Strategic Management Exam 1 Practice questions

Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales.

False

The resource-based model assumes that if firms have resources that are rare or costly to imitate, this is sufficient to form a basis for competitive advantage.

false

Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche, the firms owners can feel secure that Alligator has established a competitive advantage.

False

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

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 only if it has been unsuccessfully challenged by competitors. d. exists when competing firms are unable to find investors.

c

Although the fast food (or quick-service) industry is unattractive, McDonald's has earned above-average returns through product innovations, enhancing existing facilities, and buying properties outside the United States.

false

Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software.

false

Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource-based model.

false

Resources are considered rare when they have no structural equivalent.

false

The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is its main source of above-average returns.

false

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 main obstacle the CEO must face is inertia.

true

The two primary drivers of hypercompetition are the emergence of the global economy and technology.

true