Strategic Management
Which of the following statements is best illustrated by the decades-long business rivalry between the technology giants Apple and Microsoft?
A firm's competitive advantage is transitory.
What is the result of the airline industry having powerful buyers?
Airlines' profit margins are reduced.
Why does the learning curve go down when productivity is considered?
As workers repeatedly engage in an activity, they become more efficient, driving down costs.
True or false: Emergent strategy is planned.
False
True or false: Sociocultural factors tend to be fixed.
False
True or false: The best measure of competitive advantage can be found in the performance of specific departments.
False
What should a successful vision do for an organization? (Check all that apply.)
It should inspire employees. It should make employees feel that their work is important.
Which of the following statements about scenario planning is true?
It starts with a top-down approach.
With a(n) ______, firms describe how they turn strategy into action.
business model
A ______ outlines the steps a manager will take to achieve competitive advantage in a single product market.
business-level strategy
Which of the following leads to systematic errors in decision making and hinders rational thinking?
cognitive biases
The purpose of a SWOT analysis is to ______.
form a strategy that is tailored to the firm's unique strengths and weaknesses and the opportunities and threats in its environment
A ______ vision statement defines a business by describing the goods or services it produces or offers.
product-oriented
The type of vision statement that tends to limit a manager's flexibility and ability to adapt is the ______ vision statement.
product-oriented
The intensity with which companies in an industry jockey for market share and profitability is known as ______.
rivalry
The legal owners of publicly traded companies are called ______.
shareholders
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
vision
As JetBlue grew, which of the following occurred during the years following 2007?
It suffered a competitive disadvantage.
Which conditions are most likely to foster a positive relationship between vision statements and firm performance?
Organizational structures align with the vision statements. Internal stakeholders are invested in defining the vision. The vision statements are customer-oriented.
______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms.
Political
Why are businesses with product-oriented vision statements often less effective than businesses with customer-oriented vision statements?
Product-oriented companies have less flexibility to meet consumer needs.
Which of the following statements about legal factors as an external force is true?
Regulatory changes tend to affect entire industries at once.
What distinguishes a Level-5 leader from other levels of leaders?
They create enduring greatness.
What must strategic leaders keep in mind if they are going to achieve successful strategic positioning?
To achieve strategic positioning, firms must make important trade-offs.
Which of the following statements about Airbnb is correct?
It handles more accommodations than the three biggest hotel chains combined.
Why do many firms fail to successfully implement a blue ocean strategy?
because they end up being "stuck in the middle," unable to increase value and lower costs at the same time
Combining the razor-razor-blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their ______ rate, or the proportion of subscribers who leave, down.
churn
A company with a ______ vision statement tends to be more flexible and more likely to succeed.
customer-oriented
Strategic commitments tend to be which of the following?
difficult to reverse costly
An inspiring vision helps employees ______.
find meaning in their work.
Enterprise Machinists is always improving upon its core competencies by training its machinists constantly so that they are equipped to deal with technological changes and advancements. Based on this information, this is an example of which concept?
dynamic capabilities
How to compete on a business level is defined by the variables value and cost. Together they define the ______.
economic value created
According to the Level-5 pyramid, which level of leadership has the fewest members?
executives
The balanced scorecard approach helps managers balance ______ goals.
financial and strategic
Resource ______ and resource ______ are the key assumptions behind the resource-based model of the firm.
heterogeneity; immobility
The Level-5 leadership pyramid is a conceptual framework that shows ______.
how leaders develop
Which of the following are standard performance dimensions for a company? (Check all that apply.)
how much economic value a firm generates a firm's accounting profitability how much shareholder value a firm creates
Strategic fit ______ the likelihood that a firm is able to gain a competitive advantage.
increases
Which of the following are input factors? (Check all that apply.)
information technology services raw materials capital labor
An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors.
input
A(n) __________ strategy is the outcome of a rational and structured, top-down strategic plan.
intended
Research about how CEOs spend their days suggests that CEOs spend most of their time ______.
interacting with others
The relationship between the natural environment and business organizations can best be described as ______.
interdependent
Strategic leaders use internal and external analyses in tandem to create a customized fit between a company's ______.
internal resources and external environment
A cost leader can achieve a competitive advantage by ______.
reducing costs below those of competitors while maintaining a similar value
In addition to the static nature of the PESTEL, Porter's five forces, and strategic group mapping frameworks, what is their other shortcoming?
It does not help us understand why there are performance differences among firms in the same strategic group.
Which of the following are characteristics of the companies in a strategic group? (Check all that apply.)
The companies pursue similar strategies. The companies form part of a specific industry. The companies differ in important dimensions from companies in other strategic groups.
A(n) _ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.
strategic
What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?
Differentiation provides protection against an increase in input prices.
In performing a SWOT analysis to generate insights from external and internal analysis, internal strengths and weaknesses can be determined by applying ______ and external strengths can be evaluated in part by applying ______.
the VRIO framework; PESTEL
According to Daniel Kahneman and Amos Tversky, System 1 is analytical, logical, and deliberate.
False..Reason: System 2 decision making is analytical, logical, and deliberate.
Which statements about creating and implementing an effective business model are true?
Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure.
If two firms produce very similar products at the same rate of output, and firm A is able to achieve lower per-unit costs than firm B by taking advantage of a new manufacturing technology, firm A is benefiting from
an experience-curve effect based on process innovation.
A group of companies that deal with more or less the same set of suppliers and buyers make up ______.
an industry
Isolating mechanisms are considered to be ______.
barriers to imitation
Which strategy addresses the question of how to compete?
business
Netflix had a successful business model based on a large library of streaming content but then achieved even more success by also producing and distributing original content. This is an example of the potential value of ______.
business model innovation
A company's goal-directed plans regarding how to compete for advantage is known as the firm's ______.
business-level strategy
The power of ______ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality.
buyers
Production costs can increase when ______.
buyers demand higher quality and more service
What do the best firms in an industry seek to identify and manage on an ongoing basis as sources to respond to their external environment? (Check all that apply.)
capabilities core competencies resources
The external forces called technological factors ______.
capture the application of knowledge to create new process and products
Which of the following are examples of resources for a firm? (Check all that apply.)
cash intellectual property buildings
Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______.
charge premium pricing
What are the three aspects of mapping strategic groups?
choosing two key dimensions for the horizontal and vertical axes graphing the firms in the strategic group and indicating each firm's market share identifying the most important strategic dimensions
Public companies are required by law to release detailed accounting data, which enables ______.
comparative analysis of firms
When implementing the razor-razorblade strategy, companies make their profit from ______.
complementary goods
Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product.
complements
A ______ is a product or service that adds value to the original product offering.
compliment
Firms have a tendency to change the industry structure in their favor, for example by making industries more __ through mergers and acquisitions.
consolidated
A(n) ______ is a unique strength, embedded deep within a firm, that is critical to gaining and sustaining competitive advantage.
core competency
How are intangible resource stocks acquired?
through investments over time in intangible resources
Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.)
cost structure product and service offerings expenditures on research and development
The Ritz-Carlton provides a personalized customer experience based on sophisticated analysis of data gathered about each guest. This focus on ______ allows the hotel to increase its perceived value.
customer service
A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with ______.
cutting costs and increasing value at the same time
What is the primary focus of a customer-oriented vision statement?
developing goods and services that solve consumer problems
What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?
devil's advocacy
Economic value created is the ______ the cost to produce a product/service and the amount the buyer is willing to pay for it.
difference between
A ______ strategy aims to create higher value for customers by offering products with unique features but a similar level of costs to those of competing products.
differentiation
A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.
differentiation
Which of the following are considered the two generic business-level strategies? (Check all that apply.)
differentiation cost-leadership
A successful blue ocean strategy requires strategists to reconcile the trade-offs between ______.
differentiation and cost-leadership
What are examples of intangible resource stock a company may have? (Check all that apply.)
dynamic capabilities engineering expertise reputation for quality
Which of the following dimensions make up the triple bottom line? (Check all that apply.)
economic ecological social
The difference between the cost of producing a product and the price consumers are willing to pay for that product is known as ______.
economic value created
A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______.
economies of scale
A core values statement provides information to employees regarding the company's ______
ethics and morals
The concept of a(n) ______ attempts to combine both learning effects and process improvements.
experience curve
The perceived value that a company creates for consumers less the company's costs to create the value equals ______.
the economic value created
The resource-based model views resources as ______.
the main driver of firm performance
Both strategy formulation and strategy implementation are aspects of ______.
the strategy process
A core competency can help a company achieve which of the following? (Check all that apply.)
to differentiate its products and services to create higher value for the consumer to offer products of comparable value at lower cost than rivals can
If parts of a firm's intended strategy fall by the wayside, it is referred to as
unrealized strategy.
The ______ describes the internal activities a firm engages in when transforming inputs into outputs.
value chain
A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in ______.
value innovation
Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as ______.
value innovation
Corporate strategy concerns questions related to ______
where to compete
Place the three frameworks used in industry analysis in the order they should be used, with the first at the top.
1) PESTAL Analysis 2) Porter's five forces 3) Strategic group mapping
Place in order from first to last the steps in the devil's advocacy decision framework. (Place the first step at the top.) Instructions
1) Team 1 formulates a course of action 2) Team 2 questions the assumptions of an critiques the proposed course of action 3) Team 1 revises the proposed course of action based on the input from Team 2 4) Team 2 questions the assumptions of and critiques the revised course of action, and team 1 makes additional revisions 5) Team 1 and Team 2 agree upon a course of action
Which of the following statements are true about the rival businesses Apple and Microsoft? (Check all that apply.)
Apple introduced a series of popular consumer electronic devices. Microsoft leveraged its computer operating system to sell other software programs.
Which of the following were resources and capabilities that helped Five Guys gain a competitive advantage and develop into a successful restaurant chain? (Check all that apply.)
Carefully choosing the supplier of the potatoes for their fries Focusing on such details as store layout and design
The VRIO framework is used to evaluate a firm's resources. VRIO is an acronym for which of the following? (Check all that apply.)
Imitate Valuable Rare
Which of the following are approaches for answering the question "How to enter?" when a firm is considering entering an industry?
Leverage existing assets Reconfiguring value chains Establishing a niche
Which of the following best describes the core competency of the Five Guys Burgers and Fries company?
Making high-quality burgers without limiting costs
Which capability is required to create superior product features?
R&D
Which of the following best defines economies of scope?
They are the savings that come from producing two or more outputs at less cost than producing each output individually.
Which of the following is true about shareholders of a public company?
They can be individuals or organizations.
In terms of productivity, which of the following is true of learning curves?
They go down.
A firm's network of interconnected activities is referred to a strategic activity system because activities that are interconnected are very difficult for competitors to copy effectively.
True
Which of the following identifies the resources that can lead to a competitive advantage?
VRIO framework
When competitive advantage is assessed from an analysis of publicly available data, a firm measures its ______.
accounting profitability
Which of the following are elements of the social dimension of the triple bottom line? (Check all that apply.)
achieving work/life balance human sustainability
Which of the following contribute to consumer buying power?
low switching costs real time, accurate price comparisons
Which of the following are components of a cost-leadership strategy? (Check all that apply.)
lowest costs in the industry acceptable value
Studies show that CEOs spend the majority of their time ______.
meeting people face-to-face
In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.
mobility barrier
Industry-specific factors known as ______ separate one strategic group from another.
mobility barriers
Which competitive forces can result in erosion of margins for both differentiation and cost-leadership business strategies?
power of suppliers threat of entry power of buyers
Which of the following performance dimensions matter in judging the effectiveness of a firm's strategy? (Check all that apply.)
qualitative quantitative
When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a ______ business model.
razor—razor-blade
Products in the affordable "business-casual" clothing market have largely become commoditized, and most retailers have begun to compete mainly on price rather than product features. In this environment, it is impossible for one retailer to gain market share without another losing it. This is an example of a ______ ocean.
red
Core competencies of a business are generated by the interaction of ______.
resources and capabilities
A manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an economy of __________, reducing overall production costs by finding multiple uses for its components and facilities.
scope
The resource-based view classifies all resources as ______.
tangible or intangible
A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits? (Check all that apply.)
the ability to charge a premium price less intense competition from imitators
When managers analyze a wide variety of internal and external performance metrics in order to set financial and strategic goals, they often turn to a framework known as ______.
the balanced scorecard
True or false: The value chain concept is applicable primarily to high-tech firms in rapidly changing environments.
False
______ are any assets that a firm can draw on when formulating and implementing a strategy.
Resources
Which of the following statements is true about a firm's stock price?
The price determines in part the stock's market valuation.
True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.
True
True or false: According to the resource-based model, a firm is assumed to be a unique bundle of resources, capabilities, and competencies.
True
Intellectual property protection and social complexity are examples of __________ mechanisms, which help a firm sustain a competitive advantage.
isolating
Managers implement the blueprint of their business model through which of the following? (Check all that apply.)
structures culture processes
The business model used by telecommunication companies when they provide a basic cell phone at no charge when the customer signs a two-year contract is a combination of which of the following types of business models? (Check all that apply.)
subscription razor--razor-blade
A tablet manufacturer that includes a free stylus with every purchase is using ______ to enhance users' experiences and increase the perceived value of its tablets.
complements
A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.
cost-leadership
Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?
differentiation and cost-leadership
For a firm to sustain any competitive advantage over time, the fit between its internal strengths and external environment needs to be ______.
dynamic
Patti's Potato Chips is a national potato-chip manufacturer. Calpurnia's Crisps is a small-batch gourmet potato-chip maker. Based on just this information, which of the following is the greatest advantage Patti's has over Calpurnia's?
economies of scale
True or false: Formulating a business strategy is a relatively easy task because only a few strategic options are available.
false
Which of the following are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service? (Check all that apply.)
offering a "no questions asked" return policy maintaining a domestic call center that is open 24 hours per day
______ strategy answers questions regarding how to implement the business strategy.
Functional
Many drivers find a GPS navigation system useful. Because installing a GPS system in an automobile adds value to the vehicle, the system functions as ______.
a complement
According to Michael Porter, the profit potential of an industry is ______.
a function of five forces related to competition
Global warming would be an example of ______ factor in a firm's external environment.
an ecological
When managers understand the forces in the external environment, they are better able to ______.
mitigate threats and leverage opportunities
Michael Porter developed the five forces model to help firms do which of the following? (Check all that apply.)
gain and sustain a competitive advantage determine the profit potential of different industries
What are cognitive biases?
obstacles in thinking that result in systematic errors in decision making and hinder rational thinking
The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers.
threat of substitutes
An intended strategy is the outcome of a plan that has which of the following characteristics?
top-down rational structured
Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in?
top-down strategic planning
According to the ______, effective leadership is the outcome of certain intrinsic talents as well as education.
upper-echelons theory
In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.
vision
Strategy formulation concerns the choice of strategy in terms of ______ to compete.
where and how
Which of the following are addressed during corporate strategy formulation?
which geographic location to compete in which industry to compete in which market to compete in
Why is employee involvement crucial when developing an inspiring vision and mission? (Check all that apply.)
Because belief in the vision and mission statements motivates employees. Because employees may develop helpful strategic initiatives.
Which statements about vision statements and firm performance are true?
Effective vision statements can provide a foundation for creating competitive advantage. Vision statements and firm performance are sometimes associated with one another.
Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.)
Ensuring a smooth transaction between hosts and guests Presenting a well-designed website Fortuitous timing that led to growing demand
Which of the following are questions that managers are likely to ask when beginning the strategic management process? (Check all that apply.
How can we achieve our goals? What do we ultimately hope to achieve? What are our values?
________________ planning is a strategy-planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses.
Scenario
Mission
The mission focuses on how the company can accomplish their goals.
Which of the following are ways that powerful suppliers are a threat to firms? (Check all that apply.)
They can reduce the industry's profit potential. They can force the cost of production to increase. They can capture part of the economic value created by firms.
True or false: Smart strategic leaders devise ways to make sure that their employees feel invested in the firm's vision.
True
What is the typical result of cognitive limitations?
We choose the option that is "good enough" and satisfies immediate needs.
Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully? (Check all that apply.)
When to enter? What type of entry should be made? Who are the players? How to enter?
The most rigorous means of analyzing the profit potential within a specific industry is to conduct ______.
an industry analysis
A(n) ______ can help employees feel that they are doing something worthwhile and are part of something important and meaningful.
aspirational vision
The pressures that industry suppliers can exert on an industry's profit potential, is also called the ______.
bargaining power of suppliers
In the strategy process, questions concerning HOW to compete, such as through differentiation, are referred to as _____ strategy.
business
A statement of guiding principles that typically provides very specific ethical considerations is a(n) ______.
core values statement
A(n) ______ is a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission.
core values statement
Strategy ______ concerns the organization, coordination, and integration of how work gets done.
implementation
The economic factors that affect a firm's external environment are ______.
largely macroeconomic
An example of a recent innovation in process technology is ______.
lean manufacturing
Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of ______ factors influencing business.
legal
Which of the following tend to result from strong competitive rivalry?
limits to the industry's profit potential
Top-down strategy is derived from
military strategy
A _____outlines what an organization does, while a vision outlines what the organization wants to do.
mission
An organization's ______ is what an organization actually does, including the products and services it plans to provide and the markets in which it will compete
mission
Although the five forces model is useful in understanding an industry's profit potential, it provides only a ___.
point-in-time snapshot of a moving target
In the five forces model, threat of entry refers to the risk that ______.
potential competitors will enter a given industry
Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?
power
When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______.
powerful
Which of the following are examples of economic factors in the firm's general environment?
price stability growth rates interest rates
The type of vision statement that tends to limit a manager's flexibility and ability to adapt is the ______ vision statement. problem-solving
product-oriented
What type of vision statement focuses on the good or service provided?
product-oriented
The executives of a computer software company developed an intended strategy to make the company more competitive. The company's ultimate ______ strategy contained elements not only of the intended strategy but also unplanned elements from a(n) ______ strategy.
realized; emergent
Which of the following are factors in a firm's legal environment? (Check all that apply.)
regulations mandates laws
A strategic business unit (SBU) is defined as a(n) ______
standalone division of a larger conglomerate
Which of the following are three approaches that strategic leaders rely on to formulate and implement strategy?
strategic planning strategy as planned emergence scenario planning
Which of the following is the least formal approach to setting the strategy process?
strategy as planned emergence
What is System 1 of the brain according to Daniel Kahneman and Amos Tverksy?
the brain's default mode
Strategy Implementation primarily involves which of the following?
the organization, coordination, and integration of how work gets done
Managers are able to influence which of the following types of external forces?
the structure of their industry strategic group composition
What is strategic leadership?
the use of influence and power by executives to direct the activities of individuals while pursing an organization's goals
According to upper-echelons theory, the way strategic leaders of a firm interpret a situation is influenced by which of the following?
the values and experiences of the firm's leaders
Which of the following are examples of sociocultural factors?
the widespread adoption of smart phones an increased demand by consumers for gluten-free products the growth of the Hispanic population
The risk that potential competitors will enter the industry is known as the ______.
threat of entry
In the PESTEL model, political factors are those that relate to ______.
government bodies
Functional strategy is primarily concerned with ______.
strategy implementation
The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.
substitutes
a powerful strategic commitment assures
that steps are taken to achieve the mission
Which of the following is the conceptual framework developed by Jim Collins that describes the progression of leadership through distinct, sequential levels?
the Level-5 leadership pyramid