Allison Diaz

BU 520 Advanced Business Strategy

Due: 2/21/2024
Chapter Four
Issues for Review and Discussion
4-1. Explain why strengths are more important than weaknesses in strategic planning.
The foundation of a successful business are their strengths, which is why strengths are more
important than weaknesses.
4-2. What is bitcoin? Explain how to use bitcoin.
Bitcoin is a digital currency that uses blockchain technology to support transactions between
users on a decentralized network. Bitcoins are created when computer systems are used to
validate transactions during the mining process.
4-3. Do strengths always receive higher weights than weaknesses? Explain why.
Yes, strengths almost receive higher weights than weaknesses because strengths are the firms
main profit maker.
4-4. Do strengths always receive higher ratings than weaknesses? Explain why.
Strengths only receive the 3 and 4 ratings, while weaknesses only receive 2 or 1. During, the
development of a SWOT analysis, there can’t be more then 10 strengths or weaknesses in a
matrix.
4-5. Should assignment of weights down an IFE Matrix weight column be contingent on
“intensity of industry rivalry”? Discuss.
The IFE Matrix weights the different factors of importance to the organization success, which is
the strengths of the rivals that would be considered threats to the firm from the rivalry firms.
4-6. Explain why it is so important to focus on a firm’s narrow industry rather than its broader
industry in developing an IFE Matrix?
For a firm to be successful, they have to focus on their close related firms before expanding to
other industries. Resources are limited and it better to focus on their most threating rivals.
4-7. Explain the concept of factors being “actionable.”
The concept of actionable is the firm deciding what actions or strategies a firm should pursuing.

4-8. Explain why companies develop a list of 50 to 100 internal factors before distilling the list to
20 to include in an IFE Matrix?
Top managers must prioritize the important factors from the 100 factors listed that can positively
or negatively impact the firm’s strategic position. Prioritization is an important skill to have
because shortening the research can also hinder the survival of the firm because of missed
information.

4-9. Describe two ways how a firm can determine from a list of 50 to 100 internal factors the 20
most important factors to include in an IFE Matrix.

The two ways firms can determine from the list of 100 internal factors is by listing them and
prioritizing the most important ones. Another way is by weighting the factor, which will lead the
firm to be successful in their industry.

4-10. Discuss strategic implications of a firm receiving a total weighted IFE Matrix score of 1.5
versus 3.5.

The weighted score of 3.5 is an outstanding score compared to the 1.50. The 3.5 means that the
strategies in placed need a little bit of changing for the firm’s industry, while the 1.5 means that
the strategies are not effective.

4-11. If IFE Matrix strength factor 4 receives a rating of 4 what does that signify for the analyst?
If weakness factor 4 receives a rating of 4 what does that signify?

The firm’s analyst will consider the factor to be a successful strength for the organization if the
rating is a 4 out of 4. A four rating means that firm has a competitive advantage over their rival
firms.

4-12. The primary means for gaining and sustaining competitive advantages for most companies
are shifting downstream. Explain and discuss this statement.

Researchers noticed that upstream activities such as supply chain management, production, and
logistics are now commoditized and out sourced by other firms based of customer behavior.
Competitive advantages have been shifting away from firms producing their products. In the
past, firms have been using focus groups and surveys to obtain customer shopping habits.
Currently, firms are keeping customer data on their shopping habits to keep up changing trends
to keep gaining a competitive advantage.

4-13. In analyzing big data, there is a shift from focusing largely on aggregates or averages to
also focusing on outliers because outliers oftentimes reveal (predict) critical innovations, trends,
disruptions, and revolutions on the horizon. Explain and discuss this statement.

Keeping real time track of changing shopping behaviors is the competitive advantage to firms
because with the increase use of social media, information is passed along quicker. Which can
influence customers’ shopping behaviors, while firms might not always be able to keep up
changing trends.

4-14. What are some limitations of financial ratio analysis?

The limitations of financial ratio analysis are information being historic and not current. Ratios
also ignore the effects of inflation and the changes in the prices of goods.

4-15. Does RBV theory determine diversification targets? Explain and discuss.

Yes, the RBV theory approaches a competitive advantage with internal resources which are more
important than the external factors in a firm obtaining and maintaining competitive advantage.
The theory is purely determined by the internal resources that firms use to exploit opportunities
while also neutralizes threats.

4-16. True or False: Personal selling is typically more useful for industrial-goods companies,
whereas advertising is typically more effective for consumer-goods companies. Explain.

True, personal selling works better for services. Personal selling can go into further details about
the service that companies are trying to promote. Consumer-goods are easier to sell with
advertising because it will be remembered by the customer, when needed.

4-17. What are “collaborative machines”?

Collaborative machines are robots used in manufacturing operations. They won’t complain of
having to do many tasks to complete and are flexible.

4-18. Identify some excellent online resources for finding financial ratio information.

Top six websites best for finding financial ratio information: Bloomberg, google finance, Kitco,
SEC Report, Yahoo! Finance, XE, FAQs, and The Bottom Line.

4-19. How might elements of the marketing mix, particularly “price” and “place” vary for
common household goods versus luxury products?

Customers will be shopping for bargains and will be more likely to select the cheaper common
household goods due to inflation or other reasons. The placement of the luxury products is more
important because they have a specific customer market. Channel would not put a brick-and-
mortar store in the middle of rural New Jersey, where all there is are farms. The most reasonable
placement of the store would be New York City.

4-20. Is a capacity utilization rate of 50 percent good? Why?

Capacity utilization measures the output of goods or services being sold from a firm. The rate of
50% shows a weak production, which is a major threat and have to be improved. A great score
would be 85% to 100% for the firm capacity utilization.

4-21. Explain why communication may be the most important word in management. What do
you think is the most important word in marketing? In finance? In accounting?
Communication is an important word in management because as a leader you need to give clear
directions for your team. If not, the team will most likely be unmoved and will lose interest in
their work. As a leader, you need to give your workers the inspiration and reason for their work.

The important words for marketing would be the four Ps of marketing. (Price, Placement,
Product, and Promotion.) Finance’s important word would be “profits” because without knowing
how much cash flows into the business, managers wouldn’t be able to make decisions on if they
should do cutback on budgets or reinvest the cash back into the business, etc. Accounting’s word
would be “ethics” because of all the rules and regulations and the code of ethics they have to
follow through when they take their CPA licensure.

4-22. Discuss how the nature of marketing has changed in the last few years.

The nature of marketing has changed over the years because of the improvement of technology.
Companies now are relying on social media to deliver information faster then billboards or
newspapers. In the past, companies have spent over millions paying for billboards ads, etc. In
current times, firms have opted out to using influencers to get customers too spend on things they
don’t really need.

4-23. Explain why it is best not to have more than 30 percent of the factors in an IFE Matrix be
financial ratios.

Financial factors have too many factors and it makes it more difficult to develop a particular
strategy for the firm’s need s based on the ratio.

4-24. List three firms you are familiar with and give a distinctive competence for each firm.

Amazon: shipping/ supply chain

Apple: known for their customer service and “innovation”

Google: software engineering

4-25. Give some key reasons why it is essential to prioritize strengths and weaknesses.

By prioritizing strengths, firms can keep in focus their bread and butter and continue to
grow/develop their cash cow. Also, keeping an eye on your weaknesses will aid the company in
developing plans to turn those weaknesses into potential profits.

4-26. Why may it be easier in performing an internal assessment to develop a list of 80 strengths
and weaknesses than to decide on the top 20 to use in formulating strategies?

Every firm would need to collect, understand, and evaluate the information from all departments
just to decide on strengths and weaknesses needing to be improved. This avoids for any
overlooked future issues that could arise.
4-27. Think of an organization with which you are familiar. List three resources of that entity
that are empirical indicators.

Empirical indicators are known to be efficient and effective, which could be: difficult to imitate,
resources are rare, and not easily substitutable.

Amazon: two-day shipping (supply chain advantage), price matching/ cheaper prices, and one
click buy because they keep their customers info on file.

4-28. Think of an organization with which you are familiar. Rate that entity’s organizational
culture on the 15 example dimensions listed in Table 4-4.

Company: Google (rating 1-5)

1. Strong work ethic: 5

2. High ethical beliefs: 5

3. Formal Dress: 4

4. Informal Dress: 4

5. Socialize outside of work: 4

6. Do not question supervisors’ decision: 2

7. Encourage whistle-blowing: 1

8. Be health conscious - 5

9. Allow substantial work from home - 4

10. Encourage creativity - 5

11. Support women and minorities - 5

12. Be highly socially responsible - 5

13. Have numerous meetings - 3

14. Have participative management style - 3

15. Preserve the natural environment - 5

4-29. If you and a partner were going to visit a foreign country where you have never been
before, how much planning would you do ahead of time? What benefit would you expect that
planning to provide?

Planning the trip is an essential element to a successful trip. Having things prebooked/ paid for
has its advantages because everything is already budgeted. Any cash brought on the trip will be
for any unexpected surprises or leisure. Nothing a last minute and everything should run
smoothly, when it comes to transferring train, taxis, etc.

4-30. Even though planning is considered the foundation of management, why do you think it is
commonly the task that managers neglect most?

Reasons I think managers neglect this task the most because of the amount of time it takes to
plan, alongside the data collation and researching. The confusion of the changes it will bring to
the employees already working at the firm. The advancement of technology, developing targets
and monitoring plan/ training. Having the employees accept the new plan and managing
conflicts.

4-31. Are you more organized than the person sitting beside you in class? If not, what problems
could that present in terms of your performance and rank in the class? How analogous is this
situation to rival companies?

I’m less organized than the person beside me because I worked on the wrong assignment for this
class. The late homework assignment could affect my overall grade. This situation could relate to
the rival companies because if a company is late to a trend, it could affect the firms’ profits.

4-32. List the three ways that financial ratios should be compared or used. Which of the three
comparisons do you feel is most important? Why?

 The amount of time a ratio has changed over time.

 How the ratio is compared to the norms of the industry.
 How the ratio is compared to the competitors.

These comparisons ratios are important because they will show the firm’s strength and
weakness; ad how to improve them.

4-33. In an IFE Matrix, would it be advantageous to list your strengths, and then your
weaknesses, in order of decreasing “weight”? Why?

Listing your strengths first and then your weakness will aid in the importance of the factor.

4-34. In an IFE Matrix, a critic may say there is no significant difference between a “weight” of
0.08 and 0.06. How would you respond? What is the mathematical difference?
The critic is wrong because they are only carrying values on external factors. The math shows
what is in the weighted score which are also multiplied by the ratings. The drastic change
depends on the firms factor that is being in questioned.

The difference is .02, which means .02/.06 = 33.3%

4-35. Why do many firms consistently pay out dividends?

Many firms pay out dividends because it shows the financial strength of the firm.

4-36. What is marketing promotion? Name several examples forms of promotion commonly
used by marketers.

There are five main types of marketing promotion: personal selling, advertising, direct
marketing, sales promotion, and public relations. These are marketing tools which communicate
the reason why they should buy the firm’s products or services.

4-37. Explain why prioritizing the relative importance of strengths and weaknesses in an IFE
Matrix is an important strategic-management activity.

The firms are impacted by the different levels of internal strengths and weaknesses. Factor have
a weight, so the firms know where to allocate their resources.

4-38. How can delegation of authority contribute to effective strategic management?

Delegation of authority help to spread out the responsibilities by the strengths of the workers. It
can also make everyone feel like they have a voice in the matter and can result in higher
productivity because they feel valued and entrusted with important tasks.

4-39. Explain how you would motivate managers and employees to implement a major new
strategy.

Good moral and leadership can create a safe space for managers to implement a change within
their employees. Having clear and transparent communication throughout the process will also
give crucial moral which empowers the workers.

4-40. Why do you think production and operations managers often are not directly involved in
strategy-formulation activities? Why can this be a major organizational weakness?

When production and operations managers are not involved in strategy gives the impression of
lack communication. Which will be harmful because it can delay the ability of strategic and
investment planning.

4-41. Give two examples of human resource management (HRM) strengths and two examples of
HRM weaknesses of an organization with which you are familiar.
During my retail manager days, having seasonal employees has its strengths and weakness. A
couple of strengths is having enough manpower to recover the store and have a 24 hours
operation during the holiday season, if need be, per store. Some weaknesses are scheduling
everyone using the planned payroll hours given to us by finance department, which we
sometimes went over but made it up with sales. Another weakness is having so many bodies to
work that some people might lack in work ethics, while others are always being productive
during those hours.

4-42. Define, compare, and contrast weights versus ratings in an EFE Matrix versus an IFE
Matrix.

Both Matrixes addresses the importance of a factor that could make the firm become successful
in an industry. However, EFE rates how the company is addressing their issues/ weaknesses. IFE
rates how weak or strong is the factors to the firm.

4-43. If a firm has zero debt in its capital structure, is that always an organizational strength?
Why or why not?

Having zero debt to capital might not always be a strength, because sometimes ROI/ Profit
margins exceed the cost of debt.

4-44. After conducting an internal audit, a firm discovers a total of 100 strengths and 100
weaknesses. What procedures then could be used to determine the most important of these? Why
is it important to reduce the total number of key factors?

A firm having 100 strengths and weaknesses means that all departments have to rank and
prioritizes each factor. It’s an advantage to concentration on a few strengths and weaknesses
when it comes to improving each department.

4-45. Why is it important for companies to conduct marketing research? What type of
information might they discover from marketing research?

Market research have to be conducted because it gathers valuable information about their target
market and industry. Firms will gain insight on what their customers needs, their preferences,
and shopping behavior. This can help them track market trends in the competitive market.

4-46. What are 10 activities that comprise human resource management?

Human resource management comprise of the 10 activities of: recruiting, interviewing, testing,
selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining,
promoting, transferring, demoting, and dismissing employees, as well as managing union
relations.

4-47. Explain the difference between data and information in terms of each being useful to
strategists.
Data becomes information once data is given meaning or purpose by a firm.

4-48. What are the most important characteristics of an effective management information
system?

The most important characteristics of an effective management information system is the

hardware, software, models for analysis, and have more than one database. Everyone should be
able to understand it and economical.

4-49. Do you agree or disagree with the resource-based view theorists that internal resources are
more important for a firm than external factors in achieving and sustaining competitive
advantage? Explain your and their position.

I don’t agree with the theorist saying that internal resources are more important than external
factors. Their importance will interchange depending on the challenges the firm is facing. The
RBV shows that a firm should be able to exploit their resources and capabilities.

4-50. What makes a resource valuable to a company?

A resource will become valuable to a company by the scarcity of it. Or even being highly costly
to acquire them, which means not all companies can acquire it.

4-51. List five financial ratios that may be used by your university to monitor operations.

1. Monitoring the amount of freshman committing to Caldwell every year.

2. How many deposits is the school receiving every new freshman class.
3. Debt to total assets ratio
4. Turnover in accounts receivables
5. Operating profit margin

4-52. What is the most severe cyberthreat facing companies today, and how can firms best
mitigate against this threat?

The most severe cyberthreat facing a lot of companies is phishing and social engineering. Firms
can change passwords every so often, they can send out weekly safety tip for its customers and
employees. Training for the employees to avoid being phished.