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BUS-J 375 Midterm questions and answers.
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BUS-J 375 Midterm questions and answers.
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BUS-J 375 Midtermquestions and answers
Definition of Strategy - answer A firm's theory about how to gain
competitive advantages
Vision Statement - answer A statement describing what the firm
strives to be, at some future time
-should be specific and motivating
-reflects the firm's aspirations
-it should capture the hearts and minds of stakeholders
Mission Statement - answer A statement which specifies a firm's
purpose or "reason for being" and the primary objective towards
which the firm's programs & plans should be aimed
-specifies the firm's key consultants and how the firm will serve
them
-must be clear and understood
-discusses what business the firm competes
Strategic Management Objectives - answer Specific, measurable
targets
-the things a firm needs to "do" to achieve its mission
-should influence other elements in the strategic management
process
External and Internal Analysis - answer Systematic examination of
the environment
,Strategy Implementation - answer -how strategies are carried out
-who will do what
-who report to whom
-how does the firm hire, promote, pay, etc.
Competitive Advantage - answer The ability to create more
economic value than competitors
-the result of doing something different and/or better than
competitors
Product Differentiation - answer -preference for the firm's output
-people choose the firm's output over others
-people are willing to pay a premium
example: Nordstrom
Cost Leadership - answer -lower costs of production/distribution
-can only be one
example: Wal-Mart
Temporary & Sustainable - answer -competitive advantage
typically results in high profits
-profits attract competition
-competition limits the duration of competitive advantage in most
cases
True or False: Most competitive advantage is temporary - answer
True - competitors imitate the advantage or offer something better
Competitive Parity - answer -the firm's offering are "average"
, -people do not have preference for the firm's offering
-the firm does not have a cost advantage over others
-some things that may lead to this may still be critical to success
Competitive Disadvantage - answer -people may have an aversion
to the firm's offering
-the firm may have a cost disadvantage
-a firm may have outdated technology/equipment
-a firm may have a negative reputation
Two Classes of Measuring Competitive Advantage - answer -
accounting measures
-economic measures
Accounting Measures - answer ROA, ROS, ROE, etc. that exceed
industry averages
Economic Measures - answer Earning a return in excess of the cost
of capital
Why External Analysis? - answer Allows firms to:
-discover threats and opportunities
-see if above normal profits are likely in an industry
-better understand the nature of competition in an industry
-make informed strategic choices
General External Environments - answer -specific international
events (European Union Ban on Hormone-Trated U.S. Beef)
-technological change (PDA's & Cell Phones)
-demographic trends (Hispanic Population Growth)
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