Question 1

The concept of shared value redefines the purpose of the corporation as creating shared value in order to create a more even distribution of the profits to all employees,not just top level executives.

Accepted Answer

Shared value can be defined as policies and operating practices that enhance the competitiveness of a company, while simultaneously advancing the economic and social conditions in which it operates. It is not about personal values or sharing the value created by firms, which is a redistribution approach. Instead, it is about expanding the total pool of economic and social value.

Question 2

Social responsibility is the idea that organizations are not only accountable to stockholders but also to the community-at-large.

Accepted Answer

Social responsibility is the expectation that businesses or individuals will strive to improve the overall welfare of society. From the perspective of a business, this means that managers must take active steps to make society better by virtue of the business being in existence.

Question 3

Management innovations such as total quality,just-in-time,benchmarking,business process reengineering,and outsourcing are important,but not enough for building sustainable competitive advantage.

Accepted Answer

Sustainable competitive advantage cannot be achieved through operational effectiveness alone. Popular management innovations of the last two decades like total quality, just-in-time, benchmarking, business process reengineering, and outsourcing are concerned with operational effectiveness.

Question 4

Former Chrysler vice chairman Robert Lutz observed that companies exist to serve the shareholder and create shareholder value.He insisted that the only person who owns the company is the person who paid good money for it.This is an example of a symbiotic approach to stakeholder management.

Accepted Answer

This is zero-sum stakeholder management. On the other hand, organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes that stakeholders are dependent upon each other for their success and well-being.

Question 5

Business-level strategy focuses on (1)what businesses to compete in,and (2)the management of the business portfolio to create synergy among its businesses.

Accepted Answer

Corporate-level strategy focuses on two issues: (a) what businesses to compete in, and (b) how this portfolio of businesses can be managed to achieve value synergy.

Question 6

Strategic management recognizes the trade-offs between effectiveness and efficiency.

Accepted Answer

The fourth attribute of strategic management is that it involves the recognition of trade-offs between effectiveness and efficiency. Some authors have referred to this as the difference between doing the right thing (effectiveness) and doing things right (efficiency).

Question 7

Corporate-level strategy addresses how firms compete and outperform their rivals as well as achieve and sustain competitive advantages.

Accepted Answer

Business-level strategy addresses the issue of how to compete in a given business to attain competitive advantage.

Question 8

Decisions by boards of directors are always consistent with shareholder interests.

Accepted Answer

The board of directors (BOD) are the elected representatives of the shareholders charged with ensuring that the interests and motives of management are aligned with those of the owners (i.e., shareholders). Recent scandals have resulted in criticism and cynicism that the BOD fulfills this charge.

Question 9

The three primary participants in corporate governance are: (1)the shareholders,(2)the management (led by the chief executive officer),and (3)the employees.

Accepted Answer

The primary participants are: (1) the shareholders, (2) the management (led by the chief executive officer), and (3) the board of directors.

Question 10

According to the text,formulating strategy includes taking into consideration strategy at the business,corporate,and international levels.

Accepted Answer

The strategy formulation decisions of a firm are developed at several levels. First, business-level strategy addresses the issue of how to compete in a given business to attain competitive advantage. Second, corporate-level strategy focuses on two issues: (a) what businesses to compete in and (b) how businesses can be managed to achieve synergy. Third, a firm must develop international strategies as it ventures beyond its national boundaries. Fourth, managers must formulate effective entrepreneurial initiatives.

Question 11

The success Apple,Inc.achieved over the past decade was a direct result of the creative and forceful leadership of its late CEO,Steve Jobs.According to the text,this would be an example of the "romantic" perspective of leadership.

Accepted Answer

In the romantic view of leadership, the implicit assumption is that the leader is the key force in determining an organization's success or lack thereof.

Question 12

According to Henry Mintzberg,a management scholar,most firms realize their original intended strategy.

Accepted Answer

Henry Mintzberg states that the intended strategy rarely survives in its original form. Unforeseen environmental developments, unanticipated resource constraints, or changes in managerial preferences may result in at least some parts of the intended strategy remaining unrealized. On the other hand, good managers will want to take advantage of a new opportunity presented by the environment, even if it was not part of the original set of intentions.

Question 13

According to the textbook,strategic management does not consist of the analyses that an organization undertakes in order to create and sustain competitive advantages.

Accepted Answer

According to the textbook, strategic management consists of the analyses, decisions and actions an organization undertakes in order to create and sustain competitive advantages.

Question 14

The three interrelated and principal activities of strategic management are: strategy analysis,strategy formulation,and strategy implementation.

Accepted Answer

Strategic management is defined by the text as consisting of the analyses, decisions and actions an organization undertakes in order to create and sustain competitive advantages. It incorporates the three major processes: strategy analysis, strategy formulation, and strategy implementation.

Question 15

Strategic management consists of the analyses,decisions,and actions an organization undertakes in order to create and sustain competitive advantages.

Accepted Answer

According to the textbook, this is the definition of strategic management.

Question 16

Stockholders,employees,and the community-at-large are among the stakeholders of a firm.

Accepted Answer

A stakeholder can be defined as an individual or group, inside or outside the company, that has a stake in and can influence the performance of the organization. Stakeholders include stockholders, employees, suppliers, governments, and others.
Refer To: Exhibit 1.5

Question 17

Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders within and outside an organization.

Accepted Answer

Organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes that stakeholders are dependent upon each other for their success and well-being.

Question 18

Procter and Gamble developed a laundry detergent compaction technique that appeals to consumers,retailers,shipping and wholesalers,and environmentalists.This is an example of stakeholder symbiosis.

Accepted Answer

According to the text, the Procter and Gamble technique that compacts two to three times as much cleaning powder into a liquid concentration has led to a change in consumer shopping habits and has revolutionized industry supply-chain economics. This is an example of stakeholder symbiosis in action.

Question 19

Effective leadership can play a large role in fostering corporate entrepreneurship.Corporate entrepreneurship can have a very positive impact on the bottom line of a firm.

Accepted Answer

Entrepreneurial activity aimed at new value creation is a major engine for economic growth. For entrepreneurial initiatives to succeed viable opportunities must be recognized and effective strategies must be formulated. This requires effective leadership.

Question 20

Stockholders in a company are the only individuals with an interest in the financial performance of the company.

Accepted Answer

A stakeholder can be defined as an individual or group, inside or outside the company, that has a stake in and can influence the performance of the organization. Each stakeholder group makes various claims on the company.
Refer To: Exhibit 1.5

Quiz 1: Strategic Management: Creating Competitiveadvantages