Strategic Management & Performance Flashcards
7 cards from real AICPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Strategic Management & Performance flashcards as text
A company experiences mission drift. This most likely occurs when:
Answer: Operational goals become misaligned with the stated organizational mission
Mission drift occurs when day-to-day activities and resource allocations gradually diverge from the organization's original purpose and stated mission.
Under activity-based management (ABM), non-value-added activities should be:
Answer: Reduced or eliminated to improve efficiency
ABM focuses on eliminating or minimizing non-value-added activities — those that consume resources but do not increase the product's value to customers.
Which approach to strategy formulation is most closely associated with Henry Mintzberg's 'emergent strategy'?
Answer: Strategy evolves through learning and adaptation to unexpected events
Mintzberg argued that realized strategy often emerges from organizational actions and responses to unplanned events, not just deliberate planning.
A firm uses residual income to evaluate divisional performance. A division should accept a new investment if:
Answer: The project generates positive residual income above the required rate
Residual income is positive when a project's return exceeds the required rate of return (cost of capital), indicating it creates value for the firm.
In strategic management, 'blue ocean strategy' refers to:
Answer: Creating uncontested market space by making competition irrelevant
Blue Ocean Strategy, developed by Kim and Mauborgne, involves creating new demand in uncontested market space rather than fighting over existing markets.
Which of the following best represents a 'lagging indicator' used in strategic performance measurement?
Answer: Prior year net income
Prior year net income is a lagging indicator because it reflects historical results and cannot be influenced by current management actions.
A firm pursuing a focused differentiation strategy would most likely:
Answer: Provide unique features tailored to a narrow market segment
Focused differentiation targets a specific market niche with premium, unique offerings rather than competing broadly or on price.