MGMT 485W MIDTERM QUESTIONS AND ANSWERS LATEST UPDATE 2025-2026
strategy - Answers "a plan, a series of maneuvers that deploy resources in such a way as to
obtain a specific results
a set of related actions that managers take to increase their company's performance"
Purpose of a strategy - Answers gain an advantage over an opponent, strategy is all about
winning.
Strategies directly affect - Answers profitability
profitability - Answers the result of how efficiently and effectively manag- ers use the capital at
their disposal to produce goods and services that satisfy customer needs
profitability and shareholder value are significantly: - Answers "positively correlated
as long as we observe a reasonable sample of firms.
*Nevertheless, as we saw in the case of American Airlines, profitability and shareholder value
are sometimes uncorrelated in an individual firm."
T/F For most, companies, achieving superior performance relative to rivals is not a challenge. -
Answers False, it is the ultimate challenge
If a company's strategies result in superior performance, it is said to have - Answers competitive
advantage
Strategic leadership - Answers "how to most effectively manage a company's strategy- making
process to create competitive advantage.
increases the performance of a company, thereby increasing the value of the enterprise to its
owners, its shareholders."
strategy-making process - Answers by which managers select and then implement a set of
strategies that aim to achieve a competitive advantage
Strategy formulation - Answers is the task of selecting strategies
Strategy implementation - Answers "taking actions at the functional, business, and corporate
,levels to execute a strategic plan.
the task of putting strategies into action, which includes:
designing, delivering, and supporting products;
improving the efficiency and effectiveness of operations;
and designing a company's organizational structure, control systems, and culture"
to increase shareholder value, managers must pursue strategies that - Answers "increase the
profitability of the company and ensure that profits grow
To do this, a company must be able to outperform its rivals; it must have a competitive
advantage"
measuring overall company performance/strategy effectiveness: - Answers Financial
performance builds wealth for shareholders and cumulative total return measures the value
added for stockholders
Corporate-level strategy is all about - Answers adding value for *stockholders*
Ways to measure profitability - Answers "ROS (where return is based on either net income or
operating income),
ROA
ROE
ROIC (Finance experts favor)
,NPM (Net Profit Margin)
OPM (operating profit margin)"
ROIC - Answers "(Return on invested Capital)
related to value added for customers, but also considers the financing—debt and
equity—needed to generate sales from customers"
Risk capital - Answers capital that cannot be recovered if a company fails and goes bankrupt
the best way to maximize the long-run return to shareholders is to focus on - Answers
customers and employees
shareholder value - Answers "the returns that shareholders earn from purchasing shares in a
company.
These returns come from two sources:
-capital appreciation in the value of a company's shares
-dividend payments.
Strategic management on going process - Answers "Understand/create a mission
Analyze the situation (inside and out)
Select strategies
implement those strategies"
the strategic management process requires - Answers Strategy analysis
, Strategy formulation
Strategy Implementation
strategic management process alternative names - Answers "analysis -> ready
decisions-> aim
actions -> fire"
Strategy analysis - Answers analyzing the situation
Strategy Formulation - Answers picking the most appropriate strategies for the situation
Strategy Implementation - Answers execute the strategies
five main steps of the formal strategic planning process - Answers 1. Select the corporate
mission and major corporate goals.
2. Analyze the organization's external competitive environment to identify opportunities and
threats.
3. Analyze the organization's internal operating environment to identify the organization's
strengths and weaknesses.
4. Select strategies that build on the organization's strengths and correct its weaknesses in
order to take advantage of external opportunities and counter external threats. These strategies
should be consistent with the mission and major goals of the organization. They should be
congruent and constitute a viable business model.
5. Implement the strategies.
profit growth - Answers measured by the increase in net profit over time
strategy - Answers "a plan, a series of maneuvers that deploy resources in such a way as to
obtain a specific results
a set of related actions that managers take to increase their company's performance"
Purpose of a strategy - Answers gain an advantage over an opponent, strategy is all about
winning.
Strategies directly affect - Answers profitability
profitability - Answers the result of how efficiently and effectively manag- ers use the capital at
their disposal to produce goods and services that satisfy customer needs
profitability and shareholder value are significantly: - Answers "positively correlated
as long as we observe a reasonable sample of firms.
*Nevertheless, as we saw in the case of American Airlines, profitability and shareholder value
are sometimes uncorrelated in an individual firm."
T/F For most, companies, achieving superior performance relative to rivals is not a challenge. -
Answers False, it is the ultimate challenge
If a company's strategies result in superior performance, it is said to have - Answers competitive
advantage
Strategic leadership - Answers "how to most effectively manage a company's strategy- making
process to create competitive advantage.
increases the performance of a company, thereby increasing the value of the enterprise to its
owners, its shareholders."
strategy-making process - Answers by which managers select and then implement a set of
strategies that aim to achieve a competitive advantage
Strategy formulation - Answers is the task of selecting strategies
Strategy implementation - Answers "taking actions at the functional, business, and corporate
,levels to execute a strategic plan.
the task of putting strategies into action, which includes:
designing, delivering, and supporting products;
improving the efficiency and effectiveness of operations;
and designing a company's organizational structure, control systems, and culture"
to increase shareholder value, managers must pursue strategies that - Answers "increase the
profitability of the company and ensure that profits grow
To do this, a company must be able to outperform its rivals; it must have a competitive
advantage"
measuring overall company performance/strategy effectiveness: - Answers Financial
performance builds wealth for shareholders and cumulative total return measures the value
added for stockholders
Corporate-level strategy is all about - Answers adding value for *stockholders*
Ways to measure profitability - Answers "ROS (where return is based on either net income or
operating income),
ROA
ROE
ROIC (Finance experts favor)
,NPM (Net Profit Margin)
OPM (operating profit margin)"
ROIC - Answers "(Return on invested Capital)
related to value added for customers, but also considers the financing—debt and
equity—needed to generate sales from customers"
Risk capital - Answers capital that cannot be recovered if a company fails and goes bankrupt
the best way to maximize the long-run return to shareholders is to focus on - Answers
customers and employees
shareholder value - Answers "the returns that shareholders earn from purchasing shares in a
company.
These returns come from two sources:
-capital appreciation in the value of a company's shares
-dividend payments.
Strategic management on going process - Answers "Understand/create a mission
Analyze the situation (inside and out)
Select strategies
implement those strategies"
the strategic management process requires - Answers Strategy analysis
, Strategy formulation
Strategy Implementation
strategic management process alternative names - Answers "analysis -> ready
decisions-> aim
actions -> fire"
Strategy analysis - Answers analyzing the situation
Strategy Formulation - Answers picking the most appropriate strategies for the situation
Strategy Implementation - Answers execute the strategies
five main steps of the formal strategic planning process - Answers 1. Select the corporate
mission and major corporate goals.
2. Analyze the organization's external competitive environment to identify opportunities and
threats.
3. Analyze the organization's internal operating environment to identify the organization's
strengths and weaknesses.
4. Select strategies that build on the organization's strengths and correct its weaknesses in
order to take advantage of external opportunities and counter external threats. These strategies
should be consistent with the mission and major goals of the organization. They should be
congruent and constitute a viable business model.
5. Implement the strategies.
profit growth - Answers measured by the increase in net profit over time
