STRATEGIC MANAGEMENT FINALS REVIEWER
inception, seeks to derive significant advantage from the
Chapter 10
organizational structure - the formalized patterns of
interactions that link a firm’s tasks, technologies, and
people.
simple organizational structure - an organizational form in
which the owner-manager makes most of the decisions
and controls activities, and the staff serves as an extension
of the top executive.
functional organizational structure - an organizational
form in which the major functions of the firm, such as
production, marketing, R&D, and accounting, are grouped
internally.
divisional organizational structure - an organizational
form in which products, projects, or product markets are
grouped internally.
strategic business unit (SBU) structure - an organizational
form in which products, projects, or product-market
divisions are grouped into homogeneous units.
holding company structure - an organizational form that is
a variation of the divisional organizational structure in
which the divisions have a high degree of autonomy both
from other divisions and from corporate headquarters.
matrix organizational structure - an organizational form in
which there are multiple lines of authority and some
individuals report to at least two managers.
International division structure - an organizational form in
which international operations are in a separate,
autonomous division. Most domestic operations are kept
in other parts of the organization.
geographic-area division structure - a type of divisional
organizational structure in which operations in geographic
regions are grouped internally.
worldwide matrix structure - a type of matrix
organizational structure that has one line of authority for
geographic-area divisions and another line of authority for
worldwide product divisions.
worldwide functional structure - a functional structure in
which all departments have worldwide responsibilities.
worldwide product division structure - a product division
structure in which all divisions have worldwide
responsibilities.
global start-up - a business organization that, from
use of resources and the sale of outputs in multiple
countries.
boundaryless organizational designs - organizations in
which the boundaries, including vertical, horizontal,
external, and geographic boundaries, are permeable.
barrier-free organization - an organizational design in
which firms bridge real differences in culture, function, and
goals to find common ground that facilitates information
sharing and other forms of cooperative behavior.
modular organization - an organization in which nonvital
functions are outsourced, using the knowledge and
expertise of outside suppliers while retaining strategic
control.
virtual organization - a continually evolving network of
independent companies that are linked together to share
skills, costs, and access to one another’s markets.
horizontal organizational structures - organizational forms
that group similar or related business units under common
management control and facilitate sharing resources and
infrastructures to exploit synergies among operating units
and help to create a sense of common purpose.
Adaptability - managers’ exploration of new opportunities
and adjustment to volatile markets in order to avoid
complacency.
Alignment - managers’ clear sense of how value is being
created in the short term and how activities are integrated
and properly coordinated.
ambidextrous organizational designs – organizational
designs that attempt to simultaneously pursue modest,
incremental innovations as well as more dramatic,
breakthrough innovations.
Chapter 11
Leadership - the process of transforming organizations
from what they are to what the leader would have them
become.
setting a direction - a strategic leadership activity of
strategy analysis and strategy formulation.
designing the organization - a strategic leadership activity
of building structures, teams, systems, and organizational
processes that facilitate the implementation of the
leader’s vision and strategies.
excellent and ethical organizational culture - an
organizational culture focused on core competencies and
high ethical standards.
barriers to change - characteristics of individuals and
organizations that prevent a leader from transforming an
organization.
vested interest in the status quo - a barrier to change that
stems from people’s risk aversion.
systemic barriers - barriers to change that stem from an
organizational design that impedes the proper flow and
evaluation of information.
behavioral barriers - barriers to change associated with
the tendency for managers to look at issues from a biased
or limited perspective based on their prior education and
experience.
political barriers - barriers to change related to conflicts
arising from power relationships.
personal time constraints - a barrier to change that stems
from people’s not having sufficient time for strategic
thinking and reflection.
power - a leader’s ability to get things done in a way he or
she wants them to be done.
organizational bases of power - a formal management
position that is the basis of a leader’s power.
personal bases of power - a leader’s personality
characteristics and behavior that are the basis of the
leader’s power.
emotional intelligence (EI) - an individual’s capacity for
recognizing his or her own emotions and those of others,
including the five components of self-awareness, self-
regulation, motivation, empathy, and social skills.
learning organizations - organizations that create a
proactive, creative approach to the unknown;
characterized by (1) inspiring and motivating people with a
mission and purpose, (2) developing leaders, (3)
empowering employees at all levels, (4) accumulating and
sharing internal knowledge, (5) gathering and integrating
external information, and (6) challenging the status quo
and enabling creativity.
Benchmarking - managers seeking out best examples of a
particular practice as part of an ongoing effort to improve
the corresponding practice in their own organization.
competitive benchmarking benchmarking in which the
examples are drawn from competitors in the industry.
functional benchmarking benchmarking in which the
examples are drawn from any organization, even those
outside the industry.
Ethics - a system of right and wrong that assists
individuals in deciding when an act is moral or immoral
and/or socially desirable or not.
organizational ethics - the values, attitudes, and
behavioral patterns that define an organization’s operating
culture and that determine what an organization holds as
acceptable behavior.
ethical orientation - the practices that firms use to
promote an ethical business culture, including ethical role
models, corporate credos and codes of conduct, ethically
based reward and evaluation systems, and consistently
enforced ethical policies and procedures.
compliance-based ethics programs - programs for building
ethical organizations that have the goal of preventing,
detecting, and punishing legal violations.
integrity-based ethics programs - programs for building
ethical organizations that combine a concern for law with
an emphasis on managerial responsibility for ethical
behavior, including (1) enabling ethical conduct; (2)
examining the organization’s and members’ core guiding
values, thoughts, and actions; and (3) defining the
responsibilities and aspirations that constitute an
organization’s ethical compass.
corporate credo - a statement of the beliefs typically held
by managers in a corporation
Chapter 12
innovation - the use of new knowledge to transform
organizational processes or create commercially viable
products and services.
product innovation - efforts to create product designs and
applications of technology to develop new products for
end users.
process innovation - efforts to improve the efficiency of
organizational processes, especially manufacturing
systems and operations.
radical innovation - an innovation that fundamentally
changes existing practices. incremental innovation an
innovation that enhances existing practices or makes small investment approval criteria, even though the investment
improvements in products and processes. may not enhance firm value.

strategic envelope - a firm-specific view of innovation that
defines how a firm can create new knowledge and learn
from an innovation initiative even if the project fails.
corporate entrepreneurship (CE) - the creation of new
value for a corporation through investments that create
either new sources of competitive advantage or renewal of
the value proposition.
focused approaches to corporate entrepreneurship -
corporate entrepreneurship in which the venturing entity
is separated from the other ongoing operations of the
firm.
new venture group (NVG) - a group of individuals, or a
division within a corporation, that identifies, evaluates,
and cultivates venture opportunities.
managerial conceit - biases, blind spots, and other human
frailties that lead to poor managerial decisions.
Escalation of commitment - autonomy independent action
by an individual or a team aimed at bringing forth a
business concept or vision and carrying it through to
completion.
innovativeness - a willingness to introduce novelty
through experimentation and creative processes aimed at
developing new products and services as well as new
processes.
proactiveness - a forward-looking perspective
characteristic of a marketplace leader that has the
foresight to seize opportunities in anticipation of future
demand.

Business incubator - a corporate new venture group that

competitive aggressiveness - an intense effort to
supports and nurtures fledgling entrepreneurial ventures
outperform industry rivals; characterized by a combative
until they can thrive on their own as stand-alone
posture or an aggressive response aimed at improving
businesses.
position or overcoming a threat in a competitive
marketplace.
dispersed approaches to corporate entrepreneurship -
corporate entrepreunership in which a dedication to the
risk taking - making decisions and taking action without
principles and policies of entrepreneurship is spread
certain knowledge of probable outcomes. Some
throughout the organization.
undertakings may also involve making substantial resource
entrepreneurial culture - corporate culture in which commitments in the process of venturing forward.
change and renewal are a constant focus of attention.

product champion - an individual working within a

corporation who brings entrepreneurial ideas forward,
identifies what kind of market exists for the product or
service, finds resources to support the venture, and
promotes the venture concept to upper management.

exit champion - an individual working within a corporation

who is willing to question the viability of a venture project
by demanding hard evidence of venture success and
challenging the belief system that carries a venture
forward.

real options analysis (ROA) - an investment analysis tool

that looks at an investment or activity as a series of
sequential steps, and for each step the investor has the
option of (a) investing additional funds to grow or
accelerate, (b) delaying, (c) shrinking the scale of, or (d)
abandoning the activity.

back-solver dilemma - problem with investment decisions

in which managers scheme to have a project meet