MGNT 421 Exam 1 Smartbook
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 diagnosis of the competitive advantage
A good strategy consists of three elements. The second element is accomplished through strategy formulation, resulting in the firm's functional, business-level, and corporate-level strategies. This is also called ______.
a guiding policy to address the competitive challenge
Which of the following are elements of a good strategy according to the AFI framework?
a set of coherent actions to implement the firm's guiding policy a guiding policy to address the competitive challenge a diagnosis of the competitive challenge
Shareholder activists, such as Bill Ackman and Carl Icahn, have much more power over a firm than individual investors, because they ______.
are able to buy or sell a much larger number of shares than individuals can can exercise block-voting rights or otherwise influence the corporate government process
How should managers prioritize stakeholder concerns in the final step of stakeholder impact analysis?
by considering the power, legitimacy, and urgency of stakeholder claims
Firms should identify a ______ so that employees can determine if they are making progress in addressing it.
clear competitive challenge
Which of the following leads to systematic errors in decision making and hinders rational thinking?
cognitive biases
When a firm implements a strategy that leads to superior performance relative to other companies in the same industry, it is said to have achieved ______.
competitive advantage
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) ______.
competitive disadvantage
All of the following are sources of strategic initiatives except ______.
consumer demand
A(n) ______ is a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission.
core values statement
A company with a ______ vision statement tends to be more flexible and more likely to succeed.
customer-oriented
Which of the four corporate social responsibilities is considered first and foremost for business enterprises?
economic
According to the Level-5 Pyramid, a Level-4 leader is also referred to as a(n) ______.
effective leader
Which of the following incentivize workers by offering them discounted shares or retirement plans based on company stock?
employee stock ownership plans
A core values statement provides information to employees regarding the company's ______.
ethics and morals
In the ______ step of the stakeholder impact analysis, managers need to decide the appropriate course of action for the firm in relation to stakeholder concerns.
fifth
An inspiring vision helps employees ______.
find meaning in their work.
Business strategy is developed by ______.
general managers in strategic business units
The Level-5 leadership pyramid is a conceptual framework that shows ______.
how leaders develop
Strategy ______ concerns the organization, coordination, and integration of how work gets done.
implementation
Research about how CEOs spend their days suggests that CEOs spend most of their time ______.
interacting with others
A competitive advantage _____.
is assessed relative to other competitors in the industry
Sustainable competitive advantage exists when a firm ______.
maintains superior performance relative to its industry over a long period of time
After creating a vision as part of the strategic management process, a firm must next establish a(n) ______.
mission
The third step of stakeholder impact analysis requires managers to identify the ______ presented by internal and external stakeholders.
opportunities and threats
Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?
power
The type of vision statement that tends to limit a manager's flexibility and ability to adapt is the ______ vision statement.
product oriented
What type of vision statement focuses on the good or service provided?
product-oriented
What cognitive bias is in play when individuals draw conclusions based on very small samples or a single anecdote, thus violating the law of large numbers?
representativeness
Which of the following are three approaches that strategic leaders rely on to formulate and implement strategy?
scenario planning strategic planning strategy as planned emergence
Larry, the owner of small hotel resort, would like to advertise his hotel in major American newspapers and magazines as a part of his larger strategy. However, he doesn't have enough money to do so. One day, he meets Todd, the owner of a group of newspapers and magazines, who offers him advertising space in his publications on the condition that Larry provide him with a free stay at the hotel. This is an example of which of the following?
serendipity
A strategic business unit (SBU) is defined as a(n) ______.
standalone division of a larger conglomerate
Effective guiding policy is supported by and stays consistent through the use of ______.
strategic commitments
A(n) ______ is any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.
strategic initiative
The field of management that focuses on attaining competitive advantage by combining analysis, formulation, and implementation is known as ______.
strategic management
Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. This is known as Burger Bomb's ______.
strategy
A powerful strategic commitment assures _____.
that steps are taken to achieve the mission
What is System 1 of the brain according to Daniel Kahneman and Amos Tverksy?
the brain's default mode
Both strategy formulation and strategy implementation are aspects of ______.
the strategy process
Walmart and Nordstrom maintain very different strategic profiles, one based on cost-leadership and the other based on differentiation through superior customer service. This is an example of ______.
the trade-offs required by strategic positioning
In the ______ step of the stakeholder impact analysis, the firm identifies the opportunities and threats that stakeholders present to the firm.
third
Managers often have to make decisions between two conflicting strategic options, otherwise known as ______.
trade-offs
Competitive parity occurs when ______.
two or more firms achieve the same performance results
In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.
vision
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
vision
Which statement about strategies is true?
A statement of desire on its own often leads to goal conflict.
Why is employee involvement crucial when developing an inspiring vision and mission? (Check all that apply.)
Because employees may develop helpful strategic initiatives. Because belief in the vision and mission statements motivates employees.
In the strategy process, questions concerning HOW to compete, such as through differentiation, are referred to as _____ strategy.
Business
Which of the following is NOT necessarily a capability a Level-1 leader typically exhibits?
Contributes through collaboration.
What must a firm do after diagnosing its specific competitive challenge?
Create an effective guiding policy
Strategic commitments tend to be which of the following?
Difficult to reverse Costly
Which one of the following is a capability a Level-3 leader typically exhibits?
Does things right.
Which statement about shareholders and employees is true?
Employees are often made into shareholders through employee stock ownership plans.
True or false: A strategic leader's job is to focus like a laser on shareholders.
False
True or false: Although they are more vocal, activist investors have the same amount of power as individual investors.
False
True or false: Since experiencing major operations problems in 2017, Tesla has largely failed to act in a way that is consistent with its competitive challenge diagnosis.
False
True or false: A Level-3 leader ought to be able to create long-lasting greatness through resolve and humbleness.
False Reason: A Level-5 leader ought to be able to create long lasting greatness through resolve and humbleness, not a Level-3 one.
True or false: Although they are more vocal, activist investors have the same amount of power as individual investors
False Reason: Shareholder activists have more power over firms than individual investors do.
What is the overall purpose of strategic management?
Gain competitive advantage
Which statement best describes representativeness?
Individuals reach conclusions based on a small sample size or otherwise limited data, thereby violating the law of large numbers.
What is something that Tesla is doing to implement its guiding policy and address its competitive challenges?
It is taking advantage of economies of scale so that it can offer vehicles at a competitive price point.
According to the Level-5 leadership pyramid, a person is referred to as a contributing team member at which level?
Level 2
According to the pyramid of five levels of strategic leadership, a Level-1 leader typically shows which capability?
Offers helpful and effective input.
Which conditions are most likely to foster a positive relationship between vision statements and firm performance?
Organizational structures align with the vision statements. Internal stakeholders are invested in defining the vision. The vision statements are customer-oriented.
Why are businesses with product-oriented vision statements often less effective than businesses with customer-oriented vision statements?
Product-oriented companies have less flexibility to meet consumer needs.
A standalone division of a larger conglomerate, with its own profit-and-loss responsibilities, is called a(n) ______.
SBU
______ describe(s) random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives.
Serendipity
What is one explanation for why Tesla underperforms when the company's profits are compared to the profits of established car companies?
Startups often lose money early on.
Which of the following statements is correct?
Strategic initiatives can be the result of top-down planning or a bottom-up process.
What is the premise of Henry Mintzberg's position regarding strategic planning?
Strategy can be planned or emerge from the bottom-up.
Critics of the more formalized strategic planning approaches proposed a framework that accounts for which of the following realities?
Strategy can be planned. Strategy can emerge from the bottom up.
Which of the following traits are Tesla specifically aiming to include in its vehicles to achieve competitive advantage?
Sustainability Affordability Attractiveness
The Bright Bulb light bulb company produces a line of LED bulbs that customers consider very similar to competitors' LED bulbs. Which of the following conditions must be true for Bright Bulb to have a competitive advantage?
The bulbs must have a lower cost than competitors' bulbs.
For CEOs, what is an advantage of face-to-face meetings?
They allow CEOs to effectively communicate their ideas and positions.
What distinguishes a Level-5 leader from other levels of leaders?
They create enduring greatness.
True or false: Firms should obey all the laws, including but not limited to labor, consumer protection, and the environment.
True
Which statements about vision statements and firm performance are true?
Vision statements and firm performance are sometimes associated with one another. Effective vision statements can provide a foundation for creating competitive advantage
What is the typical result of cognitive limitations?
We choose the option that is "good enough" and satisfies immediate needs.