Once a firm acquires a competitive advantage, they are usually able to sustain the competitive advantage for an extended period of time.
Newspaper companies in the United States provide a good example of how a company can sustain a competitive advantage over the long term.
In order for a firm to achieve sustained competitive advantage, a firm must continually adapt to changes in external trends and events and effectively formulate, implement, and evaluate strategies that capitalize upon those factors.
A vision statement answers the question, “What is our business?,” whereas a mission statement answers, “What do we want to become?”
Identifying an organization’s existing vision, mission, objectives and strategies is the final step for the strategic management process.
The poor reward structure is one reason managers do not engage in strategic planning.
Strategic-management must be a self-reflective learning process that familiarizes managers and employees in the organization with key strategic issues and feasible alternatives for resolving those issues.
Today, managers and employees can be found personally liable if they ignore, conceal, or disregard a pollution problem.
Nonprofit organizations have less need for strategic management because they are not interested in making a profit.
What is a theme that has become a more important strategic issue due to global warming, bioterrorism, and increased pollution?
What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives?
During what stage of strategic management are a firm’s specific internal strengths and weaknesses determined?
What types of skills are especially critical for successful strategy implementation?
Which individuals are most responsible for the success and failure of an organization?
A mission statement, sometimes called a creed statement, can be defined as an “enduring statement of purpose that distinguishes one organization from other similar enterprises.”
There is no need for a mission statement in small, nonprofit organizations.
An important question a mission statement should answer is, “What do we want to become?”
When developing a mission statement, it is usually advisable to involve as few managers as possible.
The most important time for a company to develop a mission and vision statement is when the company is experiencing financial difficulty.
A firms concern for employees in a mission addresses the question, “Is the firm responsive to social, community, and environmental concerns?”
in annual reports.
The vision and mission statement can often be found
What do we want to become?
Which of these basic questions should a vision statement answer?
The ideal length of a vision statement is:
Who is referred to as “the father of modern management?”
What is our business?
The mission statement answers which question?
When the firm is successful
What is the best time to re-visit a mission statement?
a customer orientation
The three characteristics of a mission statement are a declaration of attitude, a declaration of social policy and:
To perform an external audit, a company first must gather competitive intelligence and information about social, cultural, demographic, environmental, economic, political, legal, governmental, technological, and global trends
Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.
A low value of the dollar means lower exports and higher imports.
The United States is getting older and less Caucasian.
Political forecasts can be the most important part of an external audit for firms that depend heavily on government contracts.
Internal opportunities can be represented by major competitors’ weaknesses.
Competitive intelligence is not considered corporate espionage because 95 percent of the information a company needs to make strategic decisions is available and accessible to the public.
Because companies are fearful of corporate espionage, cooperative agreements between competitors are becoming less popular.
According to Michael Porter, five competitive forces create vital opportunities and threats to organizations: (1) new entrants, (2) substitute products or services, (3) bargaining power of suppliers, (4) bargaining power of buyers, and (5) rivalry among existing firms.
Rampant corruption and the absence of a democratically established legal system are risks that still restrain firms from initiating business with China.
In 2006, china produced more automobiles than Germany.
Analyzing financial ratios
__________ is not part of an external audit.
Gather competitive intelligence and information about external trends
To perform an external audit, a company first must:
More important than
The I/O approach to competitive advantage advocates that external factors are ________ internal factors in a firm achieving competitive advantage.
It is predicted that the United States will have how many racial or ethnic majorities by the year 2075?
Who are the world’s longest-living people?
When an industry relies heavily on government contracts, which forecasts can be the most important part of an external audit.
Who is Japan’s largest trading partner
Technological advancements can create new ______ advantages that are more powerful than existing advantages.
Divestiture is essential to growth
Which of the following is not a characteristic that describes the most competitive companies in America?
Bargaining power of unions
What is not one of Michael Porter’s five competitive forces?
Rivalry among competing firms
According to Porter, what is usually the most powerful of the five competitive forces?
The process of performing an internal audit, compared to the external audit, provides more opportunity for participants to understand how their jobs, departments and divisions fit into the whole organization.
Proponents of the resource-based view argue that external factors are more important than internal factors for a firm in achieving and sustaining competitive advantage
In China, business behaviors revolve around guanxi, or personal relations.
In China, to show that you enjoyed your meal, you should completely finish your food.
Punctuality, in general, is revered in all cultures of the world.
The only certain thing about the future of any organization is change.
There are seven basic functions of marketing: customer analysis, selling, product and service planning, pricing, distribution, marketing research and opportunity analysis.
Financial ratios are not applicable to nonprofit organizations.
A limitation of financial ratios is the fact that they are based on accounting data.
distinctive or core competencies
A firm’s strengths that cannot be easily matched or imitated by competitors are called
The internal resource categories used in the resource-based approach are physical resources, human resources and….
Organizational resources include all of the following except:
Which of the following is not a cultural product?
Which management function includes breaking tasks into jobs, combining jobs to form departments and delegating authority?
Are the organization’s products positioned well among competing products?
All of the following are key questions that can reveal internal strengths and weaknesses in the management department except:
What category of ratios measures a firm’s ability to meet maturing short-term obligations?
What category of ratios includes return on total assets and return on stockholders’ equity?
Average collection period
Which ratio would be considered an activity ratio?
Which country has the highest average hourly pay for auto workers?
Where is the largest seaport, in terms of ship container traffic processed annually?
__________ become(s) __________ only when they are evaluated, filtered, condensed, analyzed and organized for a specific purpose, problem, individual, or time.
Value chain analysis
The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called
dividing a firm’s operations into specific activities or business processes.
The initial step to implementing value chain analysis is
The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.
Horizontal integration is seeking ownership or increased control over competitors.
Gaining ownership or increased control over distributors or retailers is called forward integration strategy.
Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.
A strategy of seeking ownership or increased control of a firm’s supplier is backward integration.
If a firm’s present suppliers are expensive and unreliable in meeting the firm’s needs for parts, components and/or raw materials, the firm should pursue a Backward integration strategy.
Market development includes introducing present products into new geographic areas.
Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.
AT&T’s acquisition of BellSouth in 2007 was the largest telecommunications acquisition ever approved in the U.S.
Unrelated diversification is an appropriate strategy when an organization’s present channels of distribution can be used to market the new products to current customers.
Morgan Stanley’s building of a casino in Atlantic City is a good example of related diversification.
All of the following are important factors in the Balanced Scorecard except:
Southwest Airlines selling tickets through Galileo is an example of which type of strategy?
Whirlpool selling its struggling Hover floor-care business to Techtronic Industries is an example of which type of strategy?
Burger King opening its first restaurant in Japan is an example of which type of strategy?
Web sites to sell products directly to consumers are examples of which type of strategy?
When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.
In which situation would horizontal integration be an especially effective strategy?
When a domestic company first begins to export to India, it is an example of:
Nortel cutting another 2,900 jobs in 2007 in an attempt to stay in business would be an example of:
A turnaround or reorganization strategy
What kind of strategy is retrenchment?
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.
The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.
In a BCG Matrix the pie slice indicates the proportion of corporate profits generated by that division.
Cash cows represent the organization’s best long-run opportunities for growth and profitability.
The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization’s various divisions.
Viewing businesses as star, cash cow, dog or question mark is an oversimplification.
Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm.
Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages.
Boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management.
The Sarbanes-Oxley Act put an end to the “country-club” atmosphere of most boards and has shifted power from CEOs to directors.
What type of strategy would divestiture be classified as?
Companies with more than one division
For what type of company is the BCG Matrix ideal for analyzing?
In the BCG Matrix, which element represents the industry growth rate in sales, measured in percentage terms?
How would a division with a low relative market share position in a high growth industry be described?
Which strategy would be most appropriate for a company classified as a Dog?
According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market growth and a strong competitive position?
The act of oversight and direction for an organization is referred to as
At least two directors are current or former company executives.
All of the following are principles of good organizational governance, as established by Business Week, except:
Strategy formulation requires coordination among a few individuals, but strategy implementation requires coordination among many.
Four types of resources that can be used to achieve desired objectives are financial, physical, human and technological.
Avoidance, infusion and confrontation are the classifications for the various approaches for minimizing and resolving conflict.
Most large companies have abandoned the functional structure in favor of decentralization.
Managing as if ‘the earth matters’ requires an understanding of how international trade, competitiveness and global resources are connected.
The United States leads the world in promoting women and minorities into mid- and top-level managerial positions in business.
It is primarily an operational process.
Which of these is true about strategy implementation?
All of the above (monitoring processes, establishing divisional priorities, allocating resources, evaluating managers)
Considerable time and effort should be devoted to assuring objectives are well conceived because they represent the basis for
To increase motivation
Which of the following issues may not require a management policy?
Which approach for managing and resolving conflict involves playing down differences between conflicting parties while accentuating similarities and common interests?
What type of organizational structure do most small businesses follow?
Which organizational structure is the most simple and inexpensive?
Restructuring is also referred to as
Which of these involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria?
The primary benefit sought from restructuring is
All of the above (Absenteeism, sabotaging production machines, filing unfounded grievances, and an unwillingness to cooperate
Resistance to change can manifest itself through
Less than 10 percent
What percent of strategies formulated are successfully implemented?
Market segmentation and product positioning
Which two variables are of central importance to strategy implementation?
What becomes a more attractive financing technique when cost of capital is high?
Dilution of the control of the company
What is a drawback of using only equity to raise capital?
A good information system can allow a firm to
All of the above (Reviewing the underlying internal and external factors that represent the bases of current strategies , measuring organizational performance, taking corrective actions)
Which of these is/are a basic activity of strategy evaluation?
Adequate and timely feedback
What is the cornerstone of effective strategy evaluation?
Qualitative and quantitative criteria
Strategy evaluation is based on
Which of the following is not a component of the Balanced Scorecard?
All of the above (Protect, mend, preserve, reflect good stewardship of)
Sustainability refers to the extent that an organization’s operations and actions _______ the natural environment.
Strategists such as CEOs and business owners
are the individuals primarily responsible for ensuring that high ethical principles are espoused and practiced in an organization.
Preventing environmental harm
All of the following business actions are considered to be unethical except:
Unethical activities that plague online commerce include all of the following except:
A document that provides behavioral guidelines that cover daily activities and decisions within an organization
A code of business ethics is
Messages from the CEO or business owner emphasizing ethical business practices, The development and discussion of codes of ethics, Procedures for discussing unethical behavior, Procedures for reporting unethical behavior (All of the above)
Ethics training programs should contain which of the following?
According to a recent Wall Street Journal article, _______ percent of all firms sampled had no restrictions on boss-subordinate love affairs at work.
Make enough profit to cover the costs of the future, because if this is not achieved then no other social responsibility can be met
According to the text, the first social responsibility of any business is to
Which state generates the greatest number of megawatts of wind power?
Remain a domestic competitor
In an industry that is, or is rapidly becoming global, the riskiest possible posture is to
Social, cultural, governmental, political (all of the above)
The _______ opportunities and threats that face a multinational corporation are almost limitless.
? Geographic distance, cultural differences, variations in business practices, national differences (all of the above)
Communication between domestic headquarters and overseas operations is often made difficult by
can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries.
Strengths of competitors in foreign lands are often _______, and weaknesses are often _______.
Liberalizing restrictions on the import of foreign goods
Protectionism involves countries doing all of the following except:
Nike running shoes, new Hollywood movies on DVD, Microsoft software, handbags (all of the above)
In China, pirated goods such as _______ can be purchased for a fraction of their actual prices on many streets.
China’s counterfeit trade practices contribute to an annual bilateral trade deficit of about _______ with the United States.
Americans place an exceptionally high priority on _______ whereas many foreigners place more worth on _______.
Which of the following nations has the highest corporate tax rate?