do, and why we are here."]
Which of the following does NOT accurately describe a mission statement?
It describes the company's current business and purpose: who we are, what we do, and why we are here. It mainly expresses that making a profit is a company's true business purpose. [Correct] It typically concerns the enterprise's present business and purpose. It specifies the buyer needs that it seeks to satisfy and the customer groups or markets it serves. It identifies the company's products and/or services. [exp: A mission statement describes the enterprise's present business and purpose—"who we are, what we do, and why we are here." It is purely descriptive. Ideally, a company mission statement (1) identifies the company's products and/or services, (2) specifies the buyer needs that the company seeks to satisfy and the customer groups or markets that it serves, and (3) gives the company its own identity.]
Which are the main components of a strategic plan?
a vision, a strategy, and a specific financial plan as to how to support the execution a strategy and management's specific, detailed plans for implementing it a vision of where it is headed, a set of core values, and a strategy to achieve it a vision of where it is headed, a set of performance targets, and a strategy to achieve them [Correct] a set of performance targets, a balanced scorecard, and a strategy to implement both [Exp: Developing a strategic vision and mission, setting objectives, and crafting a strategy are basic direction-setting tasks. They map out where a company is headed, its purpose, the targeted strategic and financial outcomes, the basic business model, and the competitive moves and internal action approaches to be used in achieving the desired business results.]
Which of the following are characteristics of an effectively worded strategic vision statement?
challenging, competitive, and "set in concrete" realistic, customer-focused, and market-driven balanced, responsible, and rational flexible, focused, and directional [Correct] achievable, profitable, and ethical [Exp: Well-conceived visions are distinctive and specific to a particular organization; they avoid generic, feel-good statements. They are forward-looking and directional and describe the strategic course that will help the company prepare for the future.]
Although senior managers have _________________________ for crafting and executing a company's strategy, it is the duty of a company's board of directors to exercise strong oversight and ensure that the five tasks of strategic management are conducted in a manner that is in the best interests of shareholders and other stakeholders.
ethical obligations legal liability lead responsibility [Correct] monetary incentives contractual duty [Exp: Although senior managers have the lead responsibility for crafting and executing a company's strategy, it is the duty of a company's board of directors to exercise strong oversight and see that management performs the various tasks involved in each of the five stages of the strategy-making, strategy-executing process in a manner that best serves the interests of shareholders and other stakeholders.]
A company's values are
focused on the wealth maximization of shareholders. an integral part of the company's DNA, if executives seek to ingrain designated core values into corporate culture. [Correct] directly linked to the strategic vision, whereas the mission has other underlying assets. barely distinctive between companies in the same industry. strictly limited in number (not more than two per company). [Exp: Most companies have articulated four to eight core values that company personnel are expected to display and that are supposed to be mirrored in how the company conducts its business. The core values thus become an integral part of the company's DNA and what makes the company tick.]
A business strategy
focuses on crafting responses to changing market circumstances and initiating actions to develop strong competitive capabilities in a particular line of business. [Correct] is concerned with how to boost the combined performance of the set of businesses the company has diversified into. outlines the specific operating activities with strategic significance. deals with R&D, production, sales and marketing, and customer service and finance. is orchestrated by the CEO and other senior executives. [Exp: Business strategy is concerned with strengthening the market position, building competitive advantage, and improving the performance of a single line of business unit. Business strategy is primarily the responsibility of business unit heads, although corporate-level executives may well exert strong influence; in diversified companies it is not unusual for corporate officers to insist that business-level objectives and strategy conform to corporate-level objectives and strategy themes.]
Which of the following strategies is not part of a company's strategy-making hierarchy?
functional area strategy business strategy operating strategy financial strategy [Correct] corporate strategy [Exp: In diversified companies, crafting a full-fledged strategy involves four distinct types of strategic actions and initiatives. These are: business strategy, corporate strategy, functional area strategy, and operating strategy. Each of these involves different facets of the company's overall strategy and calls for the participation of different types of managers.]
Greenpeace's vision, "To halt environmental abuse and promote environmental solutions"
gives the company license to pursue any opportunity. is overly generic. captures where they are heading in a catchy or easily remembered slogan. [Correct] presents both an objective and a result of what a company does. is not specific enough to provide any guidance. [Exp: The task of effectively conveying the vision to company personnel is assisted when management can capture the vision of where to head in a catchy or easily remembered slogan. Creating a short slogan to illuminate an organization's direction and purpose and using it repeatedly as a reminder of "where we are headed and why" helps rally organization members to hurdle whatever obstacles lie in the company's path and maintain their focus.]
In most situations, managing the strategy execution process does NOT primarily include which of the following principal aspects?
installing information and operating systems that enable company personnel to carry out their roles effectively and efficiently organizing the work effort along the lines of best practice motivating people and tying rewards and incentives directly to the achievement of performance objectives establishing long-run and short-run strategic and financial objectives [Correct] exerting the internal leadership needed to propel implementation forward [Exp: In most situations, managing the strategy execution process includes the following principal aspects: Creating a strategy-supporting structure; staffing the organization to obtain needed skills and expertise; developing and strengthening strategy-supporting resources and capabilities; allocating ample resources to the activities critical to strategic success; ensuring that policies and procedures facilitate effective strategy execution; organizing the work effort along the lines of best practice; installing information and operating systems that enable company personnel to perform essential activities; motivating people and tying rewards directly to the achievement of performance objectives; creating a company culture conducive to successful strategy execution; and exerting the internal leadership needed to propel implementation forward.]
Nike's vision, "to bring innovation and inspiration to every athlete in the world,"
is a generic vision statement and could apply to several companies since it doesn't give the company a unique identity. states vague and incomplete goals, and nothing is said about how the company intends to prepare for the future. is neither geographically apt, nor memorable. is not feasible because the described path and direction is not within the realm of what a company can pursue or accomplish. is a short slogan to illuminate the organization's direction and purpose. [correct] [Exp: The task of effectively conveying the vision to company personnel is assisted when management can capture the vision of where to head in a catchy or easily remembered slogan. A number of organizations have summed up their vision in a brief phrase. Creating a short slogan to illuminate an organization's direction and purpose and using it repeatedly as a reminder of 'where we are headed and why' helps rally organization members to hurdle whatever obstacles lie in the company's path and maintain their focus.]
Virtually all boards of directors have an audit committee, which is always composed entirely of
minority shareholders. inside directors. shareholders. outside directors. [Correct] majority shareholders. [Exp: Virtually all boards of directors have an audit committee, always composed entirely of outside directors (inside directors hold management positions in the company and either directly or indirectly report to the CEO).]
Top management's views and conclusions about the company's long-term direction and which product-customer-market-technology mix seems optimal for the road ahead constitute a company's
mission statement. strategic vision. [Correct] strategic objective. overall strategy. company values. [Exp: Top management's views and conclusions about the company's long-term direction and what product-market-customer business mix seems optimal for the road ahead constitute a strategic vision for the company.]
Commonly used strategic objectives include
profit margins of X percent. an annual dividend increase of X percent. increased shareholder value—in the form of an upward-trending stock price. winning an X percent of market share. [Correct] an X percent increase in annual revenues. [Exp: Commonly used strategic objectives are: winning an x percent market share: achieving lower overall costs than rivals; overtaking key competitors on product performance; quality, or customer service; deriving x percent of revenues from the sale of new products introduced within the past five years; having broader or deeper technological capabilities than rivals; having a wider product line than rivals; having a better-known or more powerful brand name than rivals; having stronger national or global sales and distribution capabilities than rivals; and consistently getting new or improved products to market ahead of rivals.]
The Balanced Scorecard
provides a company's management with detailed information on how each employee contributes to the company's overall success. links financial performance objectives to executive bonus programs. provides a company's employees with clear guidelines about how their jobs are linked to the overall objectives of the organization. [Correct] strikes a balance between past results and future performances. primarily tracks a company's financial performance to deliver better financial results from its operations. [Exp: The Balanced Scorecard is a method for linking financial performance objectives to specific strategic objectives that derive from a company's business model. It provides a company's employees with clear guidelines about how their jobs are linked to the overall objectives of the organization, so they can contribute most productively and collaboratively to the achievement of these goals]
The process of crafting and executing a company's strategy primarily consists of all of the following EXCEPT
setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve. developing a strategic vision of the company's long-term direction, a mission that describes the company's purpose, and a set of values to guide the pursuit of the vision and mission. choosing employees who can support the strategy execution and strive for change. [Correct] monitoring developments, evaluating performance, and initiating corrective adjustments in the company's vision, mission, objectives, and strategy. executing the chosen strategy efficiently and effectively. [Exp: The process of crafting and executing a company's strategy is an ongoing, continuous process consisting of five interrelated stages: developing a strategic vision that charts the company's long-term direction; setting objectives for measuring the company's performance and tracking its progress in moving in the intended long-term direction; crafting a strategy for advancing the company along the path management has charted and achieving its performance objectives; executing the chosen strategy efficiently and effectively; and monitoring developments, evaluating performance, and initiating corrective adjustments in the company's vision and mission statement, objectives, strategy, or approach to strategy execution in light of actual experience, changing conditions, new ideas, and new opportunities.]
When trade-offs have to be made between achieving long-run and short-run objectives
short-run objectives should always take precedence, because they satisfy shareholder expectations for near-term progress. neither the long-run nor the short-turn objectives should take precedence: new medium-run objectives must be created, accommodating both. short-run objectives should take precedence, unless the achievement of one or more long-run performance targets has unique importance. long-run objectives should always take precedence, because they are critical for achieving optimal long-term performance. long-run objectives should take precedence, unless the achievement of one or more short-run performance targets has unique importance. [Exp: When trade-offs have to be made between achieving long-term objectives and achieving short-term objectives, long-term objectives should take precedence (unless the achievement of one or more short-term performance targets has unique importance).]
Big Cola's mission statement, "to benefit and refresh everyone it touches,"
specifically informs customers and employees "who we are, what we do, and why we are here." portrays a company's aspirations for its future. is uninformative and blurs the essence of a company's business activities. [Correct] describes more of an objective and a result of what a company does instead of its purpose. specifies the buyer needs that it seeks to satisfy and the customer groups or markets it serves. [Exp: The task of effectively conveying the vision to company personnel is assisted when management can capture the vision of where to head in a catchy or easily remembered slogan. A number of organizations have summed up their vision in a brief phrase. Creating a short slogan to illuminate an organization's direction and purpose and using it repeatedly as a reminder of "where we are headed and why" helps rally organization members to hurdle whatever obstacles lie in the company's path and maintain their focus.]
Financial objectives
strike the balance to strategic objectives since both are important for the company's long-term success. indicate to employees whether the emphasis should be on earnings per share or return on investment, or return on assets or positive cash flow. relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects. are necessary to set and to achieve since adequate profitability and financial strength increases a company's long-term health. [Correct] convince shareholders that top management is acting in their interests [Exp: The importance of setting and attaining financial objectives is obvious. Without adequate profitability and financial strength, a company's long-term health and ultimate survival are jeopardized. Furthermore, subpar earnings and a weak balance sheet alarm shareholders and creditors and put the jobs of senior executives at risk.]
Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of
winning the support of employees to help make the vision a reality. [Correct]` making it easier for top executives to set strategic objectives. helping company personnel understand why "making a profit" is so important. letting employees know about what the company once did and does now. helping lower-level managers and employees better understand the company's business model. [Exp: A strategic vision has little value to the organization unless it's effectively communicated down the line to lower-level managers and employees. It is particularly important for executives to provide a compelling rationale for a dramatically new strategic vision and company direction. When company personnel don't understand or accept the need for redirecting organizational efforts, they are prone to resist change.]
