Chapter 1

b. Youth summer camps because the organization should use the knowledge of its passionate volunteer to their greatest advantage

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, youth summer camps, a musical performing arts series or classes for seniors. The organization's most committed volunteer is a kindergarten art 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, it should expand its programming in the following way: a. Workshops because they are not currently being offered by any other organizations in the community b. Youth summer camps because the organization should use the knowledge of its passionate volunteer to their greatest advantage c. A musical performing arts series because it has the widest appeal in the community d. A class for seniors because it can be hosted during the day and have good attendance among those who are retired

b. what the company does in terms of its customers and their needs and what core competencies it utilizes to meet those needs.

A mission statement can describe: a. the strategic direction of the company and its major goals. b. what the company does in terms of its customers and their needs and what core competencies it utilizes to meet those needs. c. the competitive environment where a company is choosing to conduct its business. d. the company's marketing approach and slogan.

c. 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.

A multi-divisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the I/O model to develop its strategy. Which of these decisions is consistent with this model? a. The company determines that it has an internal asset in a piece of software it developed for scheduling manufacturing processes and decides to make the software the centerpiece of its new business unit, selling it to transportation companies to manage their schedules. b. The company identifies a large steel tank it is currently selling to customers in the brewing industry and decides to begin selling it to customers in the transportation industry for transporting liquids. c. 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. d. The company decides to increase its investment in research and development to catch a competitor who has surpassed it in the technology it is using to produce steel tanks.

c. speaks in broad terms of what the company ultimately would like to achieve.

A vision statement differs from a mission statement in that it: a. should be completed after a company formulates its strategic plan. b. is realistic, achievable, and measurable. c. speaks in broad terms of what the company ultimately would like to achieve. d. identifies which business and what customers the company intends to serve.

d. Defining the company's corporate mission and major corporate goals

According to Hitt et al., which of these would be considered an important step in the ASP strategic management process? a. Building the company's organizational chart of strategic leaders b. Acquiring a new business unit to gain access to new markets and product lines c. Utilizing an outside consultant to lead the company through the planning process d. Defining the company's corporate mission and major corporate goals

c. Habitat for Humanity: A world where everyone has a decent place to live.

Below are several statements from companies. Which of these is a vision statement? a. Nike: Just Do It. b. Disney: To be one of the world's leading producers and providers of entertainment and information. c. Habitat for Humanity: A world where everyone has a decent place to live. d. Allstate: You're in good hands with Allstate.

a. a company's returns align with the amount of risk they incurred by investing in a company or lending the company money.

Capital market stakeholders are most satisfied when: a. a company's returns align with the amount of risk they incurred by investing in a company or lending the company money. b. a company's product market stakeholders are dissatisfied. c. a company's leadership team is earning performance-based compensation. d. a company's employees have a low turnover rate and receive higher than labor market salaries.

d. 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.

Christopher is the CEO of a company. Recently, he scheduled a meeting with a challenging objective - to discuss with a team of his employees a project that is failing. It is costing a lot of investment in time and money and does not appear to have any return on investment in sight. Which of these approaches would demonstrate successful strategic leadership? a. He should inform them that the project they are working on is no longer aligned with the company, he's killing it, and that all of their work has been in vain. b. He should keep the project going despite its failure because he doesn't have any better projects for them to work on. c. He should blame the markets for making the project unsuccessful. He'll then announce that the company is shifting customer targets and will work on the project in the context of a new industry. d. 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.

c. 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

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 these is an example of a company that did not respond strategically to technological changes? a. After Google introduced the concept of Pay-Per-Click advertising, a competing search engine, Bing, introduced a similar advertising model. b. Samsung, LG and other cell phone manufacturers continued to innovate their products after the introduction of the Apple iPhone to keep up with customer expectations of smartphones. c. 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. d. Amazon's decision to enter into the online streaming video market with Amazon Instant Video to compete directly with NetFlix.

d. All of these

Every organization has groups of people that it must establish and manage relationships with to be successful. These groups include: a. Customers b. Shareholders and investors c. Employees d. All of these

d. meet the needs of its stakeholders and achieve financial goals.

Firms use the strategic management process to: a. make hiring decisions about key leadership positions. b. plan financial resources and define annual budgets. c. identify the organization's stakeholders. d. meet the needs of its stakeholders and achieve financial goals.

b. the industry is constantly changing with global competition and innovative competitors.

Hypercompetition describes a competitive landscape where: a. there are thousands of companies competing within the same industry for the same group of customers. b. the industry is constantly changing with global competition and innovative competitors. c. the business is dominated by a single company, pushing all competitors to imitate its strategies and develop similar resources. d. the industry has a high cost of entry in capital investment, research and development or hiring of talented employees.

d. something that gives a company an edge over the competition, something that the company possesses that its competitors do not have, and something that is too difficult or costly for competitors to copy or produce an alternative.

In the resource-based model of above-average returns, a core competency is a. something that a company is really good at internally and customers are willing to pay a premium for. b. something that prevents a company from producing above-average returns. c. something that positions strategic leaders for success in managing people, processes and resources. d. something that gives a company an edge over the competition, something that the company possesses that its competitors do not have, and something that is too difficult or costly for competitors to copy or produce an alternative.

b. the unique capabilities and resources of the company.

In the resource-based model of above-average returns, differences in company performance can be attributed to: a. the strength and effectiveness of managers. b. the unique capabilities and resources of the company. c. the structural characteristics of the company's industry. d. the effective implementation of pricing strategies.

a. promoting exploratory and exploitative learning as well as innovation as a strategic leader.

Logan is an entrepreneur and president of his own company with a new software product that manages benefits administration for large multinational corporations. His start-up 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 healthcare. Logan announces that the company will be investing in training for employees to better understand small business owners and research and development to create a small business version of the software. This is an example of: a. promoting exploratory and exploitative learning as well as innovation as a strategic leader. b. utilizing the I/O model to determine the strategic direction of the firm. c. answering to demands made by capital market stakeholders for greater profitability. d. revising a company's vision statement to reflect changes in the competitive environment.

b. 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.

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 these best describes how Marquis should report back to his CEO about the plant tour? a. Marquis should present a glowing recommendation for the supplier based on their financial performance and ability to help the company deliver above-average returns through higher profitability. b. 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. c. Marquis should assume that the CEO is aware of the child labor practices at the supplier because the two companies have done business together for several decades. His report should focus on the operational improvements at the plant. d. Marquis should quit. He can't work for a company that employs child labor in any way. He should contact the media immediately after he leaves the company and tell them the whole story.

d. a decision that would benefit from using the entire strategic management process

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. a decision driven by the industrial organization model of above-average returns. b. a conflict between two of the company's stakeholder groups. c. the diffusion of technology and perpetual innovation to help the company achieve its goals. d. a decision that would benefit from using the entire strategic management process.

a. the complex set of ideologies, symbols and core values that are shared throughout a firm that influence how the firm conducts business.

Organizational culture is: a. the complex set of ideologies, symbols and core values that are shared throughout a firm that influence how the firm conducts business. b. the structure of a business' organizational chart of strategic leaders, including their roles and responsibilities. c. the attitude of a company's owners or shareholders. d. the policies and procedures detailed in the company's employee handbook.

a. 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.

Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of these correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company? a. 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. b. During the Great Recession, the United Auto Workers (UAW) union agreed to a pension restructuring with the three big U.S. car manufacturers. c. AIG's shareholders sued the U.S. government, arguing that the bailout the company received wasn't beneficial enough to financial investors. d. McDonald's announced wage increases for employees at its corporate-owned stores after months of protests by employees.

c. promote exploratory and exploitative learning as well as innovation.

Strategic leaders: a. can only be people in the C-suite of a company, such as the CEO, CFO, and COO. b. answer only to the demands made by capital market stakeholders for greater profitability. c. promote exploratory and exploitative learning as well as innovation. d. revise a company's vision statement on an annual basis.

a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.

The industrial organization (I/O) model of above-average returns: a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns. b. concentrates on the internal assets, resources, and capabilities of a firm to direct its strategic management process. c. is a new approach to strategic management that emphasizes technological advancement. d. is critical to competing in the global economy and the information age because of its emphasis on organizational development.

a. the way that businesses formulate initiatives that will create superior value for customers and then implement them to out-perform competitors.

The strategic management process is a. the way that businesses formulate initiatives that will create superior value for customers and then implement them to out-perform competitors. b. the analysis of internal and external forces at work on a company that may prevent it from achieving average returns. c. the utilization of the resource-based model of above-average returns to identify the internal resources a company should leverage to achieve strategic competitiveness. d. the identification of the industry in which a company should compete due to the attractiveness of that industry's profitability.

b. The ability of a firm to outperform its rivals by forming and executing a strategy that creates value for its stakeholders.

Which of these could be a definition of strategic competitiveness? a. The status of a company with the largest top line sales number in an industry. b. The ability of a firm to outperform its rivals by forming and executing a strategy that creates value for its stakeholders. c. A solid company with predictable sales and profitability every year, delivering predictability for its shareholders. d. A start-up company with an innovative new product that changes an industry.

b. A review of a company's competitive landscape, identifying competitors, naming their differentiations and detailing a profile of those competitors' customers

Which of these could be a part of the analysis stage of the strategic management process? a. A mission and vision task force developing these foundational statements for the company b. A review of a company's competitive landscape, identifying competitors, naming their differentiations and detailing a profile of those competitors' customers c. The collection of financial data used to track the success of the strategic plans the company is pursuing d. The selection of strategies the company will pursue to achieve its financial goals and satisfy its shareholders

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.

Which of these describes a company that has delivered above-average returns to its investors? a. A biotech firm that recently announced it has received FDA approval for its new orphan drug to treat a rare heart condition. The company will be able to sell the treatment for $10,000 per year per patient beginning in the fall. 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. c. A retail company that announced it saw growth in same store sales from last year to this year and will open 250 new stores to capitalize on its growing popularity. d. An airline that reported weaker than projected earnings this year because of increased maintenance costs for its aging fleet of planes.

b. The introduction of Global Positioning System (GPS) technology, which is used in standalone and hand-held navigation tools, smartphone apps, and in-car navigation systems

Which of these is an example of a disruptive technology? a. The introduction of television boxes that enable recording of shows and on-demand content for playback at the viewers' convenience b. The introduction of Global Positioning System (GPS) technology, which is used in standalone and hand-held navigation tools, smartphone apps, and in-car navigation systems c. The use of touch screens on mobile phones and tablets for selecting apps, texting and dialing d. The invention of laser eye surgery for corrective vision procedures

d. The spread of 4G technology between Verizon, AT&T, and Sprint, so that the high-speed network is available to nearly all mobile phone customers.

Which of these is an example of the mobility of strategies and resources across firms in the mobile network industry, one of the assumptions of the industrial organization (I/O) model of above-average returns? a. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness compared to Verizon and AT&T. b. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to achieve a broad geographic network, serving both urban and rural areas. c. A high-level engineer from AT&T is prevented from working for Verizon for five years by a non-compete agreement. d. The spread of 4G technology between Verizon, AT&T, and Sprint, so that the high-speed network is available to nearly all mobile phone customers.

c. The company's diversification of web services tailored to the Chinese market directly, which has resulted in transactions that account for more than 2 percent of China's GDP.

Which of these represents a core competency for Alibaba as presented in the opening case in the chapter? a. The company's controls surrounding fraudulent, banned and recalled goods. b. The company's purchase announcement of ChinaVision Media for online media streaming and video services. c. The company's diversification of web services tailored to the Chinese market directly, which has resulted in transactions that account for more than 2 percent of China's GDP. d. The company's strategic position compared to brick and mortar retailers because 90 percent of China's marketplace sales are online.

b. The model assumes that most firms operating in an industry have similar valuable resources that are mobile across companies, which is not necessarily true.

Which of these represents a criticism of the industrial organization (I/O) model of above-average returns? a. Research indicates that 20 percent of a firm's profitability is explained by the industry in which it chooses to compete. b. The model assumes that most firms operating in an industry have similar valuable resources that are mobile across companies, which is not necessarily true. c. The model suggests that firms must adopt strategies to address the structural characteristics of the industry in which they operate. d. The model puts too much emphasis on the effectiveness and personality of the firm's managers and not enough on the characteristics of the industry.

b. A local pipefitters union dealing with a plumbing contractor

Which of these represents a product market stakeholder: a. A private equity firm investing in a biomedical firm b. A local pipefitters union dealing with a plumbing contractor c. A member of an ownership family in a privately owned company d. A store manager of a retail chain