mana 4322 midterm 2

ch 4,5,6

Recently, strategic management has moved from focusing on tangible resources to focusing on________ due to changes in the competitive environment.

intangible resources

Diversification efforts into new markets often fail because top executives are______ interested in executive____________ and______________ rather than____________ returns.

more; power; prestige; shareholder

According to the text, corporate restructuring includes

capital restructuring, asset restructuring, and management restructuring.

Management restructuring typically involves changes in the composition of the________,________, and reporting relationships.

top management team; organizational structure

Portfolio management matrices are applied to the________ level of strategy.

corporate

Asset restructuring involves the sale of________assets, or even whole lines of peripheral businesses.

unproductive

When using a BCG matrix, a________ is a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow.

star

Capital restructuring involves changing the________mix.

debt-equity

Portfolio management frameworks, such as the BCG matrix, share which of the following characteristics?

Grid dimensions are based on external environments and internal capabilities-market positions.

The primary means by which a firm can diversify are________,________, and________.

mergers and acquisitions; joint ventures and strategic alliances; internal development

When a firm chooses to acquire another company but it does not create shareholder value, it is likely that a(n)_________ will follow.

divestiture

A(n)________ is when one firm buys another through a stock purchase, cash, or the issuance of debt.

acquisition

The downsides or limitations of mergers and acquisitions include all of the following except

it is a slow means to enter new markets and acquire skills and competences

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through________ and________ can provide

mergers; acquisitions

The antitakeover tactic,________, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

greenmail

This is an antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price.

a poison pill

When considering divestiture, if executives act only in their own best interests, then_____________ is likely to________.

shareholder value; suffer

Diversification initiatives include________ alliances and________ ventures.

 

strategic; joint

Firms have several choices of diversification initiatives that can be used to create value. These include using________ diversification to acquire________ and________.

related; economies of scope; market power

When a firm diversifies into________ businesses, the primary potential benefits to be derived come from________ relationships where value creation is derived from the corporate office.

unrelated; hierarchical

Antitakeover tactics include all the following except

golden handcuffs

Sharing core competencies is one of the primary potential advantages of diversification. For diversification to be most successful,

 

value chains of the firm must be similar enough to allow for the leveraging firm core competencies.

The risks of vertical integration include all the following except

lack of control over valuable assets.

A firm should consider vertical integration when

the suppliers of raw materials to the firm are unable to maintain quality standards.

In the BCG Matrix, a________ is a business that has a low market share in an industry characterized by high market growth.

question mark

Recently, strategic management has moved from focusing on tangible resources to focusing on________ due to changes in the competitive environment.

intangible resources

A differentiation strategy can help a firm to improve its competitive position relative to the Porter five-forces model by________ firm margins and________buyer power.

increasing; reducing

A firm following a focus strategy must focus on________ segment or________ of________.

a market; a group; segments

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?

 

Firms that target too large a market that causes unit costs to increase.

Mass customization permits companies to________unique products in relatively________ quantities at________ costs.

 

manufacture; small; lower

One of the pitfalls of integrated overall cost leadership and differentiation strategies is that of__________ the challenges and_________ associated with___________ value-creating activities in the extended value chain.

 

underestimating; expenses; coordinating

Underestimating expenses associated with coordinating value-creating activities in the extended value chain can be a result of________ integration of________ and differentiation strategies.

poor; cost leadership

Which of the following is not a reason for the possible erosion of a company’s competitive advantage?

 

company commitment to innovation

Industry life cycles are important because of the emphasis on________ strategies,________ areas, value-creating activities, and overall objectives________over the course of its industry life cycle.

 

functional; operational; stagnate

In the declining stage of the industry life cycle, there are________ segments, the emphasis on process design is________, and the major functional areas of concern are________ and finance.

few; low; general management

Primary value-chain activities that involve the effective layout of inbound logistics and support value-chain activities that include expertise in technology development are characterized by the________ generic strategy.

 

overall cost leadership

By providing________ against rivalry, a________strategy enables a business to address the five competitive forces.

protection; differentiation

A manufacturing business pursuing cost leadership is likely to rely on________ to raise efficiency.

the experience curve

During the introduction stage of the market life cycle________ are unfamiliar to consumers;________are not well-defined.

 

products offered; market segments

In the________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low.

introduction

In the________ stage of the industry life cycle, there are many segments,________ is very intense, and the emphasis on process design is low to moderate.

 

introduction; supplier power

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by________ a process until a task becomes________.

repeating; easier

Research has consistently shown firms that achieve both cost leadership and differentiation advantages tend to perform

higher than firms that achieve either a cost or a differentiation advantage.

A business that strives for a low-cost________ must attain a(n)________ cost advantage over rivals.

position; relative

An overall low-cost position enables a firm to achieve________ returns despite________ competition.

 

above-average; strong

A low-cost position permits buyers to exert power to drive prices________ only to the level of the next most efficient________.

 

down; producer

Which of the following is a risk (or potential pitfall) of cost leadership?

Cost cutting in one area of the value chain might increase costs in another.

High product differentiation is generally accompanied by________ emphasis on________ based on price.

decreased; competition

Companies that want to attract top talent often receive thousands of applications each year. Today___________ and________ are used increasingly to improve talent selection.

algorithms; artificial intelligence

Developing human capital is essential to maintaining a competitive advantage in the current knowledge economy. Efforts and initiatives to develop human capital should be directed

 

throughout the firm at all levels.

Training and development at all levels of the organization are necessary if employees are to remain current throughout the duration of their employment. Which of the following activities would also be necessary?

 

monitoring and tracking employee development

In a 360-degree evaluation and feedback system, which of these does not rate the skills and performance of an individual?

family

If employees are committed to the core________and________ of the organization, they are less likely to leave for the competition.

mission; values

The effective management of diversity can enhance the social responsibility goals of an organization. Other areas where sound management of diverse workforces can improve the effectiveness of an organization and its competitive advantages include all of the following except

problem creation.

Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished by

encouraging the sharing of ideas between employees in the firm.

Six other areas where sound management of diverse workforces can improve organization effectiveness and competitive advantages are

1. (1) cost,

2. (2) resource acquisition,

3. (3) marketing,

4. (4) creativity,

5. (5) problem solving, and

6. (6) organizational flexibility.

Knowledge workers often exhibit_________ loyalties to their colleagues and their profession than their____________ organization.

greater; employing

Changes in our economy have forced firms to be________ concerned with protecting their________workers, social capital, and intellectual capital.

more; knowledge

Knowledge-based resources tend to be more________in nature and therefore they are________ difficult to protect against loss (i.e., the individual quitting the organization) than other types of capital, such as equipment, machinery, and land

 

tacit; more

In social network analysis,________ is the importance of ties connecting heterogeneous people that help to ensure a wide range of diversity in information and perspective.

 

bridging relationships

Social capital has limitations. Which of the following is a limitation?

 

High social capital may breed groupthink.

One of the important limitations of social capital is that it can lead to________ whereby people________question shared beliefs.

groupthink; do not

The potential for________ tends to be more prevalent in________ teams than in traditional teams because the geographic dispersion of members increases the complexity of establishing effective interaction and exchanges.

 

process losses; virtual

In general, teams suffer process loss because of________ cohesion,________ trust among members, a lack of appropriate norms or standard operating procedures, or a lack of________ understanding among team members about their tasks.

 

low; low; shared

The management of intellectual property involves all of the following except

converting explicit knowledge to tacit knowledge

Dynamic capabilities include all of the following except

 

becoming more efficient in operational processes.

Dynamic capabilities include

 

learning and innovating.

 

the ability of an organization to challenge the conventional industry in its industry and market.

continuously adopting new ways of serving the evolving needs of the market.

Dynamic capabilities , defines

ability of the firm to innovate, adapt, and foster change that is favorable to customers and unfavorable to competitors. Its primary activities are:

1. (1) identifying, developing, and assessing technological opportunities (and threats) that relate to customer needs (the sensing of uncertain futures);

2. (2) mobilizing resources to focus on needs and opportunities in order to capture value from doing so (seizing); and

3. (3) continuing the ongoing process of renewal (transforming or shifting).

According to the text,________ capital is the difference between the market value and the book value of a firm. This can be increased by________and________ knowledgeable workers.

intellectual; attracting; retaining

Human capital is the________,________, and________ of an individual.

 

capabilities; knowledge; skills

Creativity and problem-solving ability are considered to be part of________ capital.

human

The network of relationships that individuals have throughout the organization is known as________capital.

social

Tacit knowledge can be accessed only with the consent of the

individual employee.

The text discusses three areas a firm must be concerned with to keep its best and brightest employees from leaving. These include all the following except

sorting/absorbing

Corporate-level strategy addresses two related issues

what businesses should a corporation compete in and how can these businesses be managed so they create synergy.

Portfolio management matrices

improve understanding of the competitive position of a portfolio (or family) of businesses, to suggest strategic alternatives, and to identify priorities for the allocation of resources.

Asset restructuring

involves the sale of unproductive assets, or even whole lines of businesses that are peripheral. In some cases, it may even involve acquisitions that strengthen the core business.

Stars

SBUs competing in high-growth industries with relatively high market shares. These firms have long-term growth potential and should continue to receive substantial investment funding.

Portfolio models

overly simplistic, consisting of only two dimensions (growth and market share). They view each business as separate, ignoring potential synergies across businesses.

three basic means of diversification

First, through acquisitions or mergers, corporations can directly acquire company assets and competencies. Second, corporations may agree to pool the resources of other companies with their resource base, commonly known as a joint venture or strategic alliance. Third, corporations may diversify into new products, markets, and technologies through internal development.

several limitations of mergers and acquisitions, including

takeover premiums paid for acquisitions are typically very high, competing firms often can imitate any advantages or copy synergies that result from the merger or acquisition, manager egos sometimes get in the way of sound business decisions, and cultural issues may doom the intended benefits from merger and acquisition endeavors.

potential disadvantages to internal development.

It may be time consuming; firms may forfeit the benefits of speed that growth through mergers or acquisitions can provide. This may be important among high-tech or a knowledge-based organization in fast-paced environments, where being an early mover is critical.

Poison pills also known as:

shareholder rights plans.

Diversification initiatives

mergers and acquisitions, strategic alliances and joint ventures, or internal development, must be justified by the creation of value for shareholders.

use unrelated diversification to

acquire parenting, restructuring, and financial synergies.

Antitakeover tactics

greenmail, golden parachutes, and poison pills

risks of vertical integration

costs and expenses associated with increased overhead and capital expenditures,

loss of flexibility resulting from large investments,

problems associated with unbalanced capacities along the value chain,

and additional administrative costs associated with managing a more complex set of activities.

firm should consider vertical integration if

company is not satisfied with the quality of the value that its present suppliers and distributors are providing.

Question marks are SBUs:

competing in high-growth industries but having relatively weak market shares. Resources should be invested in them to enhance their competitive positions.

pitfalls of integrated overall cost leadership and differentiation include

firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle;

underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain;

and miscalculating sources of revenue and profit pools in the company industry.

competitive advantages

Rapid changes in technology,

globalization, and

actions by rivals from within and outside of the industry can quickly erode company advantages.

duration of competitive advantages

declining, especially in technology-intensive industries.

Industry life cycles

emphasis on various generic strategies,

functional areas,

value-creating activities,

and overall objectives varies over the course of an industry life cycle.

cost leadership within primary value-chain activities include:

effective layout of receiving dock operations (inbound logistics),

and support value-chain activities may include expertise in process engineering (technology development).

experience curve,

how business learns to lower costs as it gains experience with production processes.

With experience, unit costs of production decline as output increases in most industries.

Potential pitfalls of overall cost leadership strategy

too much focus on one or a few value-chain activities;

increase in the cost of the inputs on which the advantage is based;

the strategy is imitated too easily;

a lack of parity on differentiation;

reduced flexibility;

and obsolescence of the basis of cost advantage.

360-degree evaluation and feedback systems

superiors,

direct reports,

colleagues,

and even internal and external customers rate the performance of an employee.

Six other areas where sound management of diverse workforces can improve organization effectiveness and competitive advantages are

1. (1) cost,

2. (2) resource acquisition,

3. (3) marketing,

4. (4) creativity,

5. (5) problem solving, and

6. (6) organizational flexibility.

management of intellectual property (IP) involves

besides patents,

contracts with confidentiality and noncompete clauses,

copyrights,

and the development of trademarks.

The development of dynamic capabilities is the only avenue providing firms with the ability to reconfigure their knowledge and activities to build and protect a sustainable competitive advantage.

Dynamic capabilities

ability of the firm to innovate,

adapt,

and foster change that is favorable to customers and unfavorable to competitors.