Strategic Management Theory & Cases: An Integrated Approach 13th Edition by Charles test bank

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Strong leaders use power effectively. They build consensus rather than use their authority to force ideas through; they act as members of a coalition or its democratic leaders rather than as dictators. They also rely on allies who can help them attain their strategic objectives. Workers are loyal when they are consulted and relied on. Politically astute leaders do not fall into the trap of advocating an action that might later be abandoned, nor do they try to make too many changes at once.
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Strong leaders have emotional intelligence—that is, they are self-aware, self-regulated, passionate about their work, empathetic toward others, and friendly. Workers have respect and trust for leaders who exhibit self-control. Workers are inspired by observing another's passion for the work, and they appreciate being treated with empathy and friendliness.


 
84. What are the reasons that profit-making companies make maximizing shareholder value one of their ultimate goals? Compare long-run and short-run profit strategies for maximizing shareholder value.  Which one is best for maximizing shareholder value?  Explain your answer. 
ANSWER:  
Maximizing shareholder value is the ultimate goal of profit-making companies, for two reasons. First, shareholders provide
a company with the risk capital that enables managers to buy the resources needed to produce and sell goods and services. Risk capital is capital that cannot be recovered if a company fails and goes bankrupt. Shareholders will not provide risk capital unless they believe that managers are committed to pursuing strategies that provide a good return on their capital investment.  Second, shareholders are the legal owners of a corporation, and their shares therefore represent a claim on the profits generated by a company. Thus, managers have an obligation to invest those profits in ways that maximize shareholder value. 
 
There is good evidence that the best way to maximize the long-run return to shareholders is to focus on customers and employees. Satisfying customer needs and making sure that employees are treated fairly and work productively, typically translates into better financial performance and superior long-run returns for shareholders. Alternatively, ignoring customer needs, and treating employees unfairly, may boost short-run profits and returns to shareholders, but it will also damage the long-run viability of the enterprise and ultimately depress shareholder value. This is why many successful managers argue that if a company focuses on its customers, and creates incentives for its employees to work productivity, shareholder returns will take care of themselves.


 
85. Describe the differences between a mission statement, a vision statement and a values statement. You have been charged with crafting an example of each of these statements for a new company that is breaking into the denim market with made-to-order jeans. The company was created to meet the  need of customers who desired comfortable jeans for their body type rather than trying to fit their body in jeans made for everyone. Customers can enter their measurements on the business’s website, choose their wash and type of fit.  Each pair of jeans is cut and handsewn onsite with locally sourced materials and comes with a tag with each customer’s name on it. Using this information, craft a possible mission statement, vision statement and values statement for this company.
ANSWER:  
A company’s mission describes what the organization does. an important first step in the process of formulating a mission is to
come up with a definition of the organization’s business. Essentially, the definition answers these questions: “What is our business? What will it be? What should it be?” The responses to these questions guide the formulation of the mission. To answer the question “What is our business?” a company should define its business in terms of three dimensions: who is being satisfied (what customer groups), what is being satisfied (what customer needs), and how customers’ needs are being satisfied (by what skills, knowledge, or distinctive competencies).
 
The vision of a company defines a desired future state; it articulates, often in bold terms, what the company would like to achieve.
 
The values of a company state how managers and employees should conduct themselves, how they should do business, and what kind of organization they should build. Insofar as they help drive and shape behavior within a company, values are commonly seen as the bedrock of a company’s organizational culture: the set of values, norms, and standards that control how employees work to achieve an organization’s mission and goals.