J401 Book Exam

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  1. The set of managerial decisions and actions that determines the long-run performance of a corporation
    Strategic Management
  2. composition of strategic management
    • § 
    • 1) Environmental
    • scanning

    • § 
    • 2)Strategy
    • formulation

    • § 
    • 3) Strategy
    • implementation

    • § 
    • 4) Evaluation and
    • control
  3. Internal environment
    • structure
    • culture
    • resources
  4. external environment
    • societal
    • task
  5. composed of general forces in the environmentExamples: sociocultural issues, political issues, technological issues, economic issuesExample: Gay marriage affects all business b/c they will have to provide benefits to the spouse
    societal environment
  6. groups in environment that directly affect or are affected by the organization's operations (often called industry)Examples: Employees, special interest groups, suppliers, shareholders, customers, creditors
    task environment
  7. the purpose of reason for the corporation's existence  It may be narrow or broad in scope. example: narrow - railroad, broad - transportationNarrow or broad, neither one is necessarily better than the other... but it may be dangerous if too narrow
    mission statement
  8. corporation's overall direction and the management of its businesses
    corporate strategy
  9. emphasizes improving the competitive position of a corporation's products or unitsEQIC - efficiency, quality, innovation, customer response
    business strategy
  10. maximizes resource productivity -  the approachtaken by a functional area, such as marketing or research and development, toachieve corporate and business unit objectives and strategies by maximizingresource productivity. Concerned withdeveloping and nurturing a distinctive competence to provide a company orbusiness unit with a competitiveadvantage.MMPF - Marketing, Management, Production, Finance
    functional strategy
  11. to be successful over time, an organization needs to be in tune with its external environment
    environmental scanning
  12. how attractive is this particular industry to our firm?
    Porter's Five Forces
  13. something that
    stimulates a change in strategy

    New CEO
    Intervention (Government, suppliers, consumers, etc.)
    Threat of a
    change in ownership
    Performance gap
    inflection point
    • Triggering
    • event
  14. ·        
    a broad guideline
    for decision making that links the formulation of strategy with its

    Companies use
    policies to make sure that employees throughout the firm make decisions and
    take actions that support the corporation’s mission, objectives, and
    • Business
    • policy
  15. ·        
    implementation that involves day-to-day decisions in resource allocation.

    Middle and lower
    managers typically implement strategy with review from top management 
    • Operational
    • strategy
  16. the
    willingness to reject unfamiliar as well as negative information
    • Strategic
    • Myopia
  17. newcomers
    to an existing industry. They typically bring new capacity, a desire to gain
    market share, and substantial resources; therefore, they are threats to an
    established corporation.
    • Threat
    • of new entrants
  18. o   
    obstruction that
    makes it difficult for a company to enter an industry

    Economies of scale, product differentiation, capital requirements, switching
    costs, distribution channels, government policy, etc.
    • Barriers
    • to entry
  19. cost
    to a consumer to switch to a substitute product or service
    • Switching
    • costs
  20. o   
    the amount of
    direct competition in an industry

    Factors include:  number of competitors, rate of industry
    growth, product characteristics, amount of fixed costs, capacity, height of
    exit barriers, and diversity of rivals
    • Firm
    • rivalry
  21. o    Bargaining power of buyers – buyers affect an industry
    through their ability to force down prices, bargain for higher quality or more
    service, and play competitors against one another.
    • Power
    • of buyers
  22. suppliers
    can affect an industry through their ability to raise prices or reduce the
    quality of purchased goods and services.
    • Power
    • of suppliers
  23. those
    products that appear to be different buy can satisfy the same need as another
    • Threat
    • of substitutes
  24. companies
    with a limited product line that focus on
    improving the efficiency of their existing competition
  25. companies with fairly broad product lines that
    focus on product innovation and market
  26. companies
    that operate in at least two different
    product-market areas, one stable and one variable
  27. companies
    that lack a consistent
    strategy-structure-culture relationship
  28. describes
    an industry undergoing an ever-increasing level of environmental uncertainty in
    which competitive advantage is only temporary
  29. ·        
    a collection of
    competencies that cross divisional boundaries, is widespread within the
    corporation, and is something that a corporation can do exceedingly well.
    • Core
    • competency
  30. ·        
    when core
    competencies are superior to those of the competition.
    • Distinctive
    • competency
  31. used
    to determine a firm’s competitive advantage; proposes four questions to
    evaluate a firm’s competencies:
    • VRIO
    • Framework
  32. VRIO
    • o   
    • 1) Value – does
    • it provide a competitive advantage?

    • o   
    • 2) Rareness – do
    • no other competitors possess it?

    • o   
    • 3) Imitability –
    • is it costly for others to imitate?

    • o   
    • 4) Organization –
    • is the firm organized to exploit the resource?
  33. the
    rate at which a firm’s underlying resources, capabilities, or core competencies
    depreciate or become obsolete.
  34. the
    rate at which a firm’s underlying resources, capabilities, or core competencies
    can be duplicated by others.
  35. the
    speed at which other firms can understand the relationship of resources and
    capabilities supporting a successful firm’s strategy.
  36. the
    ability of competitors to gather the resources and capabilities necessary to
    support a competitive challenge.
  37. the
    ability of competitors to use duplicated resources and capabilities to imitate
    the other firm’s success.
  38. has
    no functional or product categories and is appropriate for a small,
    entrepreneur-dominated company with one or two product lines that operates in a
    reasonably small, easily identifiable market niche. Employees tend to be
    generalists and jack-of-all trades.
    • Simple
    • Structure
  39. appropriate
    for medium – sized firm with several product lines in one industry. Employees
    tend to be specialists in business functions important to the industry, such as
    manufacturing, marketing, finance, and human resources.
    • Functional
    • Structure
  40. appropriate
    for large corporation with many product lines in several related industries.
    Employees tend to be functional specialists organized according to
    product/market distinctions.
    • Divisional
    • Structure
  41. the
    degree to which members of a unit accept the norms, values, or other culture
    content associated with the unit.
    • Cultural
    • intensity
  42. in
    the extent to which units throughout an organization share a common culture.
    • Cultural
    • integration
  43. ·        
    the ratio of
    total debt to total assets

    Helps describe
    the use of debt (versus equity) to finance the company’s programs from outside
    • Financial
    • Leverage
  44. in
    the analyzing and ranking of possible investments in fixed assets such as land,
    buildings, and equipment in terms of the additional outlays and additional
    receipts that will result from each investment.
    • Capital
    • budgeting
  45. ·        
    the balance of
    the three types of research of basic, product, and engineering or process.

    The mix should be
    appropriate to the strategy being considered and to each product’s life cycle.
    • R
    • & D Mix
  46. suggests
    that unit production costs decline by some fixed percentage (commonly 20-30%)
    each time the total accumulated volume of production (in units) doubles
    • Experience
    • curve
  47. ·        
    the manufacturing
    activities of the common parts of various products are combined to gain
    economies even though small numbers of each product are made

    Replace economies
    of scale in flexible manufacturing
    • Economies
    • of scope
  48. unit
    costs are reduced by making large numbers of the same product
    • Economies
    • of scale
  49. describes
    the particular strengths, weaknesses, opportunities, and threats that are
    strategic factors for a company.
    • SWOT
    • analysis
  50. a
    company’s specific competitive role that is so well suited to the firm’s
    internal and external environment that other corporations are not likely to
    challenge or dislodge it.
    • Propitious
    • niche
  51. a
    low-cost competitive strategy that aims at the broad mass market and requires
    “aggressive construction of efficient-scale facilities, vigorous pursuit of
    cost reductions from experience, tight cost and overhead control, avoidance of
    marginal customer accounts, and cost minimization in areas like R&D,
    service, sales force, advertising, and so on.”
    • Cost
    • leadership
  52. aimed
    at the broad mass market and involves the creation of a product or service that
    is perceived throughout its industry as unique.
  53. a
    lower cost competitive strategy that focuses on a particular buyer group or
    geographic market and attempts to serve only the niche, to the exclusion of
    • Cost
    • focus
  54. a
    differentiation strategy that concentrates on a particular buyer group, product
    line segment, or geographic market.
    • Focused
    • differentiation
  55. ·        
    the firm’s
    overall orientation towards growth, stability, or retrenchment
    • Directional
    • strategy
  56. expand
    the company’s activities
    • Growth
    • strategies
  57. makes
    no change to the company’s current activities
    • Stability
    • strategies
  58. reduce
    the company’s level of activities
    • Retrenchment
    • strategies
  59. the
    degree to which a firm operates vertically in multiple locations on an
    industry’s value chain from extracting raw materials to manufacturing to
    • Vertical
    • integration
  60. assuming
    a function previously provided by a distributor
    • Forward
    • vertical integration
  61. assuming
    a function previously provided by a supplier
    • Backward
    • vertical integration
  62. the
    degree to which a firm operates in multiple locations at the same point in the
    industry’s value chain
    • Horizontal
    • integration
  63. diversifying
    into an industry that is unrelated to its current one
    • Conglomerate
    • diversification
  64. growth
    through expanding into a related industry
    • Concentric
    • diversification
  65. the
    concept that two businesses will generate more profit together than they could
  66. emphasizes
    the improvement of operational efficiency and is probably most appropriate when
    a corporation’s problems are pervasive but not yet critical.
    • Turnaround
    • strategy
  67. becoming
    another company’s sole supplier or distributor in exchange for long-term
    commitment from the company.
    • Captive
    • company strategy
  68. offers
    the opportunity to “skim the cream” from the top of the demand curve with a
    high price while the product is novel and competitors are few.
    • Skim
    • pricing
  69. attempts
    to hasten market development and offers the pioneer the opportunity to use the
    experience curve to gain market share with a low price and then dominate the
    • Penetration
    • pricing
  70. a
    company is acquired in a transaction financed largely by debt, which is usually
    obtained from a third party such as an insurance company.
    • Leveraged
    • buyout
  71. purchasing
    from someone else a product or service that had been previously provided
  72. imitating
    the strategy of a leading competitor
    • Follow
    • the leader
  73. if
    a company is successful because it pioneered an extremely successful product,
    it has a tendency to search for another super product that will ensure growth
    and prosperity.
    • Hit
    • another home run
  74. o    entering into a spirited battle with another firm for
    an increase in market share
    • Arms
    • race
  75. when faced with several interesting
    opportunities, management might tend to leap at them all
    • Do
    • everything
  76. a
    corporation might have invested so much in a particular strategy that top
    management is unwilling to accept the fact that the strategy is not successful.
    • Losing
    • hand
  77. ·        
    functional and
    product forms are typically combined simultaneously at the same level of the
    • Matrix
    • Structure
  78. ·        
    nonstructural; it
    virtually eliminates in-house business functions; most activities are
    • Virtual
    • structure
  79. the
    planned elimination of positions or jobs
  80. involves
    the domination of one organization by another. The domination is not forced but
    is welcomed by members of the acquired firm, who may feel for many reasons that
    their culture and managerial practices have not produced success. The acquired
    firm surrenders its culture and adopts the culture of the acquiring company.
    • Assimilation
    • of culture
  81. an organization-wide approach to help assure purposeful action
    toward desired objectives by linking organizational objectives with individual
  82. operational
    philosophy that stresses commitment to customer satisfaction and continuous
  83. specify
    what is to be accomplished by focusing on the end result of the behaviors
    through the use of objectives and performance targets or milestones
    • Output
    • control
  84. a
    new accounting method for allocating indirect and fixed costs to individual
    products or product lines based on the value-added activities going into that
    • Activity
    • based costing
  85. ·        
    the result of
    dividing net income before taxes by total assets

    Most commonly
    used measure of corporate performance in terms of profits
  86. involves
    dividing net earnings by the number of common stock shares
  87. ·        
    obtained by
    dividing net income by total equity (the shareholder’s total investment in the

    Used as a measure
    of performance
  88. after-tax
    operating profit minus the total annual cost of capital
    • EVA
    • Economic value added
  89. A
    tendency to do nothing or to remain unchanged
Card Set:
J401 Book Exam
2013-05-19 23:37:28
J401 exam one book

First exam for j401, exam one, book exam
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