BAD 4013 Exam 1 || 100% Valid Solutions.
What is strategy? correct answers Firm's theory about how to gain sustainable competitive
advantage
Key objective of firm correct answers Want to create more economic value than competitors
and sustain it
Sustainable competitive advantage correct answers when firm implements value-creating
strategy and other companies are unable to duplicate it or find it too costly
Above-average returns correct answers returns in excess of what investor expects to earn
from another investment with similar amount of risk
competitive disadvantage correct answers unfavorable circumstance or condition that causes
a firm to underperform in an industry (ex: location)
Question marks in BCG matrix correct answers High growth, low market share
Risky
Stars in BCG matrix correct answers High growth, high market share
Rapid growth, want to increase investment
Dogs in BCG matrix correct answers Low growth, low market share
No investment
Cash cows in BCG matrix correct answers Low growth, high market share
Used to finance stars and question marks
IO (industrial organization) model of above average returns correct answers Industry firm
chooses to compete in has stronger influence on firm's performance than managerial choices
Industry properties that affect firm performance according to IO model correct answers
Economies of scale, barriers to market entry, diversification, product differentiation
4 underlying assumptions of IO model correct answers External environment assumed to
impose pressure/constraints
Most firms in industry assumed to control similar resources
Resources are highly mobile across firms
Decision makers assumed to be rational and acting in firm's best interest
Secret for above average returns correct answers cost leadership or differentiated strategy
VRIO (resource-based) view correct answers Assumes each organization is collection of
unique resources and capabilities that provides basis for strategy and primary source for
returns
VRIO correct answers To create advantage, resource must be:
Valuable, rare, costly to imitate, or organization
, Core competencies correct answers resources/capabilities that serve as source of competitive
advantage
Recent trends in strategic innovation correct answers Knowledge mgmt and organization
learning
Organization flexibility and speed of response
Virtual organizations (already happening before COVID)
Social entrepreneurship
Behavioral strategy
Business strategy correct answers Answers "how should we compete in market or industry?"
Either cost leadership or differentiation
Every company has either 1 of these strategies
Corporate strategy correct answers Answers "which industry should we be in?"
Diversification, alliances, mergers
Strategic vision correct answers Concerns firm's future business path
-markets to be pursued
-kind of comp mgmt is trying to create
Mission statement correct answers focuses on current business activities
-customer product and service offerings
-customer needs being met
Example of a financial objective correct answers Increase EPS 15% annually
Example of strategic objectives correct answers Boost firm's reputation with customers
planned strategy correct answers New initiatives plus ongoing strategy features continued
from prior periods
reactive strategy correct answers Adaptive reactions to changing circumstances
realized strategy correct answers the strategy that actually takes place
general environment (macro-environment) analysis correct answers a critical tool for external
analysis used to identify relevant trends in each segment of macro-environment and interpret
potential implications of the trends (PESTEL analysis)
PESTEL analysis correct answers Political, Economic, Social, Technological, Environmental,
Legal
Political aspects of PESTEL correct answers gov policies, foreign trade policies, taxation,
fiscal policy
Economic aspects of PESTEL correct answers interest rates, exchange rates, wage rates,
inflation
What is strategy? correct answers Firm's theory about how to gain sustainable competitive
advantage
Key objective of firm correct answers Want to create more economic value than competitors
and sustain it
Sustainable competitive advantage correct answers when firm implements value-creating
strategy and other companies are unable to duplicate it or find it too costly
Above-average returns correct answers returns in excess of what investor expects to earn
from another investment with similar amount of risk
competitive disadvantage correct answers unfavorable circumstance or condition that causes
a firm to underperform in an industry (ex: location)
Question marks in BCG matrix correct answers High growth, low market share
Risky
Stars in BCG matrix correct answers High growth, high market share
Rapid growth, want to increase investment
Dogs in BCG matrix correct answers Low growth, low market share
No investment
Cash cows in BCG matrix correct answers Low growth, high market share
Used to finance stars and question marks
IO (industrial organization) model of above average returns correct answers Industry firm
chooses to compete in has stronger influence on firm's performance than managerial choices
Industry properties that affect firm performance according to IO model correct answers
Economies of scale, barriers to market entry, diversification, product differentiation
4 underlying assumptions of IO model correct answers External environment assumed to
impose pressure/constraints
Most firms in industry assumed to control similar resources
Resources are highly mobile across firms
Decision makers assumed to be rational and acting in firm's best interest
Secret for above average returns correct answers cost leadership or differentiated strategy
VRIO (resource-based) view correct answers Assumes each organization is collection of
unique resources and capabilities that provides basis for strategy and primary source for
returns
VRIO correct answers To create advantage, resource must be:
Valuable, rare, costly to imitate, or organization
, Core competencies correct answers resources/capabilities that serve as source of competitive
advantage
Recent trends in strategic innovation correct answers Knowledge mgmt and organization
learning
Organization flexibility and speed of response
Virtual organizations (already happening before COVID)
Social entrepreneurship
Behavioral strategy
Business strategy correct answers Answers "how should we compete in market or industry?"
Either cost leadership or differentiation
Every company has either 1 of these strategies
Corporate strategy correct answers Answers "which industry should we be in?"
Diversification, alliances, mergers
Strategic vision correct answers Concerns firm's future business path
-markets to be pursued
-kind of comp mgmt is trying to create
Mission statement correct answers focuses on current business activities
-customer product and service offerings
-customer needs being met
Example of a financial objective correct answers Increase EPS 15% annually
Example of strategic objectives correct answers Boost firm's reputation with customers
planned strategy correct answers New initiatives plus ongoing strategy features continued
from prior periods
reactive strategy correct answers Adaptive reactions to changing circumstances
realized strategy correct answers the strategy that actually takes place
general environment (macro-environment) analysis correct answers a critical tool for external
analysis used to identify relevant trends in each segment of macro-environment and interpret
potential implications of the trends (PESTEL analysis)
PESTEL analysis correct answers Political, Economic, Social, Technological, Environmental,
Legal
Political aspects of PESTEL correct answers gov policies, foreign trade policies, taxation,
fiscal policy
Economic aspects of PESTEL correct answers interest rates, exchange rates, wage rates,
inflation
