WPC 480 Final - Strategic Management Exam Questions with Correct Answers
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Course
WPC 480
Institution
WPC 480
Sustainable competitive advantage - Answer-Competitors are unable (or unwilling) to duplicate the benefits of a firm's strategy
How is sustainable competitive advantage created? - Answer-created through a value-creating strategy, based on core competencies
critical strategic strategy - Answer...
WPC 480 Final - Strategic Management
Exam Questions with Correct Answers
Sustainable competitive advantage - Answer-Competitors are unable (or unwilling) to
duplicate the benefits of a firm's strategy
How is sustainable competitive advantage created? - Answer-created through a value-
creating strategy, based on core competencies
what is critical to strategic success? - Answer-Developing a shared vision and mission
statement
two models involved in competitive strategy decision - Answer-industry organization
(I/O) model and the resource-based model
The Industry Organization (I/O) Model - Answer-1. Analyze the external environment
2. Identify an industry with high potential
3. Develop a strategy
4. Develop or acquire needed assets (people, tech, etc.)
5. Implement the strategy
The Resource-based Model - Answer-1. Identify the firm's strengths and weaknesses
2. Determine the firm's capabilities
3. Match capabilities and resources to determine a competitive advantage
4. Locate an attractive industry (size, growth, etc.)
5. Set and implement a strategy
A clear Vision - Answer-"Why do we exist?"
➢ Reflecting the company's values and aspirations
An effective Mission - Answer-to promote shared values
The Vision and Mission - Answer-form the foundation to build and execute strategies
Stakeholders - Answer--Can affect development of the firm's vision and mission
-Are impacted by the strategic outcomes achieved by the firm
-Can have enforceable claims on the firm's performance
-Are influential when in control of critical or valued resources
Each stakeholder group has its own - Answer-needs and expectations
,Different stakeholders use different - Answer-measures of performance
There are _____________ between stakeholder groups - Answer-inherent conflicts
Example of inherent conflicts between stakeholder groups - Answer-the importance of
environmental concerns
Corporate governance - Answer-the oversight of companies by their boards and
owners, with aligning interests of owners and managers being a primary goal
the set of mechanisms used to monitor, measure and control corporate management
includes the processes through which corporations' strategies and objectives are set
and pursued in the context of the social, regulatory and market environment
identifies the rights and responsibilities among different stakeholders in the corporation
used in corporations to align the interests of stakeholders, particularly between owners
and managers
The "Agency Relationship" - Answer-How might short-term investors (owners) differ
from long-term investors?
Where does the Board of Directors fit in?
How involved are shareholders and the Board in setting company strategy?
Problems in the Agency Relationship - Answer-has driven the rise in governance
Principal and agent - Answer-have divergent interests and goals
Agent makes decisions that result in - Answer-the pursuit of goals that conflict with
those of the principal
Shareholders lack direct control of - Answer-large, publicly traded corporations ➢ There
usually is no dominant "principal"
It is difficult or expensive for the principal to - Answer-verify that the agent has behaved
appropriately
Agent falls prey to - Answer-managerial opportunism
Managerial Opportunism prevents - Answer-the maximization of shareholder wealth,
leading stakeholders to establish governance and control mechanisms
Managerial Opportunism - Answer-Acting in self-interest by corporate managers
Managerial opportunism is: - Answer-an attitude (inclination)
a set of behaviors (specific acts of self-interest)
, To prevent managerial opportunism - Answer-principals establish governance and
control mechanisms
Corporate governance taxonomy is grouped into three areas - Answer-Board,
Shareholder Rights and Executive Compensation
Board of Directors - Answer-How effective is the Board?
Is the Board qualified?
Executive Compensation - Answer-➢ Is the CEO (and others) paid at the right level?
➢ Do the incentives align with the interests of shareholders?
Shareholder Rights - Answer-➢ Do shareholders have an influential voice?
Poor corporate governance causes - Answer-reputational risk, often resulting in
significant negative outcomes
examples of negative outcomes of corporate abuse - Answer-Regulatory Fines and
Punishment
Class Action Litigation
Material Restatements
Equity Loss
Bond Defaults
Higher Insurance Fees
Increased Cost of Capital
Damaged Reputation
Human nature, particularly pervasive biases is - Answer-not factored into strategic
decisions
Scorpions and Frogs - Answer-When evaluating strategy, never under-estimate human
nature
Ethical practices create - Answer-social capital and goodwill
critical to long-term success - Answer-Human Capital and Social Capital
Human capital - Answer-The knowledge and skills of the firm's entire workforce are a
capital resource that requires investment in training and development
Training and development helps instill a common set of core values
Social capital - Answer-Relationships inside and outside the firm that help it accomplish
tasks and create value for customers and shareholders
Actions that develop an ethical organizational culture include: - Answer-establishing
specific, measurable ethical goals
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