MT460
Which of the following statements best describes the difference between a vision and a mission? 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 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 typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going."
A mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going." Explanation 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 is NOT a hallmark of a cleverly crafted and well-executed strategy? A strategy that facilitates the capture of emerging opportunities A strategy that produces enduringly good performance A strategy that is adaptable to changing business and market conditions A strategy that provides direction only in terms of what the company should do A strategy that can withstand the competitive challenges from rival firms
A strategy that provides the direction only in terms of what the company should do Explanation The objective of a well-crafted strategy is not merely temporary competitive success and profits in the short run, but rather the sort of lasting success that can support growth and secure the company's future over the long term.
A company's values are Focused on the wealth maximization of shareholders. Strictly limited in number (not more than two per company). Barely distinctive between companies in the same industry. Directly linked to the strategic vision, whereas the mission has other underlying assets. An integral part of the company's DNA, if executives seek to ingrain designated core values into corporate culture.
An integral part of the company's DNA, if executives seek to ingrain designated core values into corporate culture. Explanation 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.
The process of crafting and executing a company's strategy primarily consists of all of the following EXCEPT Monitoring developments, evaluating performance, and initiating corrective adjustments in the company's vision, mission, objectives, and strategy. Choosing employees who can support the strategy execution and strive for change. Executing the chosen strategy efficiently and effectively. 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. Setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve.
Choosing employees who can support the strategy execution and strive for change. Explanation 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.
The fit test, which a company's strategy has to pass in order to be qualified as a winning strategy, includes Competitive strength and market standing. A superior performance for more than a brief period of time. Close and effective alignment with the company's situation even as external and internal conditions change. Profitability, shareholder value creation, and financial strength. Competitive strength and superior performance.
Close and effective alignment with the company's situation even as external and internal conditions change. Explanation To qualify as a winner, a strategy has to be well matched to industry and competitive conditions, a company's best market opportunities, and other pertinent aspects of the business environment in which the company operates.
Which of the following is NOT a condition that would lead managers to drastically modify the company's strategy? Changing market conditions Advancing technology Shifting buyer needs Mounting evidence that the strategy is not working well Employee demands for better working conditions
Employee demands for better working conditions. Explanation The lead managers of every company must be willing and ready to modify the strategy in response to changing market conditions, advancing technology, unexpected moves by competitors, shifting buyer needs, emerging market opportunities, and new ideas for improving the strategy.
In most situations, managing the strategy execution process does NOT primarily include which of the following principal aspects? Motivating people and tying rewards and incentives directly to the achievement of performance objectives Installing information and operating systems that enable company personnel to carry out their roles effectively and efficiently Establishing long-run and short-run strategic and financial objectives Exerting the internal leadership needed to propel implementation forward Organizing the work effort along the lines of best practice
Establishing long-run and short-run strategic and financial objectives. Explanation 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.
Competing in the marketplace on the basis of a competitive advantage Involves either giving buyers what they perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm. Provides the basis for a longer, sustainable growth. Gives buyers an immediate preference for a company's products or services over those of competitors and enables the company to dominate its competitors. Deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner that keeps the company's prices as low as possible. Means that a company has to offer the lowest price for differentiated goods that at least match the feature and performance of higher-priced rival brands.
Involves either giving buyers what they perceive as a superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm. Explanation There are many routes to competitive advantage, but they all involve either giving buyers what they perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm.
The combination of a good strategy and good strategy execution Provides long-term growth for the company. Enables the company to become the industry leader. Is the most telling sign of good management. Is the sign for achieving a sustainable competitive advantage. Signals the company's superiority in the industry.
Is the most telling sign of good management. Explanation A company's performance is directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.
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. 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. It typically concerns the enterprise's present business and purpose.
It mainly expresses that a profit is a company's true business purpose. Explanation 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 of the following is NOT true of a company's business model? It is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit. It is management's storyline for how the strategy will be a moneymaker. It consists of two crucial elements: (1) its customer value proposition and (2) its profit formula. It sets forth the logic for how its strategy will create value for customers, while at the same time generates revenues sufficient to cover costs and realize a profit. It reflects how efficiently a company can meet customer wants and needs even at the cost of incurring loss.
It reflects how efficiently a company can meet the customer wants and needs even at the cost of incurring loss. Explanation A company's business model sets forth the logic for how its strategy will create value for customers and at the same time generate revenues sufficient to cover costs and realize a profit.
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. Monetary incentives Legal liability Contractual duty Lead responsibility Ethical obligations
Lead responsibility Explanation 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.
Financial objectives Relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects. Convince shareholders that top management is acting in their interests. Are necessary to set and to achieve since adequate profitability and financial strength increases a company's long-term health. Indicate to employees whether the emphasis should be on earnings per share or return on investment, or return on assets or positive cash flow. Strike the balance to strategic objectives since both are important for the company's long-term success.
Relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects. Explanation 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.
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. Overall strategy. Company values. Strategic objective.
Strategic vision Explanation 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.
A company's strategy Is mostly proactive and consists of strategy elements that are both planned and realized as planned. Tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective. Consists of initial and developing approaches aiming to ensure long-term growth. Is mainly affected by a reactive approach since uncertainty is high. Generally consists of new strategy elements and strategic moves that emerge as changing conditions warrant.
Tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective. Explanation The evolving nature of a company's strategy means that the typical company strategy is a blend of (1) proactive, planned initiatives to improve the company's financial performance and secure a competitive edge and (2) reactive responses to unanticipated developments and fresh market conditions.
Why is a strategy important? To match rival businesses' products and quality dimensions in the marketplace To build profits for short-term success To do what competitors don't do or, even better, doing what they can't do To know what the company should do, not what it should not do To balance the interests of stakeholders and shareholders
To do what competitors don't do or, even better, doing what they can't do. Explanation Strategy is about competing differently—doing what rival firms don't do or what rival firms can't do. Strategy is about competing differently than rivals do and building competencies and resource capabilities that are not readily matched.
Which of the following basic elements comprise a company's profit formula? V the value provided for customers; P the price charged to customers; and C the company's costs S the sustainable competitive advantage potential; V the value provided for customers; and C the company's costs C the competitive strength of the company; S the sustainable competitive advantage potential; and V the value provided for the customer M the company's market share; C the competitive strength of the company; and S sustainable competitive advantage potential P the price charged to customers; C the company's costs; and M the company's market share
V the value provided for customers; P the price charged to customers; and C the company's costs Explanation The customer value proposition can be expressed as V—P, which is essentially the customers' perception of how much value they are getting for the money. The profit formula, on a per-unit basis, can be expressed as P—C.
When can a company achieve sustainable competitive advantage? Whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors. When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors. When it is able to produce better products for fewer costs than its rivals. When it consistently achieves both its long-term and short-term strategic and financial objectives. If it can translate its vision, mission, and values into a well-crafted strategy.
When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors. Explanation A company achieves sustainable competitive advantage when it gives its buyers lasting reasons to prefer its products or services over those of competitors—reasons that competitors are unable to nullify or overcome despite their best efforts.
