Business Strategy Exam 1

Strategy - answer-a set of related actions designed to improve the organization Why do some organizations succeed while others fail? - answer-1. Strategic Leadership 2. Strategy Formulation 3. Strategy Implementation Strategic Leadership - answer-Effectively managing a company's strategy-making process Strategy Formulation - answer-Determining and selecting strategies strategy implementation - answer-putting strategic plans into action Determinants of Shareholder Value - answer-Profitability (ROI) vs Profit Growth (increase in sales) OC for investment dollars Strategy Making Process - answer-1.Select corporate mission and major corporate goals 2. SWOT 3. Select strategies 4. Implement strategies 5. Audit results Mission - answer-reason for existence- what an organization does Vision - answer-Some desired future state Values - answer-Key values an organization is committed to (organizational culture) Major Goals - answer-Measurable desired future state an organization attempts to realize Well constructed goals are - answer-1. precise and measurable 2. address crucial issues 3. Challenging but realistic 4. Specify time period Criticisms of Formal Planning - answer-1. unpredictability of the future 2. role that lower-level managers can play 3. many strategies result from serendipity Managers put strategies into action: - answer-1. implementation/execution of strategic plans 2. Design best organization structure, culture, control systems 3. Governance system for legal/ethical compliance The Feedback Loop - answer-1. Monitor Strategy execution - determine if strategic goals/objectives are being achieved - evaluate competitive advantage creation and sustainability 2. Monitor/reevaluate for the next round of strategy formulation Prior Hypothesis Bias - answer-Holding invalid beliefs about causality Escalation of Committment - answer-Contributing to a failing course of action to justify investment Representativeness - answer-Generalizing from too small of a sample Illusion of Control - answer-Overconfidence in the ability to control Availability Error - answer-Irrational beliefs about outcomes based on ease of perceiving the outcomes rather than statistical liklihood Macroenvironment - answer-1. Economic forces 2. Global forces 3. Technological forces 4. Demographic forces 5. Social forces 6. Political and Legal forces Industry Forces - answer-1. Threats of new entrants 2. Threat of substitute products 3. Buyer power 4. Supplier power 5. Rivalry among established companies