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WorksheetsMidterm Strategic Management
Total questions: 80
Worksheet time: 20hrs 0mins
According to Milton Friedman, the social responsibility of business is to
increase its profits
create value for stakeholders
take care of the society
work on addressing social issues
What is the definition of stakeholders?
Those who have a stake in an organization.
Those who affect or are affected by the realization of an organization's purpose.
It is just another term for shareholders.
The managers of an organization.
Who originally developed stakeholder theory?
Joseph Schumpeter
Milton Friedman
Adam Smith
Ed Freeman
Who are typically considered primary stakeholders?
employees, customers, suppliers, communities, and shareholders
media, government, and competitors
shareholders, financiers, and investors
employees, customers, communities, society, and environment
Stakeholder interests are
primarily based on financial returns
standalone (no synergies among stakeholders)
joint
not as important as shareholder interests
What is a normative argument?
It refers to how things are done in reality.
It shows how one factor affects another.
It is about what ought to be done according to a someone's value position.
It is based on logic.
What is an instrumental view of stakeholder theory?
it describes how business works in reality.
It is a belief that creating value for stakeholders results in higher financial returns.
It is a supposition that each stakeholder should be provided with an appropriate instrument.
It is about creating value for all stakeholders because it is just the right thing to do.
According to stakeholder theory, how can trade-offs be resolved?
By prioritizing shareholders.
By focusing on financial returns.
By leveraging imagination and creativity.
By ignoring shareholders.
What is the main idea of the story about Jose Lopez at General Motors (GM)?
He had a successful career at GM - he was promoted from the GM operations in Europe to the GM headquarters in the US.
He achieved a lot of savings in purchasing by squeezing suppliers, which made GM benefit in the short term but suffer in the long run.
He is a GM hero who helped the company stop bleeding and become profitable again.
He managed the GM Procurement according to stakeholder principles.
What talking about shareholder value maximization, what was NOT said by Milton Friedman?
Managers are not trained in doing social projects
Managers should not be afraid of challenging legal boundaries if needed
Managers should do social projects if these projects lead to higher profits
Managers should invest in social initiatives out of their pocket, not corporate budget
Was Monsanto a success story?
Yes, its shareholders, customers, and employees were happy.
No, because it ignored communities and virtual stakeholders which eventually backfired.
No, it didn't pay enough attention to virtual stakeholders who were willing to pay extra.
Yes, its shareholders were happy.
What word is missing in the strategic term "competitive advantage"?
Large
Long-term
Stakeholder-oriented
Sustainable
Management innovations such as total quality, just-in-time, benchmarking, business process reengineering, and outsourcing ...
lead to sustainable competitive advantage
are the key topics in the strategic management
are not important any more today
are important but not enough for building sustainable competitive advantage
What is the key criterion for success business?
Growth
Market share
Profit
International operations
According to a zero-sum perspective,
everyone in the organization shares gains and losses equally
one can only gain at the expense of someone else.
in order for someone to gain others must experience no gain or benefit.
all parts of the organization gain at no loss.
The strategic management process entails three ongoing pillars:
analysis, decisions, and evaluation
decisions, actions, and evaluation
analysis, formulation, and implementation
formulation, implementation, and evaluation
A CEO made a lot of mistakes in assessing the market and the competitive conditions. As a result, she improperly redesigned the organization into numerous business units and her errors led to significant performance declines. This example illustrates the ________ view of leadership.
external control
operational
internal control
romantic
According to Henry Mintzberg, the realized strategy of a firm is
never deliberate.
a combination of deliberate and emergent strategies.
a result of intended and deliberate strategies
a result of differentiation and cost leadership strategies.
Vision statements are used to create a better understanding of the overall purpose and direction of the organization. Vision statements
provide specific objectives.
are massively inspiring.
are detail-oriented.
set organizational structure.
The vision sets the overall direction of the organization. What role do strategic objectives serve?
are a shorter version of the vision
are only clarified by the board of directors
operationalize the vision
modify the vision
What generic strategy did Venmo initially pursue?
Cost leadership
Differentiation
Focused differentiation
Both differentiation and cost leadership
According to research, companies that are successful in both differentiation and cost leadership are more likely to perform
lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.
higher than firms that achieve either a cost or differentiation advantage.
about the same as firms that are stuck-in-the-middle.
at about the same level as firms that achieve either cost or differentiation advantages.
An apparel producer pursues an overall cost leadership strategy. Its strategy can fail if it
cannot maintain parity on differentiation dimensions valued by customers.
increases its sales prices while maintaining competitor parity.
maintains parity with competitors on low cost.
doesn't exceed customer expectations.
When it comes to a cost leadership strategy, experience effect is expected to lower costs by
spreading out a given expense or investment over a greater volume.
hiring more experienced personnel.
being present in an industry for a long time.
repeating a process until a task becomes easier
Differentiation strategy typically comes along with
decreased emphasis on competition based on price.
higher market share.
higher profit margins and lower costs.
significant economies of scale.
In Strategic Management, the term "got stuck in the middle" means that a company has
neither unique nor low-price offering for customers.
managed to achieve both cost leadership and differentiation.
been half way in implementing its turnaround strategy.
competitive parity.
A ________ is the total profits in an industry at all points along the industry value chain
profit maximization
profit pool
industry profits
profit pile
In the ________ stage of the industry life cycle, product design especially matters, while competition and market growth are low.
maturity
introduction
growth
decline
In this stage of the industry life cycle, growth in the market is stagnant and market players mainly compete on the basis of price:
introduction
decline
maturity
growth
When an industry matures
there is increasing emphasis on efficiency.
costs continue to increase.
differentiation opportunities increase.
application for patents increase.
What is a main difference between income statement and balance sheet?
Income statement and balance sheet are synonyms.
A balance sheet focuses on balancing assets and liabilities, while an income statement focuses on income.
A balance sheet is a snapshot at a single point in time of a company's accounts, while an income statement shows how profitable the company is over a given time period.
An income statement is a snapshot at a single point in time of a company's accounts, while a balance sheet shows how profitable the company is over a given time period.
What is the difference between external and internal financial reporting?
External financial reports analyze the external environment of a firm, whereas internal financial reports analyze the internal competences of a firm.
External financial reports are created for people outside the organization, whereas internal financial reports are created for managers within the organization.
External financial reports analyze competitors, whereas internal financial reports analyze a firm's own performance.
External financial reports are created by a firm's external parties (market analysts, etc.), whereas internal financial reports are created by a firm's own employees.
In an income statement, when is revenue recognized?
When a company receives an order from a customer
When a company bills a customer.
When a company receives payment from a customer.
When a company delivers products to a customer.
What is the different between Cost and Expense?
Cost is what you spend on acquiring an asset, and expense is what you spend when using the asset.
They are the same.
Expense is what you spend on acquiring an asset, and cost is what you spend on using the asset.
They are the same, but 'expense' is used in a balance sheet, and 'cost' is used in an income statement.
The statement of cash flows acts as a bridge between the income statement and the balance sheet because it
starts with the cash balance figure from the income statement, and ends with the net income that appears on the balance sheet
starts with the net income figure from the balance sheet, and ends with the cash balance that appears on the income statement.
starts with the net income figure from the income statement, and ends with the cash balance that appears on the balance sheet.
starts with the cash balance figure from the balance sheet, and ends with the net income that appears on the income statement.
What is the bottom line in an income statement?
Net Profit
Earnings
Net Income
All of the above
Which equation is correct?
L = A - E
A = E - L
A = L - E
L = A + E
What should be the first step for your team to take in the Capsim simulation?
Increase contribution margin.
Invest in R&D.
Forecast the market and your potential market share
Discuss your strategy.
Capstone simulation measures your team's performance via
financial metrics.
market share.
stock price.
balanced scorecard.
What makes you a team in the simulation?
We are a team because we work together.
We are a team not only because we work together, but because we respect, trust, and care for each other.
When it comes to organizations, which statement about Entity is true?
It is the organization for which an annual report is prepared, including the owners and employees of that organization.
It is the organization for which an annual report is prepared, separate and apart from the owners and employees of that organization.
It is an organizational identity of all stakeholders
It is the identity of employees working in the organization.
What is the difference between debit and credit?
Credit is a monetary increase to assets or a decrease to liabilities, whereas debit is just the opposite of credit.
It is the same as the difference between debit and credit cards.
Debit is a monetary increase to assets or a decrease to liabilities, whereas credit is just the opposite of debit.
The difference lies in the spelling. But otherwise there is no difference.
What is the role of managers in financial statements?
Managers can steer financial statements in the desired direction by structuring their firm's business operations accordingly.
It is at managers' full discretion how to prepare financial statements.
In a market economy, the market dictates managers how to prepare their financial statements.
There is nothing managers can do because they are obliged to report financial operations the way it is prescribed by SEC.
When does a company receive money from the sale of its shares?
A company receives money from the sale of its shares only if the transaction is approved by SEC.
A company receives money from the sale of its shares in an initial public offering.
A company receives money from the sale of its shares any time the transaction takes place.
A company never receives money from the sale of its shares
How is contribution margin ratio calculated?
(total revenue - variable costs) / variable costs
total revenue - variable costs
total revenue - fixed costs
(total revenue - variable costs) / total revenue
How would you characterize failures?
All of the above
preventable, avoidable, intelligent
preventable, unavoidable, intelligent
bad, undesired, depressing
Which failures are called intelligent?
those that provide new knowledge.
those that provide valuable new knowledge.
those that occurred to intelligent people.
those that occurred to artificial intelligence.
In "A Spectrum of Reasons for Failure", which one is the most praiseworthy?
Exploratory testing.
Hypothesis testing.
Process complexity.
Task challenge.
What color story happened with Alan Mullaly at Ford?
All his managers coded their operations black & white.
All his managers coded their operations green.
He limited Ford colors to black & white.
Ford cars were coming in any color except for green.
Coming last in the practice rounds of the Strategy simulation
should be discussed with your counselor
prevents a team from coming first in the competition rounds.
provides an opportunity to learn from mistakes.
is nothing to worry about.
It is important to understand financial ratios because
our professor seems to be obsessed with them.
it can help you become an interesting interlocutor at any event.
they allow to make meaningful comparisons about efficiency across companies as well as the historical development of your company.
they can replace a balanced scorecard.
A firm's financial position should not be analyzed in isolation, but rather as a reference point. Which financial ratios' comparison is NOT typically used in evaluating a firm's financial performance?
Comparison with key competitors.
Comparison of competitive advantages
Comparison with industry norms.
Historical comparison.
What does Balanced Scorecard measure?
How a firm creates value in a short-term perspective.
Key indicators in a firm's Balance Sheet.
How a firm balances its key scores.
How a firm creates value in a long-term perspective.
Which measure is not part of a balanced scorecard?
Financial perspective.
Customer perspective.
Shareholder perspective.
Internal business perspective.
Resources and obligations are listed on a balance sheet at their ____________ cost.
historical
present-value
market
objective
Profit margin is calculated as
Net Income / Sales
Net Income / Equity
Equity / Net Income
Sales / Net Income
How is Free Cash Flow calculated?
CapEx + Depreciation
Cash Flow from Investing + Cash Flow from Financing
Current Assets - Current Liabilities
Cash Flow from Ops - CapEx
How is this ratio called: Sales / Assets ?
Return on Sales
Return on Assets
Asset Turnover
Leverage
Working Capital should be
as high as possible
as low as possible
proportional to production
within 60-day range
If leverage equals 1, what does it mean?
Financing = Spending
Company has 0% growth
Assets = Equity
Company maximized its growth
These strategic business units (SBUs) are not part of GE:
GE Power, GE Aviation, and GE Capital
GE Healthcare, GE Renewable Energy, and GE Oil & Gas
GE Lighting and GE Transportation
GE Infrastructure and GE Consumer Goods
When eBay owned PayPal, which diversification was that?
Unrelated businesses with portfolio management
Related businesses with vertical integration
Related businesses with core competences
Unrelated businesses with parenting advantage
When diversifying into ________ businesses, most benefits can be derived from ________ relationships (such as creating value via the corporate office).
related; hierarchical
unrelated; hierarchical
related; horizontal
unrelated; horizontal
Leveraging common production facilities is an illustration of
obtaining pooled negotiation power
sharing related activities
leveraging core competencies
achieving vertical integration
If a company acquires a business that has little horizontal relationship with other businesses of the company, this is an example of ___________ diversification.
Unrelated
Related
Horizontal
Synergistic
At what level are portfolio management matrices used?
international level
business level
departmental level
corporate level
According to the BCG framework, a business with a significant market share and in a fast growing industry is called a ________ .
dog
question mark
star
cash cow
The BCG framework implies that
cash cows require substantial cash outlays to maintain market share
stars are in low growth markets and can provide excess cash to fund other opportunities.
dogs should be invested in to increase market share and become cash cows.
question marks can represent future stars if their market share is increased.
A company can enter different businesses via
mergers and acquisitions; internal development; differentiation
joint ventures and strategic alliances; integration of value chain activities; acquiring human capital
mergers and acquisitions; differentiation; overall cost leadership
mergers and acquisitions; joint ventures and strategic alliances; internal development
When it comes to internal development, which statement is false?
Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.
The firm can capture wealth created without having to share the wealth with alliance partners.
Many companies use internal development to extend their product or service offers.
An advantage of internal development is that it is generally faster than other means of diversification.
Which company launched ChatGPT?
Microsoft
AI Intelligence
OpenAI
According to RBV, what is a better perspective for analyzing competitive advantage?
The external forces side
The resource side
The product side
All of the above
RBV presupposes that resources are
Heterogeneous and mobile
Homogeneous and mobile
Heterogeneous and with limited mobility
Homogeneous and with limited mobility
According to RBV, competitive advantage in mergers and acquisitions can be achieved primarily through
Complementarity in resources
Similarity in resources
Differences in resources
Intangible resources
The three types of resources that are central to the resource-based view of the firm are
tangible resources, intangible resources, and organizational structure.
culture, tangible resources, intangible resources.
tangible resources, intangible resources, and organizational capabilities.
tangible resources, intangible resources, and top management.
_____________ are the competencies or skills that a firm employs to transform resources into competitive advantage.
Organizational knowledge
Organizational identity
Organizational wisdom
Organizational capabilities
A competitive advantage based on inimitability can be sustained for a long time, if it has the following characteristics:
psychographic uniqueness, path dependency, causal ambiguity, and substitutability.
physical uniqueness, path dependency, causal ambiguity, and social complexity.
rarity, path dependency, causal ambiguity, and social substitutability.
geographic uniqueness, cause dependency, social ambiguity, and path complexity.
A crash R&D program by one firm cannot replicate a successful technology developed by another firm, when research findings cumulate. This is an example of
social complexity.
physical uniqueness.
path dependency.
causal ambiguity.
A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain
a temporary competitive advantage.
a sustainable competitive advantage
no competitive advantage.
competitive parity.
The root of the OpenAI innovation process is complex, hard to understand, and difficult to imitate. This is a competitive advantage based on
path dependency.
social complexity.
casual ambiguity.
inevitability.
