Exam 2 Business Strategy

What are the four points on Porter's Diamond of National Advantage?

Factor conditions, related and supporting industries, firm strategy, structure, and rivalry, and demand conditions.

Which ONE of the following is NOT a primary mode of entry into foreign markets?

Maintain a host country production base and export goods to foreign markets.

Which ONE of the following is the correct description of the differences between domestic and international strategy-making processes?

The international strategy-making process is more identical to the domestic strategy-making process

Which ONE of the following is the correct list of the three tests for building shareholder value through diversification?

The industry attractiveness test, the cost of entry test, and the better-off test.

Economies of scope vs. Economies of Scale

Scale- Cost savings that accrue when variable costs go down due to the greater efficiency of operating a larger-size operation.

Scope- Cost reductions that flow from cross-business resource sharing in the activities of the multiple businesses of a firm.

Which ONE of the following is critical to successful diversification, according to Dr. Sherman's Chapter 8 lecture?

Synergy

What is the difference between ethical universalism, ethical relativism, and integrative social contracts theory?

• Universalism = Same rules everywhere

• Relativism = Different cultures, different rules

• Integrative = Universal rules + local customs

Which ONE of the following is the correct list of the measures within the Triple Bottom Line measure of firm excellence?

Environmental, Economic, and Social

What is the difference between moral, ethical, legal, and criminal issues?

• Moral = Personal beliefs

• Ethical = Society's standards

• Legal = What the law allows

• Criminal = Breaking criminal law

What is the first task new strategic leaders should address in a new organization, according to the video from author Jim Collins in Chapter 10?

Who are the great people that can help you lead the company?

Which ONE of the following is NOT one of the superior strategy execution capabilities that help a firm form a competitive advantage?

Allow the firm to easily duplicate any capability or resource held by a competitor.

What are the five process management tools used to improve strategy execution?

Benchmarking, Best Practices, Business Process Reengineering, Total Quality Management (TQM), and Six Sigma.

EQ: Explain the purpose of organizational structure.

Purpose of organizational structure is to provide coordination, communication, and control.

EQ: Define efficiency and effectiveness.

Efficiency: how well an organization uses its resources as inputs to produce its outputs

Effectiveness: how well an organization’s outputs meet the needs of the environment (the market)

EQ: Define the law of requisite variety.

An organization has the optimum structure when the structure is as complex- and no more complex- than the surrounding environment.

A question will describe a firm and its environment and ask you to assess the firm's complexity relative to its environment, or the organizational structure's complexity relative to the firm.

Compare the complexity of the firm's organizational structure to the complexity of its external environment.

• Structure LESS complex than environment: The firm may be ineffective because its structure may not be sufficient to handle environmental changes.

• Structure MORE complex than environment: The firm may be inefficient due to unnecessary bureaucracy, costs, and slower decision-making.

• Structure MATCHES environment: The firm is more likely to be effective because its structure is appropriate for its environment.

Key takeaway: An organization's structure should match the complexity of its external environment to operate effectively.