Midterm

Topics: Strategic management, Economics, Management Pages: 7 (2206 words) Published: March 19, 2014
MBA 6320 – Strategic Management
Midterm Examination
1) It is widely recognized that changes in technology and competition have diminished many of the traditional roles of location. Resources, capital, technology, and other inputs can be efficiently sourced in global markets. Firms can access immobile inputs via corporate networks. It is no longer necessary to locate near large markets to serve them. Governments are widely seen as losing their influence over competition to global forces. It is easy to conclude, then, that location is diminishing in importance. Do you agree or disagree with the statement that location is diminishing in importance in the global economy? Support your conclusions. In times of increasing globalization, transnational companies and flexible production systems, we would expect the importance of firm location to be diminishing. Multinational companies have their subsidiaries all over the world. This trend is ascending, since cost of shipping goods is getting ever cheaper. If anything, the tendency has been to see location as diminishing in importance. Globalization allows companies to source capital, goods and technology from anywhere and to locate operations wherever it is most cost effective. Governments are widely seen as losing their influence over competition to global forces. (Porter 1998, p. 197). 2B) Can a firm achieve competitive advantage and thereby strategic competitiveness without acting ethically? Explain your answer. Business ethics should be a prerequisite for conducting any type of business, particularly in the global marketplace. Traditionally, there have been two views on the role of ethics in business. The first perspective is that the corporate executives’ sole responsibility is to maximize the shareholder’s value. The second view is that “ethics pays,” which implies that acting in a socially responsible way towards shareholder will automatically enhance shareholder wealth (Verhezen, 2005). Business ethics should become part of corporate codes, and if implemented in the line of business as a corporate philosophy it should help achieving a competitive advantage for the firm. While short-term competitive advantage is obtained by appealing to customers in targeted external markets (in the context of globalization), long-term sustainable competitive advantage is the result of exploiting an enduring core of relevant capability differentials cultivated by responsible management of tangible and intangible internal skills and assets (Petrick & Quinn, 2001). Business ethics of a firm has been defined as one of the invaluable intangible assets for competing. In general, intangible assets are assuming increasingly competitive significance in rapidly changing domestic and global markets. As the speed of comparable tangible assets acquisition accelerates and the pace of imitation quickens, firms that want to sustain distinctive global competitive advantages need to protect, exploit and enhance their unique intangible assets, particularly integrity (building firms of integrity is the hidden logic of business ethics). 3B) DEFINE/DESCRIBE in detail the FIVE (5) of the following: Economic Man First coined in the late 19th century, the term 'Economic Man' has developed to refer to a hypothetical individual who acts rationally and with complete knowledge, but entirely out of self-interest and the quest to maximize personal utility. Economic Man is an imaginary figure who is able to satisfy economic models that push for consumer equilibrium. All of Economic Man's choices are based on the fulfillment of his or her "utility function", meaning the ability to maximize any situation that involves choice. Many economic models are hypothetical, and the assumptions on which they are built deviate from real-world conditions. For example, many economic-modeling assumptions assume that demand is a linear function of price. While this may sometimes be the case with certain goods, it is not reflective of...
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