Chapter 5
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Questions and Answers

What led Zuckerberg to leave Harvard to focus on TheFacebook?

  • The company's stellar early growth (correct)
  • Lack of funding opportunities
  • The pressure of academic obligations
  • A decline in user engagement

    • Which factor was crucial for Zuckerberg in the early development of TheFacebook?

  • User feedback mechanisms
  • Advertising partnerships
  • Strong networking connections (correct)
  • A large team of developers

    • Where did Zuckerberg initially move TheFacebook's headquarters?

  • New York City
  • Silicon Valley (correct)
  • Austin, Texas
  • Harvard University campus

    • How much initial funding did Zuckerberg secure for TheFacebook?

    <p>$500,000</p> Signup and view all the answers

    Which notable figure was involved in the early investment of TheFacebook?

    <p>Peter Thiel</p> Signup and view all the answers

    What was a major criticism about Facebook's Beacon feature?

    <p>It tracked users' behavior on third-party websites.</p> Signup and view all the answers

    How did Facebook initially attract advertisers?

    <p>With direct customer contact not available in traditional marketing.</p> Signup and view all the answers

    Which feature introduced in 2007 allowed businesses more opportunities on Facebook?

    <p>Groups</p> Signup and view all the answers

    What demographic shift did Facebook experience with its acquisitions?

    <p>Appealed more to older users.</p> Signup and view all the answers

    Which sign indicates that Facebook may have reached a stage of market maturity?

    <p>Running out of ad space in Newsfeed.</p> Signup and view all the answers

    What concept does Horizon 3 primarily involve?

    <p>The Metaverse with AR and VR.</p> Signup and view all the answers

    What potential impact did the acquisition of Oculus have on Facebook?

    <p>It suggested an early interest in the Metaverse.</p> Signup and view all the answers

    What remains uncertain about the Metaverse for Facebook?

    <p>Its potential financial success.</p> Signup and view all the answers

    What is primarily summarized in Chapter 5?

    <p>Traditional models of strategic management</p> Signup and view all the answers

    Which of the following questions addresses the purpose of strategy?

    <p>Why do we need strategy in business?</p> Signup and view all the answers

    What are the two simplified choices that strategy ultimately revolves around?

    <p>Where to play and how to win</p> Signup and view all the answers

    Which level of strategy is distinct from corporate strategy?

    <p>Functional strategy</p> Signup and view all the answers

    What critical stage of the strategy process is introduced in the chapter?

    <p>Organizational ideology</p> Signup and view all the answers

    What term is used to describe transformational objectives as outlined by Collins & Porras?

    <p>BHAGS</p> Signup and view all the answers

    How does the chapter describe the relationship between leadership and strategy?

    <p>They often intersect but are not synonymous.</p> Signup and view all the answers

    What aspect of organizational strategy is emphasized in today's digital age?

    <p>Digital strategy is separate from organizational strategy.</p> Signup and view all the answers

    What role do non-executive boards typically play in the strategy process?

    <p>They merely approve strategic plans without involvement.</p> Signup and view all the answers

    What significant feature was introduced to Facebook between 2003 and 2006?

    <p>The Like button</p> Signup and view all the answers

    What was Mark Zuckerberg's initial motivation for creating Facebook?

    <p>To help connect people at colleges</p> Signup and view all the answers

    Which demographic did Facebook initially target for user growth?

    <p>High school students and non-US universities</p> Signup and view all the answers

    What was a major challenge in building Facebook's user base during its early years?

    <p>Creating features that were attractive yet not controversial</p> Signup and view all the answers

    What significant change occurred in Facebook's user base by the end of 2004?

    <p>They reached over 1 million users</p> Signup and view all the answers

    How did Facebook's growth trend change by 2006?

    <p>They surpassed Myspace in users</p> Signup and view all the answers

    What was a key to Facebook’s future success mentioned in the content?

    <p>Mobile version of Facebook</p> Signup and view all the answers

    What was the first major growth phase for Facebook focused on?

    <p>Building user connections</p> Signup and view all the answers

    What did Zuckerberg believe was the most important feature of Facebook?

    <p>Connecting with people that cared about you</p> Signup and view all the answers

    What major competitor did Facebook lag behind before overtaking it in 2008?

    <p>Myspace</p> Signup and view all the answers

    What was the primary focus of TheFacebook when it was initially launched?

    <p>To serve only the Harvard student community</p> Signup and view all the answers

    Which feature distinguished TheFacebook from Myspace?

    <p>Its exclusive focus on students and campuses</p> Signup and view all the answers

    What significant milestone did TheFacebook achieve within 24 hours of its launch at Harvard?

    <p>1,200 students signed up</p> Signup and view all the answers

    What prompted the closure of the Facemash application?

    <p>Poor taste and hacking of photographs</p> Signup and view all the answers

    Who collaborated with Mark Zuckerberg to develop TheFacebook?

    <p>Dustin Moskovitz and Chris Hughes</p> Signup and view all the answers

    What event indicated the taste for social applications among students?

    <p>The closing of Facemash</p> Signup and view all the answers

    What notable issue has been associated with Zuckerberg and Facebook's operations over time?

    <p>Privacy and digital ethics concerns</p> Signup and view all the answers

    What was the original purpose of Facemash before it was shut down?

    <p>Rate the attractiveness of peers</p> Signup and view all the answers

    What is the primary purpose of organizational strategy?

    <p>To achieve the organization's vision</p> Signup and view all the answers

    According to Milton Friedman, what is the sole purpose of a company?

    <p>To maximize its profits</p> Signup and view all the answers

    How does strategy provide focus within an organization?

    <p>By outlining decision-making boundaries</p> Signup and view all the answers

    What is a common misconception about the term 'strategy' in organizational contexts?

    <p>It is merely about planning company events</p> Signup and view all the answers

    What aspect of strategy does the passage highlight as essential?

    <p>Understanding the 'why', 'what', and 'how'</p> Signup and view all the answers

    What is implied about the balance of opinion regarding profit focus in organizations?

    <p>Long-term profits dominate discussions</p> Signup and view all the answers

    In the context of organizational strategy, how is 'direction' defined?

    <p>Establishing a vision to follow</p> Signup and view all the answers

    What do the terms 'why', 'what', and 'how' represent in strategic planning?

    <p>The key components of strategy</p> Signup and view all the answers

    What best describes the 'shareholder view' of the purpose of a firm?

    <p>Maximizing profits and returning rewards to shareholders</p> Signup and view all the answers

    Which concept is largely absent from the shareholder view of the firm's purpose?

    <p>Social responsibility</p> Signup and view all the answers

    What is a primary characteristic of organizational strategy as a field of study?

    <p>It is constantly evolving and adapting.</p> Signup and view all the answers

    Which of the following enhances the necessity for strategy in organizations?

    <p>Rivals such as customer expectations and mediocre services.</p> Signup and view all the answers

    How has the perception of strategy's primary purpose changed over time?

    <p>The focus has shifted from competition to collaboration.</p> Signup and view all the answers

    In what context is the necessity of strategy questioned?

    <p>In the absence of a clearly defined rival.</p> Signup and view all the answers

    Which of the following statements about organizational rivals is true?

    <p>Rivals can include concepts of excellence and resource competition.</p> Signup and view all the answers

    What foundational assumption about strategy is being challenged?

    <p>That strategy's purpose is solely to create competitive advantages.</p> Signup and view all the answers

    What was the primary focus of early management science in the early 1900s?

    <p>Enhancing worker productivity through optimization</p> Signup and view all the answers

    Which book introduced the concept of corporate strategy in 1965?

    <p>Corporate Strategy</p> Signup and view all the answers

    What significant strategy tool was introduced by Henderson in 1968?

    <p>Growth-share matrix</p> Signup and view all the answers

    What was a major intellectual contribution to the understanding of strategy in the late 1950s?

    <p>Resource-based view</p> Signup and view all the answers

    Which concept is NOT associated with the evolution of strategy in the 1960s?

    <p>Total quality management</p> Signup and view all the answers

    What characterized the 'strategy heyday' of the late 1960s?

    <p>A surge in publications on business strategy</p> Signup and view all the answers

    Which two historical works are roots of modern business strategy?

    <p>On War and The Art of War</p> Signup and view all the answers

    During the 2000 to 2010 period, what issue arose regarding contributions to strategy?

    <p>Overproduction of books and articles, many of dubious value</p> Signup and view all the answers

    Which work is considered one of the earliest formal texts on strategy?

    <p>The Art of War</p> Signup and view all the answers

    What does the Greek term 'strategos' refer to?

    <p>The art of war</p> Signup and view all the answers

    What major evolution in the understanding of strategy was introduced by Count Guibert?

    <p>Strategy includes political ends beyond military action.</p> Signup and view all the answers

    Who wrote the influential treatise 'On War'?

    <p>Carl von Clausewitz</p> Signup and view all the answers

    What does the term 'strategemata' reflect in its origin?

    <p>Military tactics and stratagems</p> Signup and view all the answers

    Which philosopher is credited with a pivotal ancient work on managing conflicts and winning battles?

    <p>Sun Tzu</p> Signup and view all the answers

    What was the primary focus of early strategy as discussed by the Greeks and Romans?

    <p>Military application</p> Signup and view all the answers

    What aspect of strategy did the Greeks and Romans primarily emphasize?

    <p>Military tactics</p> Signup and view all the answers

    How did Sun Tzu contribute to the understanding of strategy beyond military tactics?

    <p>By creating a comprehensive political strategy framework.</p> Signup and view all the answers

    What did the economic theory of business fail to incorporate during the time strategies were being developed?

    <p>Military principles</p> Signup and view all the answers

    What is one of the four main responsibilities of corporations according to the stakeholder view?

    <p>To generate shareholder wealth and reward investment risks</p> Signup and view all the answers

    Which theory assumes that managers may prioritize the interests of the organization over their self-interest?

    <p>Stewardship Theory</p> Signup and view all the answers

    How does Social Capital Theory view the role of trust in organizations?

    <p>Trust plays a critical role in enhancing a firm’s performance.</p> Signup and view all the answers

    What is a key criticism of the shareholder model as highlighted by Social Capital Theory?

    <p>It leads to a cycle of distrust among employees.</p> Signup and view all the answers

    What type of obligation involves a firm's choice to engage in philanthropy?

    <p>Discretionary obligation</p> Signup and view all the answers

    Which view is considered a progressive alternative to the shareholder view?

    <p>Stakeholder view</p> Signup and view all the answers

    What does stewardship theory promote in an organizational context?

    <p>Collectivism and trustworthiness</p> Signup and view all the answers

    In which contexts is the stakeholder view particularly accepted?

    <p>Socialist traditions and emerging markets</p> Signup and view all the answers

    Which of the following is NOT one of the responsibilities outlined by Carroll in the stakeholder view?

    <p>Environmental obligation</p> Signup and view all the answers

    What does the term 'shared value' relate to in stewardship theory?

    <p>Balancing social and environmental responsibilities with business interests</p> Signup and view all the answers

    Study Notes

    Overview of Chapter 5: Core Concepts of Organizational Strategy

    • The chapter summarizes traditional models of strategic management while addressing their evolution in the context of the Fourth Industrial Revolution (4IR).
    • It reviews the history of strategy, including corporate strategy, disruptive innovation, and the concept of the "end of strategy."
    • Key questions include the necessity and purposes of organizational strategy, as well as what characterizes effective and ineffective strategies.

    Evolution and Purpose of Strategy

    • Strategy is defined as choices of "where to play" and "how to win."
    • Successful strategy creation involves multiple levels within an organization: corporate, business unit, and functional strategies.
    • Organizational strategy must integrate digital awareness but is not synonymous with digital strategy alone.
    • The foundational stage of the strategy process involves organizational ideology encompassing purpose, vision, mission, and transformational objectives (BHAGS).

    Facebook: Challenges and Commercial Evolution

    • Facebook faced initial criticism for features such as Newsfeed and Beacon, raising privacy concerns.
    • Despite challenges, Facebook's growth was fueled by its adaptability and responsiveness to user feedback, attracting advertisers through direct customer engagement.
    • The introduction of Groups in 2007 created new commercialization opportunities, leading to substantial annual revenue growth.

    Strategic Acquisitions and User Demographics

    • Strategic acquisitions of Instagram and WhatsApp in the 2010s helped diversify Facebook's user base and shifted demographics towards older users.
    • There are signs of maturity within the platform, signaled by a plateau in user growth and a decline in year-on-year revenue.

    Future Ventures: Horizon 3 and the Metaverse

    • Facebook is exploring the Metaverse, emphasizing augmented and virtual reality, financial technologies, and integrated record-keeping.
    • The company acquired Oculus in 2014, indicating early efforts towards the Metaverse, leading to a rebranding as Meta.
    • The success of the Metaverse remains uncertain and difficult to predict.

    Historical Foundations of Business Strategy

    • The concept of strategy has military origins, notably in Sun Tzu's The Art of War, viewed by modern business strategists as foundational.
    • The Greeks introduced the term "strategy," relating to leadership and military planning, while Romans expanded the concept to include tactics for success in warfare.
    • French military theorists in the late 18th century broadened the definition of strategy to encompass political objectives, not solely military actions.

    Significance of Early 20th Century Management

    • The early 1900s focused on efficiency and optimizing production systems and operations in industrial contexts, laying groundwork for management science.
    • Variations in strategic approaches illustrate the transition from purely military applications of strategy to its relevance in business.### Historical Foundations of Strategy
    • Taylor's 1911 book "The Principles of Scientific Management" emphasized efficiency as key to increasing productivity.
    • Alfred Sloan at General Motors prioritized metrics and efficiencies over strategic discussions, which were not common in the first half of the 1900s.

    Emergence of Modern Strategy Concepts

    • Research from the late 1950s laid groundwork for contemporary business strategy, introducing key concepts such as:
      • Resource-based view (Newman, 1951; Penrose, 1959).
      • Emergent strategy (Lindblom, 1959).
      • Positional strategy (Yelle, 1979).
    • Chandler (1962) explored the growth of multi-divisional firms post-WWII, analyzing diversification and strategic decision-making.
    • Igor Ansoff's 1965 book "Corporate Strategy" was pivotal, introducing the Ansoff matrix and popularizing corporate strategy terminology.

    Development of Business Strategy

    • Henderson's contributions at the Boston Consulting Group (1960s-70s) significantly shaped business strategy.
    • He introduced the experience curve concept in 1966 and the growth-share matrix (BCG matrix) in 1968, categorizing products into "cash cows," "dogs," "stars," and "question marks."
    • These innovations marked the transition to a scientific approach in strategy formulation.

    Evolution of Strategy Over Time

    • Strategy has evolved from military origins (e.g., Sun Tzu, Clausewitz) to a field heavily influenced by business needs.
    • The late 1960s saw a surge in strategic publications; however, the 2000s-2010s experienced a flood of mediocre works on strategy.
    • Notable contributions include Harvard Business Review's top reads on leadership and methodologies like Lean Six Sigma and Blue Ocean Strategy.

    Core Concepts of Organizational Strategy

    • Organizational strategy is an emerging field, evolving rapidly alongside technological advancements.
    • Existing perspectives largely focus on competitive interactions; however, strategy is also relevant for non-profits and government entities facing different kinds of challenges.
    • Modern organizations increasingly value collaboration over confrontation, expanding strategy's purpose beyond mere competitive advantage.

    Stakeholder Theory

    • The late 20th century saw the rise of stakeholder theory opposing the classic focus on shareholders.
    • Scholars like Carroll and Freeman argued that addressing the needs of all stakeholders enhances firm performance.
    • Carroll’s four corporate responsibilities:
      • Economic: generating profit and shareholder returns.
      • Legal: complying with laws and regulations.
      • Ethical: considering community impact beyond profits.
      • Discretionary: engaging in philanthropy and social responsibility.

    Stewardship and Social Capital Theories

    • Stewardship theory posits that individuals may prioritize collective interests over self-interest, promoting responsible management.
    • This theory highlights cooperation and community responsibilities within firms.
    • Social Capital Theory, advanced by Sumantra Ghoshal, critiques traditional views of self-interested behavior, positing that trust and goodwill can enhance performance and mitigate opportunism in organizations.

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