Business Strategy
In the external analysis phase of the AFI strategy framework, managers should ask,
"How do external forces affect our strategy and competitive advantage?"
Stakeholder impact analysis is a decision tool that helps a company do which of the following?
Achieve a competitive advantage Act as a good corporate citizen
Which of the following statements are correct regarding the interests of principals and agents? (Check all that apply.)
Agents may be more interested in personal goals, such as maximizing their compensation or gaining power. Principals want to maximize shareholder returns.
What is the result of the airline industry having powerful buyers?
Airlines' profit margins are reduced.
What is the first step in the AFI strategy framework?
Analysis
______ has a greater chance of arising from intangible resources than from tangible resources.
Competitive advantage
Under the shared value creation framework, which of the following strategic actions would fail to connect economic and societal needs?
Focusing exclusively on maximizing returns for shareholders.
What is the overall purpose of strategic management?
Gain competitive advantage
The ideas of corporate social responsibility and stakeholder strategy are particularly prevalent in ______.
Germany
Which insights gained from a SWOT analysis could lead McDonald's to open new restaurants in China? (Check all that apply.)
Growth in emerging economies and market share decline in developed economies. McDonalds' financial strength and brand name.
Which of the following are examples of economies of scale?
Having more negotiating power vis-à-vis suppliers, Spreading fixed costs over more units
Which of the following questions is involved in functional strategy implementation?
How do we put our business strategy into action?
Which statement best describes the confirmation bias?
Individuals search only for information that confirms their existing beliefs and ignore evidence that contradicts those beliefs.
When a new firm enters an industry, which of the following often occur?
Industry profit potential declines. Incumbent firms spend more to satisfy customers. Incumbent firms lower prices.
______ do not have physical attributes.
Intangible resources
True or false: According to the resource-based model, a firm is assumed to be a unique bundle of resources, capabilities, and competencies.
True
True or false: Firms should obey all the laws, including but not limited to labor, consumer protection, and the environment.
True
True or false: Core competencies should be continuously improved so that the firm can acquire or maintain a competitive advantage.
True: If core competencies are not regularly improved, competitors might acquire core competencies that will lead to a competitive advantage.
VRIO framework
VRIO framework is the strategic process that begins with a vision statement and continues through strategic implementation
Which of the following are the relationships that a firm has with stakeholders?
Stakeholders can affect the firm's actions.The actions of the firm can affect stakeholders.
Who among the following are considered internal stakeholders?
Stockholders Board members Employees
Andrew's Home Center has created a unique situation for itself in its industry that allows the company to not only provide excellent value to its customers but also control its costs. This is known as Blank______.
Strategic Positioning
Which of the following statements is correct?
Strategic initiatives can be the result of top-down planning or a bottom-up process.
______ resources have physical attributes and are visible.
Tangible
Why is competitive advantage more likely to spring from intangible rather than tangible assets?
Tangible assets can be bought on the open market.
Which of the following are the relationships that a firm has with stakeholders?
The actions of the firm can affect stakeholders Stakeholders can affect the firm's actions
Global warming would be an example of ______ factor in a firm's external environment.Multiple choice question.a politicalan ecologicala socioculturala technological
an ecological
Which of the following can help a firm extend its competitive advantage? (Check all that apply.)
better expectations of future resource value intellectual property protection path dependence
Which of the following are important components of fostering ethical behavior in employees?
board members setting clear ethical expectations strategic goals that are achievable with legal means executive behavior that is in sync with the organization's vision and values
In a(n) Blank______ strategy formulation, managers focus on deciding HOW the firm should compete.
business
In the strategy process, questions concerning HOW to compete, such as through differentiation, are referred to as _____ strategy.
business
The code of professional conduct based on societal norms and expectations is known as ______.
business ethics
A rise in economic growth is reflected by ______.Multiple choice question.businesses expanding operations to satisfy demandbusinesses staying the samebusinesses closing operations due to lack of demand
businesses expanding operations to satisfy demand
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.Multiple choice question. supplier existing competitors new entrants buyers
buyers
Production costs can increase when ______.Multiple choice question.the power of suppliers goes downbuyers demand lower quality and less servicebuyers demand higher quality and more service
buyers demand higher quality and more service
According to Porter's model, which of the following should be considered when analyzing a firm's competition? (Check all that apply.)Multiple select question.buyersthe regulations in possible host countriesthe threat of substitutessuppliers
buyers, the threat of substitutes, suppliers
How should managers prioritize stakeholder concerns in the final step of stakeholder impact analysis?
by considering the power, legitimacy, and urgency of stakeholder claims
A(n) ______ occurs when a firm performs below the industry average or is outperformed by its competitors.
competitive disadvantage
If a firm has a 10% return on invested capital while the industry average return on invested capital is 18%, the firm has a(n) ______.
competitive disadvantage
Michael's Deli is able to perform at the same level as its primary competitor. Michael's Deli has ______.
competitive parity
Which cognitive bias refers to people's tendency to seek out information that aligns with their existing beliefs?
confirmation basis
Firms have a tendency to change the industry structure in their favor, for example by making industries more __ through mergers and acquisitions.
consolidated
According to agency theory, which of the following managerial functions can be used to avoid adverse selection and moral hazard? (Check all that apply.)
control organization
Which of the following are primary strategy objectives?
controlling costs, creating value
According to the value chain perspective, ______ are located in the network that connects different, but related activities within a firm.
core competencies
A(n) ______ is a unique strength, embedded deep within a firm, that is critical to gaining and sustaining competitive advantage
core competency
If a firm's resource is valuable, rare, costly to imitate, and the firm is organized to exploit it, this resource is a ______.
core competency
A statement of guiding principles that typically provides very specific ethical considerations is a(n)
core values statement
The idea that firms should voluntarily give back to society when they are able to do so is also known as ______.
corporate citizenship
The mechanism used to guide a company toward meeting its strategic goals within the bounds of the law is known as ______.
corporate governance
The ________ specifies the distribution of rights and responsibilities among different participants in a corporation and spells out the rules and procedures for making decisions on corporate affairs.
corporate governance structure
Which framework helps firms to identify their economic, legal, ethical, and philanthropic obligations to society?
corporate social responsibility
The board of directors of Qwik Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate?
corporate strategy
According to the VRIO framework, a rare resource is ______ if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.
costly to imitate
Strategic commitments tend to be which of the following?
costly, difficult to revers, longterm
A firm's dynamic capabilities allow it to respond agilely to market changes, as well as to ______.
create market changes
In order to reconcile economic and social needs within the shared value creation network, managers need to focus on ______. (Check all that apply.)
creating new regional clusters and business centers making products affordable for the poorest socioeconomic groups in order to improve standards of living expanding value chains to include NGOs and other organizations committed to social goals
When identifying stakeholders, a firm should focus on those stakeholders that ______.
currently have, or could potentially have, a material effect on the firm
A ______ vision statement defines a company by describing its interest in developing solutions to consumer problems.
customer oriented
A company is a complementor to your company if ______.
customers value your product more when they can use it with the other company's product
Which of the following is an example of an application of agency theory?
employment contracts
In the ______ step of a stakeholder impact analysis, firms identify those stakeholders that currently have, or potentially can have, a material effect on the company.
first
Stakeholder impact analysis is a _____-step process that allows managers to better understand and address stakeholders' needs.
five
Incentives that are too high-powered, such as an outsized bonus, may cause individuals to ______.
focus too much attention on the incentive and not enough on strategic activities
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
In the _____ step of the stakeholder impact analysis, firms identify their various social responsibilities to stakeholders.
fourth
______ strategy answers questions regarding how to implement the business strategy.
functional
Using the "resource-based view" helps firms ______.
gain or maintain competitive advantage
The primary purpose of the board of directors is ______
general strategic oversight and guidance
Among the various types of responsibilities a business firm has, which are specifically considered to be economic responsibilities?
giving investors a return on invested capitalrepaying debts to creditors
In the PESTEL model, political factors are those that relate to ______.Multiple choice question.employmentclimate and weatherbanking organizationsgovernment bodies
government bodies
In the second step of the stakeholder impact analysis, managers need to identify and understand stakeholders' ______.
interests and claims
The value chain describes ______ of a firm.
internal activities
When strategizing about possible competitive advantages, a major advantage of the SWOT analysis is that it allows managers to simultaneously consider ______.
internal and external factors
In regard to the public stock company, limited liability means that _____
investors are not responsible for any debts incurred by the company and are only at risk of losing the invested capital
A competitive advantage _____.
is assessed relative to other competitors in the industry
True or false: Sociocultural factors tend to be fixed.
largely macroeconomic
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
When an organization briefly describes what they do and how they do it, they have more than likely articulated their
mission statement
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
The expectations that society has toward business, in contrast to what society requires, result in which of the following elements of the pyramid of corporate social responsibility?
philanthropic responsibilities ethical responsibilities
What cognitive bias is in play when individuals draw conclusions based on very small samples or a single anecdote, thus violating the law of large numbers?
representativeness
What are examples of intangible resource stock a company may have? (Check all that apply.)
reputation for quality engineering expertise dynamic capabilities
While the ______ clarifies a firm's core competencies, the ______ helps leaders understand how competitive advantage arises from the firm's unique activities.
resource-based view; value chain perspective
According to the resource-based view of a firm, what are defined as any asset, capability, or competency that a firm can draw upon when formulating and implementing strategy?
resources
Core competencies of a business are generated by the interaction of ______.
resources and capabilities
The concept, or framework, of corporate social _______ guides firms in identifying and addressing their economic, legal, ethical, and philanthropic obligations to society.
responsibility
The cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units, are called economies of
scale
In the ______ step of the stakeholder impact analysis the firm identifies their stakeholders' interests and claims according to the power, legitimacy, and urgency framework.
second
The interests of inside directors on the board of directors typically align with those of ______.
senior management
A board of directors is elected to represent the interests of ______.
shareholders
Which of the following is a tool that managers can use to address the needs of stakeholders while maintaining a competitive advantage?
stakeholder impact analysis
A firm's attempts to manage the web of relationships between internal and external stakeholders in order to create value is known as ______.
stakeholder strategy
A strategic business unit (SBU) is defined as a(n)
standalone division of a larger conglomerate
Which of the following statements about scenario planning is true?
starts w top down apporach
The right to buy a company's stock at a predetermined price sometime in the future is known as a(n) ______.
stock option
A ____ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.
strategic
Effective guiding policy is supported by and stays consistent through the use of ______.
strategic commitments
A(n) ______ is any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.
strategic initiative
Who sets the tone for the ethical climate within an organization?
strategic leaders
Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?
theory of bounded rationality
In the ______ step of the stakeholder impact analysis, the firm identifies the opportunities and threats that stakeholders present to the firm.
third
The risk that potential competitors will enter the industry is known as the ______.Multiple choice question.power of suppliersthreat of entryrivalry among existing competitorsthreat of substitutespower of buyers
threat of entry
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
Which of the following questions are part of the five steps in stakeholder impact analysis?
What are our stakeholders' interests and claims? Who are our stakeholders? What opportunities and threats do our stakeholders present?
Which of the following are essential questions that strategic leaders need to consider to increase the probability of entering an industry successfully?
When to enter? Who are the players?How to enter? What type of entry should be made?
A core competency can help a company achieve which of the following? (Check all that apply.)
to offer products of comparable value at lower cost than rivals can to create higher value for the consumer to differentiate its products and services
Which of the following are characteristics of the strategic plan that makes up an intended strategy?
top down, structured, rational
What are the four characteristics of a public stock company that make it an attractive corporate form? (Check all that apply.)
~transferability of investor interests ~legal personality ~separation of ownership and control ~limited liability for investors
Upper-echelons theory views organizational outcomes as a reflection of the values of the
top management team
In the strategic management process, which basic principle must be defined first?
vision
Strategy formulation concerns the choice of strategy in terms of ______ to compete.
where and how
Corporate strategy concerns questions related to
where to compete
Which of the following are addressed during corporate strategy formulation?
which market, which industry, which location to compete in
In the external analysis phase of the AFI strategy framework, what should managers ask?
"How do external forces affect our strategy and competitive advantage?"
A firm's overall efforts to gain and sustain competitive advantage is referred to as which of the following?
A competitive strategy
Eastern perspectives attempt to describe and categorize the universe from a detached, objective viewpoint.
False
Sustainability involves development that meets humanity's needs by harming future generations.
False
Which of the following statements is likely to be true about a fragmented industry?
It consists of small firms.
______ factors result from the processes and actions of government bodies that influence the decisions and behavior of firms.Multiple choice question.ProfitablePoliticalTechnologicalEconomic
Political
In an oligopoly, which of the following conditions exist?
a few large firmshigh barriers to entrydifferentiated products
In a perfectly competitive industry, firms have difficulty ______.
achieving competitive advantage
Which strategy addresses the question of how to compete?
business
Which of the following are important factors in determining the intensity of rivalry among existing competitors?
competitive industry structure, exit barriers, industry growth
The ______ is a measure of the change in the amount of goods and services produced by a nation's economy.Multiple choice question.interest ratecurrency exchange ratelevel of employmenteconomic growth rate
economic growth rate
Obstacles that determine how easily a firm can enter an industry, are called ______.
entry barriers
Although ______ coordination, such as price fixing, is illegal in the United States, ______ coordination such as "an unspoken understanding" is not.
explicit; tacit
Customers, suppliers, creditors, unions, and governments are known as Blank______
external stakeholders
______ is a form of communication that enables the CEO of a company to pick up on nonverbal information, such as moods and body language.
face to face meeting
Using a(n) Blank______ strategy formulation, managers examine where and how the firm should compete around the world.
global
Strategy ______ concerns the organization, coordination, and integration of how work gets done.
implementation
Which of the following elements comprise strategic management?
implementation analysis formulation
Under agency theory, a manager should seek to align ______ between principals and agents to minimize opportunism.
incentives
What should a successful vision do for an organization?
inspire employees, make work feel important
Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the _____________.
intensity of rivalry
An example of a recent innovation in process technology is ______.Multiple choice question.the microwavethe BP oil spilllean manufacturingthe smartphone
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.Multiple choice question.socio-culturallegaleconomictechnological
legal
A public stock company is considered by law to be an entity with legal rights and obligations. This is known as
legal personality
Which of the following tend to result from strong competitive rivalry?
limits to the industry's profit potential
Business strategy is developed by
managers in sbu's
Which of the following are the four main competitive industry structures?
monopolistic competition, perfect competition, oligopoly, monopoly
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 factors in a firm's legal environment? (Check all that apply.)Multiple select question.demographic trendsregulationsmandatesinnovative technologylaws
regulations, mandates, laws
The intensity with which companies in an industry jockey for market share and profitability is known as ______.
rivalry
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
According to the latest corruption index of countries around the world, the country with the lowest level of perceived corruption is ________.
Denmark
All of the following regions are associated with "crony capitalism" except ________.Africa,Europe, Latin America, or Asia
Europe
The study of morality and standards of conduct is referred to as ethics.
True
Stakeholder strategy argues that focusing exclusively on the needs of Blank______ places the firm at risk of failure.
shareholders
What term describes the groups or individuals who can impact or be impacted by a firm's actions?
stakeholders
Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. These ideas are Burger Bomb's Blank______.
strategy
There is a(n) ______ relationship between competitive intensity and the power of the five forces.
strong
The expected competitive intensity is stronger when the other four forces are ______, and weaker when the other four forces are ______.
stronger; weaker
The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.
substitutes
Which statement best describes groupthink?
Individuals automatically agree with a leader without critically evaluating or challenging the leader's views and assumptions.
Which statement best describes the cognitive bias of representativeness?
Individuals reach conclusions based on a small sample size or otherwise limited data, thereby violating the law of large numbers.
The United Nations has a division dedicated to the education, promotion, facilitation, and advocacy of sustainable practices and environmentally sound concerns called the ________.
UNEP
Which of the following are characteristics of a monopolistically competitive industry?
obstacles to entry, the ability to raise prices for differentiated products, a differentiated product
In a nutshell, strategy is the art and science of ______.
success and failure
competitive advantage
superior performance relative to other competitors in the same industry or the industry average
Accounting and finance are ______ activities in a firm's value chain.
support
Research and development, information systems and human resources are examples of ______ activities.
support
A competitive advantage that lasts for a long period of time is said to be ______.
sustainable
In order to avoid making costly mistakes due to the potential shortcomings of the SWOT analysis, a manager should ______
take results from the SWOT analysis with "a grain of salt"
Capital, land, buildings, and plants are examples of ______ resources
tangible
Unlike capabilities, resources can be both ______.
tangible and intangible
The resource-based view classifies all resources as ______.
tangible or intangible
What does the concept of resource heterogeneity imply?
that each firm has different resources
A powerful strategic commitment assures
that steps are taken to achieve the mission
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
Competitive parity occurs when ______.
the trade-offs required by strategic positioning
The relationship between CEO pay and job performance has been shown to be _____
weak
A well-devised strategy is about which two things?
what not to do what to do
To which types of organizations can we apply the principles of strategic management?
all types of organizations
Which type of company is considered a unicorn?
a private start-up company valued at more than $1 billion
Place the three frameworks used in industry analysis in the order they should be used, with the first at the top.
1. Pestel analysis 2. Porter's 5 forces 3. strategic group mapping
Place the five steps of the stakeholder impact analysis in order, with the first step at the top.
1. Who are our stakeholders2. What are our stakeholders' interests and claims3. What opportunities and threats do our stakeholders present?4. What economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders?5. What should we do to effectively address the stakeholders concerns?
The ratio of CEO to average employee pay in the United States is about ______.
300 to 1
Which of the following are examples of moral hazard? (Check all that apply.)
A company dumps pollution into a local lake that will be cleaned using taxpayer money. Banks make very risky loans with the knowledge that the government will bail them out if necessary. A CEO with a multi-million-dollar severance agreement performs poorly knowing he will be well compensated even if he is laid off.
Analysis, Formulation, Implementation (AFI) Strategy Framework
A model that links three interdependent strategic management tasks - analyze, formulate, and implement - that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage
Which statement about strategies is true?
A statement of desire on its own often leads to goal conflict.
In a highly competitive industry, what are likely consequences of a firm's neglecting its current core competencies? (Check all that apply.)
Competitors will gain market share. Competitors will outperform the firm by creating competitive advantage. Competitors will develop equivalent or superior skills.
What must a firm do after diagnosing its specific competitive challenge?
Create an effective guiding policy
What are the categories of expectations that society has of the business enterprise as described in the CSR framework?
Economic Philanthropic Ethical Legal
Which of the following are approaches for answering the question "How to enter?" when a firm is considering entering an industry?
Establishing a niche Leverage existing assets Reconfiguring value chains
Kantian moral analysis accepts consequences (either conceivable or likely) as morally irrelevant when evaluating the choice of an agent.
False
True or false: A statement such as, "We will be the biggest company in the world," is an example of strategy.
False
True or false: Any action taken by a manager that is within the bounds of the law is, by definition, an ethical action.
False
True or false: A competitive advantage is most often maintained for very long periods of time.
False. No competitive advantage can be sustained indefinitely.
True or false: The value chain concept is applicable primarily to high-tech firms in rapidly changing environments.
False. The value chain concept can be applied to basically any firm.
Which of the following are characteristics of a perfectly competitive industry?
Firms in the industry sell a commodity product. The industry is fragmented. Individual firms have little or no ability to raise prices.
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 statements about Airbnb is correct?Multiple choice question.It was spun off as a service developed by Google, Inc.It handles more accommodations than the three biggest hotel chains combined.It was founded before the Internet was created.It operates only in North America and Europe.
It handles more accommodations than the three biggest hotel chains combined.
Svanhildur's company is committed to corporate social responsibility but also understands that growth and profit are imperative for survival. What should Svanhildur's company do to achieve this balance?
It should use the shared value creation framework.
Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.)
Presenting a well-designed website, Fortuitous timing that led to growing demand, Ensuring a smooth transaction between hosts and guests
Which of the following statements about legal factors as an external force is true?Multiple choice question.The U.S. government has allowed very few industries to be deregulated.Regulatory changes tend to affect entire industries at once.The courts do not allow the government to use legal factors to exert its political will on businesses.Legal factors affect a firm's profit potential only indirectly.
Regulatory changes tend to affect entire industries at once.
______ are the firm's level of investments to maintain or build a resource.
Resource flows
______ refers to the idea that a firm is a bundle of resources and capabilities that is unique to the firm.
Resource heterogeneity
______ refers to the assumptions that resources tend to be "sticky" and do not move easily from firm to firm.
Resource immobility
In the context of human rights, which country has experienced widespread human trafficking that has accelerated in recent years?Russia, India , South Africa, or China
Russia
One of the most popular tools used by firms to evaluate their current situation and future prospects is the ______
SWOT analysis
______ is a framework that allows mangers to synthesize insights obtained from internal and external analysis.
SWOT analysis
Which of the following is a federal regulatory agency whose task it is to oversee stock trading and enforce federal securities laws?
Securities and Exchange Commission
Based on its long dominance as a coffeehouse chain, Starbucks has ______.
a sustainable competitive advantage
The Bright Bulb light bulb company produces a line of LED bulbs that customers consider very similar to competitors' LED bulbs. Which of the following conditions must be true for Bright Bulb to have a competitive advantage?
The bulbs must have a lower cost than competitors' bulbs.
Which of the following are characteristics of the companies in a strategic group?
The companies differ in important dimensions from companies in other strategic groups.The companies form part of a specific industry.The companies pursue similar strategies.
Which of the following statements about industry dynamics is true?
The five forces model is a static model.Over time, industry structures are not stable.
Which of the following statements about stock options is true?
The recipient is given the right to purchase stock at a predetermined price sometime in the future.
Which of the following are situations in which a resource is considered valuable? (Check all that apply.)
The resource helps a firm exploit an external opportunity. The resource helps the firm increase its economic value creation (V-C).
Which of the following constitutes an ambitious agenda to significantly improve the human condition by 2030?
The seventeen Sustainable Development Goals
Which of the following statements regarding tasks in the AFI strategy framework is true?
The tasks are very interdependent.
What is strategic leadership?
The use of influence and power by executives to direct the activities of individuals while pursuing an organization's goals
In which of the following situations can a firm providing goods and services gain a competitive advantage?
Their offerings provide more value for consumers than competitors' offerings.Their offerings are of similar quality to competitors' offerings but can be sold at lower prices due to lower costs.
Which of the following are ways that powerful suppliers are a threat to firms?
They can force the cost of production to increase.They can reduce the industry's profit potential.They can capture part of the economic value created by firms.
Which of the following statements are true about the capabilities of a firm? (Check all that apply.)
They include managerial skills. They include organizational skills. They concern the deployment of resources.
Which statement is true about pricing strategies, internet strategies, alliance strategies, and brand strategies?
They may be a necessary part of a firm's initiatives to support its competitive strategies.
Which of the following is a major drawback of public stock companies, according to Michael Porter and others?
They prioritize financial performance over all else.
Which of the following are aims of stakeholder strategy?
To gain and sustain competitive advantage To manage various stakeholders effectively
Tesla has collaborated with several other researchers and car manufacturers to produce greener automobiles to achieve its secondary goal of inspiring sustainability across the entire automobile industry.
True
Which of the following best describes an illusion of control?
a belief that a strategic plan will address any scenario
Capabilities include which of the following? (Check all that apply.)
a company's organizational structure a company's culture a company's routines
Burger Bomb has been outperforming other burger restaurants for a decade. This indicates that Burger Bomb has which of the following?
a competitive advantage
When a firm implements a strategy that leads to superior performance relative to other companies in the same industry, it is said to have achieved ______.
a competitive advantage
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
Stakeholder Impact Analysis
a decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen
Corporate Social Responsibility (CSR)
a framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time
According to Michael Porter, the profit potential of an industry is ______.Multiple choice question.entirely determined by industry-specific factorslargely randoma function of five forces related to competitionsimilar for all service industries
a function of five forces related to competition
What insights gained from a SWOT analysis would lead McDonald's to consider developing healthier food items for its menu?
a growing health consciousness among customers
In ______, a single investor or group of investors buys, with the help of borrowed money, the outstanding shares of a publicly traded company and assumes control of it.
a leveraged buyout
The SWOT analysis should be used with caution because ______.
a. Opportunities can be threats and strengths can be weaknesses
When a stakeholder has power over a company it is ______.
able to influence the company to do something it would otherwise not do
Pavel works for a successful pharmaceutical company. Despite several years of unprecedented growth, the company wants to boost profits even more. It has taken steps to drastically raise the prices of its most widely distributed medications, which are difficult to imitate. Research into employee ethical decision-making capacity indicates that Pavel will ______.
act in a manner that reflects his company's organizational culture
In the dynamic capabilities perspective, competitive advantage derives from ______.
actively modifying of the resource base.The term "dynamic" refers to capabilities that are being actively changed.
In team-based environments, the principal may have difficulty determining individual contributions by members. This can create a situation in which an opportunistic employee does little work but takes credit. This is known as ____
adverse selection
The hiring of a job seeker who claims to have extensive computer programming experience when his knowledge of the subject is minimal would be an example of ______.
adverse selection
The idea that a corporation is simply a collection of legal contracts is known as ___
agency theory
According to the dynamic capabilities perspective, competitive advantage stems from a firm's ability to ______.
agilely transform its resource base
According to the dynamic capabilities perspective, competitive advantage stems from a firm's ability to ____
agilely transform its resource base. In the dynamic capabilities perspective, competitive advantage is the result of a firm's capacity to modify and leverage its resource base to address the constantly changing environment.
Which of the following are examples of sociocultural factors? (Check all that apply.)Multiple select question.an increased demand by consumers for gluten-free productsthe growth of the Hispanic populationthe widespread adoption of smart phonesan extended period of low interest rates
an increased demand by consumers for gluten-free productsthe growth of the Hispanic populationthe widespread adoption of smart phones
A group of companies that deal with more or less the same set of suppliers and buyers make up ______.
an industry
The most rigorous means of analyzing the profit potential within a specific industry is to conduct ______.Multiple choice question.an industry analysisan industry PET scana market analysisa PESTEL analysis
an industry analysis
Core competencies
are a subset of an organization's capabilities that drive its ability to gain and sustain competitive advantage. They are unique strengths that are embedded deep within a firm.
A key feature of an oligopoly is that the competing firms in the industry ______, meaning the actions of any one firm will influence the behaviors of the other firms.
are interdependent
Additional functions of a board of directors beyond general strategic oversight include ______. (Check all that apply.)
assessing and mitigating risk ensuring that the firm's accounting practices and reports are accurate selecting, evaluating, and compensating the CEO
Which of the following are considered resources under the resource-based view of the firm? (Check all that apply.)
assets competencies capabilities
Financial statements by public companies must ______. (Check all that apply.)
be audited by certified public accountants adhere to generally accepted accounting principles (GAAP)
According to the VRIO framework, to fully exploit the competitive potential of its resources, capabilities, and competencies, a firm must ______.
be organized to capture value
In order to be successful, a firm must have a resource that is valuable, rare, costly to imitate, and the firm must ______.
be organized to capture value
Following the rise of institutional investors, the use of poison pills to avoid hostile takeover has ______.
become rarer
The shared value creation framework is a tool intended to help businesses ___
benefit all stakeholders, not just shareholders
The organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically are called ____
capabilities
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 resources core competencies
The external forces called technological factors ______.Multiple choice question.capture the application of knowledge to create new process and productsdescribe society's norms and valuesquantify characteristics of the economy and business climaterepresent official government decisions and regulations
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 buildings intellectual property
One of the key characteristics of a leveraged buyout (LBO) is that it _______.
changes the ownership structure of a company from public to private
Dynamic capabilities are most relevant in ______.
changing markets
Corporate governance is a system of _____
checks and balances
Firms should identify a Blank______ so that employees can determine if they are making progress in addressing it.
clear competitive challenge
High-profile accounting scandals and the global financial crisis are examples of ______.
companies and industries that did not conform to business ethics
The relationship between the natural environment and business organizations can best be described as ______.
interdependent
When facing an ethical dilemma, a manager should ______. (Check all that apply.)
determine whether he or she could comfortably defend the action to the public consider whether the action in question conforms to the firm's code of conduct and industry practices
By definition, resource immobility suggest that resources are ______ to move from firm to firm.
difficult
Javier, the owner of Javier's Tacos, has noticed that residents of his town are flocking to a new taco truck in increasing numbers. After doing some research, Javier learns that consumers enjoy the food truck because almost all the taco ingredients are locally sourced. Javier decides to add locally sourced ingredients to his menu. This is an example of ______.
direct imitation
A firm trying to compete with the leading firm in a competitive industry can try to negate the leading firm's competitive advantage through which of the following? (Check all that apply.)
direct imitation substitution
For a firm to sustain any competitive advantage over time, the fit between its internal strengths and external environment needs to be ______.
dynamic
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
The ______ perspective is a model that emphasizes a firm's ability to modify and leverage its resource base in a way that enables it to sustain competitive advantage in a constantly changing environment.
dynamic capabilities
Which of the four corporate social responsibilities is considered first and foremost for business enterprises?
economic
The shared value creation framework encourages managers to focus on which of the following needs? (Check all that apply.)
economic social
Internet privacy, genetic engineering, and stem-cell research are examples of areas in which a firm's ______ responsibilities exceed its legal responsibilities.
ethical
Starbucks's commitment to fair trade and responsible growing practices indicates that the firm takes its ______ responsibilities seriously.
ethical
The idea of corporate social responsibility (CSR) suggests that a firm's obligations should ______.
exceed the traditional imperative to increase profits
Which of the following are important strategic dimensions in mapping strategic groups?
expenditures on research and development product and service offerings cost structure
Customers, suppliers, creditors, unions, and governments are known as ______.
external stakeholders
Social consequences of business activities, including pollution, energy loss, and dangerous accidents, are known as __
externalities
Optics Incorporated, a publicly traded eyewear business, places profits ahead of all other performance metrics. This practice ______. (Check all that apply.)
fails to take into account the idea of corporate social responsibility conforms to the traditional notion of shareholder capitalism
True or false: Any action taken by a manager that is within the bounds of the law is, by definition, an ethical action.
false
In the ______ step of the stakeholder impact analysis, managers need to decide the appropriate course of action for the firm in relation to stakeholder concerns.
fifth
Economist Michael Porter and many others argue that the value of public stock companies is too narrowly defined in terms of ______, leading to scandals and economic crises.
financial performance
Which of the following are important sources of entry barriers? (Check all that apply.)Multiple select question.government policynetwork effectscapital requirementseconomies of scalecredible threat of retaliationlow product differentiation
government policy network effects capital requirements economies of scale credible threat of retaliation
What are the three aspects of mapping strategic groups?
graphing the firms in the strategic group and indicating each firm's market shareidentifying the most important strategic dimensionschoosing two key dimensions for the horizontal and vertical axes
Which of the following are examples of economic factors in the firm's general environment? (Check all that apply.)Multiple select question.growth ratestechnological advancementsinterest ratesprice stabilitygovernment regulations
growth rates, interest rates, price stability
Which of the following help determine competitive industry structure?
height of entry barrierssize and number of competitorsfirms' degree of pricing power
Resource ______ and resource ______ are the key assumptions behind the resource-based model of the firm.
heterogeneity; immobility
If a company is poorly managed, its stock price may fall low enough for the firm to become a target for a(n) ______.
hostile takeover
The Level-5 leadership pyramid is a conceptual framework that shows
how leaders develop
In the scenario-planning approach, what happens during the analysis stage of the AFI framework?
identify potential scenarios
In contrast to primary activities, support activities add value ______, but are necessary to sustain primary activities.
indirectly. Support activities do not add value directly.
The stakeholders of a firm are ______.
individuals or groups that can affect and are affected by the actions of the firm
Which of the following occurs when agents are better informed than principals?
information asymmetry
Managers who act upon secret company information for personal gain, such as by trading stocks based on the knowledge of future initiatives, are guilty of ____
insider trading
A firm's culture, brand equity, and intellectual property are examples of ______.
intangible resources
A(n) __________ strategy is the outcome of a rational and structured, top-down strategic plan
intended
A fiduciary responsibility is a(n) ______.
legal duty to act in another party's interests
Managers have ______ direct influence over external forces in the firm's general environment than those in the firm's task environment.
less
Stan has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Stan is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Stan is currently at __________ of the Level-5 leadership pyramid.
level 4
Managers have ______ resources in their quest for competitive advantage.
limited
Which of the following contribute to consumer buying power?
low switching costsreal time, accurate price comparisons
What are actions that strategic leaders of a company can take to increase their firm's intangible resource stocks? (Check all that apply.)
make ongoing investments in company resources promote in-house recertification programs retain key employees
Which are examples of activities that create value? (Check all that apply.)
making a physical delivery of a product taking an order from a customer invoicing a customer
Along which of the following dimensions do strategic groups differ from one another?
market segments , customer service, research and development distribution channels
The main goal of a poison pill is to ______.
minimize the threat of a hostile takeover
Many firms of all sizes actively compete in the computer hardware industry, and there are no firms with a large market share. Product offerings tend to be similar but are differentiated in ways that enable some firms to raise or impact pricing. The computer hardware industry is an example of ______.
monopolistic competition
A situation in which one party has an incentive to shirk their responsibility because the costs will fall to the other party is known as ______.
moral hazard
Employees who work in organizations that emphasize ethical behavior are ______.
more likely to act ethically.
In comparison to other countries, the United States ranks ______ in terms of its acceptance of Milton Friedman's philosophy that "the social responsibility of business is to increase its profits."
near the middle
When firms compete by offering unique product features rather than competing on price, ______ occurs.
non-price competition
Value Creation
occurs when companies with a good strategy are able to provide products or services to consumers at a price point that they can afford while keeping their costs in check, thus making a profit at the same time. Both parties benefit from this trade as each captures a part of the value created.
The third step of stakeholder impact analysis requires managers to identify the ______ presented by internal and external stakeholders.
opportunities and threats
The SWOT analysis should be used with caution because ____
opportunities can be threats and strengths can be weaknesses
Which of the following are examples of business activities? (Check all that apply.)
order taking invoicing customers delivery of products
Stakeholders
organizations, groups, and individuals that can affect or are affected by a firm's actions
sustainable competitive advantage
outperforming competitors or the industry average over a prolonged period of time
The primary difference between outside and inside members of the board of directors is that ______.
outside directors are not employees of the firms, whereas inside directors are
In the resource-based model, ______ is possible if all firms have access to the same resources and capabilities, which means that any competitive advantage acquired by a firm will be brief.
perfect competition
competitive parity
performance of two or more firms at the same level
Microsoft donating more than $3 billion in cash and software to people in need is an example of which type of corporate social responsibility?
philanthropic
Match the element of the pyramid of corporate social responsibility with its explanation
philanthropic responsibilities - corporate citizenshipethical responsibilities - do what is right, just, and fairlegal responsibilities - laws and regulations are society's codified ethics; define minimum acceptable standardeconomic responsibilities - gain and sustain competitive advantage
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
Marketing, sales, and distribution are ______ activities in a firm's value chain.
primary
______ activities add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain.
primary
Competitive advantage is gained in the value chain through which of the following types of activities? (Check all that apply.
primary support
The internal activities of a firm that for transforming inputs into outputs consist of ________ activities, which add value directly, and ______activities, which add value indirectly
primary ; support
Corporate governance addresses the ______ problem, which underscores the risk of delegating responsibility and control to individuals who may not have the firm's best interests in mind.
principal-agent
A ______ vision statement defines a business by describing the goods or services it produces or offers.
product oriented
Which of the following legal developments allow business to function as an institution?
property rights contract enforcement
Strategic positioning allows managers to ______.
provide customers value while controlling costs
A resource is ______ if the number of firms that possess it is less than the number of firms required to reach a state of perfect competition.
rare
According to the VRIO framework, in order for a firm to gain a temporary competitive advantage, a resource must be at least both _____
rare and valuable
The field of management that focuses on attaining competitive advantage by combining analysis, formulation, and implementation is known as ______.
strategic management
Andrew's Home Center has created a unique situation for itself in its industry that allows the company to not only provide excellent value to its customers but also control its costs. This is known as ______.
strategic positioning
Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. This is known as Burger Bomb's ______.
strategy
An executive can legally earn a significant profit from stock options if ______.
the firm performs well and the actual price per share exceeds the negotiated strike price
Which of the following topics should be considered during the analysis phase of the AFI framework?
the firm's business model and competitive advantagesthe external environment and associated challengesthe role of strategic leadership and the strategy processthe firm's internal strengths and resources
The resource-based model views resources as _____
the main driver of firm performance
An external governance mechanism that makes a poorly managed company vulnerable to takeover by outside investors is known as ______.
the market for corporate control
Strategy Implementation primarily involves which of the following?
the organization, coordination, and integration of how work gets done
In order to determine if Home Depot has a competitive advantage, we must compare Home Depot's performance to ______.
the performance of other firms in its industry
The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.)Multiple select question.the power of buyers and suppliersthe threat of substitutesthe barriers to entrythe threat of entry
the power of buyers and suppliersthe threat of substitutesthe threat of entry
What are the two significant issues regarding the CEO pay debate? (Check all that apply.)
the relationship between firm performance and CEO pay the size of the CEO compensation in relation to average employee pay
Strategy is ______.
the set of actions a firm takes to achieve a competitive advantage
Both strategy formulation and strategy implementation are aspects of
the strategy process
Managers are able to influence which of the following types of external forces? (Check all that apply.)Multiple select question.the structure of their industrystrategic group compositioncurrency exchange ratesinterest rates
the structure of their industrystrategic group composition
Managers often have to make decisions between two conflicting strategic options, otherwise known as ______.
trade-offs
What can cause an outflow of intangible resource stocks from a firm? (Check all that apply.)
turnover of employees forgetting knowledge
competitive disadvantage
underperformance relative to other competitors in the same industry or the industry average
Private start-up companies valued at over $1 billion, such as some of those in the tech sector, are called ______.
unicorns
If parts of a firm's intended strategy fall by the wayside, it is referred to as
unrealized strategy
Which of the following are the three important stakeholder attributes managers must pay particular attention to during stakeholder impact analysis?
urgency power legitimacy
A resource is considered ______ if it helps a firm to deal with an external threat.
valuable
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
vision
