Deck 1: Strategic Management: Creating Competitive Advantages

Question 1

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

Answer 1

True
Explanation: Strategic management is concerned with the analysis of strategic goals (vision, mission, and strategic objectives) along with the analysis of the internal and external environments of the organization.

Question 2

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

Answer 2

True
Explanation: Henry Mintzberg, a management scholar at McGill University, argues that viewing the strategic management process as one in which analysis is followed by optimal decisions and their subsequent meticulous implementation neither describes the strategic management process accurately nor prescribes ideal practice. In the Mintzberg model, decisions following from analysis constitute the intended strategy of the firm.

Question 3

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.

Answer 3

False
Explanation: Stakeholders are those individuals, groups, and organizations that have a stake in the success of the organization, including owners (shareholders in a publicly held corporation), employees, customers, suppliers, the community at large, and so on.

Question 4

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 5

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

Question 6

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

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

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 9

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

Question 10

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

Question 11

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 12

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 13

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

Question 14

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

Question 15

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

Question 16

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.

Question 17

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

Question 18

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

Question 19

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

Question 20

Strategic management is only concerned with short-term perspectives.

Question 21

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 22

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

Question 23

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 24

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 25

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

Question 26

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

Question 27

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

Question 28

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 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

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

Question 42

What constitutes socially responsible behavior changes over time.

Question 43

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

Question 44

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

Question 45

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

Question 46

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 47

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 48

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 49

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

Question 50

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

Question 51

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

Question 52

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 53

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

Question 54

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

Question 55

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 56

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

Question 57

Demands for greater corporate responsibility are decreasing today.

Question 58

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

Question 59

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

Question 60

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

Question 61

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 62

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

Question 63

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

Question 64

Strategic objectives are more specific than vision statements.

Question 65

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

Question 66

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

Question 67

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

Question 68

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 69

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

Question 70

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

Question 71

Internal networks have great positional power and formal authority.

Question 72

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

Question 73

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 74

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

Question 75

Executive leaders champion and guide ideas.

Question 76

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

Question 77

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 78

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 79

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 80

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