Deck 1: Strategic Management: Creating Competitive Advantages

Question 1

Strategic management is not concerned with how to create competitive advantage in the marketplace.

Answer 1

False
Explanation: The essence of strategic management is the study of why some firms outperform others. Managers need to determine how a firm is to compete so that it can obtain advantages that are sustainable over a lengthy period of time. That means focusing on how to compete in order to create competitive advantages in the marketplace and how to create competitive advantages in the marketplace that are unique, valuable, and difficult for rivals to copy or substitute.

Question 2

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

Answer 2

True
Explanation: 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 advantage.

Question 3

According to a recent study involving 41 business units in 10 multinational companies,one ambidextrous behavior exhibited by managers is that of being brokers who are always looking to build internal networks.

Answer 3

True
Explanation: As an example of this ambidextrous behavior, a Canadian plant manager connected a regional manager, who was looking for ways to build his business, with an $10 million investment opportunity in St Louis for a new tape manufacturing plant.

Question 4

Focusing on a single stakeholder is a good strategic principle for managers to follow.

Question 5

Strategy analysis is the study of the external environments of the firm.

Question 6

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.

Question 7

Both the internal and external environments of a firm must be analyzed as well as the goals of the firm before managers can formulate and implement appropriate strategies.

Question 8

According to Peter Senge,a leading strategic management author,creative tension results from the need to incorporate both short-term and long-term perspectives in strategic management.

Question 9

Shareholders expect only short-term value and therefore good managers should only focus on meeting short-term performance targets.

Question 10

Making trade-off decisions between effectiveness and efficiency is central to the practice of strategic management.

Question 11

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

Question 12

Strategic management is only concerned with short-term perspectives.

Question 13

The final realized strategy of a firm is a combination of deliberate and emergent strategies.

Question 14

In the Mintzberg model,organizational decisions determined only by analysis are intended strategy.

Question 15

Strategic management is concerned with the analysis of strategic goals as stated in the vision,mission,and strategic objectives of a firm.

Question 16

Hewlett-Packard's failure and success under the leadership first of Carly Fiorina and then of Mark Hurd was said to be a direct result of the quality of leadership of each of these CEOs.According to the text,this would be an example of the "romantic" perspective of leadership.

Question 17

Only shareholders in a publicly held company are stakeholders because they are the only group that has a stake in the success of the organization.

Question 18

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

Question 19

Focusing on the short term and efficiency is always a bad management principle.

Question 20

Ambidexterity refers to a manager's challenge to align resources,without having to take advantage of existing product markets or to proactively explore new opportunities.

Question 21

Leaders are responsible for creating a learning organization so that the entire organization can benefit only from the individual talents.

Question 22

Stakeholders make various claims on a company.Their interests must be taken into account in the strategic management process.

Question 23

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

Question 24

International strategy involves decisions concerning appropriate entry strategy and attaining competitive advantage in international markets.

Question 25

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.

Question 26

All successful firms compete and outperform their rivals by developing bases for competitive advantage,which can be achieved only through cost leadership.

Question 27

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

Question 28

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

Question 29

Ensuring effective corporate governance requires an effective and engaged board of directors,uninvolved shareholders,and proper managerial rewards and incentives.

Question 30

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.

Question 31

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.

Question 32

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

Question 33

Strategy formulation involves decisions made by firms regarding investments,commitments,and other aspects of operations that create and sustain competitive advantage.

Question 34

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

Question 35

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.

Question 36

Entrepreneurial activity aimed at new value creation is not a major engine for economic growth.

Question 37

Firms must exercise either informational control or behavioral control in order to assure proper strategy implementation.

Question 38

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

Question 39

Strategy implementation involves actions that carry out the formulated strategy including proper strategic controls,organizational designs,and leadership.

Question 40

Auditors,banks,and analysts are external control mechanisms to ensure effective corporate governance.

Question 41

There is a positive influence of CSR on the consumer evaluation of companies and their purchasing decisions,according to recent studies.

Question 42

As a stakeholder group,customers are interested in dividends and capital appreciation.

Question 43

Environmental sustainability is a value embraced by the most competitive and successful multinational companies.

Question 44

Many of the benefits from sustainability projects are intangible,making it difficult to calculate the ROI.

Question 45

The ROI on a sustainability project generally is easy to quantify.

Question 46

Sustainability projects often require shorter-term payback windows than other projects.

Question 47

Demands for greater corporate responsibility are decreasing today.

Question 48

Sustainability is being increasingly recognized as a source of cost efficiencies and revenue growth.

Question 49

The Higgs Index enables companies to compare environmental performance outcomes in order to improve their environmental impact and is an example of how rivals work together to resolve complex problems.

Question 50

The ROIs on sustainability projects are often very difficult to quantify because the data necessary to calculate ROI accurately are often not available when it comes to sustainability projects.

Question 51

The intangible benefits of sustainability projects,such as reducing risks,staying ahead of regulations,pleasing communities,and enhancing employee morale,are substantial even when they are difficult to quantify.

Question 52

As a stakeholder group,creditors are interested in taxes and compliance with regulations.

Question 53

Sustainability initiatives rarely have difficulty making it through the conventional approval process within corporations because managers are not concerned about their return on investment.

Question 54

Partnering with governments,communities,suppliers,customers,and rivals is a way to manage conflicting stakeholder interests.

Question 55

Shell,NEC,and Procter and Gamble have been measuring their performance according to what has been called a triple bottom line.This technique involves an assessment of financial,social,and environmental performance.

Question 56

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

Question 57

For many successful firms,environmental values are not central to the company culture and management processes.

Question 58

As a stakeholder group,communities are interested in good citizenship behavior.

Question 59

What constitutes socially responsible behavior changes over time.

Question 60

A key stakeholder group that appears to be particularly susceptible to corporate social responsibility (CSR)initiatives is customers.

Question 61

Richard Branson,the founder of the Virgin Group,is well known for creating an inclusive organizational structure in which anybody in the organization can be involved in generating and activating upon new business ideas.

Question 62

Showing interest in learning what others are thinking is a leadership weakness.

Question 63

To develop and mobilize people and other assets,leaders are needed throughout the organization.

Question 64

Internal networks have great positional power and formal authority.

Question 65

Strategic management requires managers at all levels of the organization to take a segregated view of the organization.

Question 66

In the strategic management process,only local line leaders and executive leaders are needed.

Question 67

According to the CEO of IDEO,Tim Brown,spotting and promoting at any level in the firm is important.

Question 68

To effect transformational change in an organization,managers must communicate extensively and provide incentives,training,and development.

Question 69

Nancy Snyder,corporate vice president of Whirlpool,shifted the reputation of the firm to that of an innovator by investing financially in capital spending.

Question 70

Successful executives do not reward honesty and input and do not show their interest in learning what others are thinking.

Question 71

According to the text,a mission statement is an overarching statement that is massively inspiring,long term,and only discusses the purpose of the company.

Question 72

Executive leaders champion and guide ideas.

Question 73

Local line leaders have little profit-and-loss responsibility.

Question 74

The strategic management process should be addressed only by top-level executives.Mid-level and low-level employees are best equipped to implement the strategies of the organization.

Question 75

Strategic objectives are more specific than vision statements.

Question 76

The vision of an organization is the top level of its hierarchy of organizational goals.The vision statement should be massively inspiring,overarching,and long term.

Question 77

A mission statement encompasses both the purpose of the organization as well as its basis of competition,and the basis of its competitive advantage.

Question 78

There are few benefits to having broad investment throughout the organization in the strategic management process.

Question 79

To inculcate a strategic management perspective,managers must often make a major effort to effect transformational change.

Question 80

Local line leaders are key in setting the tone for the empowerment of employees.