First Quiz ch 5,4, and 3

The PESTEL model groups the forces in the firm's general environment into what six segments:

Political Economic Sociocultural Technological Ecological Legal

8. Which of the following is NOT a criterion for a strategically important resource? • Valuable • Not everyone has it • Tangible • Difficult to imitate

Tangible

6. According to the Hambrick and Fredrickson (2001) article, strategic management is all about having the right marketing strategy and being a first-mover. True or False

False- It is about what strategy actually is

4. The innovations in process efficiencies such as Six Sigma, the Internet, and biotechnology are all elements of which macro environmental force? -Sociocultural factors -Economic factors -Political factors -Technological factors

Technological factors

The stronger the five forces:

The lower the industry's profit potential - making the industry less attractive for competitors

3. An assessment tool that takes a multidimensional approach to evaluating a firm's competitive position by utilizing specific questions and performance metrics is: -The comphrensive scorecard -The shareholder scorecard -The balanced scorecard -The strategic scorecard

The Balanced Scorecard

2. The five-forces-plus-complements model is useful in understanding industry profit potential, but it is only a snapshot in time. Managers must also consider ___________. -The competitive landscape -The strategic group -The cost structure -The industry dynamics

The Industry Dynamics

Low interest rates

firms can easily borrow money to finance future growth

8. The United Auto Workers (UAW) union is which of the five forces in the automotive industry? -A buyer -A complement -A supplier A substitute

A supplier

1. Which of the following is true when it comes to a firm's capabilities? • They are organizational and managerial skills within a firm. • They are found in the firm's structure, routines, and processes. • They are used to deploy a firm's resources to orchestrate core competencies. • All of these.

All of these

4. What is one of the challenges of measuring competitive advantage using the economic value creation approach? -The value places on a product or service by the consumer changes according to income and preferences -It is difficult to measure the economic value created for all products and services across the organization. -It is challenging to determine the value of a product or service from a customer's perspective. -All of these

All of these

5. A ____________ is a product or service that can help raise demand in an industry by indirectly enhancing performance or decreasing prices -Core competency -Substitute -Complement -Component

Complement

5. ____________ is created when a customer is willing to pay more for a good or service than it costs the firm to produce it. -Consumer value -Economic advantage -Product value -Economic value

Economic Value

1. Firms that compete within a strategic group rarely use similar competitive strategies. True or False

False

3. Fragmented industry structures typically offer high profitability potential True or False

False

1. Under the accounting profitability framework to competitive advantage, comparing return on revenue (ROR) between companies is important because: - It adjusts for size differences and provides a relative comparison -It reflects the firm's stock price -It includes the value of the firms intangible asset base. -All of these

It adjusts for size differences and provides a relative comparison

Porter's five forces model

Threat of entry Power of suppliers Power of buyers Threat of substitutes Rivalry among existing competitors

9. When a firm attempts to improve its economic, social, and ecological performance, it is taking a(n) ___________ approach to assessing competitive advantage. -Economic value creation -Triple-bottom-line -Balanced scorecard -Stakeholder valuation

Triple-bottom-line

10. One assumption made under the resource-based model is that resources do not move easily from firm to firm. True or False

True

10. When a firm evaluates its performance utilizing metrics such as the balanced-scorecard approach or accounting measurements, it should interpret the results relative to its competitors, not against its own past performance True or False

True

2. A firm can try to protect and sustain its competitive advantage by making it costly for rivals to imitate its capabilities. True or False

True

2. Macroeconomic factors such as unemployments levels can influence a stock price and make it difficult to measure a firm's competitive advantage under the shareholder value creation framework. True or False

True

4. Value-creating activities need to be upgraded by managers periodically in order for strategic activity systems to be responsive to changing environments. True or False

True

6. Under the PESTEL framework, external economic factors that are important to a firm's strategy include deflation and levels of employment. True or False

True

7. According to Hambrick and Fredrickson (2001), a firm's approach to the five elements of strategy (arenas, vehicles, differentiators, staging, and economic logic) should be consistent and mutually reinforcing. True or False

True

7. The five forces analysis is focused on factors that influence an industry's profitability potential True or False

True

8. Competitive advantage and firm strategy are best assessed using a variety of approaches True or False

True

The overall economic growth rate is

a measure of the change in the amount of goods and services produced by a nation's economy

Entry Barriers

are one of the most significant predictors of industry's profit potential

Technological factors

capture the application of knowledge to create new processes and products

The legal environment

captures the official outcomes of political processes as manifested in laws, mandates, regulations, and court decisions

Ecological factors

concern broad environmental issues such as the natural environment, global warming, and sustainable economic growth

In periods of economic expansion:

consumer and business demands are rising, and competition among firms frequently decreases

High interest rates

consumer demand slows down, credit is harder to come by, and firms find it more difficult to borrow money

The political environment

describes the processes and actions of government bodies that can influence the decisions and behavior of firms

Entry barriers

determine how easily a firm can enter an industry

Price stability

the lack of change in price levels of goods and services is rare

The state of the economy directly effects:

the level of employment

3. When a firm enjoys a competitive advantage, it attracts a significant amount of attention and its products or services can be at risk due to: • Casual ambiguity • Vale erosion • Direct imitation or substitution • Social complexity

• Direct imitation or substitution

7. ____________ refer(s) to a firm's ability to reconfigure resources and create external market changes. • Dynamic equilibrium • Dynamic programming • Dynamic capabilities • Dynamic complexity

• Dynamic capabilities

5. A SWOT analysis allows managers to evaluate a firm's current situation and future prospects by simultaneously considering _________ and __________ factors. • Internal; external • Intrinsic; extrinsic • Present; future • Core competency; dynamic capability

• Internal; external

10. Many Internet entrepreneurs have learned that it is difficult to beat the forces of perfect competition. In perfect competition, there are many small stores with largely commodity products and low entry barriers. Which industry has got caught up in the Internet bubble and has tried to join with online models, most of whom closed after a couple of years? • Express mail industry • Pet supply stores • Wine stores • Book sellers

• Pet supply stores

6. Which of the following statements regarding the resource-based view is accurate? • Resource heterogeneity and resource immobility are two critical assumptions • Resource heterogeneity is in reference to tangible assets. • Resources and capabilities are very similar across firms within the same industry. • Resources immobility dictates that resources are difficult to redeploy within the firm.

• Resource heterogeneity and resource immobility are two critical assumptions

9. An ideal competitive environment from a profit-making standpoint is when: • Rivalry is moderate, entry and exit barriers are low, and there are many substitutes • Rivalry is high, buyers and sellers have strong bargaining power, and entry barriers are low • Rivalry is moderate, entry barriers are high, and good substitutes do not exist • Rivalry is high, entry barriers are low, and there are many substitutes

• Rivalry is moderate, entry barriers are high, and good substitutes do not exist

9. Firm resources such as intellectual property and brand equity are important to a firm because: • Having such resources allows for a firm to achieve competitive parity. • Once created, maintaining such resources takes little managerial effort. • They are intangible, costly to imitate, and can lead to sustained competitive • They are tangible and have a high degree of resource mobility

• They are intangible, costly to imitate, and can lead to sustained competitive