MGMT – Ch 1 – Flashcards
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McDonald's has been able to ____.
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All of these options are correct (earn above average returns, achieve strategic competitiveness, use the strategic management process).
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A firm has achieved ____ when it successfully formulates and implements a value-creating strategy.
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strategic competitiveness
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A competitive advantage ____.
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can be identified only if it has been unsuccessfully challenged by competitors
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Above-average returns are ___.
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returns in excess of what an investor expects to earn from other investments with a similar level of risk
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The strategic management process is ___.
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the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.
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The primary drivers of hypercompetition are ___.
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the emergence of a global economy and rapid technological change
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All of the following are characteristic of the global economy EXCEPT ___.
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the increased use of tariffs to protect industries
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Essentially, ____ has become one of the world's largest markets with 700 million potential consumers.
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the European Union
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____ has become the second largest economy in the world.
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China
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The economic interdependence among countries as reflected in the flow of goods, services, financial capital, and knowledge across country borders is defined as ____.
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globalization
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Globalization has led to ____.
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higher product quality
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The "liability of foreignness" is the ___.
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overall risk of participating outside a firm's domestic country when entering global competition
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Even for companies capable of succeeding in global markets, it is critical that they ____.
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remain committed to and strategically competitive in their domestic market
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The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market?
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Internet
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New markets created by iPods, PDAs, and Wi-Fi are a result of ____.
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disruptive technologies
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Apple's iPod and iPad are examples of
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disruptive technologies
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The ability to effectively and efficiently access and use information is ___.
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an important source of competitive advantage in virtually all industries.
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The CEO of Ridgeway, Inc., realizes that the company's survival depends on developing and acquiring knowledge. Which of the following actions by the CEO would be most consistent with this need?
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planning extensive employee training and hiring educated and experienced employees
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Knowledge is composed of all the following EXCEPT ____.
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insight
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Which of the following statements about organizational knowledge is correct?
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All of these options are correct (The value of knowledge as a proportion of shareholder value is increasing, The importance of knowledge is increasing, knowledge is an intangible resource).
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In order to cope with hypercompetition, firms need to develop ___ through continuous learning.
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strategic flexiblity
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All of the following are assumptions of the industrial organization (I/O) model EXCEPT
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resources to implement strategies are firm-specific and attached to firms over the long-term.
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The industrial organization (I/O) model argues that
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the key factor in success is choosing the correct industry in which to compete.
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Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to
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the profitability of the industry in which the firm competes.
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Firms use the five forces model to identify the ____ of the industry as measured by its ____.
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attractiveness; profitability.
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Although McDonald's is competing in an unattractive industry, it has improved its performance by focusing on product innovations and by enhancing existing facilities. This improved performance is best explained by ___.
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the resource-based model
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An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using its concepts to make a decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization?
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RexRich Foods
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Research shows that approximately ____ percent of a firm's profitability is explained by the industry in which it competes, whereas ____.
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20; 36
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All of the following are resources of an organization EXCEPT ___.
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weak competitors in the industry
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All of the following are assumptions of the resource-based model EXCEPT ____.
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capabilities are highly mobile across firms
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____ is a capacity for a set of resources to perform a task or an activity in an integrative manner.
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Capability
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When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n) ____.
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core competence
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In the resource-based model, which of the following factors would be considered a key to organizational success?
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skilled employees
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To have the potential to become sources of competitive advantage, resources and capabilities must be non- substitutable, valuable, ____ , and ____.
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rate; costly to imitate
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The resource-based model of the firm argues that
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resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
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The resource-based view of the firm
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emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone.
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The goal of the organization's ____ is to point the firm in the direction of where it would like to be in the years to come.
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vision
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The Princeton Alliance Church states in its website that "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope." This pronouncement is most precisely a statement of organizational ____.
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vision
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A firm's mission ____.
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is a statement of a firm's business in which it intends to compete and the customers it intends to serve.
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The final responsibility for forming the organization's mission lies with the ____.
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CEO
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Who typically develops a firm's mission statement?
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the CEO and top managers
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Organizational stakeholders include ___.
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employees
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The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders if it cannot satisfy them all. The ___ is the most critical criterion in prioritizing stakeholders.
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power of each stakeholder
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Capital market stakeholders include ____.
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shareholders
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Dissatisfied capital market stakeholders may ___.
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All of these options are correct (seek to increase their power, tighen loan covenants, sell their stock).
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Greenleaf Property Management has been earning below-average returns for the last three years. Which of the following statements are true?
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Greenleaf will not be able to minimally satisfy all stakeholders.
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Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is ____.
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obtaining reliable products at the lowest possible price
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Generally speaking, product market stakeholders are satisfied when ____.
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a firm's profit margin yields the lowest return to capital market stakeholders that is acceptable to them
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Before liquidating, Circuit City took several actions to try to satisfy its ____ stakeholders.
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capital market
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The Chambers of Commerce of cities and towns often implore citizens to buy from local businesses. This is because the organization's role as a taxpayer is most important to ____ as stakeholders.
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host communities
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Although it closed stores, changed the top management team, and sought potential buyers, none of these actions resulted in outcomes that allowed Circuit City to meet the expectations of its _____ stakeholders.
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capital market
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Organizational stakeholders are usually satisfied when ___.
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companies provide a dynamic, stimulating, and rewarding work environment
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Product market stakeholders include ____.
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suppliers
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Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors higher returns than those earned by its direct competitors' investors. RNH has a reputation for providing high-paying managerial and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and inadequate patient-care staffing. Which statement best describes the situation?
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RNH has prioritized the demands of capital market stakeholders over the demands of product market stakeholders.
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A prominent national accounting firm runs television advertisements showing an accountant working alone late in the office on a client's project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that this firm's accountants love their work. This ad seeks to convey a sense of the organization's _____ to the viewers.
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culture
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The global economy, globalization, rapid technological change, and the increasing importance of knowledge are creating the need to ____.
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delegate strategic responsibilities to employees "closer to the action."
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The strategic leader's work is characterized by ___.
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ambiguous decision situations which make effective decisions difficult to determine.
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The profit pool is the ____.
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total profits earned in an industry along all points of the value chain
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The steps for identifying the profit pools in an industry include all of the following EXCEPT ____.
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defining the competitors in the pool
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Analysis of the industry's profit pool enables strategic managers to ____.
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locate the most promising areas of an industry's value chain
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If McDonald's were to map the profit pool in the quick-service restaurant industry, it would do all of the following EXCEPT ____.
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select the strategy to use where the largest profit pools are located
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A major assumption about the strategic management process is that it is ___.
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rational
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A business-level strategy describes _____.
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the firm's actions to exploit its competitive advantage over rivals
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In a diversified firm, corporate-level strategy is concerned with ____.
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determining in which businesses to compete and how resources will be allocated between businesses
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PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision _____.
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has ethical implications for organizational stakeholders
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It is well known that the elected school board of a large city engages in unethical and illegal activities involving the awarding of major contracts. This behavior has existed for decades, even as the membership in the school board has changed over time. This behavior reflects ____.
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the core values of the school board as an organization
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In smaller, new venture firms, returns are sometimes measured in terms of ____.
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the amount and speed of growth
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A _____ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.
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strategy
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_____ is an investor's uncertainty about the economic gains or losses that will result from a particular investment.
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risk
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The culmination of the strategic management process is ____.
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performance
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Managers must adopt a new mind-set that values ___ and the challenges that evolve from constantly changing conditions.
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All of these options are correct (flexibility, innovation, speed).
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____ innovation is a term used to describe how rapidly and consistently new, information-intensive technologies replace older ones.
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Perpetual
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_____ provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters changes.
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Continuous learning
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The I/O model is grounded in ____.
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economics
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Firms use both the ___ and ___ models. In fact, these models complement each other in that one focuses outside the firm while the other focuses inside the firm.
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I/O; resource-based
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____ should establish a firm's individuality and should be inspiring and relevant to all stakeholders.
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mission
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William Ackman is a hedge fund manager who owned a large share of J.C. Penney stock. He was also a member of the Penney board. He tried to get the CEO fired, but the board and top management said he breached his boardroom duties when he publicly disclosed information on the CEO search and financial condition of the company. He resigned from the board of directors. This is an example of a contentious relationship between ____.
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the capital market stakeholders and the organizational stakeholders
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Strategic leaders are
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located in different areas and levels.
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Successful strategic leaders are ____.
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All of these options are correct (committed to helping the firm create value for all stakeholder groups, committed to nurturing those around them, decisive).
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Strategic delegation helps ____.
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avoid too much managerial hubris.
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Organizational culture refers to _____.
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All of these options are correct (the social energy that drives, or fails to drive, the organization; the complex set of ideologies, symbols, and core values that are shared throughout the firm; what people do when non one else is looking).
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Effective strategic leaders _____.
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are willing to be brutally honest
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Strategic leaders, ____ , often work long hours, and their work is filled with ambiguous decision situations.
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regardless of their location in the organization
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If McDonald's is considering growing potatoes, the step of the profit pool analysis is the one that ____.
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estimates the size of the value-chain activity in the pool
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If Southwest Airlines is considering the consequences of videoconferencing on business travel, it is in the profit pool analysis step known as ____.
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defining the pool's boundaries
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SWOT stands for
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strengths, weaknesses, opportunities, and threats.
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In the strategic management process ASP stands for ____.
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analyses, strategies, and performance
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The firm's ____ provide the foundation for choosing one or more ______ and deciding how to implement them.
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analyses; strategies
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It is important to emphasize that, primarily because they are related to how a firm interacts with its stakeholders, almost all strategic management process decisions have ____.
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ethical dimensions
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A company competing in a single product market has ____.
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one business-level strategy and one corporate-level strategy
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The strategic management process is _____.
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the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness
