Chapter 1

Question 1

is defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Answer 1

Strategic Management

Question 2

It focuses on integrating management, marketing, finance and accounting, production and operations, research and development (R&D), and information systems to achieve organizational success.

Answer 2

Strategic Management

Question 3

It is the company’s game plan.

Answer 3

Strategic Management

Question 4

used synonymously with the term strategic planning.

Answer 4

Strategic Management

Question 5

Sometimes the term ______________ is used to refer to strategy formulation, implementation, and evaluation, with ___________ referring only to strategy formulation.

Answer 5

Strategic Management; Strategic Planning

Question 6

-developing a vision and mission,
-identifying an organization’s external opportunities and threats,
-determining internal strengths and weaknesses,
-establishing long-term objectives,
-generating alternative strategies, and
-choosing particular strategies to pursue.

Answer 6

Strategy Formulation

Question 7

The purpose of strategic management is to

Answer 7

exploit and create new and different opportunities for tomorrow.

Question 8

The strategic-management process consists of three stages:

Answer 8

1. strategy formulation,
2. strategy implementation, and
3. strategy evaluation.

Question 9

decisions commit an organization to specific products, markets, resources, and technologies over an extended period of time.

Answer 9

Strategy Formulation

Question 10

involves many types of decisions including:
-What new businesses to enter
-What businesses to abandon
-Whether to expand operations or diversify
-Whether to enter international markets
-Whether to merge or form a joint venture
-How to avoid a hostile takeover.

Answer 10

Strategy Formulation

Question 11

-establish annual objectives,
-devise policies,
-motivate employees, and
-allocate resources so that formulated strategies can be executed

Answer 11

Strategy Implementation

Question 12

It is often called the action stage.

Answer 12

Strategy Implementation

Question 13

It includes:
-developing a strategy-supportive culture,
-creating an effective organizational structure,
-redirecting marketing efforts,
-preparing budgets,
-developing and using information systems, and
-linking employee compensation to organizational performance.

Answer 13

Strategy Implementation

Question 14

is the final stage in strategic management.

Answer 14

Strategy evaluation

Question 15

Managers desperately need to know when particular strategies are not working well; __________ is the primary means for obtaining this information. All strategies are subject to future modification because external and internal factors constantly change. Determining which strategies are not working well.

Answer 15

Strategy evaluation

Question 16

Three Fundamental Activities of Strategic Evaluation:

Answer 16

-Reviewing external and internal factors that are the bases for current strategies
-Measuring performance
-Taking corrective actions

Question 16

Key Terms in Strategic Management

Answer 16

-competitive advantage
-strategic management
-strategists
-vision and mission statements
-external opportunities and threats
-internal strengths and weaknesses
-objectives
-strategis
-annual objectives
-long-term objectives

Question 17

any activity a firm does especially well compared to activities done by rival firms, or any resource a firm possesses that rival firms desire. A firm must strive to achieve sustained ____________

Answer 17

Competitive Advantage -

Question 17

is all about gaining and maintaining competitive advantage. This term can be defined as any activity a firm does especially well compared to activities done by rival firms, or any resource a firm possesses that rival firms desire.

Answer 17

Strategic management

Question 18

A firm must strive to achieve sustained competitive advantage by

Answer 18

(1) continually adapting to changes in external trends and events and internal capabilities, competencies, and resources; and
(2) effectively formulating, implementing, and evaluating strategies that capitalize on those factors.

Question 19

Individuals most responsible for the success or failure of an organization. Help an organization gather, analyze, and organize information

Answer 19

Strategists

Question 20

They have various job titles, such as chief executive officer, president, owner, chair of the board, executive director, chancellor, dean, and entrepreneur.

Answer 20

Strategists

Question 21

A __________ statement answers the question “What do we want to become?” A _________ statement answers the question “What is our business?”

Answer 21

Vision and Mission Statements -

Question 22

is often considered the first step in strategic planning, preceding even development of a mission statement. __________ are “enduring statements of purpose that distinguish one business from other similar firms. A __________ identifies the scope of a firm’s operations in product and market terms.”

Answer 22

Developing a vision statement; Mission statements

Question 23

economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization

Answer 23

External Opportunities and Threats

Question 24

are largely beyond the control of a single organization—thus the word external.

Answer 24

External opportunities and threats

Question 25

Some Opportunities and Threats

Answer 25

-Availability of capital can no longer be taken for granted. -Consumers expect green operations and products. -Marketing is moving rapidly to the Internet. -Commodity food prices are increasing. -An oversupply of oil is driving oil and gas prices down.

Question 26

an organization’s controllable activities that are performed especially well or poorly and are determined relative to competitors.

Answer 26

Internal Strengths and Internal Weaknesses

Question 27

specific results that an organization seeks to achieve in pursuing its basic mission; ________ means more than one year should be challenging, measurable, consistent, reasonable, and clear

Answer 27

Long-Term Objectives

Question 28

are essential for organizational success because they provide direction; aid in evaluation; create synergy; reveal priorities; focus coordination; and provide a basis for effective planning, organizing, motivating, and controlling activities.

Answer 28

Objectives

Question 29

the means by which long-term objectives will be achieved may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures

Answer 29

Strategies

Question 30

are potential actions that require top-management decisions and large amounts of the firm’s resources.

Answer 30

Strategies

Question 31

short-term milestones that organizations must achieve to reach long-term objectives should be measurable, quantitative, challenging, realistic, consistent, and prioritized should be established at the corporate, divisional, and functional levels in a large organization

Answer 31

Annual objectives

Question 32

is needed for each long-term objective. These objectives are especially important in strategy implementation, whereas long-term objectives are particularly important in strategy formulation.

Answer 32

A set of annual objectives

Question 33

the means by which annual objectives will be achieved.

Answer 33

Policies

Question 34

include guidelines, rules, and procedures established to support efforts to achieve stated objectives.

Answer 34

Policies

Question 35

The Strategic Management Model There are three important questions to answer in developing a strategic plan:

Answer 35

-Where are we now? -Where do we want to go? -How are we going to get there?

Question 36

The framework illustrated in Figure 1-1 is a widely accepted, ___________________________________. This model does not guarantee success, but it does represent a clear and practical approach for formulating, implementing, and evaluating strategies.

Answer 36

COMPREHENSIVE STRATEGIC MODEL; comprehensive model of the strategic-management process

Question 37

STRATEGIC MANAGEMENT BENEFITS

Answer 37

-allows an organization to be more proactive than reactive in shaping its own future; -allows an organization to initiate and influence (rather than just respond to) activities—and thus to exert control over its own destiny. -help organizations formulate better strategies through the use of a more systematic, logical, and rational approach for decision making.

Question 38

BENEFITS TO A FIRM THAT DOES STRATEGIC PLANNING

Question 39

is a key to successful strategic management. It may be the most important word in management.

Answer 39

Communication

Question 40

FINANCIAL BENEFITS

Answer 40

- show significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities - High-performing firms tend to do systematic planning to prepare for future fluctuations in their external and internal environments. - High-performing firms seem to make more informed decisions with good anticipation of both short- and long-term consequences.

Question 41

NONFINANCIAL BENEFITS

Answer 41

- Enhanced awareness of external threats - Improved understanding of competitors’ strategies - Increased employee productivity - Reduced resistance to change - Clearer understanding of performance–reward relationships

Question 42

enhances the problem-prevention capabilities of organizations because it promotes interaction among managers.

Answer 42

Strategic management

Question 43

Besides helping firms avoid financial demise, strategic management offers other tangible benefits, such as:

Answer 43

-enhanced awareness of external threats, -improved understanding of competitors’ strategies, -increased employee productivity, -reduced resistance to change, and -a clearer understanding of performance–reward relationships.

Question 44

WHY SOME FIRMS DO NOT STRATEGIC PLANNING? Ten reasons (excuses) often given for poor or no strategic planning in a firm are as follows:

Answer 44

-No formal training in strategic management -No understanding of or appreciation for the benefits of planning -No monetary rewards for doing planning -No punishment for not planning -Too busy “firefighting” (resolving internal crises) to plan ahead -View planning as a waste of time, since no product/service is made -Laziness; effective planning takes time and effort; time is money -Content with current success; failure to realize that success today is --no guarantee for success tomorrow; even Apple Inc. is an example -Overconfident -Prior bad experience with strategic planning done sometime/somewhere

Question 45

PITFALLS IN STRATEGIC PLANNING Being aware of potential pitfalls and being prepared to address them is essential to success. Here are some pitfalls to watch for and avoid in strategic planning:

Answer 45

-Using strategic planning to gain control over decisions and resources -Doing strategic planning only to satisfy accreditation or regulatory requirements -Too hastily moving from mission development to strategy formulation -Failing to communicate the plan to employees, who continue working in the dark -Top managers making many intuitive decisions that conflict with the formal plan -Top managers not actively supporting the strategic-planning process -Failing to use plans as a standard for measuring performance -Delegating planning to a “planner” rather than involving all managers -Failing to involve key employees in all phases of planning -Failing to create a collaborative climate supportive of change -Viewing planning as unnecessary or unimportant -Becoming so engrossed in current problems that insufficient or no planning is done -Being so formal in planning that flexibility and creativity are stifled

Question 46

HOW TO GAIN AND SUSTAIN COMPETITIVE ADVANTAGE

Answer 46

Figure 1-3 reveals that to gain and sustain competitive advantages, a firm must create and nurture a clear vision and mission, and then systematically formulate, implement, and evaluate strategies.

Question 47

COMPARING BUSINESS AND MILITARY STRATEGY A fundamental difference between military and business strategy is that __________ is formulated, implemented, and evaluated with an assumption of competition, whereas __________ is based on an assumption of conflict.

Answer 47

business strategy; military strategy

Question 48

Both business and military organizations must adapt to change and constantly improve to be successful A strong business heritage underlies the study of strategic management. Terms such as objectives, mission, strengths, and weaknesses were first formulated to address problems on the battlefield. TRUE OR FALSE

Answer 48

FALSE; a strong MILITARY heritage

Question 49

is a matter of vital importance to the state: a matter of life or death, the road either to survival or ruin. Hence, it is imperative that it be studied thoroughly.

Answer 49

War

Question 50

What to do according to Sun Tzu's: The Art of War Writing

Answer 50

-Know your enemy and know yourself, and in a hundred battles you will never be defeated -Skillful leaders do not let a strategy inhibit creative counter-movement

Question 51

has been applied to many fields well outside of the military. Much of the text is about how to fight wars without actually having to do battle: It gives tips on how to outsmart one’s opponent so that physical battle is not necessary. Table 1-4 provides several excerpts.

Answer 51

Sun Tzu’s The Art of War