Business Strategy Resources Quiz

Firm Resources and Capabilities

• Resources and capabilities can provide value in the market and contribute to competitive advantage.
• Unique resources or capabilities are more likely to offer sustained competitive benefits.
• Substitutes for resources or capabilities can impact their value; ready availability may diminish competitive edge.
• Organizations must be aware of their resources and capabilities to effectively realize their potential.

Types of Resources

• Tangible Resources

  • Observable and measurable, like manufacturing processes and physical products.
  • Generally easier to replicate by competitors.

• Intangible Resources

  • Difficult to quantify, including skills, knowledge, and stakeholder relationships.
  • Harder to imitate, often contributing to long-term competitive advantages.

Financial Ratios

• Liquidity Ratios

  • Current Ratio and Quick Ratio measure a firm’s ability to meet short-term obligations.

• Leverage Ratios

  • Debt to Equity and Debt Ratio assess the degree of financial leverage and the extent of asset financing through debt.

• Activity Ratios

  • Asset Turnover and Inventory Turnover evaluate the efficiency of using assets and managing inventories.

Strategic Leadership

• Leaders should create a compelling vision of the future and communicate it effectively to empower employees.
• Establish core values to shape organizational culture and behavior.
• Encourage a learning environment where questioning and innovation are promoted.

Leadership Approaches

• Various styles include:
  • Commander: CEO-driven strategy execution.
  • Change: Includes restructuring for strategic alignment.
  • Collaborative: Group involvement in strategic planning.
  • Cultural: Leadership molds supportive organizational culture.
  • Crescive: Encouragement of innovation among lower-level managers.

Corporate Ownership Structure

• Individual shareholders elect a Board of Directors to monitor and control management for shareholder interests.
• The board includes both insiders who understand internal operations and outsiders who provide fresh perspectives.

Agency Theory

• Managers (agents) should prioritize owners' interests but may act in their self-interest, creating potential conflicts.
• Entrenchment occurs when managers gain excessive power, leading to self-serving actions.

Effective Boards

• Active boards protect shareholder interests and advise management.
• A high proportion of outsiders on a board promotes independence and diverse insights.

Employee Management

• Well-managed employees are essential for competitive advantage, particularly through sophisticated HR practices.
• High-performance environments lower turnover and boost productivity, involving employees in decision-making.

Organizational Structure and Culture

• Structure influences performance through defined roles and responsibilities; some organizations are adopting modular structures for flexibility.
• Culture encompasses shared values and influences attitudes toward customers, competitors, and risk.

Knowledge Economy

• Knowledge is an intangible, vital asset in modern business.
• Core knowledge relates to product/service creation, while integrative knowledge connects various activities within the organization.
• Codified knowledge is documented and easily communicated; tacit knowledge is personal and harder to articulate, making it valuable.

Internal Knowledge Management

• Develop systems to foster innovation and encourage knowledge sharing across the organization.
• Knowledge retention involves documenting research, ideas, and responses to promote informed decision-making.