Chapter 1 Exercise

Strategic Management

(pp. 2 19)

The Nature and Value of Strategic Management

Define Strategy. Define Strategic Management and identify the 9 critical tasks. Describe the 6 dimensions of strategic decisions. Explain Formality in strategic management as well as the 3 modes of formality. What are the 5 benefits of strategic management? (pp. 3 -11)

The Strategic Management Process

Describe the strategic management model (Exhibit 1.5) and explain the process. Define and/or explain the following terms: company mission, internal analysis, external environment, strategic analysis and choice, long-term objectives, generic strategies, grand strategies, short-term objectives, action plans, and functional tactics. Define policies and explain their importance in business operations. Explain restructuring, reengineering and the refocusing of the organization. Define strategic control and continuous improvement. Describe strategic management as a process. Define process, stakeholders, feedback and dynamic. (pp. 11 18)

Chapter 2 Exercise

Company Mission

(pp. 21 41)

What is a Company Mission?

Define Company Mission and explain why it should be explicit. What questions should the mission statement address? Give examples of Mission Statement components. (pp. 23 24)

Formulating a Mission

List the fundamental beliefs that influence an owner-managers sense of company mission. Describe and explain the 3 indispensible components of the Mission Statement. Describe and explain the 3 economic goals that should be included in the Mission Statement. What is a company creed and what does it reflect? Explain and describe Public Image and Self-Concept. Discuss and describe new trends in Mission components. List W. Edwards Demings 14 points What is a Vision Statement and what is its purpose? (pp. 24 36)

Boards of Directors

Who are the Board of Directors and what are their responsibilities? (pp. 36 - 38)

Agency Theory

What is Agency Theory? Define the following terms: agency costs, moral hazard problem, and adverse selection. What are the 5 problems that can result from agency? What are the 3 solutions to the agency problem? (pp. 38 - 42)