©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Chapter 1 STRATEGIC MANAGEMENT
Exam Questions With Correct Answers
Strategy - answer✔Set of related actions that managers take to increase their company's performance
Strategic Leadership - answer✔Creating competitive advantage through effective management of the
strategy-making process
Strategy Formulation - answer✔Selecting strategies based on analysis of an organization's external and
internal environment
Strategy implementation - answer✔Putting strategies into action
Risk Capital - answer✔Equity capital for which there is no guarantee that stockholder will:
recoup their investment
Earn a decent return
Determinants of Shareholder Value - answer✔Profitabilty
Effectiveness of strategies
Profit Growth
Shareholder Value
Shareholder value - answer✔Returns that shareholders earn from purchasing shares in a company:
Sources:
Capital appreciation in the value of a company's shares
Dividend payments
Profitability - answer✔Return a company makes on the capital invested in the enterprise
Return on invested capital (ROIC) - answer✔Net profit over the capital invested in a firm
Profitability is the result of : - answer✔Result of how efficiently the capital is used to satisfy customer
needs
, ©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Profit growth - answer✔Increase in net profit over time
Profit Growth is achieved by: - answer✔1.Selling products in rapidly growing markets
2.Gaining market share from rivals
3.Selling more to existing customers
4.Expanding overseas
5. diversifying into new businesses
To boost profitability and profit growth, managers must: - answer✔1.Use strategies to give their
company a competitive advantage over rivals
2.Deliver high profitability and sustainable profit growth
Competitive advantage - answer✔Occurs when a company's profitability is greater than the average
profitability and profit growth of firms in its industry
Sustained competitive advantage - answer✔A company's strategies enable it to maintain above-average
profitability for a number of years
Strategic management Involves: - answer✔1. General Managers
2. Functional Manager
3. Multidivisional Company
General Managers - answer✔Bear responsibility for a company's overall performance or for one of its
major self-contained subunits or divisions
Functional Managers - answer✔Responsible for supervising a particular function, task, activity, or
operation
Multidivisional company - answer✔Competes in several different businesses and has a separate self-
contained division to manage each
Corporate-level managers - answer✔1. Oversee the development of strategies for the entire
organization
2. Provide a link between people concerned with the firm's strategic development and the shareholders
3. Ensure that business strategies pursued by the company are consistent with maximizing profitability
and profit growth
Business-level managers - answer✔1.Heads of business units
2. Translate statements of intents into concrete strategies for individual businesses
, ©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
3. Are concerned with strategies specific to a particular business
Business unit - answer✔Self-contained division that provides a product or service for a particular market
Functional- level managers - answer✔1. Responsible for specific business functions
2. Develop functional strategies to fulfill the strategic objectives set by business- and corporate-level
general managers
3. Provide information that helps formulate realistic and attainable strategies
Steps in a formal strategic planning process - answer✔1. Select the corporate mission and goals
2. Analyze the organization's external competitive environment and internal operating environment
3. Select strategies that:
Build on the organization's strengths and correct it's weaknesses
4. Are consistent with the organization's mission and goals
5. Are congruent and constitute a viable business model
6. Implement the strategies
Mission - answer✔Purpose of the company, or a statement of what the company strives to do
Vision - answer✔Articulation of a company's desired achievements or future state
Values - answer✔Statement of how employees should conduct themselves and their business to help
achieve the company mission
Establishing major goals - answer✔Goal - Precise and measurable desired future state that a company
attempts to realize
Components of a Mission statement: - answer✔Mission
Vision
Values
Establishing major goals
SWOT analysis - answer✔Comparison of strengths, weaknesses, opportunities, and threats
Purpose of SWOT - answer✔Identify the strategies to:
1. Exploit external opportunities
2. Build on and protect company strengths
3. Eradicate weaknesses and counter threats
11/05/2024 12:06 PM
Chapter 1 STRATEGIC MANAGEMENT
Exam Questions With Correct Answers
Strategy - answer✔Set of related actions that managers take to increase their company's performance
Strategic Leadership - answer✔Creating competitive advantage through effective management of the
strategy-making process
Strategy Formulation - answer✔Selecting strategies based on analysis of an organization's external and
internal environment
Strategy implementation - answer✔Putting strategies into action
Risk Capital - answer✔Equity capital for which there is no guarantee that stockholder will:
recoup their investment
Earn a decent return
Determinants of Shareholder Value - answer✔Profitabilty
Effectiveness of strategies
Profit Growth
Shareholder Value
Shareholder value - answer✔Returns that shareholders earn from purchasing shares in a company:
Sources:
Capital appreciation in the value of a company's shares
Dividend payments
Profitability - answer✔Return a company makes on the capital invested in the enterprise
Return on invested capital (ROIC) - answer✔Net profit over the capital invested in a firm
Profitability is the result of : - answer✔Result of how efficiently the capital is used to satisfy customer
needs
, ©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Profit growth - answer✔Increase in net profit over time
Profit Growth is achieved by: - answer✔1.Selling products in rapidly growing markets
2.Gaining market share from rivals
3.Selling more to existing customers
4.Expanding overseas
5. diversifying into new businesses
To boost profitability and profit growth, managers must: - answer✔1.Use strategies to give their
company a competitive advantage over rivals
2.Deliver high profitability and sustainable profit growth
Competitive advantage - answer✔Occurs when a company's profitability is greater than the average
profitability and profit growth of firms in its industry
Sustained competitive advantage - answer✔A company's strategies enable it to maintain above-average
profitability for a number of years
Strategic management Involves: - answer✔1. General Managers
2. Functional Manager
3. Multidivisional Company
General Managers - answer✔Bear responsibility for a company's overall performance or for one of its
major self-contained subunits or divisions
Functional Managers - answer✔Responsible for supervising a particular function, task, activity, or
operation
Multidivisional company - answer✔Competes in several different businesses and has a separate self-
contained division to manage each
Corporate-level managers - answer✔1. Oversee the development of strategies for the entire
organization
2. Provide a link between people concerned with the firm's strategic development and the shareholders
3. Ensure that business strategies pursued by the company are consistent with maximizing profitability
and profit growth
Business-level managers - answer✔1.Heads of business units
2. Translate statements of intents into concrete strategies for individual businesses
, ©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
3. Are concerned with strategies specific to a particular business
Business unit - answer✔Self-contained division that provides a product or service for a particular market
Functional- level managers - answer✔1. Responsible for specific business functions
2. Develop functional strategies to fulfill the strategic objectives set by business- and corporate-level
general managers
3. Provide information that helps formulate realistic and attainable strategies
Steps in a formal strategic planning process - answer✔1. Select the corporate mission and goals
2. Analyze the organization's external competitive environment and internal operating environment
3. Select strategies that:
Build on the organization's strengths and correct it's weaknesses
4. Are consistent with the organization's mission and goals
5. Are congruent and constitute a viable business model
6. Implement the strategies
Mission - answer✔Purpose of the company, or a statement of what the company strives to do
Vision - answer✔Articulation of a company's desired achievements or future state
Values - answer✔Statement of how employees should conduct themselves and their business to help
achieve the company mission
Establishing major goals - answer✔Goal - Precise and measurable desired future state that a company
attempts to realize
Components of a Mission statement: - answer✔Mission
Vision
Values
Establishing major goals
SWOT analysis - answer✔Comparison of strengths, weaknesses, opportunities, and threats
Purpose of SWOT - answer✔Identify the strategies to:
1. Exploit external opportunities
2. Build on and protect company strengths
3. Eradicate weaknesses and counter threats
