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exam 1 sm
| Question | Answer |
|---|---|
| Strategic-Management Process (SM Process) | the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an org to achieve its objectives. It focuses on integrating mngmnt, mrktg, finance, and MIS to achieve success consists of three stages: sf, si, se |
| Strategy Formulation (Stage 1 of SM process) | "Includes developing vision and mission statements, identifying external opportunities and threats, determining internal strengths and weaknesses, and choosing particular strategies to pursue" |
| Strategy Implementation (Stage 2 of SM process) | Often called the “action stage,” it requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources. |
| Strategy Evaluation (Stage 3 of SM process) | "The final stage where managers review the bases for current strategies, measure performance, and take corrective actions" |
| Policies | Specific guidelines and procedures established to support efforts to achieve stated objectives\n\n\nThe means by which annual objectives will be achieved |
| Business vs. Military Strategy Connection: | Both aim to gain competitive advantage and use internal strengths to exploit competitor weaknesses. A fundamental difference is that business assumes competition (multiple winners), while military strategy is based on conflict (one winner) |
| Integration of Analysis and Intuition: | Strategic management must integrate intuition (based on past experience and judgment) with objective analysis to make effective decisions under uncertainty |
| Benefits of Strategic Management | "Financial: Improvements in sales, profitability, and productivity compared to firms without systematic planning.\Nonfinancial: Enhanced awareness of threats, improved understanding of competitors, increased employee productivity, and empowerment of indiv |
| Components of Mission Statements | "There are nine essential components: customers; products or services; markets; technology; survival, growth, and profitability; philosophy; distinctive competence; public image; and concern for employees" |
| Vision vs. Mission Statements | A vision statement answers “What do we want to become?” while a mission statement answers “What is our business?” and is a declaration of an organization's “reason for being” |
| Purpose of External Assessment: | To identify external opportunities that could benefit a firm and external threats that should be avoided or mitigated |
| Ten External Forces: | Organizations are affected by: economic; social; cultural; demographic; natural environment; political; governmental; legal; technological; and competitive forces |
| Porter’s Five-Forces Model: | "A tool to evaluate industry competitiveness based on:\(1) Rivalry among competing firms; \(2) Potential entry of new competitors;\ (3) Potential development of substitute products; \(4) Bargaining power of suppliers; \(5) Bargaining power of consumers/th |
| External Factor Evaluation (EFE) Matrix: | "Allows strategists to summarize and evaluate external information, assigning weights (importance to industry) and ratings (firm's response) to identify how well current strategies respond to factors" |
| Competitive Profile Matrix (CPM) | "a strategic-planning tool designed to identify a firm’s major competitors and compare their particular strengths and weaknesses relative to a focal firm’s strategic position\n\n\nIdentify Critical Success Factors (CSFs): Tailor 10 to 20 factors to the sp |
| Purpose of Internal Assessment | "To identify a firm’s internal strengths and internal weaknesses in functional areas of business (management, marketing, finance, accounting, and MIS)" |
| Internal Factor Evaluation (IFE) Matrix | A strategy-formulation tool that weights and rates a firm’s major strengths and weaknesses to provide an overall indicator of its internal position\n\n\nit indicates the internal effectiveness of current strategies |
| Outsourcing vs. Reshoring | "Outsourcing is paying other firms to perform business activities, while reshoring is the practice of moving manufacturing operations back to the firm's home country" |
| advantages & disadvantages of global operations | pros - gaining new customers and spreading economic risks over a wider number of markets\ncons - dealing with different monetary systems (exchange rate fluctuations) and the risk of foreign operations being seized |
| What is the purpose of a management information system (MIS) | "collects, codes, stores, synthesizes, and presents information in such a manner that it answers important operating and strategic questions" |
| What are the five basic activities of marketing? | "marketing research, \2) product planning, \3) pricing, \4) promotion, \5) channels of distribution" |
| List the four basic functions of management and when they are most important | "Planning (Strategy Formulation),\n Organizing (Strategy Implementation), \nMotivating (Strategy Implementation), \nControlling (Strategy Evaluation" |
| competitive intelligence (CI) | systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends\n\n\nscanning is the act of gathering ci |
| Benefits of clear vision & mission | "achieving clarity of purpose,\n providing a basis for allocating resources, \nprovide direction\nresolving divergent views among managers." |
| Characteristics of an effective mission statement | broad to allow for the generation of various alternative strategies without stifling management creativity fewer than 100 words in length |
| Characteristics of a vision statement | passes the 5/5 test and is created before the mission statement\often considered the first step in strategic planning \1. Clear: Reveals the industry and what the firm strives to become;\n 2. Futuristic: Looks 5 years into the future; \n3. Concise: One se |
| Pitfalls in strategic planning | "assigning one person to do the planning\nplanning should involve all managers rather than being assigned to a single person, as involvement is key to gaining commitment for execution" |
| Why some firms avoid planning | "having no formal training, \nbeing too busy ""firefighting"" (resolving internal crises), \n being overconfident due to current success" |
| Analysis vs. intuition | "Analysis is an objective, logical, and systematic approach for making major decisions based on data. Intuition is based on past experience, judgment, and feelings" |
| What are the three questions a firm must answer when preparing a strategic plan? | Where are we now?\n Where do we want to go? \nHow are we going to get there? |
| sustained competitive advantage | A competitive advantage that is maintained by continually adapting to external trends and internal capabilities and effectively formulating/implementing strategies to capitalize on those factors |
| empowerment | The act of strengthening employees' sense of effectiveness by encouraging them to participate in decision-making and rewarding initiative |
| long-term objectives vs annual objectives. | "Long-term objectives are results a firm seeks over a period of (typically) five years, while annual objectives are short-term milestones needed to reach long-term goals" |
| purpose of an external audit | To identify a finite list of opportunities that could benefit a firm and threats that should be avoided or mitigated |
| forecasts | "Educated assumptions about future trends and events based on facts, figures, and research" |
| weight | The relative importance of a factor to success in the firm's industry (ranging from 0.0 to 1.0)\n-industry based\n-the sum of all weights must equal 1.0 |
| ratings | "indicates how effectively the firm's current strategies respond to the factor (1 = poor, 4 = superior)\n\n\ncompany based" |
| resource-based view (RBV) | "An approach suggesting that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage\it suggests that performance is determined by resources that are rare |
| globalization | "The process of doing business worldwide, where strategic decisions are made based on global profitability rather than just domestic considerations" |
| Why is business climate a strategic issue? | "Variations in tax rates, tariffs, and political stability across countries impact the feasibility and profitability of international expansion" |
| distinctive competence/ self-concept (MS component) | A firm's major competitive advantage; a strength that cannot be easily matched or imitated by competitors |
| total weighted score | 2.5 is the average score\nover 2.5 is good strategy implementation\nunder 2.5 means strategy could use some improvement/work |
| multinational firms. | Organizations that conduct business operations across national borders |
| business analytics. | Using software to mine huge volumes of data to help executives make decisions and generate predictive models |
| "Explain the ""Controlling"" function of management." | "Activities taken to ensure that actual results conform to planned results, such as performance evaluations and taking corrective actions" |
| Explain the difference between strategists and strategic planners. | "Strategists (e.g., CEO, President) are individuals most responsible for the success or failure of an organization. \n\n\nStrategic planners typically serve in a support or staff role helping to gather and organize information" |
| Define internal strengths and internal weaknesses | An organization's controllable activities that are performed especially well or poorly relative to competitors |
| Define external opportunities and threats | "Economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends/events that could significantly benefit or harm an organization in the future" |
| Define strategies | "The means by which long-term objectives will be achieved, such as geographic expansion, diversification, or product development" |
| What are some alternative names for a mission statement? | "Creed statement, statement of purpose, statement of philosophy, statement of beliefs, statement of business principles, or a statement ""defining our business." |
| What is the difference between a core values statement and a vision statement? | "A core values statement provides the ethical foundation (commitment to integrity, teamwork, etc.), whereas a vision statement describes the desired future state of what the firm wants to become." |
| Describe the general process of developing vision and mission statements | Select and read background articles; have managers individually prepare statements; a facilitator/committee merges these into a single draft; request modifications; and hold a final meeting to revise and finalize the document. |
| AQCD Test | "Actionable, Quantitative, Comparative, and Divisional. A high-quality factor meets three or four of these criteria to ensure it is useful for strategy formulation, while low-quality factors provide little guidance for strategy formulation" |
| What is a key difference between the CPM and the EFE Matrix? | "The CPM compares firms against one another, whereas the EFE Matrix focuses on how the firm is responding to external industry factors. Additionally, CPM factors can include both internal and external issues" |
| How do you calculate the total weighted score | "Multiply each factor's weight by its rating to get a weighted score, then sum all weighted scores" |
| Under what condition do consumers (buyers) gain high bargaining power? | "Power is high when buyers can inexpensively switch to competing brands, purchase in large volumes, or are well-informed about sellers' prices and costs." |
| Name the three basic decision areas of finance and accounting | 1. The Investment Decision (capital budgeting): Allocating capital to projects and assets; \2. The Financing Decision: Determining the best capital structure; \3. The Dividend Decision: Determining the amount of funds paid to stockholders vs. retained in |
| protectionism. | "When countries impose tariffs, taxes, and regulations on firms outside the country to favor their own companies and people" |
| List three potential advantages of initiating or expanding international operations. | Gaining new customers; 2) Spreading economic risks over a wider number of markets; and 3) Achieving economies of scale through larger-scale productio |
| List three potential disadvantages of doing business globally. | "1) Risk of foreign operations being seized by nationalistic factions; 2) Difficulty in understanding different social, cultural, and legal forces; and 3) Dealing with two or more monetary systems/exchange rate fluctuations" |
| "Define the ""reconciliatory"" nature of a mission statement." | the statement should be broad enough to resolve divergent views among diverse stakeholders \nand appeal to an organization’s diverse stakeholders |
| Define synergy in management | the effect that occurs when everyone pulls together as a team that knows what it wants to achieve |
| List the five steps to develop an Internal Factor Evaluation (IFE) Matrix. | List 20 key internal factors (10 strengths and 10 weaknesses)\n 2. Assign weights (0.01 to 1.0) based on industry importance\3. Assign ratings (1 to 4) based on the firm's response; \4. Multiply weight by rating for weighted scores\5. Sum weighted scores |
| What is the purpose of test marketing | "It allows an organization to examine alternative marketing plans, learn about potential problems, and forecast future sales of new products before beginning large-scale production." |
| Why is it more important to capitalize on strengths than to simply focus on weaknesses? | "While improving weaknesses is a vital task for efficiency, competitive advantages generally arise more from internal strengths, uniqueness, and distinctive competencies that rivals cannot easily match" |
| List three common barriers to entry for new competitors. | "economies of scale, possession of patents, brand preferences, large capital requirements, and lack of access to raw material" |
| How do substitute products affect an industry's profitability? | They put a ceiling on the price that can be charged before consumers will switch to the substitute product. Competitive pressure increases as the relative price of substitutes declines. |
| Planning | "This function encompasses all managerial activities related to preparing for the future, such as establishing objectives, devising strategies, and developing policies\the foundation of the strategy formulation stage" |
| Organizing | involves activities that result in a structure of task and authority relationships, including org design, job dscrptns, and span of ctrl. / most important during the strategy implementation stage, bc it provides the framework for executing formulated stra |
| Motivating | "focuses on shaping human behavior through leadership, communication, teamwork, and human resource management. Like organizing, motivating \n\n\na critical component of strategy implementation" |
| Name examples of published sources for an external audit | "periodicals, journals, government documents, industry reports, and corporate reports like Form 10-K" |
| How to Use and Interpret a CPM | "The comparative analysis reveals which firms possess competitive advantages or disadvantages in specific areas\allows for a side-by-side comparison of rival firms, helping strategists see where they are being outperformed\The results help strategists dec |
| Explain the strategic purpose of using Porter’s Five-Forces Model | "To identify the nature of competitiveness in a given industry and guide managers in formulating strategies to keep rival firms at bay, capitalize on opportunities, and minimize the impact of external threats" |
| Which of Porter’s Five Forces is typically the most powerful? | Rivalry among competing firms. It is considered the most traditional factor analyzed by managers and is significantly impacted by changes in the other four forces |
| Intangible Resources | "Non-physical assets that a firm uses to create value. These are often the most important assets for gaining a competitive advantage because they are difficult for rivals to imitate\n\n\nex: org culture, brand equity/reputation, specialized know.edge" |
| Tangible Resources | "Physical or financial assets that a firm possesses.\nthese are often less valuable for long-term advantage because they are easier for competitors to buy or sell\n\n\nex: Labor, capital, land, plant, and equipment." |
| Sociocultural (external force) | includes social, cultural, demographic, and natural environment trends. These forces are beyond the control of a single firm but significantly impact the demand for products and how a business must operate Ex: Trends such as an ""aging society," |
| Substitute | "Products or services from other industries that can fill the same consumer needs as a firm's products. These place a ""ceiling"" on the price a firm can charge before customers switch to the alternative Ex: Uber are substitutes for personal cars |
| Industry | A specific category of business in which a firm competes aka a group of firms |
| Suppliers | Entities that provide the raw materials, parts, or components that a firm needs to produce its own goods or services. Their bargaining power is an external force that can reduce a firm’s profits if they raise prices or reduce the quality of their inputs |
| Stakeholders | "The individuals and groups who have a special ""stake"" or claim on a company\n\n\nthey are both internal and external\n\n\n\nEx: employees, managers, stockholders, boards of directors, customers, suppliers," |
| Shareholders | Individuals who own shares of a company’s stock and have a primary interest in the firm’s profitability and revenue growth. they own a part of the company and they can be internal or external |
| Customers (MS component) | Identifies exactly who the firm's present and potential buyers are |
| Products or Services (MS component) | Describes the major goods or benefits the firm provides to satisfy customer needs |
| Markets (MS component) | "The specific geographic locations (regions, countries, or states) where the firm competes for business" |
| "Survival, Growth, and Profitability (MS component)" | Indicates the firm's commitment to remaining financially sound and achieving long-term economic success |
| Philosophy (MS component) | "Outlines the basic beliefs, ethical priorities, and values that guide the organization's conduct" |
| Concern for Public Image (MS component) | "Shows how the firm responds to social, community, and environmental concerns, indicating its commitment to being a responsible corporate citizen" |
| Concern for Employees (MS component) | Clarifies whether the company views its workforce as a valuable asset and a priority |
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