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BADM 449 - Midterm 1 Questions & Detailed Answers 2024
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BADM 449 - Midterm 1 Questions & Detailed Answers 2024
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BADM 449 - Midterm 1 Questions & DetailedAnswers 2024
Tesla had a market capitalization of some $60 billion in early 2019. What was
Tesla's sequence of moves contributing to this outcome? - ANS - 2008 introduced
1st car, the Roadster, a sports coup with faster acceleration than a Porsche or
Ferrari; served as prototype to show that electric vehicles can be competitive (cost
$110,000)
- discontinued Roadster in 2012 to focus on the Model S, a four door family sedan;
Motor Trend car of the year and received highest score of any car ever tested by
Consumer Reports; base price of $73,500
- In 2016 unveiled Model 3, all electric compact luxury sedan (cost $35,000)
- Tesla aims to provide zero emission electric power generation options and
acquired Solar City for more than $2 billion in fall of 2016
Provide the Analysis-Formulation-Implementation (AFI) Strategy Framework. - ANS
- Strategic Management: an integrative management field that combines analysis,
formulation, and implementation (AFI) in the quest for sustainable competitive
advantage
- Tesla example illustrates the AFI framework
- The AFI framework enables us to think like a general manager to help position
our firm for SCA, which can be viewed as positive economic profit (taking into
account the opportunity cost of capital), and can be operationalized as positive
NPV.
,Apply the AFI Strategy Framework to show that in late 2018, Twitter did not have a
coherent strategy. - ANS - Analysis (the competitive challenge): Twitter did not
grow its user base sufficiently - e.g., compare Twitter's 330 million monthly users
to Facebook' over 2 billion users.
- Formulation (a guiding policy): Twitter did not formulate a strategy on how to
increase its user base.
- Implementation (a set of coherent actions): From its inception, Twitter had
implementation problems due to infighting and public intrigues among co-
founders and early leaders. Twitter attempted to be everything to everybody,
without considering the strategic tradeoffs, which lead to an incoherent set of
actions. Such corporate culture problems led to low employee morale, and actual
performance that was far from its potential.
Discuss three classic definitions of strategy by (i) Schelling; (ii) Chandler; and (3)
Quinn. What do these definitions have in common, and how are they different? -
ANS - Schelling: "The term 'strategy' is intended to focus on the interdependence
of the adversaries' decisions and on their expectations about each other's
behavior."
- Chandler: "Strategy can be defined as the determination of the basic long-term
goals and objectives of an enterprise, and the adoption of courses of action and
the allocation of resources necessary for carrying out those goals."
- Quinn: Strategy is: "The pattern or plan that integrates an organization's major
goals, policies, and action sequences into a cohesive whole. A well-formulated
strategy helps to marshal and allocate an organization's resources into a unique
and viable posture based on its relative internal competencies and shortcomings,
anticipated changes in the environment, and contingent moves by intelligent
opponents."
,What are some important considerations in strategy in the quest to create,
capture, and sustain competitive advantage? - ANS - Definition: Strategy is the
quest to create, capture, and sustain competitive advantage.
- It is the managers' cognitive maps about how to sustain advantage.
- It is about deciding what to do, and what not to do (i.e., economic tradeoffs are
considered; opportunity cost).
- It has alternatives, consequences, and choices involving substantial resources,
typically made under some level of uncertainty.
- It requires long-term commitments that are not easily reversible.
- It is about being different from your rivals. It combines a set of activities to stake
out a unique positioning.
What are the tradeoffs that firms must consider when seeking a (unique) strategic
positioning? - ANS - Competitive advantage has to come from: performing
different activities, or performing the same activities differently than rivals
- Requires tradeoffs: Nordstrom focuses on differentiation with trained sales-
people and luxury settings, while Walmart's strategic activities strengthen its
position as a cost leader
If we consider a firm's sustainable competitive advantage as a function of barriers
to imitation by others, and the firm sustaining its cash flow, then how does this
conceptualization of sustainable competitive advantage relate to Net Present
Value (NPV) in corporate finance? - ANS The Net Present Value (NPV) is the sum of
the present value of all future cash flows
, Explain the stakeholder view of strategic management. - ANS - "Balancing the
shareholder's expectations of maximum return against other priorities is one of
the fundamental problems confronting corporate management."
- Understanding corporate strategy means understanding the competing value
claims of multiple stakeholders.
- Stakeholders are "the organizations, groups, and individuals that can affect or are
affected by a firm's actions"
Describe Target's stakeholder strategy. - ANS - Target Corporation has numerous
awards that reflect its strong relationship with its stakeholders. It is on lists such as
best places to work, most admired companies, most ethical companies, best in
class for corporate governance, and grassroots innovation. Since its founding,
Target has given 5% of its profits to education, the arts, and social services in
communities in which it operates, and it contributed $4 million per week in 2012.
- To show its commitment to minorities and women, Target launched a program to
bring minority- and women-owned businesses into its supply chain. Volunteerism
and corporate giving strengthen the relationship Target has with its employees,
consumers, local communities, and suppliers. These actions can help Target gain a
competitive advantage as a retailer as long as the benefits Target accrues from its
stakeholder strategy exceed the costs of such programs.
Provide the five steps of stakeholder impact analysis. - ANS 1. Who are our
stakeholders?
2. What are our stakeholders' interests and claims?
3. What opportunities and threats do our stakeholders present?
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