SGMA 591 - Midterm Exam Questions and Answers Already Passed
strategy - Answers - a plan, method, or series of actions designed to achieve a specific goal or effect
-the pattern of objectives, purposes, or goals and the major policies and plans for achieving these goals,
stated in such a way as to define what business the company is in or is to be in and the kind of company
it is or is to be
What are 3 characteristics of strategic decisions? - Answers 1) they are important
2) they involve a significant commitment of resources
3) They are not easily reversible
Strategy vs tactic: - Answers - Strategy is the overall plan for deploying resources to
establish a favorable position
- Tactic is a scheme for a specific maneuver
What is strategic management and when was it developed? - Answers Management which features an
increased focus on competition as the central characteristic of the business environment and
competitive advantage as the primary goal of strategy
Developed during the 1970s-80s
Came about after a shift from planning to strategy making, where the focus was less on detail mgmt of
growth paths than on positioning the company in markets and in relation to competitors in order to
maximize profit potential
What is corporate planning and when was it developed? - Answers Long term planning for a company
which featured macroeconomic forecasts for the firm. Typically established goals and objectives,
forecast key economic trends ( including mkt demand, share, revenue , costs and margins), established
priorities for different products and business areas and allocated capital expenditures
Created during the late 50s
,Proved to be useful for developing and guiding the diversification strategies that many large companies
were pursuing
Resource-based view - Answers - The theoretical perspective that highlights the role of resources and
capabilities as the principal basis for a firm's strategy
- Reflective of the shift to regarding resources and capabilities of the firm as the main source of
competitive advantage
Social Legitimacy - Answers - Popular acceptance of business organizations rights to behave in particular
ways which are socially or societally acceptable
- Stemming from a disillusion with shareholder value capitalism, with a renewed interest in CSR, ethics,
and sustainability
Corporate Strategy - Answers - Defines the scope of the firm in terms of the industries and markets in
which it competes
-CS decisions include: investment in diversification, vertical integration, acquisitions and new ventures,
allocation of resources, and divestments
bounded rationality - Answers When human decision analysis is subject to the cognitive limitations that
constrain all human beings
Corporate Governance - Answers the system of governing a company so that the interests of corporate
owners and other stakeholders are protected and balanced
Corporate Social Responsibility - Answers - a business's concern for society's welfare
- the notion that a business is socially responsible to a diverse group of stakeholders
Strategic Fit - Answers - state in which an organization's strategy is consistent with its external
opportunities and circumstances and its internal structure, resources, and capabilities
- implies coherence between resources, capabilities, structure, and systems
Business environment + 5 key components - Answers -All of the external influences that affect business
decision and performance
- 5 key components: economic environment, competitive environment, technological environment,
social environment, and global environment.
PEST analysis - Answers - political, economic, social, and technological
, - classifies environmental influences by source
Threat of Entry - Answers - the risk that potential competitors will enter an industry
- if entry of new firms is unrestricted, the rate of profit will fall toward its competitive level
- may be sufficient to ensure already established firms constrain their prices to the competitive level
5 factors that determine rivalry between established groups: - Answers 1) Concentration
2) diversity
3) product differentiation
4) excess capacity and exit barriers
5) cost conditions ( scale economies + fixed / variable costs)
2 factors that determine bargaining power of buyers - Answers 1) buyer price sensitivity
2)relative bargaining power [size + concentration relative to suppliers, buyer info, ability to integrate
vertically]
Ways to identify industry structure: - Answers identify:
- players
-producers
-customer
-input suppliers
-producers of substitute goods
Architectural advantage + 3 sources - Answers - The potential for businesses to influence the
development of industry structure to suit their own interests
1)Creating one's own bottleneck
2)Relieving bottlenecks in other parts of the value chain
3)Redefining roles and responsibilities in the industry
Segmentation - Answers - the process of partitioning a market on the basis of characteristics that are
likely to influence consumer's purchasing behaviour
strategy - Answers - a plan, method, or series of actions designed to achieve a specific goal or effect
-the pattern of objectives, purposes, or goals and the major policies and plans for achieving these goals,
stated in such a way as to define what business the company is in or is to be in and the kind of company
it is or is to be
What are 3 characteristics of strategic decisions? - Answers 1) they are important
2) they involve a significant commitment of resources
3) They are not easily reversible
Strategy vs tactic: - Answers - Strategy is the overall plan for deploying resources to
establish a favorable position
- Tactic is a scheme for a specific maneuver
What is strategic management and when was it developed? - Answers Management which features an
increased focus on competition as the central characteristic of the business environment and
competitive advantage as the primary goal of strategy
Developed during the 1970s-80s
Came about after a shift from planning to strategy making, where the focus was less on detail mgmt of
growth paths than on positioning the company in markets and in relation to competitors in order to
maximize profit potential
What is corporate planning and when was it developed? - Answers Long term planning for a company
which featured macroeconomic forecasts for the firm. Typically established goals and objectives,
forecast key economic trends ( including mkt demand, share, revenue , costs and margins), established
priorities for different products and business areas and allocated capital expenditures
Created during the late 50s
,Proved to be useful for developing and guiding the diversification strategies that many large companies
were pursuing
Resource-based view - Answers - The theoretical perspective that highlights the role of resources and
capabilities as the principal basis for a firm's strategy
- Reflective of the shift to regarding resources and capabilities of the firm as the main source of
competitive advantage
Social Legitimacy - Answers - Popular acceptance of business organizations rights to behave in particular
ways which are socially or societally acceptable
- Stemming from a disillusion with shareholder value capitalism, with a renewed interest in CSR, ethics,
and sustainability
Corporate Strategy - Answers - Defines the scope of the firm in terms of the industries and markets in
which it competes
-CS decisions include: investment in diversification, vertical integration, acquisitions and new ventures,
allocation of resources, and divestments
bounded rationality - Answers When human decision analysis is subject to the cognitive limitations that
constrain all human beings
Corporate Governance - Answers the system of governing a company so that the interests of corporate
owners and other stakeholders are protected and balanced
Corporate Social Responsibility - Answers - a business's concern for society's welfare
- the notion that a business is socially responsible to a diverse group of stakeholders
Strategic Fit - Answers - state in which an organization's strategy is consistent with its external
opportunities and circumstances and its internal structure, resources, and capabilities
- implies coherence between resources, capabilities, structure, and systems
Business environment + 5 key components - Answers -All of the external influences that affect business
decision and performance
- 5 key components: economic environment, competitive environment, technological environment,
social environment, and global environment.
PEST analysis - Answers - political, economic, social, and technological
, - classifies environmental influences by source
Threat of Entry - Answers - the risk that potential competitors will enter an industry
- if entry of new firms is unrestricted, the rate of profit will fall toward its competitive level
- may be sufficient to ensure already established firms constrain their prices to the competitive level
5 factors that determine rivalry between established groups: - Answers 1) Concentration
2) diversity
3) product differentiation
4) excess capacity and exit barriers
5) cost conditions ( scale economies + fixed / variable costs)
2 factors that determine bargaining power of buyers - Answers 1) buyer price sensitivity
2)relative bargaining power [size + concentration relative to suppliers, buyer info, ability to integrate
vertically]
Ways to identify industry structure: - Answers identify:
- players
-producers
-customer
-input suppliers
-producers of substitute goods
Architectural advantage + 3 sources - Answers - The potential for businesses to influence the
development of industry structure to suit their own interests
1)Creating one's own bottleneck
2)Relieving bottlenecks in other parts of the value chain
3)Redefining roles and responsibilities in the industry
Segmentation - Answers - the process of partitioning a market on the basis of characteristics that are
likely to influence consumer's purchasing behaviour
