Chapter 1 LearnSmart

In a nutshell, strategy is the art and science of __. - success and failure - maintaining a work-life balance - amassing wealth - treating people fairly

success and failure

T/F - A statement such as, "We will be the biggest company in the world," is an example of strategy.

False

A core values statement provides information to employees regarding the company's __. strategic planning vision and mission ethics and morals marketing strategy

ethics and morals

The overall purpose of a firm's strategy is to __. - determine demand for new product ideas - generate significant interest from foreign investors - perform better than other companies in the same industry - sell all existing inventory of a given product

perform better than other companies in the same industry

The element of a firm's strategy that summarizes the ultimate goals of the firm is known as the __.

vision

A firm can gain a competitive advantage by providing goods and services __. (Check all that apply.) - similar to competitors' offerings at a higher price - that create more value for consumers than competitors' offerings - that cost less to product than competitors' offerings, independent of the value it creates - that are of similar quality to competitors' offerings but can be sold at a lower price due to lower costs

- that create more value for consumers than competitors' offerings - that are of similar quality to competitors' offerings but can be sold at a lower price due to lower costs

Why might a company develop organizational core values? - to encourage employees to make ethical choices - to encourage employees to focus on profitability, not ethical issues - to discourage employees from joining labor unions - to discourage employees from reporting ethical violations

to encourage employees to make ethical choices

Which of the following are primary strategy objectives? (Check all that apply.) - controlling costs - maximizing sales - creating value - strengthening relationships

Controlling costs Creating value

An organization's __ is what an organization actually does - the products and services it plans to provide and the markets in which it will compete. Vision Commitment Mission Intent

Mission

Sustainable competitive advantage exists when __. - a firm formulates and implements strategy - a firm maintains superior performance relative to its industry over a long period of time - a firm is self-regulated and self-motivated - a firm starts up and competes for exiting market share in the industry

a firm maintains superior performance relative to its industry over a long period of time

Which of the following elements comprise strategic management? (Check all that apply.) formulation analysis definition implementation realization

formulation analysis implementation

A __ vision statement defines a business by describing the goods or services it produces or offers. marketing-oriented product-oriented customer-oriented business-oriented

product-oriented

Strategic positioning allows managers to __. - provide customer value while controlling costs - balance foreign and domestic sales - provide superior customer value regardless of costs - eliminate competition in a given industry

provide customer value while controlling costs

In order to achieve and sustain competitive advantage, a company devises and adopts a set of goal-directed actions known collectively as a(n) __.

strategy

In order to determine if Home Depot has a competitive advantage, we must compare Home Depot's performance to __. - the performance of other firms in its industry - its past financial performance - only non-US based firms - a firm in the technology industry

the performance of other firms in its industry

A(n) __ can help employees feel that they are doing something worthwhile and are part of something important and meaningful. Environmental force Benchmark Competitive mission Aspirational vision

Aspirational vision

Merck's choice to pull the drug Vioxx off the market in 2004 is an example of what? - adhering to core organizational values - implementing a business strategy - lack of strategic leadership - moving away from a product-oriented vision statement to a customer-oriented one

adhering to core organizational values

A company with a __ vision statement tends to be more flexible and more likely to succeed. product-oriented customer-oriented marketing-oriented resources-oriented

customer-oriented

Using a(n) __ strategy formulation, managers examine where and how the firm should compete around the world. business global governance immediate

global

Managers have __ resources in their quest for competitive advantage. zero unlimited unique limited

limited

Defining organizational core values provides employees with information on how to accomplish the organization's mission AFI framework product-oriented vision customer-oriented vision

mission

In the __ step of the strategy implementation phase of the AFI strategy framework, managers would examine how the firm should be structured in order to implement the desired strategy. corporate governance organizational design business ethics internal analysis

organizational design

In the external analysis phase of the AFI strategy framework, managers should ask, - "What is our mission and purpose?" - "How does strategy come about?" - "How do external forces affect our strategy and competitive advantage?" - "What is our process for making strategy so that we can be competitive?"

"How do external forces affect our strategy and competitive advantage?"

__ vision statements do not describe how to provide solutions to customer needs. Sales-oriented Customer-oriented Product-oriented Manufacturing-oriented

Product-oriented

Which of the following statements regarding tasks in the AFI strategy framework is true? - Only two of the tasks need to be followed for success - The tasks are very interdependent - The tasks happen in sequence as separate steps - The tasks are interchangeable

The tasks are very interdependent

Which of the following are questions that managers are likely to ask when beginning the strategic management process? (>1) - Is our vision product or customer-oriented? - What are our values? - What do we ultimately hope to achieve? - How can we achieve our goals?

- What are our values? - What do we ultimately hope to achieve? - How can we achieve our goals?

Which of the following are elements of a good strategy according to the AFI framework? (>1) - a guiding policy to address the competitive challenge - strong stakeholder involvement in the strategy formulation process - a diagnosis of the competitive challenge - a set of coherent actions to implement the firm's guiding policy - a leadership group with relevant prior industry experience

- a guiding policy to address the competitive challenge - a diagnosis of the competitive challenge - a set of coherent actions to implement the firm's guiding policy

Which of the following topics should be considered during the strategy analysis phase of the AFI framework? (Check all that apply.) - the external environment and associated challenges - the firm's internal strengths and resources - the role of strategic leadership and the strategy-making process - the firm's business model and competitive advantages - the amount and types of compensation to offer employees

- the external environment and associated challenges - the firm's internal strengths and resources - the role of strategic leadership and the strategy-making process - the firm's business model and competitive advantages

A good strategy consists of three elements. The first element is accomplished through analysis of the firm's external and internal environments. We also call this __. - a guiding policy to address the competitive advantage - a diagnosis of the competitive advantage - a set of coherent actions to implement the firms' guiding policy

a diagnosis of the competitive advantage

What are strategic commitments? - They are comparisons of scenario planning and planned emergence. - They are actions that are costly, long-term oriented, and difficult to reverse. - They are mission statements for technological innovators. - They are relationships between strategic planning, competitive parity, and mission statement.

They are actions that are costly, long-term oriented, and difficult to reverse.

Managers often have to make decisions between two conflicting strategic options, otherwise known as __. Managerial dilemmas Hot-points Bad choices Trade-offs

Trade-offs

If a firm has a 10% return on invested capital while the industry average return on invested capital is 18%, the firm has a(n) __. overperforming norm purchasing parity competitive parity competitive disadvantage

competitive disadvantage

Michael's Deli is able to perform at the same level as its primary competitor. Michael's Deli has __. a competitive advantage competitive parity a noncompetitive business a competitive disadvantage

competitive parity

Merck's decision to donate more than one billion treatments to help end river blindness free of charge was __. - driven by its organizational core values - a strategy aimed at creating greater brand awareness - a way to quickly introduce a new drug - a strategic move designed to appease stakeholders

driven by its organizational core values