MGMT 449 Test Prep | Questions with 100% Correct Answers

MGMT 449 Test Prep | Questions with 100% Correct Answers Why are strategies important in an organization? They have a major impact on performance relative to competitors. How do managers identify and determine the process they want to use to create competitive advantage? strategy-making Who is responsible for managing the strategy-making process and its implementation? Leadership Why is competitive advantage an important part of creating profitability in a firm? It allows the firm to outperform rivals. Why should maximizing shareholder value be the primary goal of profit-making companies? to provide risk capital to shareholders What do shareholders expect managers to deliver through strategic leadership? high profitability and sustainable profit growth How do strategic leaders use a business model to create competitive advantage? to see how strategies will work together to achieve goals In what way is a company's performance affected by the industry in which it competes? Different industries have different competitive conditions. Why is the profitability and profit growth of a company based on its relative success in its industry and not on how much profit is made? Different industries are characterized by different competitive conditions. What is the role of the CEO as a corporate-level manager? to oversee strategies for the entire organization How do general managers ensure their business units support the overall goals of the company? by developing strategies that support corporate objectives Why are functional-level managers in a unique position to generate ideas for major strategies of a company? They are closest to the customer. How does the strategy-making process typically end? with the design of control systems to implement the strategy Why is a customer-oriented approach to formulating a mission more effective than a product-oriented business definition? A customer-oriented approach helps safeguard the company from shifts in demand. Which value or attribute can lead to higher performance and more success? encouraging entrepreneurial behavior What should be a manager's focus when setting up goals to increase the long-term performance and competitiveness of the organization? issues such as customer satisfaction and efficiency Why is it important that managers monitor the feedback loop? It provides information for future strategy formulation. How can managers most effectively implement strategies in a way that maximizes profitability ethically and legally? use governance systems that focus on culture and control systems Why do critics claim that formal planning systems are not effective? The world is unpredictable When would the ability for lower-level managers to formulate and alter strategic priorities be especially important? when radical new technology is introduced in the industry According to Henry Mintzberg's model of strategy development, why do many planned strategies fail to be implemented? Managers did not anticipate changes in the environment. How can top-level managers develop more effective strategic plans? include formal planning and emergent strategies What is one of the biggest advantages to scenario planning in terms of strategic management? Managers are forced to think outside the box. Why is the ivory tower concept of planning less effective than a decentralized approach? It ignores the importance of autonomous action. Why might a manager who uses simple analogies to explain complex issues create problems in the decision-making process? The analogy might not be valid. Why is the use of devil's advocacy helpful in the decision-making process? It can counteract cognitive biases. How can a manager counter biases such as illusion of control, reasoning by analogy, or representativeness when evaluating plans? Use the outside view to evaluate alternative plans. How can leaders provide an organization with a sense of direction? Communicate and make their vision part of the organization's culture. Why is a high degree of motivation important in leaders? It persuades others to join together in pursuit of a common goal. What is the hallmark of a great strategic leader? Their impact lasts beyond their years at the organization. Why is it important to do an analysis of the forces that affect a firm before formulating a strategy? to identify strategies that will allow the firm to outperform rivals Why should firms pay attention to conditions in the industry environment that lead to opportunities? to increase profitability What makes a company a competitor? It has a product that can be used as a substitute for that of the firm. Why should firms take a customer-oriented view of their industry rather than a product-oriented view? Basic customer needs define the industry's boundaries. How might a firm in an unrelated industry become a competitor to firms in another industry? through the use of new technology What happens when the forces that shape competition in an industry, as outlined in Porter's Five Forces, grow stronger? It becomes more difficult to make a profit. Why would a firm that is a potential competitor in an industry choose not to become a rival? The barrier to entry is too high. The airline industry has several companies that fly similar routes, often at similar prices. What long-term effect does this type of competitive rivalry have on the industry? decreased profitability How can a supplier increase their power over their customers when they have the same knowledge and experience as firms in their customers' industry? by threatening to become a competitor Which of the following would serve as a complementor to the electric vehicle industry? solar panels for car roofs When a company has a product that is very similar to that of their competitors, how can they differentiate it from others? with strategic positioning Which of the following would be characteristic of a firm pursuing a low-risk, low-return strategy? an emphasis on price Why may some strategic groups face different threats and opportunities than other strategic groups in the same industry? it can relate to the competitive positioning approach When a strategic group has a strong position in relation to buyers because there are no substitutes for their product, what does that say about that strategic group? competitive forces are weak What risk do managers incur when they consider whether it is worth working to overcome mobility barriers and pursue a new strategic group? new competition Why is the life-cycle model a useful tool for analyzing industry evolution? differences and similarities become more pronounced over time How should a manager use the industry life-cycle model in evolving industry environments? to formulate strategies that counter emerging threats Why is space travel considered an embryonic industry? there are no economies of scale Why should managers use the growth stage of a new market to prepare for the shakeout stage of the industry life cycle? to position themselves as leaders during shakeout How can firms respond to changes in the market as the industry reaches the maturity stage of the life-cycle? by building brand loyalty Why can the industry life-cycle model be considered only a generalization? life cycles do not always follow a pattern What is the relationship between innovation and competition? innovation drives competition How can innovation transform the nature of industry competition? it reduces barriers to entry During times of punctuated equilibrium, why is an industry structure likely to become more fragmented? More companies enter the industry because of lower barriers to entry. What is the relationship between industry structure and profits across companies? A firm's resources and capabilities determine profitability. How would changes in the macroenvironment impact the forces in Porter's model? they change the attractiveness of an industry Why would price inflation make investment planning hazardous for firms? the future is less predictable Why can technological changes be considered both an opportunity and a threat for organization? they can radically reshape industry structure Why might an aging population create a threat to an organization? fewer people in the workforce How do political and legal processes shape the opportunities and threats experienced in an industry? they shape laws the industry must follow In what way was the flood of new entrants into the airline industry that followed deregulation in 1978 good for customers? they created price wars In what way did the flood of new entrants into the airline industry that followed deregulation in 1978 negatively affect the airline industry? New strategies had to be formulated to counter emerging threats. Apart from government regulations, what are the other barriers to entry into the U.S. airline industry? the cost of labor How have barriers to entry in the U.S. airline industry changed over time? Air travel has continued to expand for all carriers. Why did the legacy airlines take so long to adjust to the entry of low-cost carriers such as Southwest and JetBlue? it was a mature industry What does this case tell you about the role of strategy in changing the competitive structure of an industry? Managers must tailor strategies to changing industry conditions. What does this case tell you about the role of strategy in enterprise success and failure? Business models should be based on new positioning strategies. What events triggered price wars in this industry? airline travel became viewed as a commodity What can the airlines do strategically to avoid future price wars? Take over smaller airlines to reduce competition A company wants to emulate one of Apple's most important distinctive competencies. Which of the following would achieve that goal? making beautiful products How might a consultant analyze a company's process knowledge? by analyzing the rules, routines, and procedures of an organization Which is the primary channel by which process knowledge is shared? learning by doing Which factors of production are most important to a company's competitive advantage? advanced and basic factors of production Which system best allows managers to evaluate the quality of their resources? value, rarity, imitability, and organization (VRIO) A company claims that it has valuable resources. How might another firm determine whether their claim is accurate? determine whether the resources make it possible to exploit opportunities and counter threats Why is it important that a competitive resource be rare? if it's not rare, competitors can access it. To what degree does a patent protect a company's intellectual property for the long term? to a limited degree