Ch. 1 Strategic Management – Flashcards

Situations in which the leader is the key force determining the organization's success or lack thereof.

Situations in which external forces-where the leader has limited influence-determine the organization's success.

The analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.

The ideas, decisions, and actions that enable a firm to succeed.

A firm's resources and capabilities that enable it to overcome the competitive forces in its industry(ies).

Performing similar activities better than rivals

Individuals, groups, and organizations who have a stake in the success of the organization, including owners, employees, customers, suppliers, and the community at large.

Tailoring actions to the needs of an organization rather than wasting effort, or "doing the right thing."

Performing actions at a low cost relative to a benchmark or doing things right.

Strategy analysis, strategy formulation, and strategy implementation.

The challenge managers face of both aligning resources to take advantage of existing product markets as well as proactively exploring new opportunities.

Strategy in which organizational decisions are determined only by analysis.

Study of firms' external and internal environments, and their fit with organizational vision and goals

strategy in which organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences

Decisions made by firms regarding investments, commitments, and other aspects of operations that crate and sustain competitive advantage.

Actions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership.

The relationship among various participants in determining the direction and performance of corporations. The primary participants are -stakeholders, the management, and the board of directors.

a firm's strategy for recognizing and responding to the interests of all its salient stakeholders

The expectation that businesses or individuals will strive to improve the overall welfare of society.

Assessment of a firm's financial, social, and environmental performance.

A set of organizational goals that include both the purpose of the organization, its scope of operations, and the basis of its competitive advantage.

a set of organizational goals that are used to operationalize the mission statement and that are specific and cover a well-defined time frame

organizational goals ranging from, at the top, those that are less specific yet able to evoke powerful and compelling mental images, to, at the bottom, those that are more specific and measurable.

Organizational goals that evoke powerful and compelling mental images.

Strategic management is the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. The four key attributes of strategic management are that it: • Directs the organization toward overall goals and objectives • Includes multiple stakeholders in decision-making • Needs to incorporate short-term and long-term objectives • Recognizes trade-offs between efficiency and effectiveness

The three key attributes in the strategic management process are analyses, decisions, and actions. Analysis, also called strategy analysis, refers to managers' development of an understanding of the organization's internal and external environment, and the organization's overarching goals. These understandings are an important prerequisite for the strategic management process. Decisions, also called strategy formulation, refer to the overall plans that firms develop to compete and outperform their rivals. These plans utilize the results of strategy analysis, by formulating strategies that use their strengths, limit weaknesses, exploit opportunities, and defend against threats simultaneously. Actions, also called strategy implementation, refer to ensuring that proper strategic controls and organizational designs are put in place to carry out the strategy. The interdependent nature of these activities stems from various feedback mechanisms that occur as managers implement their firms' strategies. Unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences will force firms to modify their intended strategy, combining it with an emergent strategy, and resulting in a realized strategy. The realized strategy will in turn be modified by further unforeseen events. The continually modified realized strategy will consist of refined analyses, decisions, and actions that are constantly being updated.

Stakeholder management is where multiple individuals or groups, who have a stake in or can influence an organization's performance, are included in the strategic management process. So, top managers will be interested in satisfying the needs of shareholders and other stakeholders such as customers, suppliers, employees, creditors, government, and the community. Managers who are interested solely in stockholder management are likely to make decisions that satisfy short-term profit objectives. These decisions might include downsizing, neglect of asset maintenance, or put pressure on suppliers to lower prices. However, these decisions are likely to adversely affect long-term performance. Top managers who pay attention to all stakeholders are less likely to make decisions counter to the firm's objective of long-term profit maximization.

Corporate governance is defined in the text as the relationship among various participants in determining the direction and performance of corporations. The primary participants are (1) the shareholders, (2) the management (led by the chief executive officer), and (3) the board of directors. Corporate governance is designed to focus the efforts of the CEO on maximizing long-term shareholder wealth. The board of directors is elected or chosen by shareholders, and is charged with monitoring and evaluating CEO performance. Corporate governance can be improved by including other stakeholder representatives on the board of directors. These other members would ensure that top management will respond to these interests and become more socially responsible in addition to earning profits. Managers will respond to and exploit overlapping stakeholder interests, which can lead to increased long-term profits.

Stakeholder management will, in part, be tricky because of competing interests. For example, customers may want lower prices while shareholders might want higher prices (which may lead to higher profits). However, stakeholder symbiosis can also result because stakeholders depend on each other for success and well-being. Firms can achieve stakeholder symbiosis by learning stakeholder interests and looking for overlaps. For example Outback Steakhouse discovered that employees and customers both benefited by employing staff who agreed with the company's principles and beliefs. Such staffs tended to have lower turnover and more satisfied customers. Inclusion of stakeholders such as the community, government, and environmental groups can also increase a firm's reputation. For example, firms that use a triple bottom line and evaluate their performance in financial, social, and environmental dimensions are likely to have good reputations with customers, governments, and the community at large.

In today's complex and dynamic business environment, top managers do not have all the answers. Rather, top managers will be responsible for communicating their firms' strategies to lower-level managers, and in turn empower these managers with discretion to respond quickly and appropriately to opportunities as they arise. Such empowerment enables a firm to respond more quickly to the needs of customers and stakeholders, thus improving competitiveness.

An organization's hierarchy of goals refers to goals ranging from, at the top, those that are less specific yet able to evoke powerful and compelling mental images, to, at the bottom, those that are more specific and measurable. The main components are, at the top, the organizational vision, which evokes powerful and compelling mental images, the mission statement, which includes both the purpose of the organization, its scope of operations, and the basis of its competitive advantage, and the strategic objectives, which are used to operationalize the mission statement and that are specific and cover a well-defined time frame. There must be consistency among these goals in order to maximize employee motivation and a sense of equity and fairness when rewards are allocated. Inconsistency among the goals between any level can result in confusion among employees as to what the firm values, and subsequently to loss of identification with the firm, loss of motivation, and turnover.

D) romantic

B) a sustainable outcome

B) False

B) False

5. Zero sum thinking is in direct contrast with ________ thinking. A) emergent strategic B) symbiosis C) leadership D) creative

A) True

For organizations to be socially responsible, they must be accountable only to their stockholders.

C) financial

9. Strategic management should take place at what organizational level? A) at the top of the organization B) throughout the organization C) from the bottom up in an organization D) at the middle of the organization

A) True