BADM 449 Exam 1 || All Correct.
why is strategy not a zero-sum game? correct answers win-win scenarios - co-opetition
(collaborative efforts among competitors for mutual gain)
analysis-formulation-implementation (afi) strategy framework correct answers analysis - a
diagnosis of the competitive challenge, which is accomplished through strategy analysis of the
firm's internal and external environments; formulation - a guiding policy providing overarching
approach that addresses the competitive challenge, and which is accomplished through strategy
formulation, resulting in the firm's corporate, business, and functional strategies; implementation
- a set of coherent actions to implement the firm's guiding policy, which is accomplished through
clear communication, organizational structure, organizational culture, and control
competitive advantage correct answers superior performance relative to other competitors in the
same industry or the industry average
sustainable competitive advantage correct answers occurs when a firm implements a value-
creating strategy that other companies are unable to duplicate or find too costly to imitate
(important basis for this is the development of resources and capabilities)
what are the three basic ways in which economic value can be created? correct answers revenue
increase, cost decrease, and risk decrease
in determining differential economic performance, what are industry effects and what are firm
effects? what approximate percentage of the variance does each effect explain? correct answers -
Firm effects (55%): Attribute firm performance directly to the actions strategic leaders take
- Other effects (25%): Business cycle effects, unexplained variance
- Industry effects (20%): Attribute firm performance to industry in which the firm competes;
structure of the industry is determined by elements common to all industries (such as entry and
exit barriers, number and size of companies, and types of products and services offered
corporate level strategy correct answers Typically involves decision making by the top
management team that includes the CEO, senior executives, the board of directors, and the
corporate staff. Decisions include vertical integration, diversification, strategic alliances,
acquisitions, new ventures, and restructuring
business level strategy correct answers Includes the strategic choice of generic strategy (cost
leadership, differentiation, focus) and the benefits and costs of first-mover advantages. Often a
firm participating in multiple businesses will have different business strategies for those
businesses.
functional level strategy correct answers Typically directed at improving the effectiveness of
functional operations within a company, such as manufacturing, materials management, human
resources, marketing, R&D, and operations management
, give examples of strategic actions at the corporate, business, and functional levels correct
answers Corporate: Where to compete; should a firm move more aggressively into the healthcare
industry?
Business: How to compete; should a firm have better fuel efficiency than Rolls Royce?
Functional strategy: How to implement; should a firm recruit more science graduates
discuss black swan events and their importance for business correct answers Events that are
highly improbable, but have a high impact. Important because it causes executives to be less
surprised and more prepared should such an event occur, and their strategic planning may be
messed up if such events occur.
describe the stakeholder view of strategic management correct answers Depending on how
strategy is utilized, managerial actions can effect the economic well-being of large groups around
the world
who are the external stakeholders correct answers Customers, suppliers, alliance partners,
creditors, unions, commiunities, governments, and media
who are the internal stakeholders correct answers Employees, stockholders, and board members
What is the difference between a customer-oriented mission and a product-oriented mission?
correct answers Customer-oriented mission: Define the firm in terms of solutions for customers;
enhanced strategic flexibility
Product-oriented mission: Define the firm in terms of products or services; "safest north
American railroad, US railroads"
How did the fact that the U.S. railroads had a product-oriented mission rather than a customer-
oriented mission lead to loss of customers? correct answers Missed the opportunity to be
transport-oriented and use delivery, were mainly railroad-oriented and lead to myopia/not paying
attention to needs of customers enough
Based on evidence, do mission statements help gain and sustain competitive advantage? correct
answers Yes, but only if the firms make strategic commitments informed by economic
fundamentals of value creation (i.e. lithium-ion batteries for Tesla)
What are trait theories of leadership? correct answers Theories that argue leaders can be
distinguished from non-leaders on the basis of personality traits
What do these theories tell us about how personality influences leadership effectiveness? correct
answers Big 5 model of personality:
Extraversion (+ leadership effectiveness)
Agreeableness (0)
Conscientiousness (+ leadership effectiveness)
Neuroticism (- leadership effectiveness)
Openness to experience (+ leadership effectiveness)
