Business Policy multi questions 2
The ______ are those with the potential to be formed into core competencies as the foundation for creating value. a) "most" knowledge resources b) "most" capabilities c) "right" resources d) "dark side" resources
"right" resources
70. ______ is a capacity for a set of resources to perform a task or an activity in an integrative manner. (A) A capability (B) A core competence (C) Sustainable competitive advantage (D) Organizational intelligence
(A) A capability
79. According to Hitt, the final responsibility for forming the organization's mission lies with the: (A) CEO. (B) top-management team. (C) employees. (D) organization's stakeholders.
(A) CEO.
107. ______ innovation is a term used to describe how rapidly and consistently new, information- intensive technologies replace older ones. (A) Perpetual (B) Disruptive (C) Global (D) Diffusion
(A) Perpetual
87. Generally speaking, product market stakeholders are satisfied when: (A) a firm achieves a balance between profit margins, costs paid to suppliers and prices set for customers. (B) a firm's profit margin yields an above-average return to its capital market stakeholders. (C) the interests of the firm's organizational stakeholders have been maximized. (D) the interests of all stakeholders have been at least minimally satisfied.
(A) a firm achieves a balance between profit margins, costs paid to suppliers and prices set for customers.
96. The strategic leader's work is characterized by: (A) ambiguous decision situations where the best course of action is not always easy to identify. (B) a willingness to unify stakeholders through skillful manipulation. (C) an ability to identify solutions to long-range problems. (D) concentration on the practical day-to-day aspects of the organization's operations.
(A) ambiguous decision situations where the best course of action is not always easy to identify.
88. Before liquidating during a bankruptcy, a company will take several actions to try to satisfy its ______ stakeholders. (A) capital market (B) product market (C) organizational (D) governmental
(A) capital market
95. The global economy, globalization, rapid technological change, and the increasing importance of knowledge are creating the need to: (A) delegate strategic responsibilities to employees "closer to the action." (B) split responsibilities between the CEO and the board of directors to minimize the possibility of corporate scandals triggered by unethical CEOs. (C) re-centralize the responsibility for strategy to the CEO. (D) expand the strategic responsibilities to all organizational stakeholders.
(A) delegate strategic responsibilities to employees "closer to the action."
54. New markets created by iPods, PDAs, and Wi-Fi are a result of: (A) disruptive technologies. (B) global competition. (C) knowledge intensity. (D) hypercompetition.
(A) disruptive technologies.
75. The resource-based view of the firm: (A) emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone. (B) argues that the industry environment has a stronger influence on firms' ability to implement strategies successfully than does the competitive environment. (C) calls for firms to focus on their homogeneous capabilities to compete against their rivals. (D) suggests that vision and mission are marketing messages not tied to strategic plans.
(A) emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone.
122. It is important to emphasize that almost all strategic management process decisions have ______ because they are related to how a firm interacts with its stakeholders. (A) ethical dimensions. (B) local dimensions. (C) political dimensions. (D) global dimensions.
(A) ethical dimensions.
110. Firms use both the ______ and ______ models. In fact, these models complement each other in that one focuses outside the firm while the other focuses inside the firm. (A) industry; capability (B) I/O; resource-based (C) competition; competency (D) industry; competency
(A) industry; capability
58. Knowledge is composed of all the following EXCEPT: (A) insight. (B) expertise. (C) information. (D) intelligence.
(A) insight.
78. A firm's mission: (A) is a statement of a firm's business in which it intends to compete and the customers it intends to serve. (B) is an internally focused affirmation of the organization's financial, social, and ethical goals. (C) is mainly intended to emotionally inspire employees and other stakeholders. (D) is developed by a firm before the firm develops its vision.
(A) is a statement of a firm's business in which it intends to compete and the customers it intends to serve.
105. The culmination of the strategic management process is: (A) performance. (B) strategy implementation. (C) strategy formulation. (D) analysis.
(A) performance.
82. The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders if it cannot satisfy them all. The ______ is the most critical criterion in prioritizing stakeholders. (A) power of each stakeholder (B) urgency of satisfying each stakeholder (C) vulnerability of organizational stakeholders (D) social value of each stakeholder
(A) power of each stakeholder
52. Even for companies capable of succeeding in global markets, it is critical that they: (A) remain committed to and strategically competitive in their domestic market. (B) introduce many new products immediately after entering a new market. (C) acquire a local competitor in each significant foreign market. (D) develop good negotiating skills in order to take advantage of local suppliers in the international market.
(A) remain committed to and strategically competitive in their domestic market.
92. Product market stakeholders include (A) suppliers. (B) shareholders. (C) employees. (D) the firm's chief executive officer.
(A) suppliers.
47. Essentially, _______ has become one of the world's largest markets with 700 million potential consumers. (A) the European Union (B) the United States (C) China (D) Japan
(A) the European Union
112. William Ackman is a hedge fund manager who owned a large share of J.C. Penney stock. He was also a member of the J.C. Penney board. He tried to get the CEO fired, but the board and top management said he breached his boardroom duties when he publicly disclosed information about the CEO search and financial condition of the company. He resigned from the board of directors. This is an example of a contentious relationship between: (A) the capital market stakeholders and the organizational stakeholders. (B) the organizational stakeholders and the product market stakeholders. (C) the capital market stakeholders and the product market stakeholders. (D) all the stakeholders.
(A) the capital market stakeholders and the organizational stakeholders.
62. The industrial organization (I/O) model argues that: (A) the key factor in success is choosing the correct industry in which to compete. (B) the firm's internal resources and capabilities represent the foundation for development of a value-creating strategy. (C) the key to earning above-average returns is strategic flexibility. (D) the internal structure of the organization must match the industry in which it competes for it to earn above-average returns on investment.
(A) the key factor in success is choosing the correct industry in which to compete.
117. Effective strategic leaders are chosen based on: (A) their capabilities and accumulation of human capital over time. (B) their single-minded focus on strategy formation. (C) their aptitude for strategy implementation. (D) their focus on innovation.
(A) their capabilities and accumulation of human capital over time.
76. The goal of the organization's ______ is to point the firm in the direction of where it would like to be in the years to come. (A) vision (B) mission (C) culture (D) strategy
(A) vision
108. ______ provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters changes. (A) Strategic flexibility (B) Continuous learning (C) Knowledge (D) The Internet
(B) Continuous learning
57. The CEO of Ridgeway, Inc., realizes that the company's survival depends on developing and acquiring knowledge. Which of the following actions by the CEO would be most consistent with this need? (A) Ensuring that all current unique knowledge of the firm is protected by patents (B) Planning extensive employee training and hiring educated and experienced employees (C) Investing in sophisticated databases in relevant knowledge areas (D) Establishing a system of organizational intelligence gathering
(B) Planning extensive employee training and hiring educated and experienced employees
93. Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors higher returns than those earned by its direct competitors' investors. RNH has a reputation for providing high-paying managerial and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and inadequate patient-care staffing. Which statement best describes the situation? (A) RNH has been earning below-average returns, so it has had to prioritize the demands of its various stakeholders. (B) RNH has prioritized the demands of capital market stakeholders and organizational stakeholders, over the demands of product market stakeholders. (C) RNH has earned above-average returns and so has satisfied the needs of all relevant stakeholders. (D) RNH has been attempting to minimally satisfy the demands of all of its stakeholders.
(B) RNH has prioritized the demands of capital market stakeholders and organizational stakeholders, over the demands of product market stakeholders.
66. An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using that as a guideline to make a decision. Both start-up companies propose to manufacture health-focused foods with low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health- foods industry because of its internal culture and commitment to healthy lifestyles, but it does not have any executives with experience in food production. Which firm will the investor feel is most consistent with the model of industrial organization? (A) Green Pastures Foods (B) RexRich Foods (C) Both firms are consistent with the I/O approach. (D) At the entrepreneurial stage, the model that companies follow is not important.
(B) RexRich Foods
56. A company's ability to acquire knowledge is: (A) less important in the 21st century than in previous periods of business history. (B) an important source of competitive advantage in virtually all industries. (C) not considered an asset or resource for businesses. (D) only important in high technology industries.
(B) an important source of competitive advantage in virtually all industries.
120. In the strategic management process ASP stands for (A) analyses, successes, and purposes. (B) analyses, strategies, and performance. (C) ability, strategies, and purposes. (D) ability, successes, and performance.
(B) analyses, strategies, and performance.
90. A retail outlet can attempt several remedies to improve profitability to meet the expectations of its _______ stakeholders, including closing stores, changing the top management team, and seeking potential buyers. (A) product market (B) capital market (C) organizational (D) governmental
(B) capital market
100. PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision: (A) should be based solely on the results of the CEO's approval of the mine's general manager. (B) has ethical implications for organizational stakeholders. (C) need not be socially responsible if the firm is making below-average returns from the mine. (D) All of these choices are important to consider.
(B) has ethical implications for organizational stakeholders.
113. Strategic leaders are: (A) located only at the executive level. (B) located in different areas and levels. (C) the CEO, COO, and CFO only. (D) located at different levels, but only in the operating area of the organization.
(B) located in different areas and levels.
94. A prominent national website services company runs Super Bowl advertisements showing a small business owner working alone in the office on a project, during the big game. The message of the ad is that the company understands the sacrifices of its customers. This ad seeks to convey a sense of the organization's ____ to the product market stakeholders. (A) culture of recognition and reward (B) mission to radically shift the global economy toward small businesses (C) leadership as a technology company (D) personality as sports lovers
(B) mission to radically shift the global economy toward small businesses
118. Strategic leaders, ______, often work long hours, and their work is filled with ambiguous decision situations. (A) at the top of the organization (B) regardless of their location in the organization (C) in the finance area (D) in the operations area
(B) regardless of their location in the organization
61. All of the following are assumptions of the industrial organization (I/O) model EXCEPT: (A) organizational decision makers are rational and committed to acting in the firm's best interests. (B) resources to implement strategies are firm-specific and attached to firms over the long-term. (C) the external environment is assumed to impose pressures and constraints that determine the strategies that result in above-average returns. (D) every firm in an industry controls similar strategically relevant resources.
(B) resources to implement strategies are firm-specific and attached to firms over the long-term.
83. Capital market stakeholders include: (A) industry competitors. (B) shareholders. (C) employees. (D) government regulators.
(B) shareholders.
80. A key purpose of a mission statement is to inform _________what a firm is, what it seeks to accomplish and who it seeks to serve. (A) CEOs (B) stakeholders (C) regulators (D) former employees
(B) stakeholders
60. In order to cope with hypercompetition, firms need to develop ______ through continuous learning. (A) competitive resilience (B) strategic flexibility (C) strategic power (D) competitive dominance
(B) strategic flexibility
103. A ______ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. (A) goal (B) strategy (C) tactic (D) mission
(B) strategy
45. According to Hitt, the primary drivers of hypercompetition are: (A) rising global socio-economic instability and increased inflation. (B) the emergence of a global economy and rapid technological change. (C) increased global competition and decreased tariffs. (D) increased availability of capital and increased competition.
(B) the emergence of a global economy and rapid technological change.
65. Although Alibaba is competing in the internet services industry, it has improved its performance by focusing on innovation and service diversification. This improved performance is best explained by: (A) globalization. (B) the resource-based model. (C) the I/O model. (D) hypercompetition.
(B) the resource-based model.
101. A large corporation has earned a reputation for being a challenging work environment for employees, placing demands on employees' time and pushing them to accomplish tasks, sometimes with little recognition. A recent audit found that the company was denying employees overtime pay despite the extra work. This is a reflection of the company's: (A) core values of hard work to gain advancement. (B) unethical corporate culture. (C) lack of an organizational mission. (D) search for its core competencies.
(B) unethical corporate culture.
42. A competitive advantage: (A) can be permanent if the firm has successfully implemented the strategic management process. (B) entails reducing investors' risk to near zero. (C) can be identified when competitors are unable to duplicate or find it too costly to try to imitate. (D) exists when competing firms are unable to find investors.
(C) can be identified when competitors are unable to duplicate or find it too costly to try to imitate.
111. ______ should establish a firm's individuality and should be inspiring and relevant to all stakeholders. (A) A strategy (B) A vision (C) A mission (D) A goal
(C) A mission
104. ______ is an investor's uncertainty about the economic gains or losses that will result from a particular investment. (A) Return (B) Reward (C) Risk (D) Revenue
(C) Risk
121. The firm's ______ provide the foundation for choosing one or more ______ and deciding how to implement them. (A) analyses; strengths (B) abilities; strengths (C) analyses; strategies (D) abilities; strategies
(C) analyses; strategies
115. Strategic delegation helps: (A) overload middle managers. (B) executives control strategy implementation. (C) avoid too much managerial hubris. (D) emphasize profit maximization.
(C) avoid too much managerial hubris.
69. All of the following are assumptions of the resource-based model EXCEPT: (A) each firm is a unique collection of resources and capabilities. (B) the industry's structural characteristics have little impact on a firm's performance over time. (C) capabilities are highly mobile across firms. (D) differences in resources and capabilities are the basis of competitive advantage.
(C) capabilities are highly mobile across firms.
91. Organizational stakeholders are usually satisfied when (A) their return on investment has been maximized. (B) customers pay the highest sustainable price for the goods and services they receive. (C) companies provide a dynamic, stimulating, and rewarding work environment. (D) companies are paying the highest prices to suppliers.
(C) companies provide a dynamic, stimulating, and rewarding work environment.
71. When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n): (A) strategic mission. (B) inspiring vision. (C) core competence. (D) sustainable market niche.
(C) core competence.
99. In a diversified firm, corporate-level strategy is concerned with: (A) operating each individual business under the corporate umbrella. (B) determining how each functional department of the firm will operate. (C) determining in which businesses to compete and how resources will be allocated between businesses. (D) coordinating the vision and mission of each subsidiary firm.
(C) determining in which businesses to compete and how resources will be allocated between businesses.
55. Henry Ford once said, "If I had asked people what they wanted, they would have said faster horses." The invention of the car is an early example of: (A) the march of globalization. (B) rapid technological diffusion. (C) disruptive technologies. (D) products that were not imitated by competitors.
(C) disruptive technologies.
109. The I/O model is grounded in: (A) anthropology. (B) psychology. (C) economics. (D) accounting.
(C) economics.
81. Organizational stakeholders include: (A) unions. (B) host communities. (C) employees. (D) suppliers of capital.
(C) employees.
89. The Chambers of Commerce of cities and towns often implore citizens to buy from local businesses. This is because the organization's role as a taxpayer is most important to ______ as stakeholders. (A) major suppliers of capital (B) shareholders (C) host communities (D) unions
(C) host communities
86. Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is: (A) maximizing the firm's return on investment. (B) receiving the highest-quality services in the industry at any price. (C) obtaining reliable products at the lowest possible price. (D) increasing the profitability of the firm.
(C) obtaining reliable products at the lowest possible price.
51. The "liability of foreignness" is the: (A) inability of most U.S. managers to truly comprehend foreign cultures. (B) political disadvantage that U.S. firms have when doing business abroad. (C) overall risk of participating outside a firm's domestic country when entering global competition. (D) preference for "buying local," which always puts foreign firms at a disadvantage when competing in the U.S. market.
(C) overall risk of participating outside a firm's domestic country when entering global competition.
73. To have the potential to become sources of competitive advantage, resources and capabilities must be non-substitutable, valuable, ______, and ______. (A) unique; easy to imitate. (B) easy to imitate; difficult to implement. (C) rare; costly to imitate. (D) easy to implement; unique.
(C) rare; costly to imitate.
97. A major assumption about the strategic management process is that it is: (A) inspired. (B) team-based. (C) rational. (D) inclusive.
(C) rational.
98. :A business-level strategy describes (A) the businesses in which the company intends to compete. (B) all policies and procedures used in functional departments. (C) the business unit's actions to exploit its competitive advantage over rivals. (D) a firm's resources, intent, and mission.
(C) the business unit's actions to exploit its competitive advantage over rivals.
46. All of the following are characteristics of the global economy EXCEPT: (A) the increasing importance of developing countries as sources of revenue growth. (B) the free movement of goods, services, people, skills, and ideas across geographic borders. (C) the increased use of tariffs to protect industries. (D) higher levels of opportunities and challenges in new geographic markets.
(C) the increased use of tariffs to protect industries
63. Which of the following statements is most consistent with the I/O view? Performance of a firm is most directly attributable to: (A) the power of the financial market stakeholders. (B) the resources the firm possesses. (C) the profitability of the industry in which the firm competes. (D) hypercompetition within the industry.
(C) the profitability of the industry in which the firm competes.
77. The Princeton Alliance Church states in its website that "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope." This pronouncement is most precisely a statement of organizational: (A) values. (B) structure. (C) vision. (D) culture.
(C) vision.
68. All of the following are resources of an organization EXCEPT: (A) an hourly production employee's ability to catch subtle quality defects in products. (B) oil drilling rights in a promising region. (C) weak competitors in the industry. (D) a charity's board of directors of experienced executives.
(C) weak competitors in the industry.
67. Research shows that approximately ______ percent of a firm's profitability is explained by the industry in which it competes, whereas ______ percent is explained by the firm's characteristics and actions. (A) 90; 10 (B) 60; 40 (C) 36; 20 (D) 20; 36
(D) 20; 36
106. Managers must adopt a new mind-set that values ______ and the challenges that evolve from constantly changing conditions. (A) flexibility (B) innovation (C) speed (D) All of these options are correct.
(D) All of these options are correct.
114. Successful strategic leaders are: (A) committed to helping the firm to create value for all stakeholder groups. (B) committed to nurturing those around them. (C) decisive. (D) All of these options are correct.
(D) All of these options are correct.
116. Organizational culture refers to: (A) the social energy that drives, or fails to drive, the organization. (B) the complex set of ideologies, symbols, and core values that are shared throughout the firm. (C) what people do when no one else is looking. (D) All of these options are correct.
(D) All of these options are correct.
59. Which of the following statements about organizational knowledge is correct? (A) Knowledge is an intangible resource. (B) The importance of knowledge is increasing. (C) The value of knowledge as a proportion of shareholder value is increasing. (D) All of these options are correct.
(D) All of these options are correct.
84. Dissatisfied capital market stakeholders may: (A) sell their stock. (B) tighten loan covenants. (C) seek to increase their power. (D) All of these options are correct.
(D) All of these options are correct.
48. ______ has become the second-largest economy in the world. (A) The United States (B) The European Union (C) Japan (D) China
(D) China
85. Greenleaf Property Management has been earning below-average returns for the last three years. Which one of the following statements is true? (A) Greenleaf will be able to satisfy its multiple stakeholders easily as long as the stakeholders are committed to the strategic mission of the firm. (B) Greenleaf will be able to minimally satisfy the demands of each stakeholder. (C) Greenleaf will need to prioritize the demands of its stakeholders based on the political influence each wields. (D) Greenleaf will not be able to minimally satisfy all stakeholders.
(D) Greenleaf will not be able to minimally satisfy all stakeholders.
53. The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market? (A) Mobile Phone (B) Television (C) Personal Computer (D) Internet Answer : (D)
(D) Internet
72. In the resource-based model, which of the following factors would be considered a key to organizational success? (A) Unique market niche (B) Weak competition (C) Economies of scale (D) Skilled employees
(D) Skilled employees
64. Firms use the five forces model of competition to identify the ______ of the industry. It is measured by its _______. (A) size; number of competitors. (B) globalization; export percentages. (C) hypercompetition; technology diffusion. (D) attractiveness; profitability.
(D) attractiveness; profitability.
49. The economic interdependence among countries which is reflected in the flow of goods, services, financial capital, and knowledge across country borders is defined as: (A) hypercompetition. (B) boundaryless retailing. (C) strategic intensity. (D) globalization.
(D) globalization.
50. Globalization has led to: (A) lower operational efficiency as firms must transport raw materials and finished goods farther. (B) increasing loyalty of customers for products made domestically. (C) declining returns from investment in research and development. (D) higher performance standards including quality and cost.
(D) higher performance standards including quality and cost.
123. A company competing in a single product market has (A) one corporate-level strategy. (B) one business-level strategy. (C) one business-level strategy for failure. It should seek to diversify. (D) one business-level strategy and one corporate-level strategy.
(D) one business-level strategy and one corporate-level strategy.
74. The resource-based model argues that: (A) all resources have the potential to be the basis of sustainable competitive advantage. (B) resources alone can be a source of sustainable competitive advantage. (C) the key to competitive success is the structure of the industry in which the firm competes. (D) resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
(D) resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
119. SWOT stands for (A) strategy, wealth, organization, and threats. (B) success, weakness, opportunities, and taxes. (C) strength, wealth, organization, and taxes. (D) strengths, weaknesses, opportunities, and threats.
(D) strengths, weaknesses, opportunities, and threats.
102. In smaller, new venture firms, returns are sometimes measured in terms of: (A) return on assets. (B) return on equity. (C) return on sales. (D) the amount and speed of growth.
(D) the amount and speed of growth.
44. The strategic management process is; (A) a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm. (B) a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment. (C) a process directed by top-management with input from other stakeholders that seeks to achieve above-average returns for investors through effective use of the organization's resources. (D) the formulation and implementation of a full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.
(D) the formulation and implementation of a full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.
Firms achieve strategic competitiveness by:
. formulating and implementing a value-creating strategy.
Which of the following capabilities meets the criteria for being a core competency, in that it is rare, valuable, costly to imitate, and nonsubstitutable?
A company's history and brand
Which of the following is NOT an external event that reveals the "dark side" of core capabilities? a) A new competitor figures out a better way to serve the firm's customers. b) New technologies emerge and replace those used by the firm. c) A firm changes its focus to a new core competence. d) Political or social events shift the foundation of current core capabilities.
A firm changes its focus to a new core competence
Which of the following is an intangible resource?
A firm's ability to come up with new and different ideas
______ is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context. a) Strategic thinking b) A global mind-set c) Profit-pooling d) Competency-discovering
A global mind-set
Which of the following would be considered a product market stakeholder?
A local pipefitters union dealing with a plumbing contractor
Which of the following could be a part of the analysis stage of the strategic management process?
A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers
41. A firm has achieved ______ when it successfully formulates and implements a value-creating strategy. (A) strategic competitiveness (B) a permanently sustainable competitive advantage (C) substantial returns (D) legal and ethical core values
A. Strategic competitiveness
Which of the following is NOT a component of internal analysis leading to competitive advantage?
Analysis of supplier power
Which of the following is NOT a component of internal analysis leading to competitive advantage? a) Tangible and intangible resources b) Analysis of supplier power c) Capabilities d) Core competencies
Analysis of supplier power
Which of the following is a true statement about capabilities?
Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.
Which of the following is a true statement about capabilities? a) Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing. b) Valuable capabilities are based almost entirely on tangible resources. c) Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated. d) The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources.
Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.
______ can be viewed as the capacity to take action. a) Strategic assets b) Human capital c) Core competencies d) Functional capabilities
Core competencies
Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies? a) Core competencies must be acquired. b) Core competencies must be bundled. c) Core competencies must be internationalized. d) Core competencies must be leveraged.
Core competencies must be internationalized.
The senior managers of a grocery store chain have a disagreement over the direction of the company. One faction wants to leverage its capabilities and core competencies to take advantage of the opportunities provided by a stronger online presence, including online ordering with both at-store pickup and home delivery. The other faction feels that the company's strengths lie in small, convenient neighborhood stores and the customer service that accompany an in-store shopping experience. The online expansion would be a departure from what the company already knows how to do and would require a significant investment. Those in favor of the changes feel that the potential returns make the investment worthwhile. What concept are those in favor of change struggling against?
Core rigidity
McDonald's culture, with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics, illustrates which of the following criteria for sustainable competitive advantage? a) Valuable b) Rare c) Costly to imitate d) Nonsubstitutable
Costly to imitate
Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples illustrate which of the following criteria for sustainable competitive advantage? a) Valuable b) Rare c) Costly to imitate d) Nonsubstitutable
Costly to imitate
Myspace, the social networking site, was a leader and innovator for modern social networking. However, not long after Myspace's peak, a new social networking site, Facebook, began gaining ground. Myspace quickly became obsolete because of Facebook's superior functionality, design, and features. Which of the following was Myspace lacking that resulted in the company losing its competitive advantage?
Costly-to-imitate capabilities because it became less expensive to start a social networking site
Above-average returns are; (A) higher profits than the firm earned the previous year. (B) higher profits than the industry averaged over the last 10 years. (C) profits in excess of what an investor expects to earn from a historical pattern of performance of the firm. (D) returns in excess of what an investor expects to earn from other investments with a similar level of risk.
D) returns in excess of what an investor expects to earn from other investments with a similar level of risk
Check My Work Tockit is a children's toy developer that uses the resource-based model of above-average returns. Which of the following steps does it use in its business?
Determine the firm's capabilities.
Which of the following is an example of an operations activity?
Developing employees' work schedules
______ is an example of a capability that is based in the functional area of distribution. a) Effective use of logistics management techniques b) Effective control of inventories through point-of-purchase data collection c) Effective organizational structure d) Product and design quality
Effective use of logistics management techniques
Which of the following is NOT a reputational resource? a) Customers' opinions that the firm's products are high quality b) Employees' opinions of the firm as a terrible place to work c) Suppliers' opinions that the firm pays its bills in a timely manner d) Customers' opinions that using the firm's products makes them attractive
Employees' opinions of the firm as a terrible place to work
13. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software. (A) True (B) False
False
14. The rapid rate of technological diffusion has increased the competitive benefits of patents. (A) True (B) False
False
15. Developed countries still have major advantages in their access to information technology when compared to emerging economies because of the significant cost of the infrastructure needed for computing power. (A) True (B) False
False
18. The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is the main source of above-average returns. (A) True (B) False
False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in the firm to serve the needs of the natural gardening community by providing rare and native plants to individuals and nurseries around the United States. The perspective of the CEO of Twin Spires is consistent with the assumptions of the industrial organization (I/O) model. (A) True (B) False
False
2. Alligator Enterprises has earned above-average returns since its founding five years ago. No other firm has challenged Alligator in its particular market niche; therefore, the firm's owners can feel secure that Alligator has established a competitive advantage. (A) True (B) False
False
22. Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource-based model. (A) True (B) False
False
24. Resources are considered rare when they have no structural equivalent. (A) True (B) False
False
26. An effective vision statement must specify the industry in which a company will operate. (A) True (B) False
False
29. A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions. (A) True (B) False
False
30. Organizational stakeholders are the firm's internal resources, capabilities, and core competencies that are used to accomplish what may appear to be unattainable goals in the competitive environment. (A) True (B) False
False
34. Customers, suppliers, unions, and local governments are examples of capital market stakeholders. (A) True (B) False
False
5. Average returns are those in excess of what an investor expects to earn from other investments with a similar amount of risk (A) True (B) False
False
A company can earn above-average returns only when the value it creates is less than the costs incurred to create that value.
False
Age structure, geographic distribution, income distribution, interest rates, and process innovations are all elements of concern when studying the demographic segment of the general environment.
False
Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity.
False
An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, and low rivalry among firms.
False
Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist.
False
Any competitor intelligence practice that is legal is also ethical.
False
By themselves, resources can allow firms to create value for customers as the foundation for earning above-average returns.
False
Capabilities are usually developed separately from specific functional areas such as manufacturing, R&D, and marketing.
False
Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources.
False
Compared to tangible resources, intangible resources are an inferior source of core competencies.
False
Competitor analysis is focused on the factors and conditions influencing an industry's profitability potential.
False
Contrary to popular belief, the global segment of the external environment does not provide many opportunities for firms such as H.J. Heinz, SAB Miller, and Citigroup, all of which recently experienced low growth and profits coming from emerging markets.
False
Costly-to-imitate capabilities are those which other firms cannot easily develop as they have no strategic equivalent.
False
Developing a political strategy by the newly formed General Motors would likely be ineffective as firms are generally unable to influence the political/legal environment.
False
Eavesdropping by the NSA on average Americans is ethical because it is a governmental organization instead of a for-profit company.
False
Eavesdropping is an ethical way to obtain information about competitors' actions.
False
Firms can directly control the elements of the seven segments of the general environment.
False
Firms should never outsource a primary activity because of the danger of the activity being imitated by rivals.
False
Firms should seek to continually develop new core competencies because all core competencies guarantee above-average profit.
False
Generally, the stronger the competitive forces, the higher the profit potential of an industry.
False
Global warming and energy consumption are aspects of the technological environment segment that firms should monitor.
False
Globalfocusing is often used by firms with high levels of international operations who further increase their internationalization by focusing on global niche markets.
False
In recent times, businesspeople have become more confident in the ability of economists to provide valid and reliable predictions about the world's economic environment.
False
Interpersonal relationships, trust, friendships, and a firm's reputation are all examples of complex social phenomena that make capabilities easy to imitate.
False
Monitoring involves the development of a forecast of what might happen at a future point in time.
False
Older employees are less valuable resources to firms than younger employees, because older employees have lower levels of knowledge. Consequently, employee layoffs should begin with early-retirement inducements.
False
Scanning involves detecting meaning through early signals of environmental trends.
False
Strategic groups are firms in different industries following the same or similar strategies.
False
Switching costs, access to distribution channels, economies of scale, large numbers of competing firms, and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry.
False
Tablets such as the iPad have had little effect on the sale of PCs in the United States, and PC producers such as Taiwan's Acer Computers have experienced significant growth.
False
The external environment facing business stays relatively constant over time.
False
The firm with the most capabilities wins.
False
The learning generated by making and correcting mistakes is generally unimportant to efforts to create new capabilities and core competencies.
False
The legislation introduced in the U.S. Congress during the early tenure of the Obama administration intended to reduce the amount of work U.S. companies outsource and is an example of a potential change in the sociocultural segment of the general environment.
False
The more distant strategic groups are in terms of their strategies, the greater the likelihood of rivalry between the groups.
False
The need to meet quarterly earnings results causes managers to accurately examine the firm's internal organization.
False
The strengths of the five competitive forces are similar across strategic groups within an industry.
False
The value of tangible assets, such as the firm's borrowing capacity and its physical plant, is high because these assets can be easily leveraged to derive additional value.
False
Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment.
False
Value chain activities in the value chain create value, whereas support functions generate costs.
False
Value is measured by the variable and fixed costs associated with the production and marketing of a particular product compared with the revenue and profits the product generates.
False
When Philip Morris International studies the cigarette tax policies of various nations, it is engaged in the forecasting component of the environmental analysis process.
False
When firms analyze the external environment, they typically have complete and unambiguous data.
False
Which of the following company statements is a vision statement?
Habitat for Humanity: A world where everyone has a decent place to live.
Christopher is the manager of the development department for a large company. Recently, he scheduled a meeting with a challenging objective—to discuss a failing project with one of his product development teams. The project is costing a lot of time and money but does not appear to have any return on investment in sight. Which of the following approaches would demonstrate successful strategic leadership?
He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.
A nonprofit organization is focused on providing mental health services to the homeless in its geographic area. It serves people by ensuring they receive the public assistance they are eligible for and then connects them with care providers that have expertise working with transient patients. The company's primary expenses are the salary and benefits for its staff of social workers, and it receives government funding to cover those. However, the organization does not have enough people to fill its open positions and has a waiting list of homeless people in need of case workers. Which of the following represents a weakness for the nonprofit organization?
Human resources
According to your textbook, which of the following would be considered an important step in the A-S-P strategic management process?
Identifying marketplace opportunities and threats in the external environment
Apple, a leader in mobile technology products, wasn't always focused on mobile technology. In 2007, the company changed its name from Apple Computers to Apple Inc. This change was indicative of a shift in the industry. Apple began introducing iPods, iPhones, iPads, iTunes, and the App Store. Apple recognized its core competencies in hardware design and software engineering should serve as the foundation of its future strategy. Which of the following tools did Apple use to determine its competitive advantage?
Internal analysis
A hospital system operates 22 physicians' offices, five skilled nursing facilities, and two hospitals. The system employs more than 500 people directly and is affiliated with more than 100 additional physicians. The system offers a wide breadth of medical services, including all of the major specialties. The system was recently recognized as the top cardiac hospital in the state. Which of the following represents the company's capabilities?
Its complete list of medical services
Companies must be aware of technological advances within their industry and make strategic management decisions that take into account perpetual innovation and disruptive technologies. Which of the following is an example of a company that did not respond strategically to technological changes?
Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology
Marquis is the international operations manager for an athletic clothing line. As part of his responsibilities, he regularly tours the factories of the company's suppliers. He recently took a tour of one of the most efficient plants that delivers low-cost clothing. This gives his company a greater profit margin. However, on the tour, he noticed an 8-year-old child operating one of the machines. Which of the following best describes how Marquis should report back to his CEO about the plant tour?
Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values
TaylorTech, a high-quality metals finishing company, is struggling with its margins. TaylorTech has raw materials delivered to its foundry in Pittsburgh, where the company melts the metals into castings. The firm then polishes them as a value-added process before selling the custom castings to customers. Its unique polishing process is rare in the United States, is very secretive, and results in a more efficient cast that commands a premium price. Unfortunately, the casting process is becoming more expensive because of increased wage pressure from the workers specializing in casting. With these issues, TaylorTech has to make a decision. Which of the following is the most viable option for TaylorTech to increase its margins?
Outsource the casting process
Which of the following is TRUE about outsourcing? a) Outsourcing allows firms to be more flexible and requires minimal coordination. b) Outsourcing allows firms to concentrate on those areas in which they can create value. c) Outsourcing strengthens the creative and innovative functions within the firm. d) Outsourcing is effective only when it includes all support activities.
Outsourcing allows firms to concentrate on those areas in which they can create value.
Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of the following correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company?
Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds.
______ are the source of a firm's ______, which are the source of the firm's ______. a) Resources; capabilities; core competencies b) Capabilities; resources; core competencies c) Capabilities; resources; above-average returns d) Core competencies; resources; competitive advantage
Resources; capabilities; core competencies
A local community arts nonprofit organization is seeking to expand its programming and is considering putting just one new program in place this year. It may choose painting workshops for people with disabilities, summer camps for young children, a musical performing arts series for skilled musicians, or classes for seniors. The organization's most committed volunteer is a kindergarten teacher who has offered to be the leader of whichever new program the organization implements. If the nonprofit is utilizing the resource-based model of above-average returns, in which of the following ways should it expand its programming?
Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage
A multidivisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the industrial organization (I/O) model of above-average returns to develop its strategy. Which of the following decisions is consistent with this model?
The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand.
Which of the following is a value-generating activity?
The core competencies that a company holds that make it possible for it to serve customers in a different way from its competitors
A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for the project. Which of the following statements is MOST likely to be true?
The cost of the marble will be expensive because of the bargaining power of the supplier.
An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision? a) The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. b) The investor will find that the restaurant's financial statements undervalue the true value of its resources. c) The investor should be aware that intangible assets are difficult to leverage into additional businesses. d) The investor should search for a firm that has competitive advantages based on tangible resources.
The investor will find that the restaurant's financial statements undervalue the true value of its resources.
Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant just for the appetizer, and it was at the center of a recent highly positive review by a food critic. Preparation involves common ingredients and average culinary skills but requires a very high oven temperature, which significantly increases utility costs. Several competing restaurants have since added their own version of the appetizer to their menu. Which criterion for assessing capabilities/core competencies is met? a) The restaurant has the capability to develop something that is valuable. b) The restaurant has the capability to develop something that is rare. c) The restaurant has the capability to develop something that is costly to imitate. d) All of these criteria are met.
The restaurant has the capability to develop something that is valuable.
Which of the following is an example of the mobility of strategies and resources across firms in the mobile network industry?
The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.
ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit-board technology. ACME has protected its market leadership with continued advancements in this technology, which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based technology instead of circuit boards. ACME's technology leadership fails which capability test? a) The value test b) The rareness test c) The substitutability test d) The costly-to-imitate test
The substitutability test
Which of the following statements about tangible resources is true?
The value of tangible resources is constrained because they are hard to leverage.
"Motivating, empowering, and retaining employees" is an example of a capability that resides within the human resources functional area.
True
10. The two primary drivers of hypercompetition are the emergence of the global economy and technology. (A) True (B) False
True
11. The rate of technology diffusion has been steadily increasing over the last two decades. (A) True (B) False
True
12. While patents may be an effective way of protecting proprietary technology, many firms competing in the electronics industry do not apply for patents to prevent competitors from utilizing the technological knowledge that would be included in the patent application. (A) True (B) False
True
16. The rate of growth of Internet-based applications could be affected by strategies of Internet service providers charging users for downloading those applications. (A) True (B) False
True
17. The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO feels that the employees of the company have the ability, training, and resources to engage in continuous learning. The CEO must encourage ambidextrous learning, absorbing new knowledge and building incremental knowledge. (A) True (B) False
True
21. The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and determines its ability to earn above-average returns under the I/O view. (A) True (B) False
True
27. An effective vision stretches and challenges people and can result in increased innovation. This is illustrated by Apple's CEO Steve Jobs, who was known to think bigger and differently than most people ("putting a dent in the universe"). (A) True (B) False
True
28. Organizational mission statements typically do not include statements about profitability and earning above-average returns. (A) True (B) False
True
32. Relative power is the most critical element for prioritizing the demands of stakeholders. (A) True (B) False
True
33. Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders. (A) True (B) False
True
40. An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values. (A) True (B) False
True
6. Above average returns are those in excess of what an investor expects to earn from other investments with similar stock prices. (A) True (B) False
True
8. To implement a firm's strategies, the firm takes actions to with the goal of achieving strategic competitiveness and above average returns. (A) True (B) False
True
A firm should outsource only activities where it cannot create value or where it is at a substantial disadvantage compared to competitors.
True
Although health care reform legislation was passed in the early part of the Obama administration, it continues to be a bone of contention for employers, employees, and politicians because of its delays and increased expenses. These attitudes about health care reform make up the sociocultural segment of the general environment.
True
An example of a government policy barrier to entry would be a situation in which the Antitrust Division of the Department of Justice disallows a merger because it creates a firm that is too dominant and would thus create unfair competition.
True
Analyzing the internal environment enables a firm to determine what it can do by identifying resources, capabilities, and core competencies in the internal organization.
True
Any core competency has the potential to lose its value-creating ability.
True
Apple has combined some of its tangible resources (such as financial resources and research laboratories) and intangible resources (such as scientists, engineers, and organizational routines) to create a capability in R&D that creates a core competence in innovation.
True
At IBM, human capital is critical to forming and using the firm's capabilities in customer relationships, scientific and research skills, and technical skills in hardware, software, and services.
True
At Southwest Airlines, the complex interrelationship between its culture and human capital adds value for customers in ways that other airlines cannot, such as jokes on flights by flight attendants and cooperation between gate personnel and pilots.
True
Capabilities may be costly to imitate if firms have unique and valuable organizational cultures, are causally ambiguous, and socially complex.
True
Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.
True
Creating customer value is the source of the firm's potential to earn above-average returns.
True
Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven elements comprising the industry environment.
True
Early adopters of new technology often achieve higher market shares and higher returns than later adopters of the technology.
True
Exit barriers are especially low in the airline industry as aircraft are not particularly specialized and can easily be sold to other airlines, air cargo companies, the military, or even to wealthy individuals who want to own a private jet
True
Firms achieve strategic competitiveness and earn above-average returns by acquiring, bundling, and leveraging their resources for the purpose of taking advantage of opportunities in the external environment in ways that create value for customers.
True
In today's global economy, some resources that were traditionally critical to firms' efforts to sell goods are now less likely to be a source of competitive advantage.
True
One criterion for a resource or capability to be a source of competitive advantage is that it must allow the firm to perform a value-creating activity that competitors cannot perform.
True
PepsiCo's strategy called "capital performance with a purpose" links green efforts in ll businesses to the bottom line. This is an example of addressing concerns in the physical segment of the general environment.
True
Resources are the source of capabilities, some of which lead to the development of core competencies. In turn, some core competencies may lead to competitive advantage.
True
Resources must be combined to form capabilities, as illustrated by Chipotle, which linked fresh ingredients with several other resources, including the marketing and training of employees, as the foundation for customer service as a capability.
True
Risk in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment. (A) True (B) False
True
Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing industry, and switching costs are high.
True
Technology has made it more difficult for companies to find ways to develop competitive advantages.
True
The European sovereign-debt crisis and political upheavals in Egypt, Tunisia, Libya, and Syria illustrate uncertainties in the political/legal segment of the general environment that could affect the performance of business firms.
True
The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and Lowe's, and Airbus and Boeing).
True
The five forces model expands the arena of competitive analysis beyond direct competitors (i.e., rivals) to include buyers and suppliers who may also be a source of competition.
True
The foundation of many capabilities lies in the unique skills and knowledge of a firm's employees.
True
The industry environment directly influences the firm and its competitive actions and responses.
True
The objective of assessing the external environment is to determine the timing and importance of the effects of environmental changes and trends on the strategic management of the firm.
True
The process of competitor analysis should examine the competitor's future objectives, current strategy, assumptions, and capabilities.
True
The recent bankruptcy filings by General Motors and Chrysler Corporation illustrate that firms cannot directly control the general environment's segments.
True
Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work.
True
Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization.
True
Walmart uses core competencies, such as information technology and distribution channels, to create value for its customers through its "everyday low prices."
True
When Delta Air Lines wants to study Continental Airlines, it must examine both Continental and its complementor, Star Alliance
True
______ is measured by a product's performance characteristics and its attributes for which customers are willing to pay. a) Competitive advantage b) Profit potential c) Contribution d) Value
Value
Charmed by Claire is a successful retail boutique that sells women's accessories. Claire, the owner/manager, knows that women have many options when buying jewelry. When customers enter her store they are greeted by name and given prompt, friendly attention. Customers return to the store because the service is excellent. Claire says the most important decision she makes is hiring the best staff because customer service is vital to her business. Customer service is: a) a human resource. b) an organizational resource. c) a rare resource. d) a core competency.
a core competency.
Michael is the CEO of a manufacturer with plants in three countries. He currently has a product line that is manufactured only in the company's U.S. plant. That product has experienced a steady increase in its export sales to Europe over the last three years. The international sales director is recommending that the company expand manufacturing capabilities at the European plant to include this product line. Michael and his management team must consider whether to pursue this strategy. This is:
a decision that would benefit from using the entire strategic management process.
All of the following are tangible resources EXCEPT: a) production equipment. b) distribution centers. c) a firm's reputation. d) formal reporting structures.
a firm's reputation.
All of the following were traditional sources of competitive advantage EXCEPT: a) labor costs. b) access to financial resources. c) protected markets. d) a highly educated labor market.
a highly educated labor market.
All competitive advantages have: a) a limited life. b) an expiration date. c) the ability to earn above-average returns indefinitely. d) the ability to lead to more competitive advantages.
a limited life.
Value consists of: a) a product's proprietary characteristics and attributes for which customers are willing to pay. b) a product's performance characteristics and attributes for which customers are willing to pay. c) a product's proprietary characteristics and attributes for which customers consider paying. d) a product's performance characteristics and attributes for which customers consider paying.
a product's performance characteristics and attributes for which customers are willing to pay.
Value is measured by:
a product's performance characteristics and by its attributes for which customers are willing to pay.
Compared to tangible resources, intangible resources are: a) of less strategic value to the firm. b) less likely to be the focus of strategic analysis. c) a superior source of capabilities. d) more likely to be reflected on the firm's balance sheet.
a superior source of capabilities.
Which of the following describes the relationship between Apple, the leading cell phone manufacturer and applications provider, and King, the developers behind the Candy Crush Saga app? a. Apple and King are complementors. b. King is a supplier to Apple. c. Apple is a customer of King. d. Apple and King are competitors.
a. Apple and King are complementors.
You are hired as a strategic analyst for a Fortune 500 company. Your first task is to develop a competitive intelligence report to find key insights on the rivals' latest actions, current capabilities, and potential future actions. Being new to this type of report and the ethical protocols, what should be your first action? a. Contact the Strategy and Competitive Intelligence Professionals association. b. Analyze the publicly released financial records from six months ago. c. Infiltrate the competitors' headquarters and plant devices to receive information. d. Call the competitors' CEO for an interview.
a. Contact the Strategy and Competitive Intelligence Professionals association.
A company is debating whether to enter a new industry. The first order of business is to conduct an analysis of the five forces. Why is this a crucial first step in the decision-making process of entering a new market or industry? a. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely fail. b. If the barrier for entry is high, and suppliers and buyers have strong bargaining positions, the venture will most likely succeed. c. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely succeed. d. If the barrier for entry is high, and suppliers and buyers have little bargaining power, the venture will most likely fail.
a. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely fail.
In an external environmental analysis, there are two important elements that need to be identified. What are those two elements? a. Opportunities and threats b. Opportunities and weaknesses c. Strengths and weaknesses d. Threats and strengths
a. Opportunities and threats
Potential competitors may enter an industry and begin to take market share from existing companies. Which of the following is one of the largest challenges a new entrant needs to overcome to be successful when entering an industry? a. Production costs are high and require high volumes to achieve profitability. b. There may be a lack of products that go along with the product. c. Several powerful retailers provide the only access to customers. d. Very few customers are currently buying a product.
a. Production costs are high and require high volumes to achieve profitability.
Suppliers are most powerful when a company: a. would have switching costs if it went to a different supplier because the current supplier's products are unique. b. has multiple suppliers to choose from that produce similar components at similar quality. c. buys from a supplier in large quantities, making up 50 percent or more of the supplier's total sales. d. has the capability of producing the end product without the supplier.
a. would have switching costs if it went to a different supplier because the current supplier's products are unique.
DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets as well. The main barrier to entry that DWK is likely to encounter here is:
access to distribution channels
Value chain activities are: a) the activities most likely to be imitated by competitors. b) activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers. c) the core competencies of the organization. d) the activities most crucial to implementing the firm's business strategy.
activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers.
Valuable capabilities: a) allow the firm to exploit opportunities in its external environment. b) allow the firm to neutralize threats in its internal environment. c) allow the firm to exploit opportunities or neutralize threats in its external environment. d) allow the firm to neutralize opportunities in its internal environment.
allow the firm to exploit opportunities or neutralize threats in its external environment.
One reason executive judgment can be a particularly important source of competitive advantage is that judgment: a) allows a firm to build a strong reputation. b) gains the loyalty of shareholders. c) increases human intellectual capacity. d) allows for superior bundling of resources.
allows a firm to build a strong reputation.
A decision that results in failure: a) is a career-ending event because it is so unusual. b) often results from lack of accountability. c) fosters organizational inertia. d) allows for learning.
allows for learning.
Capabilities: a) tend to be developed through firm-wide interactions and reside in the firm as a whole. b) tend to be concentrated in the support activities of the value chain. c) tend to be concentrated in the primary activities of the value chain. d) are often developed in specific functional areas.
are often developed in specific functional areas.
Tangible resources include: a) assets that are people-dependent, such as know-how. b) assets that can be observed and quantified. c) organizational culture. d) a firm's reputation.
assets that can be observed and quantified.
Which of the following describes a company that has delivered above-average returns to its investors?
b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets
Car manufacturers have a large lead time on new products. If an idea for a feature on a vehicle is developed, it will likely be two years before consumers know about it and can decide if they want to buy it. Consumer trends are sometimes short lived as they are always evolving. Which external environmental analysis element is a primary focus of car manufacturers? a. Forecasting b. Assessing c. Scanning d. Monitoring
b. Assessing
Which of the following is NOT a concern of a competitor analysis? a. Intelligence about what the competitor believes about the industry, as shown by its assumptions b. Data on what the competitor's available funds are for innovation, as shown by its balance sheet c. Information about what the competitor is doing and can do, as revealed by its current strategy d. Information about what drives the competitor, as shown by its future objectives
b. Data on what the competitor's available funds are for innovation, as shown by its balance sheet
What are the possible repercussions of a company that performs unethically in order to receive competitive intelligence to gain an advantage? a. Significant prison sentences b. Possible jail time or fines, but not always c. No threat of legal action, as unethical actions are not necessarily illegal d. No threat, as unethical actions will be kept secret
b. Possible jail time or fines, but not always
What is a set of competitive firms emphasizing similar strategic dimensions and using a similar strategy? a. Collusion group b. Strategic group c. Complementors d. Business partners
b. Strategic group
What is the most likely outcome for a company if the executives never analyze a competitor's possible reaction to competitive actions the firm takes? a. The company will most likely fail due to unlawful actions that it was unaware of. b. The company will most likely fail because the competitor might neutralize its competitive advantage. c. The company will still succeed if it has effective marketing. d. The company will still succeed as long as it has an efficient corporate structure.
b. The company will most likely fail because the competitor might neutralize its competitive advantage.
In 2011, Apple and Samsung were in a legal battle over patenting. Apple and Samsung mutually accused each other of infringing on intellectual property, and each took action legally. Why would both parties want to spend the time and resources to reclaim their intellectual property? a. To distract the competition and hopefully gain a competitive edge in the meantime b. To neutralize a threat that could hinder strategic competitiveness c. To ruin the reputation of the other company d. To receive compensation, as both companies were struggling financially
b. To neutralize a threat that could hinder strategic competitiveness
A telecommunications company is impacted by government regulations of the wireless spectrum, cell tower locations, and Internet accessibility. The company decides to hire a lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and Congress. This is an example of a company managing _____ forces in the macroenvironment. a. technological b. political/legal c. global d. social
b. political/lega
A software company that is seeking a sustained competitive advantage will constantly be facing obsolescence because of environmental change. To generate a sustained competitive advantage, this company must:
be continually building its technological capabilities to develop new skills as technology advances so that it can offer constant upgrades to meet customers' needs.
To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT: a) be technologically innovative. b) be hard for competing firms to duplicate. c) be without good substitutes. d) be valuable to customers.
be technologically innovative.
The communications industry is broadly defined as encompassing all of the following EXCEPT:
book retailers
An industrial tool manufacturer relies on a particular distributor network. This distributor network has the largest online outlet and store network, and its product lines are aimed at construction workers. The distributor network is seeking a manufacturer to provide it with private-label products, as it has decided to offer only its own product line in this category of industrial tools. Now, the industrial tool company must decide whether to agree to this proposition or lose this network as a customer. This is an example of which of the competitive forces at play in this industry? a. Rivalry among competing firms b. Industry competitive structure c. Bargaining power of buyers d. Bargaining power of suppliers
c. Bargaining power of buyers
General Electric (GE), the multinational conglomerate, is researching rivals in the appliance industry by analyzing the financials, current product offerings, and strategies of competitors in order to gain insight as to how to gain a competitive advantage. Which of the following is GE performing? a. Industry analysis b. External environmental analysis c. Competitor analysis d. General analysis
c. Competitor analysis
The executive leadership team of a large corporation is analyzing a report. The report's contents have information that can be used to better understand and anticipate a competitor's objectives, strategies, assumptions, and capabilities. Which of the following is the term for the report being analyzed? a. Internal analysis b. SWOT analysis c. Competitor intelligence d. External environmental analysis
c. Competitor intelligence
Through research and development (R&D), a cable company has found a way to use its existing network lines to serve customers with a new product offering—home security systems. The company is offering the service with a lower monthly fee than most other security companies. However, the sales force didn't see a lot of interest among its customers who had an existing security system from a competitor until they ran a promotion for reduced prices on equipment and free installation. Which of the competitive forces is at play? a. Bargaining power of suppliers b. Complementors c. Customer switching costs d. Cost conditions
c. Customer switching costs
Many large corporations have a presence in Washington D.C. in the form of lobbyists. These individuals attempt to have their voice, and the voice of the company they represent, heard. If there is a potential advantage to be had due to new legislation or implementation/abolition of laws and rules, it is the lobbyists' duty to ensure it is in their company's favor. Which of the following segments is this process referring to? a. Sociocultural segment b. Governmental segment c. Political/legal segment d. Economic segment
c. Political/legal segment
The term "white space" has become a very popular term over the last few years. This term describes a space in the competitive landscape that competitors are not occupying. Pricing, quality, and distribution channels are examples of what may be plotted along strategic dimensions to determine points of parity and points of difference. As a company, do you want to be in the "white space"? a. No, as the void in that space most likely is due to a disadvantage b. Yes, as you will be easily identifiable from the competition as having vastly different capabilities c. Possibly, as the "white space" could be a place that is competitive but has been neglected or could also be a space that is not competitive or profitable d. No, as you will not be associated with the competition
c. Possibly, as the "white space" could be a place that is competitive but has been neglected or could also be a space that is not competitive or profitable
Internal analysis enables a firm to determine what the firm: a) can do. b) should do. c) will do. d) might do.
can do.
Because firms combine tangible and intangible resources to create capabilities: a) these capabilities are fragile and subject to sudden loss of value. b) capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital. c) capabilities are easily transferred from one firm to another as employees change jobs. d) these types of capabilities are considered primary activities in the value chain.
capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital.
Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent's success is a) impregnable. b) causally ambiguous. c) rationally obscure. d) elusive.
causally ambiguous.
Capabilities are the:
combination of tangible and intangible resources used to complete the organizational tasks required to produce, distribute, and service the goods or services the firm provides to customers.
Capabilities typically come from: a) individual resources. b) one unique resource. c) several outstanding resources used independently. d) combining resources.
combining resources.
A company has identified a core competency in providing telecommunications services for mid-sized businesses through a combination of simple technology and software, excellent customer service, and low-cost hardware. As competitors gain ground in competing for mid-sized companies, this core competency might become a core rigidity if the:
company doesn't keep up with advances in technology and customers begin to expect greater value from the technology.
Organizational culture is the:
complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business.
A company is analyzing its value chain to discover its value-creating activities. While formulating its strategy, the firm will:
consider the value chain activities and support functions to determine which activities contribute the greatest value in the product or service being sold to customers.
The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of: a) the hazard of competitors being able to imitate a firm's core competency. b) the need for firms to stick to their core competencies through temporary downturns in market demand. c) the lack of intangible resources undermining the core competencies of the firm. d) core competencies that have become core rigidities.
core competencies that have become core rigidities.
Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G performs well and are examples of the company's: a) tangible resources. b) intangible resources. c) core competencies. d) capabilities.
core competencies.
A core rigidity arises when a:
core competency generates inertia and stifles innovation, often because of conditions in the external environment.
Capabilities that other firms cannot develop easily are classified as: a) costly to imitate. b) rare. c) valuable. d) nonsubstitutable.
costly to imitate.
Cisco is a technology company looking to diversify its portfolio and compete in a new market. After conducting a scan and forecast, the consultants hired by Cisco provide several options. In which of the following economic segments should Cisco seek to compete? a. A stable economy with a declining growth potential b. An unstable, new economy that has an attractively high growth potential c. A very stable economy with low growth potential d. A relatively stable economy with strong growth potential
d. A relatively stable economy with strong growth potential
Which of the following would be deemed unethical when developing competitor intelligence? a. Analyzing competitors' financial reports b. Attending trade shows solely to obtain knowledge of competitors' new products c. Obtaining court records in an attempt to find statements that may not be found anywhere else d. All of these actions are ethical.
d. All of these actions are ethical.
What is a competitor analysis? a. A robust analysis of one specific competitor b. A SWOT report of a competitor c. An internal report of what a competitor may discover if the competitor analyzed the company d. An analysis of companies with which a firm competes directly
d. An analysis of companies with which a firm competes directly
In the toy industry, Mattel is one of the world leaders, especially with their line of Barbie dolls. However, it has faced competition from MGA Entertainment, who has produced Bratz dolls since the 1990s. Which of the following statements is true about the strategic group in which these companies compete? a. The companies are dealing with the same competitive forces as all of the other companies in the toy industry. b. The two companies occupy different strategic groups and will likely have very different competitive forces and different strategies. c. Since they are both toy companies, they both have the ability to quickly pursue the toy truck market with minimal investment. d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.
d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.
What is the term that is concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution? a. Political/legal segment b. Sociocultural segment c. Economic segment d. Demographic segment
d. Demographic segment
Procter & Gamble (P&G) is a consumer products company that is consistently implementing scanning systems of the environment. They want to identify early signals of environmental changes and trends. P&G's competitors also frequently utilize scanning systems but are not as competitive as P&G. Which of the following could be the reason for P&G's competitiveness? a. The competitors are not as educated as P&G's executives b. P&G's reports are more robust and contain insider information c. The competitors are less concerned with competitive advantages d. P&G's ability to take action on ambiguous, incomplete, or unconnected data
d. P&G's ability to take action on ambiguous, incomplete, or unconnected data
The country's largest landscape company is the result of a merger between two multistate firms, Brickman Group and ValleyCrest. Now called BrightView, the $2 billion firm was created in 2015. The company is operating in a fragmented industry dominated by small, local businesses. Which of the following identifies a relevant competitive force and a way the company might leverage it? a. Complementors: BrightView will need to collaborate with other companies to develop outdoor products because there are not enough complementary products in the marketplace to make homeowners value their landscaping. b. Bargaining Power of Buyers: BrightView can expect customers to purchase from it because of brand loyalty. c. Bargaining Power of Suppliers: BrightView will have difficulty leaving the landscape industry because of its investment in this merger and the cost of all of the landscape equipment included among both companies' assets. d. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-barrier industry through economies of scale, specifically discounts on bulk purchases of raw material inputs.
d. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-barrier industry through economies of scale, specifically discounts on bulk purchases of raw material inputs
Strategic groups exist because: a. government regulators have different rules for companies based on the size of the company, geographic headquarters, and number of employees. b. customers want variety in the products and services they select, and different brands can serve customers' needs differently. c. industries are one-dimensional, and all businesses within an industry utilize the same resources and same strategies to achieve their goals. d. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, and affects their strategies.
d. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, and affects their strategies.
The _____ environment is the set of factors that directly influences a firm and its competitive actions and responses within the industry. a. competitor b. political/legal c. internal d. industry
d. industry
The five competitive forces include all of the following forces that shape competition within an industry EXCEPT: a. threat of substitute products. b. threat of new entrants. c. bargaining power of suppliers. d. rate of innovation and change.
d. rate of innovation and change.
As an industry environment evolves over time, the: a. industry becomes more profitable. b. number of companies is reduced, and the environment becomes more consolidated. c. strategic groups become less attractive to new entrants. d. strength of the competitive forces in the industry change.
d. strength of the competitive forces in the industry change.
A sporting goods company developed an innovative material for the manufacture of baseball bats. For many years, the material and its process for manufacturing served as a rare and valuable capability, distinguishing it from competitors. Unfortunately, many of the baseball leagues have been changing their regulations to outlaw bats made of this material because they constitute an unfair advantage for players. As part of its internal analysis, its leaders might:
determine if the company's core competency is in research and development of different materials or only in working with this material specifically.
Cell phones and digital music files are examples of:
disruptive technologies.
A food bank in Florida was struggling to serve its customers. It asked Walmart for help. Walmart sent a team of managers who reorganized storage and transportation. The food bank was able to increase the number of clients served by tenfold. Walmart shared its expertise in:
distribution
A food bank in Florida was struggling to serve its customers. It asked Walmart for help. Walmart sent a team of managers who reorganized storage and transportation. The food bank was able to increase the number of clients served by tenfold. Walmart shared its expertise in: a) distribution. b) human resources. c) marketing. d) manufacturing.
distribution.
A firm's core competencies, integrated with an understanding of the results of studying the conditions in the external environment, should:
drive the selection of strategies.
A firm's core competencies, integrated with an understanding of the results of studying the conditions in the external environment, should: a) guarantee profits. b) lead to a first-mover advantage. c) drive the selection of strategies. d) increase the firm's market share.
drive the selection of strategies.
Firms that achieve competitive parity can expect to: a) earn below-average returns. b) earn average returns. c) earn above-average returns. d) initially earn above-average returns, declining to average returns.
earn average returns.
An industrial fabrication firm has purchased a facility capable of housing large-scale projects—as long as 120 feet. The firm could develop this tangible resource into a capability by:
employing engineers who can design large projects and welders who have expertise in these projects.
When firms lay off employees, they are: a) treating employees as an intangible resource. b) recognizing the reduced value of labor in the value chain. c) eroding the organization's knowledge resources. d) temporarily sacrificing a tangible asset that is easily replaced.
eroding the organization's knowledge resources.
Valuable capabilities allow the firm to:
exploit opportunities or neutralize threats in its external environment
23. The resource-based model assumes that firms must have resources that are rare or costly to imitate to form a basis for competitive advantage. (A) True (B) False
false
25. The assumptions of the industrial organization model and the resource-based model are contradictory. Therefore, organizational strategists must choose one or the other model as the basis for developing a strategic plan. (A) True (B) False
false
31. If a firm is dependent on a specific stakeholder group, that group has less influence on the firm's strategic decision making. (A) True (B) False
false
35. When a firm earns lower-than-average returns, the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders. (A) True (B) False
false
37. Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others in terms of ethical considerations. (A) True (B) False
false
39. Corporate-level strategy in a diversified organization requires a common business strategy for each component business. (A) True (B) False
false
7. Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales. (A) True (B) False
false
9. Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past. (A) True (B) False
false
The goal of strategy implementation is to develop a permanent competitive advantage. (A) True (B) False
false
For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent of scale would be if
favorable locations are not available
A major reason outsourcing is effective is that: a) it increases the innovative potential of the firm. b) few firms possess superior capability in all primary and support activities. c) it permits unlimited access to capital resources. d) competitors do not have access to the same external sources.
few firms possess superior capability in all primary and support activities.
A major reason outsourcing is effective is that:
few firms possess superior capability in each value chain activity and support function.
By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of: a) intangible resources. b) their primary activities. c) firm-specific differences. d) efficiency of production.
firm-specific differences.
An assumption of the industrial organization (I/O) model of above-average returns that supports the need for a firm to find the most attractive industry in which to compete is that:
firms possess the same types of resources with value and those resources are mobile across companies
Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should: a) concentrate on maintaining Acme's current core competencies. b) focus on developing Acme's future competitive advantages. c) place more emphasis on tangible resources, which are less vulnerable to obsolescence than intangible resources. d) recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resources.
focus on developing Acme's future competitive advantages.
Examples of support activities include all of the following EXCEPT: a) finance. b) human resources. c) follow-up service. d) management information systems.
follow-up service.
The strategic management process is the:
full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns.
The three parts of the external environment that affect a firm's strategic actions are
general, industry, and competitor
New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people moving out compared to people moving into the state. This impacts the __________ aspect of demographic analysis.
geographic distribution
If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will: a) achieve competitive parity. b) have a competitive disadvantage. c) have a temporary competitive advantage. d) gain a sustainable competitive advantage.
have a temporary competitive advantage.
Logan is an entrepreneur and president of his own company that makes a new software product that manages benefits administration for large multinational corporations. His startup company grew quickly to a team of about 25. A new federal law recently passed by Congress will cause small-business owners to invest in software like his to manage employee health care. Logan announces that the company will be investing in training for employees to better understand small-business owners and research and development (R&D) to create a small-business version of the software. This is an example of:
having a strong strategic orientation and promoting innovation as a strategic leader.
A product's value is created by each of the following EXCEPT: a) high cost and highly differentiated features. b) low cost. c) highly differentiated features. d) low cost and highly differentiated features.
high cost and highly differentiated features.
A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are: a) causally ambiguous. b) unobservable. c) imitable. d) common.
imitable.
Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green:
is likely to raise the level of competitive rivalry in the industry
A capability meets the criteria of being valuable when:
it helps a firm exploit opportunities in its external environment.
A resource or capability can be classified as a core competency that can be a source for a sustainable competitive advantage if:
it is different and better than the way a competitor is executing the same capability.
A capability is considered rare when:
it is possessed by few, if any, other firms.
An attorney has grown his law firm, gaining new clients in two diverse areas—estate law and immigration law. He's not sure which specialty will become his focus in the long run. At the same time, he believes he has enough work to support hiring a paralegal. However, he is having trouble hiring a paralegal who can manage both types of clients. He was able to find a freelance paralegal referral service that connects attorneys to paralegals who have experience in a variety of specialties. He might consider outsourcing through the referral service because:
it provides him with the flexibility to gain capabilities to serve both types of clients without making a long-term investment.
A firm should analyze its internal organization as part of the strategic management process because:
it provides the insights the firm requires to match what the firm can do with what the firm might do when formulating strategies.
A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised: a) foresight. b) judgment. c) effective strategic thinking. d) decisiveness.
judgment.
Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT: a) lack of scientific transference. b) social complexity. c) unique historical conditions. d) causal ambiguity.
lack of scientific transference.
Compared to tangible resources, intangible resources are ______ and ______. a) less visible; more difficult to copy. b) less visible; less difficult to copy. c) more visible; more difficult to copy. d) more visible; less difficult to copy.
less visible; more difficult to copy.
The critical executive skill of the current business age is the ability to: a) manage technological innovation. b) manage human intellect. c) initiate change and overcome inertia. d) coordinate tangible and intangible resources.
manage human intellect.
Value chain activities include all of the following EXCEPT: a) supply-chain management. b) operations. c) management information systems. d) distribution.
management information systems.
Compared to intangible resources, tangible resources are ______ constrained because they are ______ to leverage. a) less; easier b) less; harder c) more; harder d) more; easier
more; harder
Strategic leaders:
must have tenacity and a willingness to be brutally honest in order to be successful.
Judgment is the capacity for making a successful decision when: a) there are multiple decision criteria. b) no obviously correct model or rule is available. c) cognitive biases create barriers to rationality. d) there are contradictions between the firm's vision and its implemented strategy.
no obviously correct model or rule is available.
Organizational culture is: a) amorphous and changeable. b) not easily imitable. c) so difficult to analyze that most firms should choose to ignore it. d) typically fragile in the face of changes in the external environment.
not easily imitable.
All of the following are analyzed during a SWOT analysis EXCEPT:
objectives
As customers come to believe that a firm's product is unique, this allows the firm to:
obtain loyal customers.
The challenge and difficulty of making effective decisions are implied by preliminary evidence that ______ of organizational decisions fail. a) one-fourth b) one-fifth c) one-tenth d) one-half
one-half
Government agencies are known for having so many layers and rules that decisions are made slowly and inefficiently. In this case the ______ resource is a detriment to taxpayers using and paying for the bureaucracy. a) financial b) organizational c) physical d) technological
organizational
Tools such as ______ help the firm focus on its core competencies as the source of its competitive advantages. a) marketing b) manufacturing c) outsourcing d) imitation
outsourcing
Tools such as __________ help the firm focus on its core competencies as the source of its competitive advantages.
outsourcing
A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive: a) advantage. b) parity. c) disadvantage. d) neutrality.
parity.
Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a(n) ______ resource. a) financial b) organizational c) physical d) technological
physical
Which of the following is the most critical criterion in prioritizing stakeholders?
power
Outsourcing is the: a) spinning off of a value-creating activity to create a new firm. b) selling of a value-creating activity to other firms. c) purchase of a value-creating activity from an external supplier. d) use of computers to obtain value-creating data from the Internet.
purchase of a value-creating activity from an external supplier.
Outsourcing is the:
purchase of a value-creating activity or a support function activity from an external supplier.
The industrial organization (I/O) model of above-average returns:
puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.
One capability that can be learned from failure is when to: a) repeat with a modification. b) add more resources. c) dig in. d) quit.
quit.
A company owns a patent, with six more years of protection, on a prescription medication that is used by people around the world. This resource is:
rare and valuable.
A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is: a) operations. b) research and development. c) supply-chain management. d) distribution.
research and development.
The most numerous of the following organizational characteristics are: a) resources. b) capacities. c) capabilities. d) core competencies.
resources.
Capital market stakeholders are most satisfied when a company's:
returns align with the amount of risk they incurred by investing in a company or lending the company money.
All core competencies have the potential to become core: a) rigidities. b) stagnations. c) inefficiencies. d) weaknesses.
rigidities.
Hypercompetition describes a competitive landscape in which:
rivalry tends to occur among global competitors who innovate regularly and successfully.
When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of:
slow industry growth.
Firms that have strong positive relationships with suppliers and customers are said to have ______, an essential ingredient to creating value. a) customer value b) social capital c) effective marketing d) an attractive industry
social capital
Knowledge transfer and access to resources within the value chain are enhanced by: a) guidelines for sharing knowledge and resources. b) social capital. c) penalties for not sharing knowledge and resources. d) training employees on how to cooperate.
social capital.
A financial management firm has existed for more than 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its a) access to large amounts of financial capital. b) causally ambiguous core competencies. c) social complexity. d) unique historical conditions.
social complexity.
A vision statement differs from a mission statement in that the vision statement:
speaks in broad terms of what the company wants to achieve.
If a U.S.-based automobile parts supplier were to apply a global mind-set to its internal analysis, it would:
study all of its internal resources with an understanding of which capabilities offer value to meet the needs of U.S., Japanese, European, and Korean automakers.
The environmental segments that make up the general environment typically will NOT include:
substitute products or services.
Many firms outsource the payroll function of paying employees to firms such as ADP. Payroll is a(n): a) value-chain activity. b) operation function. c) support function. d) supply-chain function.
support function.
The corporate research division of Siemens files, on average, 25 patents a day. The patents are a(n) ______ resource. a) financial b) organizational c) physical d) technological
technological
The corporate research division of Siemens files, on average, 25 patents a day. The patents are a(n) __________ resource.
technological
A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be:
temporary
A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be: a) permanent. b) sustainable. c) temporary. d) defensible.
temporary.
In the resource-based model of above-average returns, a capability is:
the capacity for a set of resources to perform a task or an activity in an integrative manner.
Which of the following is NOT a factor affecting sustainability of a competitive advantage? a) the availability of substitutes for a firm's core competence b) the rate at which obsolescence of the core competence occurs because of environmental changes c) the imitability of a core competence d) the length of time the core competence has existed
the length of time the core competence has existed
It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and: a) the rapid development of the Internet's capabilities. b) extensive use of outsourcing within the borders of the United States. c) the declining number of inventions and patents developed by U.S. citizens. d) the simultaneous erosion of the U.S. work ethic and the U.S. education system.
the rapid development of the Internet's capabilities.
All of the following are true about the strategic decisions managers make about their firm's internal organization EXCEPT that: a) they are directly correlated to executive compensation. b) they are non-routine. c) they have ethical implications. d) they significantly influence the firm's ability to earn above-average returns.
they are directly correlated to executive compensation.
1. Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy. (A) True (B) Fals
true
20. The five forces model suggests that firms should target the industry with the highest potential for above-average returns and then implement either a cost-leadership strategy or a differentiation strategy. (A) True (B) False
true
36. Six years ago, Colette Smith founded a successful catering company that specializes in providing a wide assortment of miniature cheesecakes for corporate and social events. Although Ms. Smith is no longer active in the actual production of the cheesecakes, she continues as president of the catering company. Ms. Smith could be considered a strategic leader of this firm. (A) True (B) False
true
38. Strategic leaders must have a strong strategic orientation while embracing change in the dynamic competitive landscape. (A) True (B) False
true
To build social capital whereby resources such as knowledge are transferred across organizations requires ______ between the parties. a) a contract b) determination c) confidence d) trust
trust
To build social capital whereby resources such as knowledge are transferred across organizations requires __________ between partners.
trust
The three conditions that characterize difficult managerial decisions concerning resources, capabilities, and core competencies are a) complexity, rarity, and human intellectual capital. b) uncertainty, complexity, and intra-organizational conflicts. c) imitability, complexity, and inter-organizational conflicts. d) imitability, comparability, and human intellectual capital.
uncertainty, complexity, and intra-organizational conflicts.
Subscriptions to the New York Times have been decreasing as more customers receive their news through other media. At the same time, advertisers have shifted portions of their spending to other media. The NYT's managers are making decisions under: a) certainty. b) uncertainty. c) intraorganizational conflict. d) interorganizational conflict.
uncertainty.
Value chain analysis is a tool used to: a) analyze a firm's external environment for value-creating opportunities. b) analyze a firm's value chain activities and support functions in isolation from its competitors' value chain. c) understand the parts of the firm's operation that create value and those that do not. d) identify the firm's core competencies in each of the primary activities of the firm
understand the parts of the firm's operation that create value and those that do not.
According to the resource-based model of above-average returns, differences in firms' performance across time can be attributed to the:
unique capabilities and resources of each company.
From a customer's point of view, for an organization's capability to be a core competence it must be: a) inimitable and unique. b) valuable and unique. c) inimitable and nonsubstitutable. d) valuable and nonsubstitutable.
valuable and unique.
In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are ______ but no longer _____. a) rare; valuable b) valuable; rare c) socially complex; rare d) valuable; causally ambiguous
valuable; rare
The capabilities used to create the sustainability/green initiatives at Walmart and Target are ______ but less likely to be ______. a) rare; valuable b) valuable; rare c) socially complex; rare d) valuable; causally ambiguous
valuable; rare
BlackBerry, a one-time leader in secure cell phones, lost its edge. Without significant upgrades or innovation, the company quickly lost market share to iPhones and Android devices. The company attempted to imitate these advances with the Blackberry Storm product, which flopped. Blackberry was criticized as trying to leverage capabilities beyond its core competencies. Which of the following tools should Blackberry use to regain a scope of its core competencies and determine potential sources of competitive advantage?
value chain analysis
A _____ is a picture of what the firm wants to be and, in broad terms, what it wants to achieve.
vision
In the process of conducting an internal analysis and making decisions, a manager faces the challenge of uncertainty:
while gathering complete information about the characteristics of the firm's general and industry environments and customers' needs.
The key to achieving competitiveness, earning above-average returns, and remaining ahead of competitors in the long run is to manage current core competencies: a) in a way that uniquely bundles and leverages the firm's existing resources. b) while simultaneously developing new ones. c) and imitate the core competencies of successful competitors. d) in order to preserve and enhance them against the firm's competitors.
while simultaneously developing new ones.
The proper matching of what a firm can do with what it might do: a) balances the internal characteristics of the firm with the characteristics of the external environment. b) overcomes the rigidity and inertia resulting from a history of success. c) yields insights the firm requires to select its strategy. d) develops core competencies based on human knowledge.
yields insights the firm requires to select its strategy.