Strategic Management: Concepts and Cases 3rd Edition by Jeffrey H. Dyer Test bank

In the 1980s, the resource-based view of the firm, also known as the resource-based model, was developed to explain why some firms outperform other firms within the same industry.
Firms that do not have the resources and capabilities that are necessary to implement the strategies they are contemplating, may need to improve, change, or possibly create them in order to offer unique value to their customers. This is where resource allocation becomes an important dimension of strategy. Once a company decides how it hopes to offer unique value, it must allocate the resources necessary to build those resources or capabilities.
 
 
65) List the four primary stakeholder groups and give explanations for each.
 
Answer:
 
Difficulty: Medium
Section Reference 4: Who Is Responsible for Business Strategy?
Learning Objective 4: Explain who is responsible for, and who benefits from, good business strategy.
Bloomcode: Comprehension
Standard 1: AACSB || Analytic
Solution: Every organization has a set of stakeholders to whom it is accountable—and who therefore can influence business strategies. Organizations have four primary stakeholder groups:
1) Capital market stakeholders (shareholders, banks, etc.)
2) Product market stakeholders (customers, suppliers)
3) Organizational stakeholders (employees)
4) Community stakeholders (communities, government bodies, community activists).

Stakeholders are those who have a share or an interest in the activities and performance of an organization. Shareholders are the owners of a company. Some people believe that shareholders (owners of the company) are the most important. Others make the case that customers, employees, governments, or communities should be the primary beneficiaries of business activity. Each stakeholder group can influence the strategic decisions that are made by a company. Sometimes, different stakeholder groups have conflicting views as to the appropriateness of different strategic decisions. Imagine that your company can lower its product costs by closing down your plants in the United States and moving production to China, where labor is cheaper. This will require firing many of your U.S. employees. Both the employee stakeholder group and community stakeholder groups in the cities where your plants are located will perceive this move as negative, and they will try to stop the company from making this decision. However, shareholders and customer stakeholder groups may applaud this decision. It could increase profits for shareholders and lower prices for customers, or both. Because of conflicts like this, companies need to make sure their strategic actions follow accepted ethical standards for business activity. Since stakeholders influence, and are influenced by, strategic decisions made by a company’s management team, it is important to understand and consider the needs of different stakeholder groups when making strategic decisions.