Chapter 1
A vision statement differs from a mission statement in that the vision statement: a. should be completed before a company analyzes its external environment and internal organization. b. is realistic, achievable, and measurable. c. speaks in broad terms of what the company wants to achieve. d. specifies the businesses in which the firm intends to compete and the customers it intends to serve.
c. speaks in broad terms of what the company wants to achieve.
An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values. a. True b. False
ANSWER: True
Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders. a. True b. False
ANSWER: True
In contrast to shareholders, a firm's customers prefer that investors receive a minimum return on their investments. a. True b. False
ANSWER: True
Power is the most critical criterion in prioritizing stakeholders. a. True b. False
ANSWER: True
An effective vision stretches and challenges people and can result in increased innovation. This is illustrated by Apple's CEO Steve Jobs, who was known to think bigger and differently than most people. a. True b. False
ANSWER: True
A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions. a. True b. False
ANSWER: False
All of a firm's resources and capabilities have the potential to be the foundation for a competitive advantage. a. True b. False
ANSWER: False
Alligator Enterprises has earned above-average returns since its founding five years ago. No other firm has challenged Alligator in its particular market niche; therefore, the firm's owners can feel secure that Alligator has established a competitive advantage. a. True b. False
ANSWER: False
An effective vision statement must specify the industry in which a company will operate. a. True b. False
ANSWER: False
Companies searching for opportunities in the global economy would likely conclude that the three leading European economies of Germany, United Kingdom, and France would be good investments because they are predicted to continue increasing in size. a. True b. False
ANSWER: False
Economies of scale and huge advertising budgets are more effective in the new competitive landscape than they were in the past. a. True b. False
ANSWER: False
Examples of incremental innovations include iPads, Wi-Fi, and the web browser. a. True b. False
ANSWER: False
If a firm is dependent on a specific stakeholder group, that group has less influence on the firm's strategic decision making. a. True b. False
ANSWER: False
Particularly when assessing investments in new venture firms, the most effective, and often the only, way to measure the performance of the firms and determine their viability as an investment option is to examine financial metrics such as returns on assets, and sales. a. True b. False
ANSWER: False
Research shows that a greater percentage of a firm's profitability is explained by the I/O model rather than the resource-based model. a. True b. False
ANSWER: False
Since the 1980s, the basis for competition has shifted from intangible resources to hard assets. a. True b. False
ANSWER: False
Stakeholders are people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission. a. True b. False
ANSWER: False
The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in the firm to serve the needs of the natural gardening community by providing rare and native plants to individuals and nurseries around the United States. The perspective of the CEO of Twin Spires is consistent with the assumptions of the industrial organization (I/O) model. a. True b. False
ANSWER: False
The I/O and resource-based models contain many of the same steps. One clear difference between the two models is the resource-based model starts by looking at the internal strengths and weaknesses of a firm, while the I/O model begins with an examination of the external environment. Another key difference is the resource-based model identifies an attractive industry much earlier in the process than does the I/O model. a. True b. False
ANSWER: False
The assumptions of the industrial organization model and the resource-based model are contradictory. Therefore, organizational strategists must choose one or the other model as the basis for developing a strategic plan. a. True b. False
ANSWER: False
The difference between average and above-average returns is that average returns are returns that an investor expects to earn from an investment as compared to other investments with similar stock prices, while above-average returns are in excess of expectations for similarly priced stocks. a. True b. False
ANSWER: False
The goal of strategy implementation is to develop a permanent competitive advantage. a. True b. False
ANSWER: False
The industrial organization (I/O) model suggests that above-average returns are determined primarily by the firm's unique internal resources rather than by external capabilities. a. True b. False
ANSWER: False
The local government with whom a firm interacts, the people who buy its products, and the contractors who supply raw materials are all part of a firm's capital market stakeholders. a. True b. False
ANSWER: False
The rapid rate of technological diffusion has increased the competitive benefits of patents. a. True b. False
ANSWER: False
The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and its ability to earn above-average returns under the industrial organization (I/O) model. a. True b. False
ANSWER: False
When a firm earns lower-than-average returns, the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders. a. True b. False
ANSWER: False
Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk. a. True b. False
ANSWER: True
RelTech is a firm in the electronics industry. It could protect its proprietary technology through patents. However, it likely will not apply for patents to keep competitors from gaining access to the technological knowledge included in the patent application.
ANSWER: True
Risk in terms of financial returns reflects an investor's uncertainty about the economic gains or losses that will result from a particular investment. a. True b. False
ANSWER: True
Six years ago, Colette Smith founded a successful catering company that specializes in providing a wide assortment of miniature cheesecakes for corporate and social events. Although Ms. Smith is no longer active in the actual production of the cheesecakes, she continues as president of the catering company. Ms. Smith could be considered a strategic leader of this firm. a. True b. False
ANSWER: True
Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy. a. True b. False
ANSWER: True
Strategic leaders must have a strong strategic orientation while simultaneously embracing change in the dynamic competitive landscape. a. True b. False
ANSWER: True
Strategy formulation and implementation must be simultaneously integrated for a successful strategic management process. a. True b. False
ANSWER: True
The firm's mission is more concrete than its vision. a. True b. False
ANSWER: True
The five forces model suggests that firms should target the industry with the highest potential for above-average returns and then implement either a cost-leadership strategy or a differentiation strategy. a. True b. False
ANSWER: True
The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO should understand that the task is not easy, largely because of inertia that can build up over time. a. True b. False
ANSWER: True
The rate of technology diffusion has increased significantly over the last two decades. a. True b. False
ANSWER: True
The two primary drivers of hypercompetition are the emergence of the global economy and technology. a. True b. False
ANSWER: True
To implement a firm's strategies, the firm takes actions to enact each strategy with the intent of achieving strategic competitiveness and above-average returns.
ANSWER: True
Even for companies capable of succeeding in global markets, it is critical that they: a. remain committed to and strategically competitive in their domestic market. b. introduce many new products immediately after entering a new market. c. acquire a local competitor in each significant foreign market. d. develop good negotiating skills in order to take advantage of local suppliers in the international market.
a. remain committed to and strategically competitive in their domestic market.
__________ is the capacity for a set of resources to perform a task or an activity in an integrative manner. a. A capability b. A core competence c. Sustainable competitive advantage d. Organizational intelligence
a. A capability
EnergyOne wants to install a high-capacity gas pipeline extension in the region. Shareholders anticipate better delivery of energy at lower costs, which will increase profitability. State and local governments are expecting increased tax revenue as well as new jobs in the region during construction of the expansion. Some customers look forward to lower gas rates as a result of more efficient delivery. Residents of the area, including customers and environmental groups, are opposed to the pipeline because of the increased risk for explosion and danger to the surrounding area. If EnergyOne cannot meet the needs of each stakeholder, what is the most critical way the firm prioritize them? a. By identifying its level of dependence on each stakeholder b. By considering the urgency of each stakeholder's need c. By classifying the vulnerability of each stakeholder d. By assessing the social value of each stakeholder
a. By identifying its level of dependence on each stakeholder
GlenOak Corp. is planning to open a second corporate office in a new city. The legal team at GlenOak Corp. is studying the various state and local regulations that control its industry in order to narrow down the possible sites to those which would be most conducive to success. What type of stakeholder is being focused at this stage? a. Host communities, which are product market stakeholders b. Shareholders, which are capital market stakeholders c. Primary customers, which are product market stakeholders d. Managers, which are organizational stakeholders
a. Host communities, which are product market stakeholders
Dissatisfied capital market stakeholders may: a. sell their stock. b. impose more flexible covenants on subsequent borrowing of capital. c. lobby for better working conditions for employees. d. All of these are correct.
a. sell their stock.
A firm has achieved __________ when it successfully formulates and implements a value-creating strategy. a. strategic competitiveness b. a permanently sustainable competitive advantage c. substantial returns d. legal and ethical core values
a. strategic competitiveness
Jan is the CEO of GlenOak Corp. After analyzing GlenOak's vision statement and aligning it with new environmental conditions, Jan rewrote GlenOak's mission. Which of the following best characterizes Jan's action? a. Jan should have involved managers at all levels in the firm as well as employees who interact with customers and the markets for input when rewriting the mission statement. b. Because a mission can change along with environmental circumstances, Jan did the right thing in rewriting the mission. c. Because the CEO has the final responsibility for forming a firm's mission, it was proper for Jan to rewrite the mission statement. d. A mission statement is an enduring reflection of the values and aspirations of a firm, and Jan should not have rewritten it.
a. Jan should have involved managers at all levels in the firm as well as employees who interact with customers and the markets for input when rewriting the mission statement.
RelTech has developed a proprietary approach to supply chain management and uses that expertise as a source of competitive advantage. RelTech is relying on what intangible asset as a basis of competition? a. Knowledge b. Insight c. Intensity d. Strategic flexibility
a. Knowledge
__________ innovation is a term used to describe how rapidly and consistently new, information-intensive technologies replace older ones. a. Perpetual b. Disruptive c. Global d. Diffusion
a. Perpetual
Sandy, a line manager on the production floor at Oakway Industries, is an entry-level manager. Sandy has a strong commitment to the Oakway's vision and mission. She has good relationships with workers on her line as well as with employees throughout Oakway. Sandy is able to make decisions on the fly to keep the line moving, and other line managers often ask for her help in troubleshooting different situations. Which of the following best characterizes Sandy? a. Sandy is a strategic leader. b. Sandy is assuming inappropriate responsibility considering her position in the firm. c. Sandy is likely to be promoted into an upper-management position where she would become a strategic leader. d. If Sandy were using these same skills to determine strategy, perhaps in the finance department rather than on the production line, she would be considered a strategic leader.
a. Sandy is a strategic leader.
Product market stakeholders generally are satisfied when: a. a firm's profit margin reflects at least a balance between the returns to capital market stakeholders and the returns in which they share. b. a firm's profit margin yields an above-average return to its capital market stakeholders. c. the interests of the firm's organizational stakeholders have been maximized. d. the interests of all stakeholders have been at least minimally satisfied.
a. a firm's profit margin reflects at least a balance between the returns to capital market stakeholders and the returns in which they share.
A firm's mission is: a. a statement of a firm's businesses in which it intends to compete and the customers it intends to serve. b. an internally-focused affirmation of the organization's financial, social, and ethical goals. c. mainly intended to emotionally inspire employees and other stakeholders. d. the foundation for the firm's vision.
a. a statement of a firm's businesses in which it intends to compete and the customers it intends to serve.
The strategic leader's work is characterized by: a. ambiguous decision situations. b. a willingness to unify stakeholders through skillful manipulation. c. an ability to identify solutions to long-range problems. d. concentration on the practical day-to-day aspects of the organization's operations.
a. ambiguous decision situations.
Effective strategic leaders emerge on the basis of their: a. capabilities and accumulation of human capital and skills over time. b. single-minded focus on strategy formation. c. aptitude for strategy implementation. d. focus on innovation.
a. capabilities and accumulation of human capital and skills over time.
Before liquidating during a bankruptcy, a company will take several actions to try to satisfy its __________ stakeholders. a. capital market b. product market c. organizational d. governmental
a. capital market
The global economy, globalization, rapid technological change, and the increasing importance of knowledge and people as sources of competitive advantage are creating the need to: a. delegate strategic responsibilities to employees "closer to the action." b. split responsibilities between the CEO and the board of directors to minimize the possibility of corporate scandals triggered by unethical CEOs. c. re-centralize the responsibility for strategy to the CEO. d. expand the strategic responsibilities to all organizational stakeholders.
a. delegate strategic responsibilities to employees "closer to the action."
New markets created by the technologies underlying the development of products such as iPads and Wi-Fi are a result of: a. disruptive technologies. b. global competition. c. knowledge intensity. d. hypercompetition.
a. disruptive technologies.
The resource-based view of the firm: a. emphasizes that it is difficult to achieve and sustain a competitive advantage based on resources alone. b. argues that the industry environment has a stronger influence on firms' ability to implement strategies successfully than does the competitive environment. c. calls for firms to focus on their homogeneous capabilities to compete against their rivals. d. suggests that vision and mission are marketing messages not tied to strategic plans.
a. emphasizes that it is difficult to achieve and sustain a competitive advantage based on resources alone.
It is important to emphasize that primarily because they are related to how a firm interacts with its stakeholders, almost all strategic management process decisions have __________ dimensions. a. ethical b. local c. political d. global
a. ethical
The industrial organization (I/O) model argues that the: a. key factor in success is choosing the correct industry in which to compete. b. firm's internal resources and capabilities represent the foundation for development of a value-creating strategy. c. key to earning above-average returns is strategic flexibility. d. internal structure of the organization must match the industry in which it competes for it to earn above-average returns on investment.
a. key factor in success is choosing the correct industry in which to compete.
The culmination of the strategic management process is: a. performance. b. strategy implementation. c. strategy formulation. d. analysis.
a. performance.
William Ackman is a hedge fund manager who owned a large share of J.C. Penney stock. He was also a member of the J.C. Penney board. He tried to get the CEO fired, but the board and top management said he breached his boardroom duties when he publicly disclosed information about the CEO search and financial condition of the company. He resigned from the board of directors. This is an example of a contentious relationship between: a. the capital market stakeholders and the organizational stakeholders. b. the organizational stakeholders and the product market stakeholders. c. the capital market stakeholders and the product market stakeholders. d. all of the stakeholders.
a. the capital market stakeholders and the organizational stakeholders.
The goal of the organization's __________ is to point the firm in the direction of where it would like to be in the years to come. a. vision b. mission c. culture d. strategy
a. vision
Organizational culture is the: a. complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business. b. structure of a company's organizational chart of strategic leaders, including their roles and responsibilities. c. attitude of a company's owners or shareholders. d. policies and procedures detailed in the company's employee handbook.
a. complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business.
The industrial organization (I/O) model of above-average returns: a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns. b. concentrates on the unique resources and capabilities of a firm to direct its strategic management process. c. is a new approach to strategic management that emphasizes technological advancement. d. is critical to competing in the global economy and the information age because of its emphasis on organizational development.
a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.
__________ provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters changes. a. Strategic flexibility b. Continuous learning c. Knowledge d. The Internet
b. Continuous learning
Knollbridge Industries has been expanding globally. The company wants to build employee skills for the global landscape in order to provide employees with more opportunities and also leverage their expertise in more markets. They can best facilitate this effort through what strategy? a. Establishing first-mover advantage b. Making international assignments c. Designing diversity training programs d. Limiting expatriate experiences
b. Making international assignments
The CEO of Ridgeway, Inc., realizes that the company's survival depends on developing and acquiring knowledge. Which of the following actions by the CEO would be MOST consistent with this need? a. Ensuring that all current, unique knowledge of the firm is protected by patents b. Planning extensive employee training and hiring educated and experienced employees c. Investing in sophisticated databases in relevant knowledge areas d. Establishing a system of organizational intelligence gathering
b. Planning extensive employee training and hiring educated and experienced employees
Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors higher returns than those earned by its direct competitors' investors. RNH has a reputation for providing high-paying managerial and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and inadequate patient-care staffing. Which of the following statements best describes the situation? a. RNH has been earning below-average returns, so it has had to prioritize the demands of its various stakeholders. b. RNH has prioritized the demands of capital market stakeholders and organizational stakeholders over the demands of product market stakeholders. c. RNH has earned above-average returns and so has satisfied the needs of all relevant stakeholders. d. RNH has been attempting to minimally satisfy the demands of all of its stakeholders.
b. RNH has prioritized the demands of capital market stakeholders and organizational stakeholders over the demands of product market stakeholders.
An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization (I/O) model of above-average returns and is using that as a guideline to make a decision. Both start-up companies propose to manufacture health-focused foods with low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthy lifestyles, but it does not have any executives with experience in food production. Which investment decision is the investor most likely to make? a. The investor will select Green Pastures Foods since it is most consistent with the I/O model. b. The investor will select RexRich Foods since it is most consistent with the I/O model. c. Since both firms are consistent with the I/O model, the investor will seek additional information before making a decision. d. At the entrepreneurial stage, the model that companies follow is not important, and the investor will wait before making any investments.
b. The investor will select RexRich Foods since it is most consistent with the I/O model.
A company's ability to acquire knowledge is: a. less important in the twenty-first century than in previous periods of business history. b. an increasingly valuable source of competitive advantage. c. not considered an asset or resource for businesses. d. only important in high-technology industries.
b. an increasingly valuable source of competitive advantage.
In the strategic management process, A-S-P stands for: a. analyses, successes, and purposes. b. analyses, strategies, and performance. c. ability, strategies, and purposes. d. ability, successes, and performance.
b. analyses, strategies, and performance.
A retail outlet can attempt several remedies to improve profitability to meet the expectations of its __________ stakeholders, including closing stores, changing the top management team, and seeking potential buyers. a. product market b. capital market c. organizational d. governmental
b. capital market
PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision: a. should be based solely on the results of the CEO's approval of the mine's general manager. b. has ethical implications for organizational stakeholders. c. need not be socially responsible if the firm is making below-average returns from the mine. d. All of these are important to consider.
b. has ethical implications for organizational stakeholders.
Strategic leaders are: a. located only at the executive level. b. located in different areas and levels. c. the CEO, COO, and CFO only. d. located at different levels, but only in the operating area of the organization.
b. located in different areas and levels.
Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is: a. maximizing the firm's return on investment. b. receiving the highest-quality services in the industry at any price. c. obtaining reliable products at the lowest possible prices. d. increasing the profitability of the firm.
c. obtaining reliable products at the lowest possible prices.
All of the following are assumptions of the industrial organization (I/O) model EXCEPT: a. organizational decision makers are assumed to be rational and committed to acting in the firm's best interests. b. resources to implement strategies are firm-specific and attached to firms over the long-term. c. the external environment is assumed to impose pressures and constraints that determine the strategies that would result in above-average returns. d. most firms competing within an industry or within a segment of that industry are assumed to control similar strategically relevant resources and to pursue similar strategies in light of those resources.
b. resources to implement strategies are firm-specific and attached to firms over the long-term.
Capital market stakeholders include: a. industry competitors. b. shareholders. c. employees. d. government regulators.
b. shareholders.
A key purpose of a vision and mission statement is to inform _________ what a firm is, what it seeks to accomplish, and who it seeks to serve. a. CEOs b. stakeholders c. regulators d. former employees
b. stakeholders
In order to cope with hypercompetition, firms need to develop __________ through continuous learning. a. competitive resilience b. strategic flexibility c. strategic power d. competitive dominance
b. strategic flexibility
A __________ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. a. goal b. strategy c. tactic d. mission
b. strategy
Organizational culture refers to: a. an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. b. the complex set of ideologies, symbols, and core values that are shared throughout the firm. c. a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment. d. how a firm acquires, uses, and develops its various resources and capabilities.
b. the complex set of ideologies, symbols, and core values that are shared throughout the firm.
The primary drivers of hypercompetition are __________ and __________. a. rising global socio-economic instability; increased inflation b. the emergence of a global economy; rapid technological change c. increased global competition; decreased tariffs d. increased availability of capital; increased competition
b. the emergence of a global economy; rapid technological change
Alibaba is a company in the Internet services industry that has improved its performance by focusing on its unique abilities in the area of innovation and service diversification. This improved performance is best explained by: a. globalization. b. the resource-based model. c. the industrial organization (I/O) model. d. hypercompetition.
b. the resource-based model.
A large corporation has earned a reputation for being a challenging work environment for employees, placing demands on employees' time and pushing them to accomplish tasks, sometimes with little recognition. A recent audit found that the company was denying employees overtime pay despite the extra work. This is a reflection of the company's: a. core values of hard work to gain advancement. b. unethical organizational culture. c. lack of an organizational mission. d. search for its core competencies.
b. unethical organizational culture.
Which of the following could be a part of the analysis stage of the strategic management process? a. A mission and vision task force developing these foundational statements for the company b. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers c. The collection of financial data used to track the success of the strategic plans the company is pursuing d. The selection of strategies the company will pursue to achieve its financial goals and satisfy its shareholders
b. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers
Which of the following describes a company that has delivered above-average returns to its investors? a. A biotech firm that recently announced it has received FDA approval for its new orphan drug to treat a rare heart condition and will be able to sell the treatment for $10,000 per year per patient beginning in the fall b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets c. A retail company that announced it saw growth in same-store sales from last year to this year and will open 250 new stores to capitalize on its growing popularity d. An airline that reported weaker-than-projected earnings this year because of increased maintenance costs for its aging fleet of planes
b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets
Hypercompetition describes a competitive landscape in which: a. there are thousands of companies competing within the same industry for the same group of customers. b. rivalry tends to occur among global competitors who innovate regularly and successfully. c. the business is dominated by a single company, pushing all competitors to imitate its strategies and develop similar resources. d. the industry has a high cost of entry in capital investment, research and development (R&D), or hiring of talented employees.
b. rivalry tends to occur among global competitors who innovate regularly and successfully.
A _____ is a picture of what the firm wants to be and, in broad terms, what it wants to achieve. a. mission b. vision c. capability d. competitive advantage
b. vision
Which of the following statements about a vision and mission is true? a. A firm's vision is more concrete than its mission. b. The mission points the firm in the direction of where it would like to be in the years to come. c. A vision statement should be clearly tied to the conditions in the firm's external environment and internal organization. d. The mission deals more directly with capital markets.
c. A vision statement should be clearly tied to the conditions in the firm's external environment and internal organization.
A forward-looking analysis suggests that markets in __________ will yield significant opportunities, as their economies, while currently not the largest, are expected to grow significantly in the future. a. the European Union b. Germany and India c. India and China d. China and Japan
c. India and China
__________ is an investor's uncertainty about the economic gains or losses that will result from a particular investment. a. Return b. Reward c. Risk d. Revenue
c. Risk
The firm's __________ provide the foundation for choosing one or more __________ and deciding which one(s) to implement. a. analyses; strengths b. abilities; strengths c. analyses; strategies d. abilities; strategies
c. analyses; strategies
Delegation helps: a. overload middle managers. b. control strategy implementation. c. avoid too much managerial arrogance at the top. d. emphasize profit maximization.
c. avoid too much managerial arrogance at the top.
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 when competitors are unable to duplicate a strategy or find it too costly to try to imitate. d. exists when competing firms are unable to find investors.
c. can be identified when competitors are unable to duplicate a strategy or find it too costly to try to imitate.
Todd works at EnergyOne and also owns shares of stock in the company and is a member in the union there. Todd himself is a(n) __________ stakeholder; the union is a(n) __________ stakeholder. a. product market and organizational; organizational b. capital market; capital market c. capital market and organizational; product market d. organizational; organizational and product market
c. capital market and organizational; product market
Organizational stakeholders are usually satisfied when: a. their return on investment has been maximized. b. customers pay the highest sustainable price for the goods and services they receive. c. companies provide a dynamic, stimulating, and rewarding work environment. d. companies are paying the highest prices to suppliers.
c. companies provide a dynamic, stimulating, and rewarding work environment.
When capabilities serve as a source of competitive advantage for a firm over its rivals, the firm has created a(n): a. strategic mission. b. inspiring vision. c. core competence. d. sustainable market niche.
c. core competence.
For a diversified firm, corporate-level strategy is concerned with: a. operating each individual business under the corporate umbrella. b. determining how each functional department of the firm will operate. c. determining the businesses in which the company intends to compete as well as how to manage its different businesses. d. coordinating the vision and mission of each subsidiary firm.
c. determining the businesses in which the company intends to compete as well as how to manage its different businesses.
Henry Ford once said, "If I had asked people what they wanted, they would have said faster horses." The invention of the car is an early example of: a. the march of globalization. b. rapid technological diffusion. c. disruptive technologies. d. products that were not imitated by competitors.
c. disruptive technologies.
The industrial organization (I/O) model is grounded in: a. anthropology. b. psychology. c. economics. d. accounting.
c. economics
The Chambers of Commerce of cities and towns often implore citizens to buy from local businesses. This is because the organization's role as a taxpayer is MOST important to __________ as stakeholders. a. major suppliers of capital b. shareholders c. host communities d. unions
c. host communities
A diversified firm competing in multiple product markets has: a. no business-level strategy and one corporate-level strategy. b. one business-level strategy and no corporate-level strategy. c. more than one business-level strategy and one corporate-level strategy. d. one business-level strategy and one corporate-level strategy.
c. more than one business-level strategy and one corporate-level strategy.
To have the potential to become sources of competitive advantage, resources and capabilities must be non-substitutable, valuable, __________, and __________. a. unique; easy to imitate b. easy to imitate; difficult to implement c. rare; costly to imitate d. easy to implement; unique
c. rare; costly to imitate
A major assumption about the strategic management process is that it is: a. inspired. b. team-based. c. rational. d. inclusive.
c. rational.
All of the following are assumptions of the resource-based model EXCEPT: a. firms acquire different resources and develop unique capabilities based on how they combine and use resources. b. firms' performances across time are due primarily to their unique resources and capabilities rather than the industry's structural characteristics. c. resources and capabilities are highly mobile across firms. d. differences in resources and capabilities are the basis of competitive advantage.
c. resources and capabilities are highly mobile across firms.
The "liability of foreignness" is the: a. inability of most U.S. managers to truly comprehend foreign cultures. b. political disadvantage that U.S. firms have when doing business abroad. c. risk of participating outside a firm's domestic markets in the global economy. d. preference for "buying local," which always puts foreign firms at a disadvantage when competing in the U.S. market.
c. risk of participating outside a firm's domestic markets in the global economy.
A business-level strategy describes: a. the businesses in which the company intends to compete. b. all policies and procedures used in functional departments. c. the actions a firm takes to exploit its competitive advantage over rivals. d. a firm's resources, intent, and mission.
c. the actions a firm takes to exploit its competitive advantage over rivals.
All of the following are characteristics of the global economy EXCEPT: a. the increasing importance of emerging economies as sources of revenue growth. b. the free movement of goods, services, people, skills, and ideas across geographic borders. c. the increased use of tariffs to protect industries. d. higher levels of opportunities and challenges in new geographic markets.
c. the increased use of tariffs to protect industries.
Which of the following statements is MOST consistent with the I/O view? Performance of a firm is most directly attributable to: a. the power of the financial market stakeholders. b. the resources the firm possesses. c. the profitability of the industry in which the firm competes. d. hypercompetition within the industry.
c. the profitability of the industry in which the firm competes.
The Princeton Alliance Church states on its website that "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope." This pronouncement is MOST precisely a statement of organizational: a. values. b. structure. c. vision. d. culture.
c. vision
All of the following are resources of an organization EXCEPT: a. an hourly production employee's ability to catch subtle quality defects in products. b. oil drilling rights in a promising region. c. weak competitors in the industry. d. a charity's board of directors of experienced executives.
c. weak competitors in the industry.
Companies must be aware of technological advances within their industry and make strategic management decisions that take into account perpetual innovation and disruptive technologies. Which of the following is an example of a company that did not respond strategically to technological changes? a. After Google introduced the concept of pay-per-click advertising, a competing search engine, Bing, introduced a similar advertising model. b. Samsung, LG, and other cell phone manufacturers continued to innovate their products after the introduction of the Apple iPhone to keep up with customer expectations of smartphones. c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology. d. Amazon decided to enter into the online streaming video market with Amazon Prime Video to compete directly with Netflix.
c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology.
Research shows that approximately _____ percent of a firm's profitability is explained by the industry in which it chooses to compete, whereas _____ percent is explained by the firm's characteristics and actions. a. 90; 10 b. 60; 40 c. 36; 20 d. 20; 36
d. 20; 36
Managers must adopt a new mind-set that values __________ and the challenges that evolve from constantly changing conditions. a. flexibility b. innovation c. speed d. All of these are correct.
d. All of these are correct.
Successful strategic leaders are: a. committed to helping the firm create value for all stakeholder groups. b. committed to nurturing those around them. c. decisive. d. All of these are correct.
d. All of these are correct.
Which of the following statements about organizational knowledge is true? a. Knowledge is an intangible resource. b. Firms with appropriate internal knowledge resources are likely to invest an appropriate amount of money in research and development. c. The value of knowledge as a proportion of total shareholder value is increasing. d. All of these are correct.
d. All of these are correct.
In 2018, __________ was the second-largest economy in the world. a. the United States b. the European Union c. Japan d. China
d. China
Greenleaf Property Management has been earning below-average returns for the last three years. Which of the following statements is true? a. Greenleaf will be able to satisfy its multiple stakeholders easily as long as the stakeholders are committed to the strategic mission of the firm. b. Greenleaf 's current goal should be to satisfy each group's minimal expectations. c. Greenleaf will need to prioritize the demands of its stakeholders to maximize the interests of all stakeholders. d. Greenleaf will not be able to minimally satisfy all stakeholders.
d. Greenleaf will not be able to minimally satisfy all stakeholders.
The rate of technological diffusion has increased substantially over the past 15 to 20 years. Which of the following was fastest in penetrating 25 percent of homes in the United States? a. Radio b. Television c. Personal computers d. Internet
d. Internet
In the resource-based model, which of the following factors would be considered a key to organizational success? a. Unique market niche b. Weak competition c. Economies of scale d. Skilled employees
d. Skilled employees
GlenOak Corp. is conducting an analysis to determine which strategies would best enable the firm to achieve above-average returns. How might the firm best make use of the different models available to select strategies and determine how to implement them? a. The firm should first focus on internal factors, using a resource-based model to acquire necessary assets and skills. b. The firm should first focus on external factors, using an I/O model to identify the firm's competitive advantage. c. If the firm should write a vision and mission, and then use the I/O or resource-based model that best aligns with those statements. d. The firm should use both the I/O model and the resource-based model to focus on factors outside and inside the firm at the same time.
d. The firm should use both the I/O model and the resource-based model to focus on factors outside and inside the firm at the same time.
Firms use the five forces model of competition to identify the __________ of an industry, as measured by its __________. a. size; number of competitors b. globalization; percentage of exports c. hypercompetition; technology diffusion d. attractiveness; profitability potential
d. attractiveness; profitability potential
The increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital, and knowledge across country borders is defined as: a. hypercompetition. b. boundaryless retailing. c. strategic intensity. d. globalization.
d. globalization.
Globalization has led to: a. lower operational efficiency, as firms must transport raw materials and finished goods farther. b. increasing loyalty of customers for products made domestically. c. declining returns from investment in research and development. d. higher performance standards in competitive dimensions, including quality and cost.
d. higher performance standards in competitive dimensions, including quality and cost.
The resource-based model argues that: a. all resources have the potential to be the basis of sustainable competitive advantage. b. resources alone can be a source of sustainable competitive advantage. c. the key to competitive success is the structure of the industry in which the firm competes. d. resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
d. resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
Above-average returns are: a. higher profits than the firm earned the previous year. b. higher profits than the industry averaged over the last 10 years. c. profits in excess of what an investor expects to earn from a historical pattern of performance of the firm. d. returns in excess of what an investor expects to earn from other investments with a similar level of risk.
d. returns in excess of what an investor expects to earn from other investments with a similar level of risk.
SWOT stands for: a. strategy, wealth, organization, and threats. b. success, weakness, opportunities, and taxes. c. strength, wealth, organization, and taxes. d. strengths, weaknesses, opportunities, and threats.
d. strengths, weaknesses, opportunities, and threats.
In smaller, new venture firms, returns are sometimes measured in terms of: a. return on assets. b. return on equity. c. return on sales. d. the amount and speed of growth.
d. the amount and speed of growth.
The strategic management process is: a. a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm. b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment. c. a process directed by top management with input from other stakeholders that seeks to earn above-average returns for investors through effective use of the organization's resources. d. the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.
d. the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.
Tockit is a children's toy developer that uses the resource-based model of above-average returns. Which of the following steps does it use in its business? a. Study the external environment, especially the industry environment. b. Use the firm's strengths to implement the strategy. c. Find the most attractive industry in which to compete. d. Determine the firm's capabilities.
d. Determine the firm's capabilities.
Christopher is the manager of the development department for a large company. Recently, he scheduled a meeting with a challenging objective—to discuss a failing project with one of his product development teams. The project is costing a lot of time and money but does not appear to have any return on investment in sight. Which of the following approaches would demonstrate successful strategic leadership? a. He should inform them that the project they are working on is no longer aligned with the company's vision, that he's killing it, and that all of their work has been in vain. b. He should keep the project going despite its failure because he doesn't have any better projects for them to work on. c. He should blame the markets for making the project unsuccessful and announce that the company is shifting customer targets and will work on the project in the context of a new industry. d. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.
d. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.