GEB4890 Exam 1 Graded A Q&A Complete

Strategy - Answer-Set of action's that a company's managers take to outperform the company's competitors and achieve superior profitability-- competitive initiatives and business approaches Business Model - Answer-How the firm will make money: customer value proposition & profit formula Customer Value Proposition - Answer-Satisfying buyer wants and needs at a price that customers will consider a good value Customer Value Proposition is most attractive when value provided (V) is - Answer-Greater Customer Value Proposition is most attractive when price (P) is - Answer-Lower Relationship between strategy and business model - Answer-It takes a proven business model-- one that yields appealing profitability-- to demonstrate viability of a firm's strategy 3 Questions for thinking strategically - Answer-1. What is our present situation? 2. Where do we go from here? 3. How are we going to get there? What is our present situation? - Answer--Business environment and industry conditions -Firm's financial and competitive capabilities Where do we go from here? - Answer-Creating a vision for the firm's future direction How are we going to get there - Answer-Crafting an action plan for heading the firm in the intended direction, attracting customers, achieving the targeted financial and market performance, and getting the firm where it wants to go--its strategy.Strategic Management Process - Answer-1. Developing a strategic vision 2. Setting objectives 3. Crafting a strategy 4. Executing the chosen strategy 5. Monitoring developments, evaluating performance, and imitating corrective adjustments Distinction between vision and mission - Answer--Vision portrays a firm's aspirations for its future (where are we going?) -Mission describes the scope and purpose of its present business (who are we? what do we do? why are we here?) Why does a strategy (mission/vision) need to be well communicated? - Answer--crystalizes senior executives' own views about the firm's long term direction -reduces risk of rudderless decision-making -tool for winning support of org. members to help make the vision a reality -provides beacon for lower-level managers in setting dep. objectives and crafting strategies that align with firm's overall strategy -helps org. prepare for the future Financial Objectives - Answer--communicate top management's goals for financial performance -are focused internally on the firm's operations and activities Strategic Objectives - Answer--firm's goals related to marketing standing and competitive position -focused externally on competition vis-a-vis firm's rivals Why do objectives need to be top-down? - Answer-Anything less than a unified collection of strategies weakens the overall strategy and is likely to impair company performance Why is collaboration important at different levels for strategy-making? - Answer-Operating involving different products, industries, and geographic areas must have strategic-making authority delegated tofunctional and operating unit managers (all managers have a strategy-making role-- ranging from major to minor-- for the area that they head) Role of the board of directors - Answer--oversee firm's financial accounting and reporting compliance with GAAP principles -critically appraise the firm's direction, strategy, and business approaches -evaluate the caliber of senior executives' strategic leadership skills -institute a compensation plan that rewards top executives for actions and results that serve stakeholder interests-- specially shareholder A strong, independent board of directors... - Answer--Is well informed about the firm's performance -Guides and judges the CEO and other executives -Can curb management actions the board believes are inappropriate or unduly risky -Can certify to shareholders that the CEO is doing what the board expects -Provides insight and advice to top management -Is intensely involved in debating the pros and cons of key strategic decisions and actions