MGMT 4513 TEST 1 STUDY GUIDE
Strategic Management - Answers - the study of why some firms outperform others
Mission - Answers - statement explaining why a company exists. both internal and
external. No time frame.
Vision - Answers - Crystallization of what leaders want firm to be. Guides development
of strategy and organization. achievable within a time period. Internal except for
slogans.
Goals/ Strat. Plan - Answers - How to beat present and potential competitors. Set of
actions to provide products or services that create more value than their cost.
Constantly changing. Internal use.
Strat Mgmt- Firm Perspective - Answers - Goals and values, resources and capabilities,
structure and systems.
Strat Mgmt- The industry Environment - Answers - competitors, customers, suppliers
Alt. views of "outperform others" - Answers - economic value model: max shareholder
wealth
Objectives other than wealth creation
Stakeholder surplus model: defines benificiary group and max wealth for total group
How do we know if a company is performing well? - Answers - -to replace assets a firm
must earn return on capital in excess of cost of capital
-to survive acquisition, firm must achieve stock market value in excess of break-up
value
Value Metrics Framework - Answers - shareholder value: market value of the firm, MVA,
return to shareholders.
Intrinsic Value: discounted CFs, real option values
Financial Indicators: Return on Capital, Growth, EVA
Value Drivers: Market Share, Scale Economies, Innovation, Brands
2 Approaches for eval. firm performance - Answers - 1. financial Ratio analysis: balance
sheet, income stmt
2. Stakeholder Perspective: employees, owners, customers
, Stakeholders - Answers - individuals and groups who can affect the strategic outcomes
achieved & have enforceable claims on a firms performance
Capital Market, Product Market and Organizational Stakeholders.
Strategic Competitiveness - Answers - When a firm successfully formulates and
implements a value-creating strategy
Sustainable Competitive Advantage - Answers - When competitors are unable to
duplicate a companys value-creating strategy
Strategic Management Process - Answers - full set of commitments, decisions, and
actions required for a firm to achieve strategic competitiveness and earn above-average
returns
Risk - Answers - an investor's uncertainty about the economic gains or losses that will
result from a particular investment
Avg. Returns - Answers - Returns equal to those an investor expects to earn from other
investments w/ a similar amount of risk
Above avg. returns - Answers - returns in excess of what an investor expects to earn
from other investments w/ a similar amount of risk
Corporate Governance - Answers - the relationship among various participants in
determining the direction and performance of corporations
External Environments - Answers - General, Industry, Competitor
General Environment - Answers - focused on the future. Little ability to predict trends
and events, less ability to control them, can vary across industries.
Industry environment - Answers - focused on factors and conditions influencing a firm's
profitability w/in an industry. firms that influence one another and produce close
substitutes.
competitor environment - Answers - focused on predicting the dynamics of competitors
actions, responses and intentions. sometimes called task or industry environment
Switching Price - Answers - price at which product value equals value of next best alt.
for that customer or segment
How to capture consumer surplus - Answers - product differentiation, tailor pricing to
segments
Porter's Five Forces Model1 - Answers - Potential Entrants- threat of new entrants,
Buyers- bargaining power of buyers, Substitutes- threat of substitute products and
Strategic Management - Answers - the study of why some firms outperform others
Mission - Answers - statement explaining why a company exists. both internal and
external. No time frame.
Vision - Answers - Crystallization of what leaders want firm to be. Guides development
of strategy and organization. achievable within a time period. Internal except for
slogans.
Goals/ Strat. Plan - Answers - How to beat present and potential competitors. Set of
actions to provide products or services that create more value than their cost.
Constantly changing. Internal use.
Strat Mgmt- Firm Perspective - Answers - Goals and values, resources and capabilities,
structure and systems.
Strat Mgmt- The industry Environment - Answers - competitors, customers, suppliers
Alt. views of "outperform others" - Answers - economic value model: max shareholder
wealth
Objectives other than wealth creation
Stakeholder surplus model: defines benificiary group and max wealth for total group
How do we know if a company is performing well? - Answers - -to replace assets a firm
must earn return on capital in excess of cost of capital
-to survive acquisition, firm must achieve stock market value in excess of break-up
value
Value Metrics Framework - Answers - shareholder value: market value of the firm, MVA,
return to shareholders.
Intrinsic Value: discounted CFs, real option values
Financial Indicators: Return on Capital, Growth, EVA
Value Drivers: Market Share, Scale Economies, Innovation, Brands
2 Approaches for eval. firm performance - Answers - 1. financial Ratio analysis: balance
sheet, income stmt
2. Stakeholder Perspective: employees, owners, customers
, Stakeholders - Answers - individuals and groups who can affect the strategic outcomes
achieved & have enforceable claims on a firms performance
Capital Market, Product Market and Organizational Stakeholders.
Strategic Competitiveness - Answers - When a firm successfully formulates and
implements a value-creating strategy
Sustainable Competitive Advantage - Answers - When competitors are unable to
duplicate a companys value-creating strategy
Strategic Management Process - Answers - full set of commitments, decisions, and
actions required for a firm to achieve strategic competitiveness and earn above-average
returns
Risk - Answers - an investor's uncertainty about the economic gains or losses that will
result from a particular investment
Avg. Returns - Answers - Returns equal to those an investor expects to earn from other
investments w/ a similar amount of risk
Above avg. returns - Answers - returns in excess of what an investor expects to earn
from other investments w/ a similar amount of risk
Corporate Governance - Answers - the relationship among various participants in
determining the direction and performance of corporations
External Environments - Answers - General, Industry, Competitor
General Environment - Answers - focused on the future. Little ability to predict trends
and events, less ability to control them, can vary across industries.
Industry environment - Answers - focused on factors and conditions influencing a firm's
profitability w/in an industry. firms that influence one another and produce close
substitutes.
competitor environment - Answers - focused on predicting the dynamics of competitors
actions, responses and intentions. sometimes called task or industry environment
Switching Price - Answers - price at which product value equals value of next best alt.
for that customer or segment
How to capture consumer surplus - Answers - product differentiation, tailor pricing to
segments
Porter's Five Forces Model1 - Answers - Potential Entrants- threat of new entrants,
Buyers- bargaining power of buyers, Substitutes- threat of substitute products and
