MAN4894 Midterm Study Guide

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collaborative machines

a new breed of robots that work alongside people

backward integration

a strategy of seeking ownership or increased control of a firm's suppliers

assumptions

Best present estimates of the impact of major external factors, over which the manager has little if any control, but which may exert a significant impact on performance or the ability to achieve desired results.

shift company profits to the United States from countries with low corporate tax rates

Mergers and acquisitions are created for all of the following reasons EXCEPT to

true

Most organizations simultaneously pursue a combination of two or more strategies.

higher

When the products being purchased are standard or undifferentiated, it results in ________ bargaining power of consumers.

divisional

Which level of strategy is most likely NOT present in small firms?

organizing

Which management function includes breaking tasks into jobs, combining jobs to form departments, and delegating authority?

emotions

Which of the following are NOT mentioned as an example of cultural products?

backward integration

Which of these strategies is effective when the number of suppliers is small and the number of competitors is large?

joint venture

Which strategy would be most appropriate when the distinctive competencies of two or more firms complement each other especially well?

false

While interesting, organizational culture does not significantly affect business decisions.

true

Wild guesses should never be made in formulating strategies.

true

Without reasonable assumptions, the strategy-formulation process could not proceed effectively.

identifying industry executives who could be hired by the firm

________ is NOT a basic mission of a competitive intelligence program.

managing by crisis

a form of reacting, letting events dictate the what and when of management decisions

variable costs

a key variable in breakeven analysis which includes costs such as labor and materials

fixed costs (FC)

a key variable in breakeven analysis which includes costs such as plant, equipment, stores, advertising, and land

organizational culture

a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaption and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel

product development

a strategy that seeks increased sales by improving or modifying present products or services

porter's five forces model

a widely used approach for developing strategies in many industries;

resource based view (RBV)

approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage

bankruptcy

can allow a firm to avoid major debt obligations and to void union contracts

management information systems (MIS)

collects, codes, synthesizes, and presents information

functions of finance/accounting

comprised of 3 decisions; investment decision, financing decision, and dividend decision

dividend decisions

concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock

empirical indicators

considered rare, hard to imitate, and not easily substitutable; enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage

functions of management

consist of five basic activities; planning, organizing, motivating, staffing and controlling

product/operations function

consists of all those activities that transform input into goods and services

true

consumer power is high when products are standard and undifferentiated

physical resources, human resources, and organizational resources

contend that organizational performance will primarily be determined by internal resources that can be grouped into three all encompassing categories of

process, capacity, inventory, workforce and quality

decisions within a product/operations function include:

benchmarking

determines best practices

financing decisions

determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital

external forces

economic forces, social, cultural, demographic, and natural environment forces, political, governmenta, and legal forces, technological forces, and competitive forces

actionable responses

has strategic implications ans suggestive of potential strategies to capitalize on or compensate for

competitive profile matrix (CPM)

identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position

hostile takeover

if the merger or acquisition is not desired by both firms

financial objectives

include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on

cultural products

include values, beliefs, rites, rituals, ceremonies, myths, stories, legends, sagas, language, metaphors, symbols, folktales, and heroes and heroines

product and service planning

includes activities such as test marketing, product and brand positioning, devising warranties, packaging, determining product options, features, styles, and quality, deleting old products, and providing for customer service

selling

includes many marketing activities such as advertising, sales promotion, publicity, personal selling, sales force management, customer relations, and dealer relations

true

Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.

false

Public enterprises generally cannot diversify into unrelated businesses or merge with other firms.

strategic objectives

includes things such as a larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improves products to market ahead of rivals and so on

market development

introducing present products or services into new geographic areas

functions of marketing

seven basic functions; customer analysis, selling products and services, product and service planning, pricing, distribution, marketing research, and cost/benefit analysis

unpublished and published

sources of external information

research and development (R&D)

spending money to enhance existing products or services and or create new and improved products

vertical integration

strategies that allow a firm to gain control over distributors and suppliers

controlling

strategy evaluation; function of management which includes all activities undertaken to ensure that actual operations conform to planned operations

planning

strategy formulation; the essential bridge between the present and the future that increases the likelihood of achieving desired results

staffing or human resource management (HR)

strategy implementation; includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees as well as managing union relations

motivating

strategy implementation; the process of influencing people to accomplish specific objectives

market penetration

strategy seeks to increase market share for present products or services in present markets through greater marketing efforts

distinctive competencies

strengths that cannot be easily matched or imitated by competitors

internal factor evaluation matrix (IFE)

summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas

investment decision or capital budgeting

the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization

first mover advantages

the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms

customer analysis

the examination and evaluation of customer needs, desires, and wants

capacity utilization

the extent to which a manufacturing plant's output reaches its potential output

managing by hope

the future is laden with uncertainty and that if we try and do not succeed, then we hope our second (or third) attempt will succeed

global interdependence

the increase of this makes it imperative that firms consider the possible impact of political variable on the formulation and implementation of competitive strategies

rivalry among competing firms

the most powerful of the five forces

financial ratio analysis

the most widely used method for determining an organization's strengths and weaknesses in the investment, financing, and dividend areas

breakeven point (BE)

the quantity of units that a firm must sell in order for its total revenues to equal its total costs

marketing research

the systematic gathering, recording, and analyzing of data about problems relating to the marketing goods and services

unrelated diversification

their value chains are so dissimilar that no competitively valuable cross-business relationships exist

related diversification

their value chains possess competitively valuable cross-business strategic fits

managing by subjectives

there is no general plan for which way to go and what to do; just do the best you can to accomplish what you think should be done

chapter 7, chapter 9, chapter 11, chapter 12, and chapter 13

these are the five major bankruptcy types

pricing

these five major stakeholders consumers, governments, suppliers, distributors, and competitors affect this

cost leadership

type 1 (low cost) and type 2 (best value); emphasizes producing standardized products at a low per-unit cost for consumers who are price sensitive

differentiation

type 3; a strategy aimed at producing products and services considered unique to the industry and directed at consumers who are relatively price insensitive

focus

type 4 (low cost) and type 5 (best value); means producing products and services that fulfill the needs of small groups of consumers

integration strategies

vertical and horizontal actions by firms are broadly referred to as

secondary buyouts

when private-equity firms buy companies from other private-equity firms

managing by extrapolation

"if it ain't broke, don't fix it"; keep on doing the same things in the same ways because things are going well

competitive profile matrix scores

1 is a major weakness, 2 is minor weakness, 3 is a minor strength, and 4 is a major strength

2050

20% of the population will be over 65 by the year

true

A limitation of financial ratios is the fact that they are based on accounting data.

ritual

A standardized set of behaviors used to manage anxieties is called a

competitive intelligence

A systematic and ethical process for gathering and analyzing information about the competition's activities and general trends to further a business' own goals is called

higher exports and lower imports

A weak dollar means

true

According to William King, a task force of managers from different units of the organization should be charged with determining the 20 most important strengths and weaknesses that should influence the future of the organization.

false

Allocating resources is one of the five basic activities (functions) performed by managers.

false

An external audit focuses on identifying and evaluating trends and events within the control of management.

symbol

Any object, act, event, quality, or relation used to convey meaning is known as a

false

Bargaining power of consumers is usually the most powerful of Porter's five competitive forces.

false

By 2050, the Census Bureau projects that the number of Americans age 100 and older will dramatically decrease.

all of the above

Changes in which of the following can significantly affect firms?

false

Chapter 13 bancruptcy is similar to Chapter 11, but available only to large corporations.

true

Constructing an Internal Factor Evaluation Matrix is a summary step when conducting an internal strategic-management audit.

false

Corporate intelligence is the name for a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals.

true

During the 2015 Super Bowl, a 30-second advertisement cost over $4 million.

false

Erosion of the U.S. manufacturing base is reflected in the sharp increase in labor union membership in the last decade.

actionable

External audits attempt to identify key variables that offer ________ responses.

true

First mover advantages refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.

true

For a resource to be valuable it must be rare, hard to imitate, and easily substitutable.

true

In 2014-2016, companies are aggressively boosting their dividends paid to shareholders.

true

In order to exploit common use of a well-known brand name, most companies favor related diversification strategies.

2075

It is predicted that the United States will have no racial or ethnic majorities by the year

true

Linkages between a firm's culture and strategies often determine success.

true

Major competitors' strengths may represent key threats.

true

Market penetration, market development, and product development are intensive strategies.

true

No organization can afford to pursue all the strategies that might benefit them.

dividend recapitalizations

PE firms and other firms borrow money simply to fund dividend payouts to themselves

true

Political issues and stances impact strategic decisions.

false

Research and Development (R&D) Management is focused on managing inputs, transformations, and outputs that vary across industries and markets.

true

Strategic objectives include larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.

false

The United States has been more active than other nations in protectionist measures and has engaged in many "Buy American" policies.

true

The controlling function of management is especially important for effective strategy evaluation.

dividing a firm's operations into specific activities or business processes

The initial step to implementing value chain analysis is

value chain analysis (VCA)

The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called

organizational resources

The three all-encompassing internal resource categories used in the resource-based view are physical resources, human resources, and

leverage ratio

The times-interest-earned ratio would be classified as a(n)

reshoring

U.S. companies planning to move some of their manufacturing back to the United States

when technological change is fast paced and competition revolves around rapidly evolving product features

Under which condition would a differentiation strategy be especially effective?

growth

What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry?

horizontal integration

What refers to a strategy of seeking ownership of, or increased control over a firm's competitors?

true

When an acquisition or merger is not desired by both parties, it is called a hostile takeover.

political

When an industry relies heavily on government contracts, which forecasts can be the most important part of an external audit?

outsourcing

When companies are hired by other companies to take over functional operations such as human resources, information systems, payroll, accounting, or customer service, this is called

a secondary buyout

When the private equity (PE) firm Clayton, Dubilier & Rice bought David's Bridal from the PE firm Leonard Green & Partner LP this was an example of

merger

When two organizations of about equal size unite to form one enterprise, which of these occurs?

increase

Whenever new firms can easily enter a particular industry, the intensity of competitiveness among firms tends to

customer profiling

________ can reveal the demographic characteristics of an organization's customers.

lower exports and higher imports

a strong dollar means

industrial organization view

advocates that external factors are more important than internal factors in a firm for gaining and sustaining competitive advantage

external factor evaluation matrix (EFE)

allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information

business analytics

an MIS technique that involves using software to mine huge volumes of data to help executives make decisions

benchmarking

an analytical tool used to determine whether a firm's value chain analysis is competitive compared to those of rivals and thus conducive to winning in the marketplace

franchising

an effective means of implementing forward integration whereby a franchisee purchases the right to own one or more stores/restaurants of a chain firm

data mining

analyzing huge volumes of information in order to determine trends and garner information to make decision making more effective

generic strategies

cost leadership, differentiation, and focus

forecasts

educated assumptions about the future; none of these are perfect

synergy

exists when everyone pulls together as a team that knows what it wants to achieve

long term objectives

expected results within a 2 to 5 year timeframe

environmental scanning or industry analysis

external strategic management audit

external audit

focuses on identifying and evaluating trends and events beyond the control of a single firm, such as increased foreign competition, population shifts to coastal areas of the United States, an aging society, and taxing Internet sales

forward integration

gaining ownership or increased control over distributors or retailers

friendly merger

if the merger or acquisition is desired by both firms

cost/benefit analysis

involves assessing the costs, benefits, and risks associated with marketing decisions

core competence

is a VCA that a firm performs especially well

EFE matrix steps

list 20 key external factors, weight from 0 to 1, rate effectiveness from 1 to 4, multiply weight and sum weighted scores

nature of long term objectives

provide direction, allow synergy, assist in evaluation, establish priorities, reduce uncertainty, minimize conflicts, stimulate exertion, and aid in both the allocation of resources and the design of jobs

combination strategy

pursuing two or more strategies

organizing

strategy implementation; to achieve coordinated effort by defining task and authority relationships

divesture

selling a division or part of an organization

liquidation

selling all of a company's assets, in parts, for their tangible worth

intensive strategies

market penetration, market development, and product development are sometimes referred to as

chief information officer (CIO)

more like a manager who manages the firm's relationships with stakeholders

chief technology officer (CTO)

more like a technician focused on technical issues such as data acquisition, data processing, decision-support systems, and software and hardware acquisition

leveraged buyout (LBO)

occurs when a corporation's shareholders are bought (hence buyout) by the company's management and other private investors using borrowed funds (hence leverage)

acquisition

occurs when a large organization purchases (acquires) a smaller firm or vice versa

retrenchment

occurs when an organization regroups through cost and asset reduction to reverse delining sales and profits; sometimes called turnaround or reogranizational strategy

merger

occurs when two organizations of about equal size unite to form one enterprise

test marketing

one of the most effective product and service planning techniques that allow an organization to test alternative marketing plans and to forecast future sales of new products

desired characteristics of outcomes

quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable and congruent across departments

management information system (MIS)

receives raw material from both the external and internal evaluation of an organization

de-integration

reducing the pursuit of backward integration; instead of owning suppliers, companies negotiate with several outside suppliers

diversification strategies

related diversification and unrelated diversification are two general types of

long term objectives

represent the results expected from pursuing certain strategies

internal audit

requires gathering, assimilating, and prioritizing information about the firm's management, marketing, finance and accounting, production and operations, R&D, and MIS operations to reveal the firm's most important strengths and most severe weaknesses


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