Strategic Management Flashcards Test 3

Front 1

Define cooperative strategy

Back 1

When firms work together to achieve a common objective.

Front 2

Define Strategic alliance

Back 2

When firms combine resources in order to gain a competitive advantage.

Front 3

Define Joint Venture

Back 3

When firms create an independent company with equal stake.

Front 4

Equity strategic alliance

Back 4

When firms create an independent company and there is not an equal stake in ownership.

Front 5

Non-equity strategic alliance

Back 5

When an individual firm is not created as an alliance. Projects are usually less complex and commitment levels are low.

Front 6

Business level cooperative strategy

Back 6

a strategic alliance where firms attempt to improve performance in specific product markets

Front 7

Complimentary strategic alliance

Back 7

a type of business level cooperative strategy where firms share complimentary resources to develop a competitive advantage

Front 8

Vertical complimentary strategy

Back 8

a type of complimentary strategic alliance where different places in the value chain are shared

Front 9

Horizontal complimentary strategy

Back 9

a type of complimentary strategic alliance where the same places in the value chain are shared

Front 10

Competition response strategy

Back 10

a cooperative strategy used to respond to competitors attacks, usually used to take strategic and not tactical action

Front 11

Uncertainty reducing strategy

Back 11

cooperative strategy used to reduce risk and uncertainty.

Front 12

Competition reducing strategy

Back 12

when firms try to eliminate competition through some form of collusion

Front 13

Explicit collusion

Back 13

Illegal collusion; price setting

Front 14

Tacit collusion

Back 14

when firms impliedly collude by observing each other actions

Front 15

Corporate-level cooperative strategy

Back 15

A strategy used to diversify products or markets it competes in.

Front 16

Diversifying strategic alliance

Back 16

when firms cooperate in order to enter new markets

Front 17

Synergistic strategic alliance

Back 17

when firms cooperate to create new synergies

Front 18

Franchising

Back 18

A contractual agreement to do business with someone else's trade name

Front 19

Cross-border strategic alliance

Back 19

where firms across borders share resources to create a competitive advantage

Front 20

Network cooperative strategy

Back 20

where multiple firms create an alliance to shared objectives

Front 21

Reasons why firms participate in strategic alliances

Back 21

reduce competition, enhance firms competitive capabilities, allow firms to gain access to resources, allow a firm to take advantage of opportunities

Front 22

Define complimentary alliances

Back 22

sharing of firms resources to gain a competitive advantage

Front 23

Define competitive alliances

Back 23

Response to competitors strategic actions, usually not tactical

Front 24

Why are some alliances more stable than others?

Back 24

When one of the firm acts opportunistically, misrepresentation of competencies, resources not made available, firms do not invest same amounts in the relationship, lack of trust, sufficient contracts

Front 25

Why join a franchise?

Back 25

market is well fragmented, franchisor develops program/store, franchisees notify firm of ways to be more efficient

Front 26

Corporate governance objectives

Back 26

Make strategic decisions more effectively, creates order between managing owning parties, reflects/enforces firm values, aligns interests of execs and shareholders

Front 27

What are the internal mechanisms for corporate governance

Back 27

ownership concentration, board of directors, executive compensation

Front 28

What are the external mechanisms for corporate governance

Back 28

market for corporate control

Front 29

Define the market for corporate control

Back 29

Market where ownerships in the firm can be traded; often used as a last resort to maintain or gain control over the firm

Front 30

Agency relationship

Back 30

where one person hires an agent to make decisions

Front 31

Agency costs

Back 31

The costs associates with maintaining a principal/agent relationship

Front 32

Agency problems

Back 32

Problems that arise as a result of an agency relationship

Front 33

Why might a CEO want to diversify a corporation?

Back 33

Decrease job loss risk, Increase salary

Front 34

Why aren't dividends offered more often?

Back 34

Executives use excess cash to invest in personal projects

Front 35

What are the positive consequences of SOX?

Back 35

Regulations have been copied around the world, stock market confidence increases due to more stringent reporting standards

Front 36

What are the negative consequences of SOX?

Back 36

increased firm costs, less foreign firms on US stock exchange

Front 37

Define a large blockholder

Back 37

Someone who owns at least 5 percent of a corporations issues shares

Front 38

How do large blockholders impact firms?

Back 38

Higher monitoring of managers actions, lower levels of firm diversification

Front 39

Define Strategic controls

Back 39

verifications of a firms direction and use of appropriate methods/standards in conducting business

Front 40

Define Financial controls

Back 40

using quantified measures to measure firm performance such as ROI and ROA

Front 41

When are strategic/financial controls used?

Back 41

Strategic controls used in differentiated strategy; Financial controls used in a cost-leadership strategy or when the firm is highly diversified (diversification makes it hard to design strategic controls)

Front 42

What changes have boards of directors implemented since the scandals this decade?

Back 42

Compensation and nomination committies must be headed by outsiders; Boards must be headed by outsiders

Front 43

Positives/Negatives of stock options for top management?

Back 43

links pay to performance but makes CEOs richer and are often used in high risk situations

Front 44

What is organizational structure?

Back 44

The formal relationships, procedures, controls, authority, and decision making

Front 45

Structural stability

Back 45

allows the firm the manage work routines

Front 46

Structural flexability

Back 46

allows the firm to explore opportunities/competitive advantages

Front 47

Do top managers like to change an organizations structure?

Back 47

No, unless it is necessary

Front 48

What is a simple organizational structure, when is it used?

Back 48

Manager owner makes all decisions; best when used for a single product line and market

Front 49

What is the functional structure and how is it used?

Back 49

CEO and managers of different departments; used when business and some corporate level strategies used

Front 50

Describe how the functional structure is set up under a cost leadership strategy

Back 50

Centralized staff makes decisions and continually cuts costs; highly specialized tasks; highly formalized rules

Front 51

Describe how the functional structure is set up under a differentiation strategy

Back 51

Decision making is not centralized; Job structure is not specialized; and few formal rules

Front 52

What is the multi-divisional corporate structure?

Back 52

each division acts as a separate business and firm functions in different markets but with same or different products for each business

Front 53

What are the benefits of a multi-divisional corporate structure?

Back 53

Corporate officers can monitor firm performance, divisions can be easily compared, managers can easily motivate poorly performing divisions

Front 54

What is the cooperate form of multi-divisional corporate structure?

Back 54

used with related constrained assets split up by product division with a headquarters office containing managerial functions

Front 55

What are the benefits of the cooperate form of multi-divisional corporate structure?

Back 55

allows for cooperation between divisions, some functions centralized and available to entire organization, division managers make frequent contact, matrix organization

Front 56

What is a matrix organization?

Back 56

Where divisions have both function and produce specializations

Front 57

What is a strategic business unit?

Back 57

Used under the related linked strategy where physical assets are not shared; Each SBU is run as a separate business and often have nothing in common with each other

Front 58

What is the competitive form of multi-divisional corporate structure?

Back 58

Used under the unrelated diversification strategy; each unit competes with the other units; Firms are often more flexible

Front 59

What is entreprunership?

Back 59

pursuing market conditions that create a new need and not being constrained by currently controlled processes

Front 60

Strategic entrepreneurership

Back 60

Finding the best way to manage entreprenural efforts using a strategic perspective

Front 61

Corporate entreprenership

Back 61

Enteprenership within an established firm; linked to a firms survival and success

Front 62

Invention

Back 62

creating a new product/process

Front 63

Innovation

Back 63

turning a new product or process into a good in the market

Front 64

Imitation

Back 64

adopting an innovation

Front 65

What is the difference between invention and innovation

Back 65

Invention involves brining something into existence while innovation involves commercializing it

Front 66

What is the entreprunerial mindset?

Back 66

Looks for and values marketplace uncertainty and identifies opportunities for innovativeness

Front 67

Benefits/risks of international entreprunership

Back 67

improved firm performance; unstable foreign currencies; market efficiency problems; insufficient infrastructures; limitations on market size

Front 68

Bottom-up corporate venturing

Back 68

When a product champion brings an entreprunial vision to the top of an organization

Front 69

Top-down corporate venturing

Back 69

Internal innovations are induced through the firms current strategy

Front 70

What kinds of alliances are most likely in various industries?

Back 70

slow cycle: Joint venture; standard cycle: equity strategic alliance; fast cycle: Non-equity strategic alliance

Front 71

What is more important to an organization, strategy or structure?

Back 71

Both are very important, but strategy determines structure.