CH 2 Strategy Formulation, Execution, and Governance

A ______ combines both strategic and financial objectives, allowing managers to achieve a complete assessment of a company's performance. a. scorecard objective b. balance sheet c. balanced scorecard d. strategic vision

c. balanced scorecard Note: why not d. A simple strategic vision does not combine financial objectives.

Which of the following would not be a key aspect to managing the strategy execution process? a. staffing the organization to provide required expertise b. establishing a conducive work climate c. ensuring that policies work to facilitate execution d. accepting the value chain activities as they are currently performed

d. accepting the value chain activities as they are currently performed

A company's financial objectives a. are the most reliable predictors of future success in the marketplace. b. are leading indicators of a company's future financial performance and business prospects. c. signal that the company is well-positioned to sustain or improve performance. d. are lagging indicators that provide evidence of the success or failure of the company's past activities.

d. are lagging indicators that provide evidence of the success or failure of the company's past activities. Note: Reason why not B: Recall that financial objectives are not leading indicators of a company's future financial performance but instead lagging indicators that reflect the results of past decisions and organizational activities.

Business strategy, as a level of the company's strategy-making process, is a. concerned with the actions related to particular functions or processes within a business. b. the overall company wide game plan for managing a set of businesses. c. the strategic initiatives and approaches for managing key operating units and specific operating activities. d. focused on improving the competitive strength of a single business unit or nondiversified business.

d. focused on improving the competitive strength of a single business unit or non diversified business. Why not: A: a. concerned with the actions related to particular functions or processes within a business. Reason: Recall that this is more indicative of functional-area strategies than business strategies. c. the strategic initiatives and approaches for managing key operating units and specific operating activities. Reason: Recall that this is a company's operating strategy rather than the business strategy.

Attainment of strategic objectives a. is a lagging indicator that reflects the results of past decisions. b. is less important than attaining financial objectives. c. is useful only for the evaluation of the company's current and past performance. d. is a leading indicator, providing evidence of a company's prospects and future financial performance.

d. is a leading indicator, providing evidence of a company's prospects and future financial performance.

Long-term objectives are useful because they a. can be accurately measured, whereas short-term objectives are vague and difficult to quantify. b. set specific expectations for employees on a day-to-day basis. c. emphasize performance improvements in the current period. d. prevent a company from becoming overly focused on the near term and losing sight of larger trends and opportunities.

d. prevent a company from becoming overly focused on the near term and losing sight of larger trends and opportunities.

A strategic objective should be both concrete and measurable in order to be a valuable management tool. Which of the following is the best example of an objective that is a valuable management tool? maximize profits in the near future reduce costs increase sales increase sales by 5% over the next fiscal year

increase sales by 5% over the next fiscal year

True or false: When achieving objectives requires a trade-off, short-term objectives should usually take precedence over long-term objectives.

False Note: long run objectives should take precedence (unless the achievement of one or more short run performance targets has unique importance).

In 2015, almost ______% of companies in the world used a balanced scorecard approach to measure their performance. a. 50 b. 15 c. 25 d. 40

a. 50%

Product development strategy, marketing strategy, and human resources strategy are examples of ______ strategy. a. functional-area b. corporate c. business d. operating

a. functional-area Why not: c. business Reason: Business strategy is concerned with building a competitive advantage. d. operating Reason: Recall that operating strategies concern the relatively narrow strategic initiatives and approaches for managing key operating units, such as plants and distribution centers.

Which of the following is not a desirable characteristic of an effective board of directors? a. The board refrains from challenging the CEO's decisions out of respect for his or her authority. b. The board considers the merits of important decisions and actions. c. The board confirms that the CEO is acting in the best interest of shareholders. d. The board advises management as needed.

a. The board refrains from challenging the CEO's decisions out of respect for his or her authority.

In most companies--especially larger ones in which operations cut across different products, industries, and geographical areas--crafting strategy is a. a collaborative team effort involving managers at all levels. b. done only by the CEO or owner-entrepreneur. c. performed only by top executives. d. the primary responsibility of the board of directors.

a. a collaborative team effort involving managers at all levels.

In most companies--especially larger ones in which operations cut across different products, industries, and geographical areas--crafting strategy is a. a collaborative team effort involving managers at all levels. b. performed only by top executives. c. done only by the CEO or owner-entrepreneur. d. the primary responsibility of the board of directors.

a. a collaborative team effort involving managers at all levels.

Select all that apply When setting objectives, a company should include performance targets for which of the following? a. departments b. product lines c. macro-environment forces d. individual work units

a. departments b. product lines & d. individual work units

Select all that apply When setting objectives, a company should include performance targets for which of the following? a. departments b. macro-environment forces c. individual work units d. product lines

a. departments c. individual work units & d. product lines

A company's ______ objectives communicate management's targets for revenues, profits or investment returns, whereas ______ objectives are related to a company's competitive strength and market position. a. financial; strategic b. strategic; financial c. short-term; long-term d. results-oriented; strategic-oriented

a. financial; strategic

Which of the following requires the most time and effort for strategic managers? a. implementing and executing the strategy b. crafting the strategy c. monitoring and evaluating the strategy d. developing a strategic vision, mission, and values

a. implementing and executing the strategy Notes Why Not: d. developing a strategic vision, mission, and values Reason: The implementation is demanding and an ongoing effort.

Select all that apply Which of the following statements are true of a company's functional-area strategies? a. They are at the lowest level of the strategy-making hierarchy. b. They are focused on particular functions or processes within a business. c. The strategies of functional units should be compatible and mutually reinforcing rather than having separate, narrow purposes. d. Responsibility for them is delegated to the heads of the respective functions.

b. They are focused on particular functions or processes within a business. c. The strategies of functional units should be compatible and mutually reinforcing rather than having separate, narrow purposes. & d. Responsibility for them is delegated to the heads of the respective functions. Why not A: a. They are at the lowest level of the strategy-making hierarchy. Operational strategies lie below functional area strategies.

In most companies--especially larger ones in which operations cut across different products, industries, and geographical areas--crafting strategy is a. done only by the CEO or owner-entrepreneur. b. a collaborative team effort involving managers at all levels. c. performed only by top executives. d. the primary responsibility of the board of directors.

b. a collaborative team effort involving managers at all levels.

A company's ______ objectives communicate management's targets for revenues, profits or investment returns, whereas ______ objectives are related to a company's competitive strength and market position. a. results-oriented; strategic-oriented b. financial; strategic c. short-term; long-term d. strategic; financial

b. financial; strategic

Business strategy, as a level of the company's strategy-making process, is a. concerned with the actions related to particular functions or processes within a business. b. the strategic initiatives and approaches for managing key operating units and specific operating activities. c. focused on improving the competitive strength of a single business unit or non-diversified business. d. the overall company-wide game plan for managing a set of businesses.

c. focused on improving the competitive strength of a single business unit or non-diversified business. Notes: Why not: a. concerned with the actions related to particular functions or processes within a business. Reason: Recall that this is more indicative of functional-area strategies than business strategies. b. the strategic initiatives and approaches for managing key operating units and specific operating activities. Reason: Recall that this is a company's operating strategy rather than the business strategy.

Product development strategy, marketing strategy, and human resources strategy are examples of ______ strategy. a. corporate b. operating c. functional-area d. business

c. functional-area Why not: b. operating Reason: Recall that operating strategies concern the relatively narrow strategic initiatives and approaches for managing key operating units, such as plants and distribution centers. d. business Reason: Business strategy is concerned with building a competitive advantage.

A strategic objective should be both concrete and measurable in order to be a valuable management tool. Which of the following is the best example of an objective that is a valuable management tool? a. maximize profits in the near future b. reduce costs c. increase sales by 5% over the next fiscal year d. increase sales

c. increase sales by 5% over the next fiscal year

As a level in the strategy-making hierarchy, corporate strategy a. is developed by functional unit managers and operating managers. b. is a collection of strategic initiatives and actions devised by managers up and down the hierarchy. c. is a broad plan for managing all businesses in a multibusiness company. d. is focused on achieving certain objectives in a single business owned by a multibusiness company.

c. is a broad plan for managing all businesses in a multibusiness company.

Strategic objectives

are related to a company's marketing standing and competitive vitality. The importance of attaining fin

Difference between a strategic vision and a mission statement

SV portrays a company's future business scope "where are we going" MS typically describes its present business and purpose "Who we are, What we do, and Why we are here". MS conveys a company's purpose in language specific enough to give the company its own identity.

A Strategic Vision

Describes "where we are going" the course and direction management has charted and the company's future product-customer-market-technology focus.

In 2015, nearly 50% of global companies used a balanced scorecard approach to measuring strategic and financial performance. Such as

Siemens AG, Wells Fargo Bank, Ann Taylor Stores, Ford Motor Company, Hilton Hotels, and over 30 colleges and universities.

The model illustrates the need for management to evaluate a number of external and internal factors in deciding upon a strategic direction, appropriate objectives, and approaches to crafting and executing strategy. Management's decisions that are made in the strategic management process must be shaped by the prevailing economic conditions and competitive environment and the company's own internal resources and competitive capabilities. These strategy-shaping conditions will be the focus of CH3 & 4.

Stage 1/ Step 1: Developing a strategic vision, mission, and values. Stage 2/ Step 2: Setting Objectives Stage 3/ Step 3: Crafting a strategy to achieve the objectives and move the company along the intended path. Stage 4/ Step 4: Executing the Strategy. Stage 5/ Step 5: Evaluating and analyzing the external environment and the company's internal situation to identify corrective adjustments.

What is a balanced scorecard

a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.

When a manager has evidence that a strategy is failing to achieve the company's objectives, the manager should: a. adjust the strategy as needed in the first four stages of the strategy process. b. do nothing; wait and see if things get better. c. completely reverse course and develop an entirely new strategy. d. invest more money in the chosen strategy to ensure it is successful.

a. adjust the strategy as needed in the first four stages of the strategy process.

"We will become the world's leader in catnip-filled mice, offering fun, safe, and appealing recreation to cats everywhere" is an example of a a. strategic vision indicating where the company wants to be in the future. b. mission statement describing what business the company is in. c. tag line for an advertising campaign.

a. strategic vision indicating where the company wants to be in the future.

A company's strategic vision communicates which of the following to stakeholders? a. "What is our current mission?" b. "Where are we going?" c. "How profitable is our strategy?" d. "What is our current strategic plan?"

b. "Where are we going?"

Ideally, objectives related to company strategy should NOT a. be measurable. b. be easy to achieve. c. be quantifiable. d. be tied to a specific deadline.

b. be easy to achieve. Note: Well stated objectives are quantifiable or measurable, and contain a deadline for achievement.

Which of the following is NOT a characteristic of a "good" vision statement? a. distinctive b. generalized to the industry c. clearly indicates the company's focus d. specific to the company

b. generalized to the industry

"Who we are, what we do, and why we are here" is usually conveyed in a company's ______ whereas "where we are going" is conveyed in a ______. a. strategic vision; set of performance objectives b. mission statement; strategic vision c. statement of core values; strategic vision d. strategic vision; mission statement

b. mission statement; strategic vision

A ______ communicates top management's ideas about the direction of the company and its priorities for the future. a. statement of core values b. strategic vision c. mission statement d. strategic plan

b. strategic vision

A company's ______ objectives communicate management's targets for revenues, profits or investment returns, whereas ______ objectives are related to a company's competitive strength and market position. a. results-oriented; strategic-oriented b. short-term; long-term c. financial; strategic d. strategic; financial

c. financial; strategic

Consequently, utilizing a performance measurement system that strikes a balance between financial objectives and strategic objectives is optimal. Just tracking a company's financial performance overlooks:

the fact that what ultimately enables a company to deliver better financial results is the achievement of strategic objectives that improve its competitiveness and market strength. Representative examples of financial and strategic objectives that companies often include in a balanced scorecard approach to measuring their performance are displayed in table 2.4.

Many vision statements on company websites and in annual reports are

vague and unrevealing, saying very little about the company's future product-market-customer-technology focus. Some could apply to almost any company in any industry. Many read like a public relations statement- lofty words that someone came up with because it is fashionable for companies to have an official vision statement. Vision statements can be used properly or improperly, either clearly conveying a company's strategic course or not

A well thought out, forcefully communicated strategic vision pays off in several respects such as:

Benefits of a well though out and well communicated strategic vision: 1. It crystallizes senior executives' own about the firm's long-term direction. 2. It reduces the risk of rudderless decisions making by management at all levels. 3. It is a tool for winning the support of employees to help make the vision a reality. 4. It provides a beacon for lower- level managers in forming departmental missions. 5. It helps an organization prepare for the future.

Well conceived visions are

Distinctive and Specific to a particular organization; they avoid generic, feel-good statements such as "We will become a global leader and the first choice of customers in every market we choose to serve" which could apply to any of hundreds of organizations. And they are not the product of committee charged with coming up with an innocuous but well-meaning one-sentence vision that wins consensus approval from various stakeholders. Nicely worded vision statements with no specifics about the company's product-market-customer-technology focus fall well short of what it takes for a vision to measure up. For a strategic vision to function as a valuable managerial tool, it must provide understanding of what management wants its business to look like and provide managers with a reference point in making strategic decisions. It must say something definitive about how the company's leaders intend to position the company beyond where it is today.

Keuirg Dr. Pepper A leading producer and distributor of hot and cold beverages to satisfy every consumer need, anytime and any where.

Effective Elements: Focused, Desirable, Easy to communicate In-Effective Elements: Not Graphic, Not distinctive

Whole Foods Vision Statement: Whole Foods Market is a dynamic leader in the quality food business. We are a mission driven company that aims to set the standards of excellence for food retailers. We are building a business in which high standards permeate all aspects of our company. Quality is a state of mind at Whole Foods Market.

Effective Elements: Forward Looking, Graphic, Focused, and Desirable. Ineffective Elements: Long and Not Memorable!

Nike: Nike, Inc., Fosters a culture of invention. We create products, services, and experiences for today's athlete* while solving problems for the next generation

Effective Elements: Forward-Looking, Flexible In-Effective Elements: Vague, Not Focused, Too Reliant on Superlatives

Concrete, measurable objectives are managerially valuable for three reasons:

1. They focus organizational attention and align actions throughout the organization. 2. They serve as yardsticks for tracking a company's performance and progress. 3. They motivate employees to expend greater effort and perform at a higher level.

Expressing the Essence of the Vision in a Slogan: 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 # of organizations have summed up their vision in a brief phrase. Disney for its five business groups (theme parks, movie studios, television channels, consumer products, and interactive media entertainment): "Create Happiness by Providing the Finest in Entertainment for People of All Ages, Everywhere." Mayo Clinic: "The best care to every patient every day" Greenpeace: "To halt environmental abuse and promote environmental solutions" ****Creating a short slogan to illuminate an organization's direction and then 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. An effectively communicated vision is a valuable management tool for enlisting the commitment of company personnel to engage in actions that move the company in the intended direction.

Table 2.4: The balanced scorecard approach to performance measurement. Financial Objectives:

An x percent increase in annual revenues. annual increases in earnings per share of x percent An x percent return on capital employed (ROCE) or shareholder investment (ROE). Bond and credit ratings of x. Internal cash flows of x to fund new capital investment.

In most companies, crafting strategy is a collaborative team effort that includes managers in various positions and at various organizational levels.

Crafting strategy is rarely something only high level executives do.

Caterpillar: Our vision is a world in which all people's basic needs - such as shelter, clean water, sanitation, food and reliable power - are fulfilled in an environmentally sustainable way and a company that improves the quality of the environment and the communities where we live and work.

Effective Elements: Graphic, Desirable In-Effective Elements: Too Broad, Too Reliant on Superlatives, Non-Distinctive

True or false: The purpose of setting objectives is to convert the company's strategic vision into a broad road map for the future.

False: It is not to set BROAD BUT SPECIFIC

The core concept: A company's values are the beliefs, traits, and behavioral norms that company personnel is expected to display in conducting the company's business and pursuing its strategic vision and mission.

Most companies normally have four (4) to eight (8) core values. Samsung has 5 core values that are linked to its philosophy of devoting its talent and technology to create superior products and services that contribute to a better global society. 1. Giving people opportunities to reach their full potential. 2. developing the best products and services on the market. 3. Embracing change. 4. Operating in an ethical way 5. Dedication to social and environmental responsibility.

Core Concept: Objectives, Strategic Objectives, and Strategic Intent

Objectives: are an organization's performance targets (the results management wants to achieve. Strategic Objectives: Set of performance targets high enough to stretch an organization to perform at its full potential and deliver the best possible results. Strategic Intent: When a company exhibits strategic intent, it relentlessly pursues and ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.

The first three stages of the strategic management process make up a strategic plan. A strategic plan maps out where a company is headed, establishes strategic and financial targets, and outlines the competitive moves and approaches to be used in achieving the desired business results.

Stage 1: Developing a strategic vision, mission, and values. Stage 2: Setting Objectives Stage 3: Crafting a strategy to achieve the objectives and move the company along the intended path.

The evaluation stage of the strategic management process shown in the stages. Also, allows for a change in the company's vision, but this should be necessary only when it becomes evident to management that the industry has changed in a significant way that renders the vision obsolete. Such occasions can be referred to as

Strategic Inflection Points. When a company reaches a strategic inflection point, management has tough decisions to make about the company's direction because abandoning an established course carries considerable risk. However, responding to unfolding changes in the marketplace in a timely fashion lessens a company's chances of becoming trapped in a stagnant or declining business or letting attractive new growth opportunities slip away.

Discussion on how weak governance at VW contributed to the 2015 emissions cheating scandal, which cost the company billions of dollars and trust of its stakeholders.

The "Defeat Devices" on at least 11 Million vehicles with diesel engines to falsly pass emissions test while actually emitting pollutants up to 40x above what is allowed in the US. Management must have been involved in approving the use of cheating devices, but VS supervisory board has been unwilling to accept any responsibility. Some board members even questioned whether it was the board's responsibility to be aware of such problems, stating "matters of technical expertise were not for us" and "the scandal has nothing, not one iota, to do with the advisory board". Yet governing boards do have a responsibility to be well informed, to provide oversight, and to become involved in key decisions and actions. This is the third time in the past 20 years that VW has been embroiled in scandal! Every corporation should have a strong, independent board of directions that 1. is well informed about the company's performance. 2. Guides and judges the CEO and other top executives 3. has the courage to curb management actions it believes are inappropriate or unduly risky 4. certifies to shareholders that the CEO is doing what the board expects. 5. Provides insight and advice to management 6. Is intensely involved in debating the pros and cons of key decisions and actions. Board of directors that lack the backbone to challenge a strong-willed or "imperial" CEO or that rubber stamp most anything the CEO recommends without probing inquiry and debate abandon their duty to represent and protect shareholder interests.

A company's overall strategy is therefore

a collection of strategic initiatives and actions devised by managers up and down the whole organizational hierarchy. Ideally, the pieces of a company's strategy up and down the strategy hierarchy should be cohesive and mutually reinforcing, fitting together like a jigsaw puzzle.

Which of the following most accurately describes the distinction between a strategic vision and a mission statement? a. A strategic vision portrays the company's future accomplishments; a mission statement describes the company's present purpose. b. A strategic vision is very specific; a mission statement is very general. c. A strategic vision describes the company's present business and purpose; a mission statement portrays a company's future business scope. d. A strategic vision is industry-wide; a mission statement applies to the specific company.

a. A strategic vision portrays the company's future accomplishments; a mission statement describes the company's present purpose.

Select all that apply Which of the following are recommendations for making a company's strategic vision effective in moving the company in the intended direction? a. The vision statement should be distributed organization-wide. b. The "Where we are going and why" of the strategic vision should be put in writing. c. The strategic vision should be considered a legal formality, not as a motivational document. d. Company executives should personally explain the vision to as many people as possible.

a. The vision statement should be distributed organization-wide. b. The "Where we are going and why" of the strategic vision should be put in writing. & d. Company executives should personally explain the vision to as many people as possible.

Select all that apply Which of the following are problems with some company strategic vision statements? a. They are vague and unrevealing. b. They are general and could apply to most any company in any industry. c. They force the company to commit to a specific course of action. d. They don't specify the company's future focus.

a. They are vague and unrevealing. b. They are general and could apply to most any company in any industry. & d. They don't specify the company's future focus.

Select all that apply For a strategic vision to function as a valuable managerial tool, it must a. be useful to managers in making strategic decisions. b. clearly communicate what management wants the business to look like. c. be explicit about the company's position in the future. d. describe the nature of the business as it currently exists.

a. be useful to managers in making strategic decisions. b. clearly communicate what management wants the business to look like. & c. be explicit about the company's position in the future.

Which of the following is the first step of the strategy-making process? a. Crafting a strategy. b. Developing a vision, mission, and set of values. c. Setting objectives. d. Implementing the chosen strategy.

b. Developing a vision, mission, and set of values.

Changing a company's strategic vision should be necessary only when a. profits are declining. b. a company has reached a strategic inflection point. c. revenues are decreasing. d. the company is ready to release a new product to the market.

b. a company has reached a strategic inflection point.

In a single-business company, business strategy consists of both a. functional area and operating strategies. b. corporate and operating strategies. c. nondiversified and functional-area strategies. d. corporate and business strategies.

b. corporate and operating strategies. Why Not: a.functional area and operating strategies. Reason: The functional-area strategies and operating strategies exist at a different level from the business strategy. c. non-diversified and functional-area strategies. Reason: The functional-area strategies exist at a different level from the business strategy.

Crafting strategy a. is almost always something that only high-level executives do. b. is often a process that includes managers up and down the whole organizational hierarchy. c. is rarely delegated to managers of specific work units. d. is not generally a collaborative team effort.

b. is often a process that includes managers up and down the whole organizational hierarchy.

Attaining financial objectives is important because a. they indicate the company's future business prospects. b. they are related to market standing and competitive vitality. c. it ensures the company's viability over the long term. d. they are more important than strategic objectives.

b. it ensures the company's viability over the long term. Note: Strategic objectives are related to a company's marketing standing and competitive vitality. Why not A: Future Business prospects exist only if the company itself is able to stay in business. Why not B: B. they are related to market standing and competitive vitality. Reason: Strategic objectives are related to a company's marketing standing and competitive vitality.

"Rubber stamping" a CEO's recommendations a. is generally a reasonable expectation of the board of directors. b. suggests that the board of directors has lost sight of the importance of protecting shareholders. c. is necessary to avoid illegal corporate governance behavior. d. avoids risk and signals to shareholders that the board has total confidence in the CEO.

b. suggests that the board of directors has lost sight of the importance of protecting shareholders. why not: d. avoids risk and signals to shareholders that the board has total confidence in the CEO. Reason: Failing to critically review the recommendations increases risk because it demonstrates a lack of oversight.

Select all that apply Which of the following might appropriately be included in a company's statement of values? a. a set of legal rules that employees must follow. b. the expectation that employees will conduct business in an ethical manner c. an emphasis on teamwork throughout the company. d. a passion for excellence in customer service.

b. the expectation that employees will conduct business in an ethical manner c. an emphasis on teamwork throughout the company. & d. a passion for excellence in customer service.

Select all that apply Company managers use stretch goals for which of the following purposes? a. to maintain the company's status b. to get the company to reach its full potential c. to spur the company to better financial performance d. to push the company to be more inventive

b. to get the company to reach its full potential c. to spur the company to better financial performance & d. to push the company to be more inventive

Setting objectives as part of company's strategy development is generally a(n) a. work-unit procedure. b. top-down process. c. department-level consensus. d. democratic operation.

b. top-down process.

Ideally, objectives related to company strategy should NOT a. be quantifiable. b. be measurable. c. be easy to achieve. d. be tied to a specific deadline.

c. be easy to achieve.

Developing a strategic vision, mission statement, and set of core values occurs at what stage of the strategy-making process? a. after objectives have been set b. at the same time that the strategy is executed. c. before setting objectives d. after the strategy has been crafted

c. before setting objectives

In a diversified, multibusiness company, the questions of "which new markets should we enter" and "how to best enter new markets" are best addressed by ______ strategy. a. functional area b. operating c. corporate d. business

c. corporate

In a diversified, multi-business company, the questions of "which new markets should we enter" and "how to best enter new markets" are best addressed by ______ strategy. a. operating b. functional area c. corporate d. business

c. corporate Note: Why not D: This would be true for a single business company or a single business in a diversified, multi-business company.

Multiple Choice Question In a single-business company, business strategy consists of both a. functional area and operating strategies. b. corporate and operating strategies. c. corporate and business strategies. d. nondiversified and functional-area strategies

c. corporate and business strategies.

As a level in the strategy-making hierarchy, corporate strategy a. is focused on achieving certain objectives in a single business owned by a multibusiness company. b. is developed by functional unit managers and operating managers. c. is a broad plan for managing all businesses in a multibusiness company. d. is a collection of strategic initiatives and actions devised by managers up and down the hierarchy.

c. is a broad plan for managing all businesses in a multi business company. Why Not A or D: A. is focused on achieving certain objectives in a single business owned by a multi business company. Reason: A corporate strategy takes into account all the company's businesses. D. is a collection of strategic initiatives and actions devised by managers up and down the hierarchy. Reason: Recall that this is the company's overall strategy, not the corporate strategy.

A company's board of directors a. should take a hands-off role with respect to the overall strategic management process. b. is responsible only for oversight of strategy execution and not strategy formulation. c. is responsible for ensuring that the strategic management process benefits shareholders or stakeholders. d. has the lead responsibility for crafting and executing company strategy.

c. is responsible for ensuring that the strategic management process benefits shareholders or stakeholders.

Proficient strategy execution a. indicates that corrective adjustments will rarely need to be made. b. is almost always achieved very slowly. c. is the result of an organization learning from its mistakes. d. is almost always achieved quickly.

c. is the result of an organization learning from its mistakes. Why not: a. indicates that corrective adjustments will rarely need to be made. Reason: Recall that the identification of areas needing corrective adjustments is a normal part of the fifth stage of the strategy management process. b. is almost always achieved very slowly. Reason: It isn't usually very slow nor very quick, either. d. is almost always achieved quickly. Reason: It isn't usually very slow nor very quick, either.

As a level of a company's strategy-making hierarchy, ______ strategy focuses on the day-to-day activities of key operating units, such as factories and distribution centers. a. corporate b. functional c. operating d. business

c. operating

A bland or uninspiring strategic vision statement falls short because it a. is short on specifics about where the company is headed in the future. b. provides no unique company identity and could apply to other companies. c. will not motivate employees or give shareholders confidence. d. is so all-inclusive that the company could head in almost any direction.

c. will not motivate employees or give shareholders confidence. Notes: Key word is "uninspiring" - the vision will not provide motivation or confidence.

Which of the following statements correctly describes a strategic plan? a. It is a plan for how to imitate and improve upon competitor's strategic moves. b. It includes all five steps of the strategy-making, strategy-executing process. c. It is a set of detailed, measurable objectives for the company. d. It provides a road map for the company to meet its strategic and financial objectives.

d. It provides a road map for the company to meet its strategic and financial objectives.

It is NOT desirable for a strategic vision to a. be explained by company executives to as many people as possible. b. be communicated to all organizational members. c. be put in writing. d. be communicated only within the ranks of top-management

d. be communicated only within the ranks of top-management

Strategic outcomes are

leading indicators of a company's future financial performance and business prospects. The accomplishment of strategic objectives signals the company is well positioned to sustain or improve its performance. For instance, if a co. is achieving ambitious strategic objectives, then there's reason to expect that its future financial performance will be better than its current or past performance. If a company begins to lose competitive strength and fails to achieve important strategic objectives, then its ability to maintain its present profitability is highly suspect.

What do objectives reflect

management's aspirations for company performance in light of the industry's prevailing economic and competitive conditions and the company's internal capabilities. Well stated objectives are quantifiable or measurable, and contain a deadline for achievement.

In Single Business Companies, the corporate and business level of the strategy-making hierarchy

merge into a single level business strategy because the strategy for the entire enterprise involves only one distinct business. So a single business company has three levels of strategy: 1. Business Strategy 2. Functional Area Strategies & 3. Operating Strategies

Financial Performance Objectives or Financial Objectives

relate to the financial performance targets management has established for the organization to achieve.

Stage 2: Setting Objectives What is the managerial purpose of setting objectives

to convert the strategic vision into specific performance targets.

As a step in the strategy-formulating, strategy-executing process, setting objectives: a. is the execution aspect of strategy. b. involves creating a vision, mission, and core values. c. helps the company measure and track performance and progress. d. is generally not necessary.

c. helps the company measure and track performance and progress.

Select all that apply Evaluating company performance and making corrective adjustments a. helps management determine whether to maintain or alter the company's vision, objectives, and strategy. b. is necessary only when the company's strategic vision changes significantly. c. is important in understanding how well the strategy is being executed. d. is an ongoing process.

a. helps management determine whether to maintain or alter the company's vision, objectives, and strategy. c. is important in understanding how well strategy is being executed. & d. is an ongoing process.

Select all that apply Which of the following are key aspects to managing the strategy execution process? a. staffing the organization to provide the needed expertise b. providing employees rewards not linked directly to performance objectives c. presenting the proper internal leadership d. creating a conducive company culture

a. staffing the organization to provide the needed expertise c. presenting the proper internal leadership & d. creating a conducive company culture

Multiple Choice Question Hiring employees, determining incentives for achieving objectives, maintaining a productive work environment, and installing information and operating systems are all part of which stage of strategic management? a. implementing and executing the chosen strategy b. crafting strategy to achieve objectives and move the company along the intended path c. evaluating performance and initiating corrective adjustments d. setting objectives for measuring company performance

a. implementing and executing the chosen strategy Why not: b. crafting strategy to achieve objectives and move the company along the intended path Reason: Recall that staffing the organization, etc., are part of stage 4: implementing and executing the chosen strategy.

Crafting strategy a. is often a process that includes managers up and down the whole organizational hierarchy. b. is almost always something that only high-level executives do. c. is not generally a collaborative team effort. d. is rarely delegated to managers of specific work units.

a. is often a process that includes managers up and down the whole organizational hierarchy.

Mike is a front-line manager in a distribution center for a large company. Which level of the strategy-making hierarchy would most likely be delegated to Mike? a. operating b. business c. functional area d. corporate

a. operating Why Not: C. Functional Area Reason: Recall that lead responsibility for functional strategies within a business is normally delegated to the heads of respective functions. Mike is not a head.

Attaining financial objectives is important because a. they indicate company's future business prospects. b. they are related to market standing and competitive vitality. c. it ensures the company's viability over the long term. d. they are more important than strategic objectives.

a. they indicate company's future business prospects.

A company's ______ should be measurable and time-specific. a. mission statement b. objectives c. sales pitch d. strategic vision

b. objectives

Select all that apply Which of the following are key corporate governance responsibilities of boards of directors? a. approving week-to-week planning by middle management b. offering judgments on the strategic decisions made by managers c. monitoring the financial accounting and reporting activities of the firm d. evaluating the strategic performance of top executives

b. offering judgments on the strategic decisions made by managers c. monitoring the financial accounting and reporting activities of the firm & d. evaluating the strategic performance of top executives

Lagging Indicators

indicators that seem to lag behind changes in overall business activity

Select all that apply A company can show strategic intent in which of the following ways? a. by channeling its competitive actions in seeking a strategic objective b. by focusing all of its resources on achieving a strategic objective c. by considering the pros and cons of pursuing a specific strategic objective d. by pursuing an ambitious strategic objective relentlessly

a. by channeling its competitive actions in seeking a strategic objective b. by focusing all of its resources on achieving a strategic objective & d. by pursuing an ambitious strategic objective relentlessly

The Strategy Formulation, Strategy Execution Process: The managerial process of crafting and executing a company's strategy is an ongoing, a continuous process consisting of five integrated stages:

1. Developing a Strategic Vision: That charts the company's long-term direction, a mission statement that describes the company's business, and a set of core values to guide the pursuit of the strategic vision and mission. 2. Setting Objectives: for measuring the company's performance and tracking its progress in moving in the intended long-term direction. 3. Crafting a Strategy: for advancing the company along the path to management's envisioned future and achieving its performance objectives. 4. Implementing and Executing the Chosen Strategy: efficiently and effectively. 5. Evaluating and Analyzing the External Environment and the Company's Internal Situation and Performance: to Identify corrective adjustments that are needed in the company's long-term direction, objectives, strategy, or approach to strategy execution.

Factors Shaping Decisions in the Strategy Formulation, Strategy Execution Process: External Considerations (External Factors)

1. Does sticking with the company's present strategic course present attractive opportunities for growth and profitability? 2.What Kind of competitive forces are industry members facing, and are they acting to enhance or weaken the company's prospects for growth and profitability? 3. What kind of competitive forces are industry members facing, and are they acting to enhance or weaken the company's prospects for growth and profitability? 4. What factors are driving industry change, and what impact on the company's prospects will they have? 5. How are industry rivals positioned, and what strategic moves are they likely to make next? 6. What are the key factors of future competitive success, and does the industry offer good prospects for attractive profits for companies possessing those capabilities?

Factors Shaping Decisions in the Strategy Formulation, Strategy Execution Process: Internal Considerations (Internal Factors)

1. Does the company have an appealing customer value proposition? 2. What are the company's competitively important resources and capabilities, and are they potent enough to produce a sustainable competitive advantage? 3. Does the company have sufficient business and competitive strength to seize market opportunities and nullify external threats? 4. Are the company's costs competitive with those of key rivals? 5. Is the company competitively strong or weaker than key rivals?

Some Characteristics of Effectively Worded Vision Statements

1. Graphic: Paints a picture of the kind of company that management is trying to create and the market position(s) the company is striving to stake out. 2. Directional: is forward-looking - describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future. 3. Focused: Is specific enough to provide managers with guidance in making decisions and allocating resources. 4. Flexible: Is not so focused that it makes it difficult for management to adjust to changing circumstances in markets, customer preferences, or technology. 5. Feasible: Is within the realm of what the company can reasonably expect to achieve. 6. Desirable: Indicates why the directional path makes good business sense. 7. Easy to Communicate: Is explainable in 5 to 10 minutes and, ideally, can be reduced to a simple, memorable "slogan" (like Henry Ford's famous vision of "a car in every garage").

What are the most common shortcomings in a company vision statement

1. Vague or Incomplete: Short on specifics about where the company is headed or what the company is doing to prepare for the future. 2. Not forward-looking: Does not indicate whether or how management intends to alter the company's current product, market, customer, technology focus. 3. Too broad: So all-inclusive that the company could head in almost any direction, pursue most any opportunity, or enter most any business. 4. Bland or Uninspiring: Lacks the power to motivate company personnel or inspire shareholder confidence about the company's direction. 5. Not Distinctive: Provides no unique company identity; could apply to companies in any of several industries (Including rivals operating in the same market arena). 6. Too Reliant on Superlatives: does not say anything specific about the company's strategic course beyond the pursuit of such distinctions as being a recognized leader, a global or worldwide leader, or the first choice of customers.

Corp Governance: The Role of the Board of Directors in the Strategy Formulation, Strategy Execution Process

Although senior managers have lead responsibility for crafting and executing a company's strategy, it is the duty of the board of directors to exercise strong oversight and see that the five tasks of strategic management are done in a manner that benefits shareholders (in the case of investor owned enterprises) or stakeholders (in the case of not for profit organizations). In watching over management's strategy formulation, strategy execution actions, a company's board of directions has four important corporate governance obligations to fulfill: 1. Oversee the company's financial accounting and financial reporting practices. While top management, particularly the company's CEO and CFO is primarily responsible for seeing that the company's financial statements accurately report the results of the company's operations, board members have a fiduciary duty to protect shareholders by exercising oversight of the company's financial practices. In addition, corporate boards must ensure that generally acceptable accounting principles (GAAP) are properly used in preparing the company's financial statements and determine whether proper financial controls are in place to prevent fraud and misuse of funds. Virtually all boards of directors monitor the financial reporting activities by appointing an audit committee, always composed entirely of outside directions (inside directors hold management positions in the company and either directly or indirectly report to the CEO). The members of the audit committee have lead responsibility for overseeing the decisions of the company's financial officers and consulting with both internal and external auditors to ensure that financial reports are accurate and adequate financial controls are in place. 2. Diligently critique and oversee the company's direction, strategy, and business approaches. Even though board members have a legal obligation to warrant the accuracy of the company's financial reports, directors must set aside time to guide management in choosing a strategic direction and to make independent judgments about the validity and wisdom of management's proposed strategic actions. Many boards have found that meeting agendas become consumed by compliance matters and little time is left to discuss matters of strategic importance. The board of directors and management at Philips Electronics hold annual two to three day retreats devoted to evaluating the company's long term direction and various strategic proposals. The company's exit from the semiconductor business and its increased focus on medical technology and home health care resulted from management - board discussion during such retreats. 3. Evaluate the caliber of senior executives' strategy formulation and strategy execution skills. The board is always responsible for determing whether the current CEO is doing a good job of strategic leadership and whether senior managment is actively creating a pool of potential successors to the CEO and other top executives. Evaluation of senior executives' strategy formulation and strategy execution skills enchanced when outside directors go into the field to personally evaluate how well the strategy is being executed. Independent board members at GE visit operating executives at each major business unit once per year to assess the company's talent pool and stay abreast of emerging strategic and operating issues affecting the company's divisions. Home Depot board members visit a store once per quarter to determine the health of the company's operations. 4. Institute a compensation plan for top executives that reward them for actions and results that serve shareholder interest. A basic principle of corporate governance is that the owners of a corporation delegate operating authority and managerial control to top management in return for compensation. In their role as an agent of shareholders, top executives have a clear and unequivocal duty to make decisions and operate the company in accord with shareholders interests (but this does not mean disregarding the interests of other stakeholders, particularly those of employees, with whom they also have an agency relationship). Most boards of directors ahve a compensation committee, composed entirely of directors from outside the company, to develop a salary and incentive compensation plan that rewards senior executives for boosting the company's long term performance and growing the economic value of the enterprise on behalf of shareholders; the compensation committee's recommendations are presented to the full board for approval. During the past 10-15 years. many boards of directors have done a poor job of ensuring that executive salary increases, bonuses, and stock option awards are tied tightly to performance measures that are truly in the long term interest of shareholders. Rather, compensation packages at many companies have rewarded executives for short term performance improvements - most notably - achieving quarterly and annual earnings targets and boosting the stock price by specified percentages. This has had the perverse effect of causing company managers to become preoccupied with actions to improve a company's near term performance, even if excessively risky and damaging to long term company performance. As a consequence, the need to overhaul and reform executive compensation has become a hot topic in both public circles and corporate boardrooms.

Management must be alert to changes in the marketplace that call for an alteration of its competitive approach or revisions to its business model. Embrace the risks of uncertainty and the discomfort that naturally accompanies such risks.

Bold strategies involve making difficult choices and placing bets on the future. Good strategic planning is not about eliminating risks, but increasing the odds of success. In sorting through the possibilities of what the company should and should not do, managers may conclude some opportunities are unrealistic or not sufficiently attractive to pursue. However, innovative strategy making that results in a powerful customer value proposition or pushes the company into new markets will likely require the development of new resources and capabilities and force the company outside its comfort zone. Such a quest for continuous improvement in the competitive approach helps generate business model innovations and is essential to sustaining competitive advantage.

The importance of Communicating the Strategic Vision: A strategic Vision has little value to the organization unless it's effectively communicated down the line to lower-level managers and employees. It would be difficult for a vision statement to provide direction to decision-makers and energize employees toward achieving long-term strategic intent unless they know of the vision and observe management's commitment to that vision

Communicating the vision to organization members nearly always means putting "where we are going and why" in writing, distributing the statement organization-wide, and having executives personally explain the vision and its rationale to as many people as feasible. Ideally, executives should present their vision for the company in a manner that reaches out and grabs people's attention. An engaging and convincing strategic vision has enormous motivational value - for the same reason that a stonemason is inspired by building a great cathedral for the ages. Therefore, an executive's ability to paint a convincing and inspiring picture of a company's journey to a future destination is an important element of effective strategic leadership.

Operating Strategies

Concern the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales. Operating strategies are limited in scope but add further detail to functional area strategies and the overall business strategy. Lead responsibility for operating strategies is usually delegated to front line managers, subject to review and approval by higher ranking managers.

A company's Strategy Making Hierarchy Corporate Strategy Business Strategy Functional Area Strategies Operating Strategies

Corporate Strategy: Orchestrated by the CEO & other Senior executives. * The overall company-wide game plan for managing a set of businesses ^ Two Way Influence ^ Business Strategy: Orchestrated by the CEO and senior executives of a business, often with advice and input from the heads of functional area activities within the business and other key people. * How to strengthen market position and gain competitive advantage ****(in the case of a single business company these two (corporate and business strategy) levels merge into one level business strategy that is orchestrated by the company's CEO and other top Executives)**** ^ Two Way Influence ^ Functional- Area Strategies: Orchestrated by the heads of major functional activities within a business, often in collaboration with other key people. * Add relevant detail to the hows of overall business strategy. * Provide a game plan for managing a particular activity in ways that support the overall business strategy. ^ Two Way Influence ^ Operating Strategies: Orchestrated by brand managers; the operating managers of plans, distribution centers, and geographic units, and the managers of strategically important activities such as advertising and website operations, often in collaboration with other key people. * Add detail and completeness to business and functional strategy. * Provide a game plan for managing specific lower- echelon activities with strategic significance.

Corporate strategy is orchestrated by the CEO and other senior executives and establishes an overall game plan for managing a set of businesses in a diversified, multi-business company.

Corporate strategy addresses the questions of how to capture cross business synergies, what businesses to hold or divest, which new markets to enter, and how to best enter new markets (by acquisition, by creation or a strategic alliance, or though internal development). Corp. Strategy and business diversification are the subject of CH 8 where they are discussed in fuller details.

Set Objective Type What are the two kinds of objectives to set or a company should set?

Financial Performance and Strategic Performance Objectives. Financial Objectives: communicate management's targets for financial performance. Common financial objectives relate to revenue growth, profitability, and return on investment. Strategic Performance Objectives: are related to a company's market standing and competitive vitality. The importance of attaining financial objectives is intuitive. Without adequate profitability and financial strength, a company's long-term health and ultimate survival is jeopardized. Furthermore, subpar earnings and a weak balance sheet alarm shareholders and creditors and put the jobs of senior executives at risk. However, good financial performance, by itself, is not enough.

Select all that apply A well-conceived mission statement should a. establish a unique identity for the company. b. set specific profit objectives. c. identify the company's customers or target market. d. describe the company's products or services.

a. establish a unique identity for the company. c. identify the company's customers or target market. & d. describe the company's products or services.

A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.

Google & Amazon have had the strategic intent of developing drones: Amazon for delivery & Google for delivery and High-Speed Internet Delivery from the skies. Stretch goals have mobilized employees at companies such as Southwest Airlines, 3M, and General Electric to Produce best in industry performance. However, Radical objectives that are not achieved can erode employee confidence and ultimately damage the company performance. Stretch objectives are most likely to produce desired results when the company is building upon strong recent performance and when ample resources are available to support growth aspirations.

Strategy Formulation Involves Managers at All Organizational Levels: In some enterprises, the CEO or owner functions as strategic visionary and chief architect of the strategy, personally deciding what the key elements of the company's strategy will be, although the CEO may seek the advice of key subordinates in fashioning an overall strategy and deciding on important strategic moves.

However, it is a mistake to view strategy making as a top management function The exclusive province of owner entrepreneurs, CEO's, high ranking executives, and board members. The more a company's operations cut across different products, industries, and geographical areas, the more that headquarters executives have little option but to delegate considerable strategy making authority to down the line managers. On the scene managers who oversee specifics operating units are likely to have a more detailed command of the strategic issues and choices for the particular operating unit under their supervision. Knowing the prevailing market and competitive conditions, customer requirements and expectations, and all the other relevant aspects affecting the several strategic options available.

Stage 4: Implementing and Executing the Chosen Strategy

Managing the implementation and execution of strategy is easily the most demanding and time consuming part of the strategic management process. Good strategy execution entails that managers pay careful attention to how key internal business processes are performed and see to it that employees' efforts are directed toward the accomplishment of desired operational outcomes. It is also necessitates an ongoing analysis of the efficiency and effectiveness of a company's internal activities and a managerial awareness of new technological developments that might improve business process. In most situations, managing the strategy execution process includes the following principal aspects: 1. Staffing the organization to provide needed skills and expertise. 2. Allocating ample resources to activities critical to good strategy execution. 3. Ensuring that policies and procedures facilitate rather than impede effective execution. 4. Installing information and operating systems that enable company personnel to perform essential activities. 5. Pushing for continuous improvement in how value chain activities are performed. 6. Trying rewards and incentives directly to the achievement of performance objectives. 7. Creating a company culture and work climate conducive to successful strategy execution. 8. Exerting the internal leadership needed to propel implementation forward.

A company's vision, objectives, strategy, and approach to strategy execution are

NEVER FINAL; managing strategy is an ongoing process, not an every now and then task.. It is not unusual for co to find that one or more aspects of its strategy implementation and execution are not going as well as intended. Proficient strategy execution is always the product of much organizational learning. It is achieved unevenly (coming quickly in some areas and proving nettlesome in others). Successful strategy execution entails vigilantly searching for ways to improve and then making corrective adjustments whenever and wherever it is useful to do so.

Short and Long Term Objectives A company's set of financial and strategic objectives should include both near-term and long-term performance targets.

Short term objectives focus attention on delivering performance improvements in the current period, whereas long term targets force the organization to consider how actions currently under way will affect the company later. Specifically, long term objectives stand as a barrier to an undue focus on short term results by nearsighted management. When trad offs have to be made between achieving long run and short run objectives, long run objectives should take precedence (unless the achievement of one or more short run performance targets has unique importance).

Stage 3: Crafting a Strategy: Explain why the strategic initiatives taken at various organizational levels must be tightly coordinated to achieve company wide performance targets.

Stitching a strategy together entails addressing a series of hows: How to attract and please customers. How to compete against rivals. How to position the company in the marketplace and capitalize on attractive opportunities to grow the business. How best to respond to changing economic and market conditions. How to manage each functional piece of the business. How to achieve the company's performance targets. It also means choosing among the various strategic alternatives and proactively searching for opportunities to do new things or to do existing things in new or better ways.

The stages also illustrate the need for management to evaluate the company's performance on an ongoing basis. Any indication that the company is failing to achieve its objectives calls for corrective adjustments in one of the first four stages of the process.

The company's implementation efforts might have fallen short, and new tactics must be devised to fully exploit the potential of the company's strategy. If management determines that the company's execution efforts are sufficient, it should challenge the assumptions underlying the company's business model and strategy and make alterations to better fit competitive conditions and the company's internal capabilities. If the company's strategic approach to competition is rated as sound, the perhaps management set-overly ambitious targets for the company's performance.

What kinds of objectives to Set: Two very distinct types of performance yardsticks are required:

Those relating to financial performance and those related to strategic performance.

Senior managers must wrestle with the issue of what directional path the company should take and whether its market positioning and future performance prospects could be improved by changing the company's product offerings and/or the markets in which it participates and/or the customers it caters to and/or the technologies it employs.

Top management's views about the company's direction and future product-customer-market-technology focus constitute a strategic vision for the company. A clearly articulated strategic vision communicates management's aspirations to stakeholders about "where we are going" and helps steer the energies of company personnel in a common direction. For instance, the vision of Google's co-founders Larry Page and Sergey Brin "to organize the world's information and make it universally accessible and useful" captured the imagination of Google employees, served as the basis for crafting the company's strategic actions and aided internal efforts to mobilize and direct the company's resources.

Occasionally, companies state that their mission is simply earn a profit: True or False

True and this is misguided. Profit is more correctly an objective and a result of what a company does. Moreover, earning a profit is the obvious intent of every commercial enterprise. Companies like BMW, Netflix, Shell Oil, Procter & Gamble, & CitiGroup are each striving to earn a profit for shareholders, but the fundamentals of their businesses are substantially different when it comes to "who we are and what we do". It is management's answer to "make a profit doing what and for whom?" that reveals the substance of a company's true mission and business purpose.

Table 2.4: The balanced scorecard approach to performance measurement. Strategic Objectives:

Win an x percent market share Achieve customer satisfaction rates of x percent. Achieve a customer retention rate of x percent. Acquire x number of new customers. Introduce x number of new products in the next three years. Reduce product development times to x months. Increase percentage of sales coming from new products to x percent. Improve information systems capabilities to give front-line managers defect information in x minutes. Improve teamwork by increasing the number of projects involving more than one business unit to x.

Companies practice what they preach?

Yes and no. One extreme are companies with window dressing values: The professed values are given lip service by top executives but have little discernible impact on either how company personnel behave or how the company operates. The other Extreme: Companies whose executives are committed to grounding company operations on sound values and principled ways of doing business. Executives at these companies deliberately seek to ingrain the designated core values into the corporate culture - the core values thus become an integral part of the company's DNA and what makes it tick At Such values - driven companies, executives "walk the talk" and company personnel are held accountable for displaying the stated values.

A ______ establishes a company's financial and strategic objectives and provides a set of guidelines for achieving the desired results. a. strategic plan b. strategic vision c. mission statement d. strategic inflection

a. strategic plan

Including the goal of "making a profit" in a company's mission statement a. should not be done because it is unethical for management to publicly communicate a desire to make a profit. b. is important to signal the obvious idea to shareholders that the company intends to be profitable. c. is unnecessary because all firms seek to earn profits, which are the result of more specific actions described in a mission statement. d. is legally required for publicly-traded corporations.

c. is unnecessary because all firms seek to earn profits, which are the result of more specific actions described in a mission statement.

The last stage of the strategy-formulating, strategy-executing process is: a. crafting a strategy b. implementing and executing strategy c. making corrective adjustments d. setting objectives

c. making corrective adjustments reason why it is not B: this occurs after the strategy and objectives are specified, but it not the last state.

If a strategic plan is failing to meet its objectives, but the company's execution is deemed sufficient, management should first: a. set less ambitious objectives. b. start from stage one of the strategy process. c. reconsider the assumptions that were used to formulate the strategic plan. d. pressure employees to improve their implementation efforts.

c. reconsider the assumptions that were used to formulate the strategic plan.

When a company reaches a strategic inflection point a. the company should toss out its old strategy without further analysis. b. a new strategy should be immediately implemented. c.management must weigh the benefits of changing strategy against the risks of changing course. d. the strategy has been deemed a success.

c.management must weigh the benefits of changing strategy against the risks of changing course.

Financial objectives

communicate management's targets for financial performance. Common financial objectives relate to revenue growth, profitability, and return on investment. The importance of attaining financial objectives is intuitive. Without profitability and financial strength, a company's long term health and ultimate survival is jeopardized. Furthermore, subpar earnings and a weak balance sheet alarm shareholders and creditors and put the job of senior executives at risk. However, good financial performance, by itself is not enough/

What are Functional Area Strategies

concern the actions related to particular functions or processes within a business. A company's product development strategy, for example, represents the managerial game plan for creating new products that are in tune with what buyers are looking for. Lead responsibility for functional strategies within a business is normally delegated to the heads of the respective functions, with the general manager of the business having final approval over functional strategies. For the overall business strategy, finance strategy, customer service strategy, product development strategy, and human resources strategy should be compatible and mutually reinforcing rather than each serving its own narrower purpose.

"We will become the best and most-loved company in the U.S." is an example of a poor strategic vision because a. it does not provide a specific time frame. b. it places too strict of a geographical constraint on the company's aspirations. c. it does not contain financial targets. d. it is too broad and generic.

d. it is too broad and generic.

A company's values are a. a statement of how the company intends to pursue its financial obligations to key shareholders. b. a compilation of legal and regulatory guidelines that must be adhered to by all employees to avoid lawsuits and government-imposed fines. c. intended to be separately considered from the company's strategic vision and mission. d. the beliefs and behavioral expectations that guide a company toward achieving its objectives.

d. the beliefs and behavioral expectations that guide a company toward achieving its objectives.

Strategic Vision Development

defining characteristic of a well-conceived strategic vision is what it says about the company's future strategic course "where we are headed and what our future product, customer, market, technology focus will be".

Stage 5: Evaluating Performance and Initiating Corrective Adjustments.

evaluating and analyzing the external enviornment and the company's internal situation and performance to identify needed corrective adjustments is the trigger point for deciding whether to continue or change the company's vision, objectives, business model or strategy, and/or strategy execution methods. So long as the company's direction and strategy seem well matched to industry and competitive conditions and performance targets are being met, company executives may well decide to stay the course. Simply fine-tuning the strategic plan and continuing with efforts to improve strategy execution are sufficient. But whenever a co. encounters disruptive changes in its enviornment questions need to be raised about the appropriateness of its direction and strategy. If a company experiences a downturn in its market position or persistent shortfalls in performance, then company managers are obligated to ferret out the causes (do they relate to an obsolete business model, poor strategy, poor strategy execution, or a combo of all) and take timely corrective action. A company's direction, objectives and business model have to revisited any time external or internal conditions warrant.

The Imperative of Setting Stretch Objectives: One of the best ways to promote outstanding company performance is what?

for managers to deliberately set performance targets high enough to stretch an organization to perform at its full potential. Challenging company personnel to go all out and deliver "stretch" gains in performance pushes an enterprise to be inventive and to exhibit more urgency in improving its financial performance and business position. Stretch objectives spur exceptional performance and help build a firewall against contentment with modest gains in organizational performance.

Example of Company objectives: JetBlue

increase EPS by $0.65-$0.95 in 2020; further develop fare options, a co-branded credit card, and the Mint franchise; commit to achieving total cost savings of $250 to $300 million by 2020; kickoff multi-year cabin restyling program; convert all core A321 aircraft from 190 to 200 seats; target growth in key cities like Boston, plan to grow 150 flights a day to 200 over the coming years; grow toward becoming the carrier of choice in S. Florida; organically grow west coast presence by expanding Mint offering to more transcontinental routes; optimize fare mix to increase overall average fare.

What is Business Strategy

is primarily concerned with building competitive advantage in a single business unit of a diversified company or strengthening the market position of a non-diversified single business company. Business strategy is also the responsibility of the CEO and other senior executives, but key business unit heads may also be influential, especially in strategic decisions affecting the businesses they lead.

What is a Corporate Strategy

it establishes an overall game plan for managing a set of businesses in a diversified, multi business company.

What is a Business Strategy

it is primarily concerned with strengthening the company's market position and building competitive advantage in a single business company or a single business unit of a diversified multi business corporation.

Company objectives need to be broken into

performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. Employees within various functional areas and operating levels will be guided much better by narrow objectives relating directly to their departmental activities than broad organizational level goals. Objective setting is thus a top down process that must extend to the lowest organizational levels. And it means that each organizational unit must take care to set performance targets that support rather than conflict with or negate the achievement of company wide strategic and financial objectives.

Strategic Objectives or Strategic Performance Objectives

related to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.

Statement of Values

sometimes called Core Values: to guide the actions and behavior of company personnel in conducting the company's business and pursing its strategic vision and mission. These values are designed beliefs and desired ways of doing things at the company and frequently relate to such things as fair treatment, honor and integrity, ethical behavior, innovativeness, teamwork, a passion for excellence, social responsibility, and community citizenship.

A company's financial objectives are really lagging indicators that reflect the results of past decisions and organizational activities are not reliable indicators of a company's future prospects. Companies that have been poor financial performers are sometimes able to turn things around, and good financial performers on occasion fall upon hard times. Hence, the best and most reliable predictors of a company's success in the marketplace and future financial performance are

strategic objectives

A mission statement describes

the enterprise's present business scope 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. 3. Gives the company its own identity. Example: Consistently rated among the world's best airlines: Singapore Airlines: Singapore Airlines is a global company dedicated to providing air transportation services of the highest quality and to maximizing returns for the benefit of its shareholders and employees. Note that Singapore Airlines' mission statement does a good job of conveying "Who we are, What we do, and Why we are here" but it provides no sense of "Where are We Headed".

LL Bean has how many core values

two (2) which are encompassed in a quote from founder Leon Leonwood Bean - "Sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more".