CHAP 1 Practice Questions

What was BP's strategic response to the penalties associated with the 2010 Deepwater Horizon oil spill?

The company sold off a significant number assets, creating a smaller, more agile business

A good strategy consists of three elements. The first element is accomplished through analysis of the firm's external and internal environments. We also call this:

a diagnosis of the competitive advantage

sustainable competitive advantage exists when:

a firm maintains superior performance relative to its industry over a long period of time

Strategy is

a set of actions a firm takes to achieve a competitive

Which of the following could be accurately be called a strategy?

a set of activities designed to achieve a sustainable competitive advantage

When a stakeholder has power over a company it is`

able to influence the company to pursue a course of action it would not other wise take

A _____________ event is an unexpected and unlikely occurrence that has a significant impact on society

black swan

How should managers prioritize stakeholder concerns in the final step of stakeholder impact analysis?

by considering the power, legitimacy, and urgency of stakeholder claims

When a firm implements a strategy that leads to superior performance relative to other companies in the same industry, it is said to achieve a:

competitive advantage

If a firm has a 10% return on invested capital while the industry average return on the invested capital is 18%, the firm has:

competitive disadvantage

Michael's Deli is able to perform at the same level as its primary competitor. Michael's Deli has

competitive parity

The idea that firms should voluntarily give back to society when they are able to is also known as

corporate citizenship

When identifying stakeholders, a firm should focus only on those stakeholders that

currently have, or could potentially have, a material effect on the firm

Which of the following elements of the pyramid of corporate social responsibility are required by society?

economic responsibilities, legal responsibilities

Which of the following incentivize employees by offering them discounted shares or retirement plans based on company stock?

employee stock ownership plans

Starbuck's commitment to fair trade and responsible practices indicates that the firm takes its ____ responsibilities seriously

ethical

True or False: managers should only obey laws when they do not interfere with the firm's strategy

false

As a CEO, Maya's actions influence company performance far more than any forces exerted by the external environment. Maya's actions are classified as

firm effects

In the ___ step of the stakeholder impact analysis, firms identify their various social responsibilities to stakeholders

fourth

Stakeholders are

individuals or groups that can affect and are affected by the actions of a business

In the second step of the stakeholder impact analysis, managers need to identify and understand stakeholders'

interests and claims

Managers have ____ resources in their quest for competitive advantage

limited

The third step of stakeholder impact analysis requires managers to identify the ____ and____ presented by internal and external stakeholders

opportunities and threats

Which of the following is a strategy used by Threadless to reduce costs?

outsourcing activities to consumers

Strategic positioning allows managers to

provide customer value while controlling costs

The most like result of failing to meet the needs of shareholders is that they will

sell the company's stock, negatively affecting the firm's market value

Stakeholder strategy argues that focusing only on the needs of ___ places the firm at risk of failure

shareholder

Which of the following is a tool that managers can use to address the needs of stakeholder while maintain 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

In order to achieve and sustain competitive advantage, a company devises and adopts a set of goal directed actions known collectively as _________.

strategy

The Bright Bulb light bulb ocmpany produces a line of LED bulbs that 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 then competitors bulb

The most important factor in determining firm performance is

the firm's strategy

In order to determine if the Home Depot has a competitive advantage, we must compare the Home Depot's performance to:

the performance of other firms in its industry

Walmart and Nordstrom maintain very different strategic positions, one based on cost leadership and the other based on differentiation through superior customer service. This is an example of:

the trade-offs required by strategic positioning

In the ____ step of the stakeholder impact analysis, the firm identifies the opportunities and threats that stakeholders present to the firm

third

Competitive Parity occurs when

two or more firms achieve the same performance results

A successful business strategy creates ____ for both producers and consumers

value

A firm can gain a competitive advantage by providing goods and services:

- that create more value for consumers than competitors' offerings - that are of similar quality to competitor's offerings but can be sold at a lower price due to lower costs

Which of the following are primary strategy objectives?

-Creating value -controlling costs

Which of the following are considered part of the firm's economic responsibilities?

-Firms need to repay the debts they have with creditors and suppliers -firms must try to give investors a sufficient return on their invested capital

Institutional investors like TIAA-CREF and the Vanguard Group have much more power over a firm than individual investors, because

-They are able to buy or sell a much larger number of shares than can individuals -They can exercise block-voting rights or otherwise influence the corporate government process

A well-devised strategy helps a firm understand

-What to do -What not to do

Which of the following legal developments allow business to function as an institution?

-contract enforcement -property rights

What are the expectations that society has of the business enterprise as described in the CSR framework?

Ethical, legal, economic, philanthropic

Customers, suppliers, creditors, unions, and governments, are known as:

External stakeholders

The industry a firm is in determines about ___ of the firm's profitability.

20%

The _____ is an example of a black swan event

2008 global financial crisis

What is the overall purpose of strategic management?

Gain Competitive Advantage