MQM 385 Exam 1 Study Guide // Ch. Quizzes 1 & 2
Which of the following summarizes the difference between a firm's vision and mission?
A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision.
While creating its AFI strategy framework, Gordon's Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?
Corporate Strategy Explanation: Corporate strategy involves deciding where a firm should compete, which includes industry, markets, and geography.
Which of the following summarizes the difference between corporate strategy and business strategy?
Corporate strategy deals with where to compete; business strategy deals with how to compete.
Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week; this is the industry average. We can conclude that since he has a positive net income, he also has a competitive parity in the industry.
Correct—competitive parity is achieved by generating average returns, relative to competition in a given industry. Explanation: A competitive parity is defined as a firm's ability to generate average returns relative to the industry in which they operate.
Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented?
Customer-oriented visions tend to be more flexible when adapting to changing environments.
Contour Inc., a vendor, regularly supplies capacitors to All Purpose Electronics for use in its products. Therefore, Contour Inc. is All Purpose Electronics'
External Stakeholder Explanation: Contour Inc. is All Purpose's external stakeholder. External stakeholders include customers, suppliers, alliance partners, creditors, unions, communities, media, and governments at various levels.
Green and Good Inc., a multinational company, relies on its media partner OmniSignal to regularly advertise its offers, sales, and new products. OmniSignal is invested in this relationship because it generates most of its revenue from advertising Green and Good's products. In this scenario, OmniSignal is Green and Good Inc.'s
External Stakeholder Explanation: In this scenario, Radio Plus is Green and Good Inc.'s external stakeholder. External stakeholders include customers, suppliers, alliance partners, creditors, unions, communities, media, and governments at various levels.
A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities.
FALSE
A good strategy is a set of actions that enables a firm to achieve its own internal goals without regard to the external environment.
FALSE
Managers should create two sets of core values: one for employees and one for themselves.
FALSE
Product-oriented vision statements are better suited than customer-oriented vision statements for helping companies to adapt to changes in the external environment.
FALSE
Strategic leaders spend the majority of their time working alone to devise new strategies. (T/F)
FALSE
The following statement by the chief executive of GoFlix movie studio is an effective strategy: "We will produce the greatest films of the 21st century."
FALSE
The three tasks of the AFI strategy framework are to Assemble a prototype, Find a buyer, and Incorporate feedback.
FALSE
Once a strategy has been formulated and implemented, it is important that the firm sticks to it no matter what happens.
FALSE Explanation: Strategic leaders make decisions under conditions of uncertainty and complexity. They must carefully monitor and evaluate the progress toward key strategic objectives and make adjustments by fine-tuning any strategy as necessary.
________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.
Strategic management
________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
Strategy Explanation: Strategy is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
An employee lacking some of the innate abilities to be a top-level manager can still become an effective strategic leader through hard work and experience. (T/F)
TRUE
Strategic commitments are actions that are
long-term-oriented.
A positive relationship between vision statements and firm performance is more likely to exist when
organizational structures are aligned with the firm's vision statement.
Which of the following strategy plans might work best in an industry that is considered a fast-changing environment with new laws going into effect regularly?
scenario planning
John is a bit confused about the difference between stakeholders and stockholders. You meet with John and inform him that the main difference is that
stakeholders can be both internal and external while stockholders own shares of a firm and are classified as internal to the firm. Explanation: Stakeholder strategy is an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage. Internal stakeholders include; employees (executives, managers, and workers), stockholders, and board members. External stakeholders include customers, suppliers, alliance partners, creditors, unions, communities, governments at various levels, and the media.
When do employees fail to adopt the organizational values of a firm?
when the top managers in the firm are merely paying lip service to the firm's stated values
The goal of a good strategy is focused primarily on:
Creating superior value while containing costs Explanation:A good strategy is about creating value while containing costs in order to achieve competitive advantage for the firm.
Which of the following tasks in the AFI strategy framework involves evaluating the internal and external environments in which a firm operates?
Analysis Explanation: Strategic analysis, the "A" in the AFI strategy framework, includes analyzing the internal and external environments of a firm.
If Modern Furniture LLC obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies?
Comparing the return to the return on invested capital obtained by other firms in the industry Explanation: Comparing the return to the return on invested capital obtained by other firms in the industry will help determine if Modern Furniture LLC has a competitive advantage. Competitive advantage is always relative, not absolute.
Which of the following is an example of a business acting upon an organizational core value?
Emerald Autos reduces engine emissions below federal guidelines to reduce pollution.
A firm's resource-allocation process (RAP) has very little effect on its realized strategy. (T/F)
FALSE *** A firm's resource-allocation process (RAP) determines the way it allocates its resources and can be critical in shaping its realized strategy. Emergent strategies can result from a firm's resource-allocation process (RAP).
Tony's Pizza Shop is able to net $10,000 a week; this makes his shop profitable. His number one competitor, Leo's Pies is also profitable, netting $12,000 a week. Lil Anthony's Pizza Palace nets $13,000 a week. Since Tony's Pizza Shop is profitable, we can conclude that he has a competitive advantage in the industry
False—competitive advantage is only achieved by generating above average returns, relative to competition. Explanation: Profitability does not necessarily equate to competitive advantage. A competitive advantage is measured by a firm's ability to generate above average returns, not just a measure of profitability.
Which of the following best describes a Level 5 manager in the Level-5 leadership pyramid? **In the Level-5 leadership pyramid, the Level 5 manager reaches a leadership pinnacle, turning into a strategic leader. An effective strategic leader is an executive who builds enduring greatness into the organizations he or she leads.
Jim is the CEO of Eco Inc.; he has helped his company in gaining and sustaining a competitive advantage through ethical decision making.
Brandon is part of a sales team. He effectively coordinates his tasks with others in the team and willingly contributes to their efforts in achieving the team's objectives. Thus, Brandon is in ________ of the Level-5 leadership pyramid.
Level 2 *The Level 2 manager masters the skills required at Level 1 but is also a contributing team member who works effectively with others to achieve synergies and team objectives.
Bob is exploring multiple suppliers in order to find the best price. However, instead of calling all eight potential suppliers, he only reaches out to the first three and bases his selection on those instead of contacting all suppliers. Bob's action best describes the concept of
Satisficing
As the legal owners, ________ have the most legitimate claim on a company's profits.
Shareholders
Maria and Tom both serve as SBU managers of their divisions. They have both been asked by the CEO to generate two different courses of action for a new product launch. This strategic decision-making technique can be described as
dialectic inquiry
Industrial Drills, a company that manufactures industrial tools, incurs higher costs because of its refusal to outsource its manufacturing to countries where labor costs are lower. This reflects Industrial Drills' ________ responsibility.
ethical Explanation: This reflects Industrial Drills' ethical responsibility. A firm's ethical responsibilities go beyond its legal responsibilities. They embody the full scope of expectations, norms, and values of its stakeholders. Managers are called upon to do what society deems just and fair.
The interaction between a firm and its diverse internal and external stakeholders is best described as a(n)
exchange relationship. Explanation: All stakeholders make specific contributions to a firm, which in turn provides different types of benefits to different stakeholders. The firm, therefore, is embedded in a multifaceted exchange relationship with a number of diverse internal and external stakeholders.
