Strategic Management Exam #1
Sociocultural
forces influence the values, beliefs, and lifestyles of a society; (more women in the workforce, increase in temporary workers, greater concern for fitness)
Path dependency
hard to duplicate decrease of all that has happened along the path followed in development and/or accumulation of resources
Competitive Intelligence
helps firms define and understand their industry, identifies rival's strengths and weaknesses, helps firms avoid surprises, potential for unethical behavior while gathering intelligence.
Causal ambiguity
impossible to explain what causes a resource to exist or how to recreate it.
Competitive parity
two or more firms that perform at the same level
Mastery of strategic management enables you to
view a firm in its entirety, think like a general manager, and position your organization for superior performance.
Economic
forces affect all industries (interest rates, unemployment, consumer price index, trends in GDP, changes in stock market valuations, national debt)
What are the three elements that provide the basis of a good strategy?
1. A diagnosis of the competitive challenge (analysis of the firm's internal and external environments) 2. A guiding policy to address the competitive challenge (formulation; results in corporate, business and functional strategies) 3. A set of coherent actions to implement the firm's guiding policy (implementation)
What four perspectives are incorporated into the balanced scorecard?
1. How do customers see us? (customer perspective) 2. What must we excel at? (internal perspective) 3. Can we continue to improve and create value? (innovation and learning perspective) 4. How do we look to shareholders? (financial perspective)
Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week, which is about the same as the income of a close competitor. As a result, we can conclude that the two businesses also have a competitive parity in the industry. A: Correct—competitive parity is a performance of two or more firms at the same level. B: Correct—competitive advantage is achieved through profitability alone. C: Incorrect—Bill's Auto & Airplane Repair shop more than likely has a sustained competitive advantage because the business is diversified. D: Correct—competitive advantage is achieved since Bill's Auto & Airplane Repair shop has a positive net income.
A
Juan wants to open his own hot dog restaurant but doesn't know anything about business. He needs help determining who his competition is, how he should craft his strategy to compete and how he'll implement his strategy to achieve a competitive advantage. He's hired you to help him get started. As a result, you will probably use which of the following? A: AFI strategy framework B: Red Queen effect C: Competitive benchmarking D: Stakeholder Impact analysis
A
Superior performance allows a company to benefit society by implementing which of the following strategies? A: reinvest some of its profits and grow, providing more employment and career opportunities B: sell more advertising space C: substitute less-expensive components to keep costs low D: imitate the features of the most popular products of competitors on the market
A
Which of the following three important stakeholder attributes should managers pay special close attention to in order to better understand stakeholder impact analysis? A: shareholder rights plan, board representation and CEO influence B: power, legitimacy, and urgency C: competitive advantage, economic value, and time D: grace under pressure, financial control, and reward power
B
________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. A: Credo B: Strategy C: Behavior modification D: Competency management
B
Meaningful ratio analysis must include what?
Analysis of how ratios change over time, comparison with industry norms, comparison with key competitors
The goal of a good strategy is focused primarily on A: encouraging investors to buy more shares of the firm. B: creating superior value while containing costs. C: making as much money as possible. D: employing lean manufacturing and Six Sigma.
B
Which is a model that links strategy analysis, strategy formulation, and strategy implementation, thereby helping managers plan and implement a good strategy? A: corporate social responsibility B: FI strategy framework C: the Four Ps D: stakeholder impact analysis
B
Which of the following provides an example of what AFI strategy framework is used for? A: Using AFI, the Fine Dine Restaurant Group was able to improve employee benefits and thereby increase employee loyalty. B: Using AFI, the Quest Auto firm was able to implement a strategy that produced high-quality cars more efficiently and thereby reduced costs. C: Using AFI, the Pure Tea Group was able to reduce the pollution it caused while processing tea and thereby receive an award. D: Using AFI, the Mossimo Apparel Company was able to implement a strategy that allowed them to give more money to charities and thereby gain good press.
B
Successful managers are always aware of what's going on outside their company. Their _____ allows them to sense what's coming. Detecting early warning signals, keeping pace with changes in the external environment can sustain a competitive advantage.
Perceptual acuity
________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage. A: Inventory management B: Integrated technology management C: Strategic management D: Supply chain management
C
Strategic management
Combines analysis, formulation, and implementation in the quest for competitive advantage.
What are the three characteristics of stakeholders that need to be assessed in developing a stakeholder strategy?
Power, legitimacy, and urgency
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 A: stakeholders are external to the firm while stockholders are considered internal to the firm. B: stakeholders are both internal and external to the firm while stockholders are considered external to the firm. C: stakeholders are considered internal to the firm while stockholders are external to the firm. D: stakeholders can be both internal and external while stockholders own shares of a firm and are classified as internal to the firm.
D
Why is it important for a firm to establish a unique strategic positioning?
Enhances the likelihood of competitive advantage
Strategy
Goal-directed actions to gain and sustain superior performance relative to competitors. Companies are competing for resources
What are the interests/claims of different stakeholder groups?
Have a vested claim or interest in the performance of survival of the firm
Who are the stakeholders of a firm?
Organizations, groups, and individuals
What actions can a firm take to gain competitive advantage?
Provide goods or services that consumers values more highly than those of its competitors or are similar to the competitors at a lower price
TRUE or FALSE; Strategic groups can be analytical tools
True
TRUE or FALSE; Value is the amount buyers are willing to pay for what a firm provides
True
True or False; Competitive advantage is relative, not absolute
True
Sustainable competitive advantage
a firm that is able to outperform its competitors or the industry average over a prolonged period (EX: Apple in the smartphone industry)
Competitive disadvantage
a firm that underperforms its rivals and the industry average
Balanced scorecard
a meaningful integration of many issue that come into evaluating performance
Demographics
aging population, rising affluence, change sin ethnic composition, geographic distribution of population, greater disparities in income levels
Tangible resources
assets that are relatively easy to identify (physical assets, financial, technological resources, organizational resources)
Financial ratio analysis
balance sheet, income statement, market valuation, historical comparison, comparison with industry norms, comparison with key competitors
The bargaining power of buyers
buyers can force down prices, bargain for higher quality or more services, or play competitors against each other
Strategic groups
clusters of firms that share similar strategies: breadth of product and geographic scope, price/quality, degree of vertical integration, type of distribution
How can we access competitive advantage?
compare the firm to competitors in the same industry and compare the firm to the industry average
Primary activities
contribute to the direct physical creation of the product or service; the sale and transfer to th ebuyer; and service after the sale (inbound logistics, operations, outbound logistics, marketing and sales, service)
External stakeholders
customer suppliers, alliance partners, creditors, unions, communities, media, and governments
The general environment is composed of what 6 factors that are both hard to predict and difficult to control?
demographic, sociocultural, political/legal, technological, economic, and global
Intangible resources
difficult for competitors to account for or imitate. They are embedded in unique routines and practices (human resources, innovation resources, reputation resources)
Support activities
either add value by themselves or add value through important relationships with both primary activities and other support activities (procurement, technology development, human resource management, general administration)
Balanced scorecard analysis
employees, owners, customer satisfaction, internal processes, innovation, learning and improvement activities, financial perspectives
Environmental scanning
involves surveillance of a firm's external environment (predicts environmental changes to come, detects changes already under way, allows firm to be proactive)
What is a SWOT analysis?
is a basic technique for analyzing firm and industry conditions (strengths, weaknesses, opportunities, and threats)
Scenario analysis
is an in-depth approach
The threat of substitute products and services
limit the potential returns of an industry, substitutes come from another industry
Value-chain analysis
looks at the sequential process of value-creating activities
The threat of new entrants
possibility that the profits of established firms in the industry may be eroded by new competitors.
Environmental forecasting
predicts change
Social complexity
resources that result from social engineering such as interpersonal relations, culture.
The intensity of rivalry among competitors in an industry
rivalry tactics include price competition, advertising battles, new product introductions, increased customer service or warranties
Internal stakeholders
stockholders, employees (including executives, managers, and workers), and board members
Competitive advantage
superior performance relative to other competitors in the same industry or the industry average
The bargaining power of suppliers
suppliers can exert bargaining power by threatening to raise prices or reduce the quality of purchased goods and services
Physical uniqueness
these are resources that are physically unique, therefore impossible to duplicate
What is Tesla's guiding policy?
they are building cost-competitive mass-market vehicles such as Models 3/Y, they have also made significant investments in lithium-ion battery production across the globe.
What is Tesla's competitive challenge?
they must manufacture attractive and affordable vehicles using its new technology and build the required infrastructure such as charging station networks.
What are Tesla's coherent actions?
they need to ramp up production volumes to achieve economies of scale and have broken ground for a new factory in Shanghai, China. Tesla will not introduce any new vehicles for the time being and they have made some proprietary technology available to the public.
Environmental monitoring
tracks evolution of environmental trends (sequences of measurable facts/events, streams of activities or trends from outside the organization)
