Ch. 1 Book Quiz

Firms achieve strategic competitiveness by: a. being the first to try a new business strategy. b. formulating and implementing a value-creating strategy. c. creating a vision for a company. d. starting a new company.

b. formulating and implementing a value-creating strategy.

Which of the following company statements is a vision statement? a. Nike: Just Do It. b. Disney: To be one of the world's leading producers and providers of entertainment and information. c. Habitat for Humanity: A world where everyone has a decent place to live. d. Allstate: You're in good hands with Allstate.

c. Habitat for Humanity: A world where everyone has a decent place to live.

Which of the following would be considered a product market stakeholder? a. A private equity firm investing in a biomedical firm b. A local pipefitters union dealing with a plumbing contractor c. A member of an ownership family in a privately owned company d. A store manager of a retail chain

b. A local pipefitters union dealing with a plumbing contractor

Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of the following correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company? a. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds. b. During the Great Recession, the United Auto Workers (UAW) union agreed to a pension restructuring with the three big U.S. car manufacturers. c. AIG's shareholders sued the U.S. government, arguing that the bailout the company received wasn't beneficial enough to financial investors. d. McDonald's announced wage increases for employees at its corporate-owned stores after months of protests by employees.

a. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds.

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.

Capital market stakeholders are most satisfied when a company's: a. returns align with the amount of risk they incurred by investing in a company or lending the company money. b. product market stakeholders are dissatisfied. c. leadership team is earning performance-based compensation. d. employees have a low turnover rate and receive salaries that are higher than the labor market.

a. returns align with the amount of risk they incurred by investing in a company or lending the company money.

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

Marquis is the international operations manager for an athletic clothing line. As part of his responsibilities, he regularly tours the factories of the company's suppliers. He recently took a tour of one of the most efficient plants that delivers low-cost clothing. This gives his company a greater profit margin. However, on the tour, he noticed an 8-year-old child operating one of the machines. Which of the following best describes how Marquis should report back to his CEO about the plant tour? a. Marquis should present a glowing recommendation for the supplier based on its financial performance and ability to help the company deliver above-average returns through higher profitability. b. Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values. c. Marquis should assume that the CEO is aware of the child labor practices at the supplier because the two companies have done business together for several decades. His report should focus on the operational improvements at the plant. d. Marquis should quit. He can't work for a company that employs child labor in any way. He should contact the media immediately after he leaves the company and tell them the whole story.

b. Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values.

A local community arts nonprofit organization is seeking to expand its programming and is considering putting just one new program in place this year. It may choose painting workshops for people with disabilities, summer camps for young children, a musical performing arts series for skilled musicians, or classes for seniors. The organization's most committed volunteer is a kindergarten teacher who has offered to be the leader of whichever new program the organization implements. If the nonprofit is utilizing the resource-based model of above-average returns, in which of the following ways should it expand its programming? a. Painting workshops for people with disabilities because they are not currently being offered by any other organizations in the community b. Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage c. A musical performing arts series for skilled musicians because it has the widest appeal in the community d. Classes for seniors because they can be hosted during the day and have good attendance among those who are retired

b. Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage

Cell phones and digital music files are examples of: a. hypercompetition. b. disruptive technologies. c. knowledge. d. core competencies.

b. disruptive technologies.

An assumption of the industrial organization (I/O) model of above-average returns that supports the need for a firm to find the most attractive industry in which to compete is that: a. the external environment imposes pressures and constraints that determine the strategies that would result in above-average returns. b. firms possess the same types of resources with value and those resources are mobile across companies. c. differences in resources and capabilities are the basis of competitive advantage. d. organizational decision makers are rational individuals who are committed to acting in the firm's best interests, as shown by their profit-maximizing behaviors.

b. firms possess the same types of resources with value and those resources are mobile across companies.

According to the resource-based model of above-average returns, differences in firms' performance across time can be attributed to the: a. strength and effectiveness of managers. b. unique capabilities and resources of each company. c. industry's structural characteristics. d. effective implementation of pricing strategies.

b. unique capabilities and resources of each company.

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

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.

Strategic leaders: a. can only be people in the C-suite of a company, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO). b. answer only to the demands made by capital market stakeholders for greater profitability. c. must have tenacity and a willingness to be brutally honest in order to be successful. d. revise a company's vision statement on an annual basis.

c. must have tenacity and a willingness to be brutally honest in order to be successful.

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.

In the resource-based model of above-average returns, a capability is: a. an input into a firm's production process. b. the foundation for a firm's mission. c. the capacity for a set of resources to perform a task or an activity in an integrative manner. d. a product of a large number of firms competing against one another in an increasing number of global economies.

c. the capacity for a set of resources to perform a task or an activity in an integrative manner.

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.

Which of the following is the most critical criterion in prioritizing stakeholders? a. Status b. Reliability c. Degree of risk d. Power

d. Power

Which of the following is an example of the mobility of strategies and resources across firms in the mobile network industry? a. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness compared to Verizon and AT&T. b. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to achieve a broad geographic network, serving both urban and rural areas. c. A high-level engineer from AT&T is prevented from working for Verizon for five years by a non-compete agreement. d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

All of the following are analyzed during a SWOT analysis EXCEPT: a. weaknesses. b. threats. c. strengths. d. objectives.

d. objectives

The strategic management process is the: a. full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns. b. analysis of the firm's external environment and internal organization to identify external opportunities and threats. c. utilization of the resource-based model of above-average returns to identify the internal resources a company should leverage to achieve strategic competitiveness. d. set of capabilities firms use to respond to various demands and opportunities existing in today's dynamic and uncertain competitive environment.

a. full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns.

Logan is an entrepreneur and president of his own company that makes a new software product that manages benefits administration for large multinational corporations. His startup company grew quickly to a team of about 25. A new federal law recently passed by Congress will cause small-business owners to invest in software like his to manage employee health care. Logan announces that the company will be investing in training for employees to better understand small-business owners and research and development (R&D) to create a small-business version of the software. This is an example of: a. having a strong strategic orientation and promoting innovation as a strategic leader. b. utilizing the industrial organization (I/O) model of above-average returns to determine the strategic direction of the firm. c. answering to demands made by capital market stakeholders for greater profitability. d. revising a company's vision statement to reflect changes in the competitive environment.

a. having a strong strategic orientation and promoting innovation as a strategic leader.

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.

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 multidivisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the industrial organization (I/O) model of above-average returns to develop its strategy. Which of the following decisions is consistent with this model? a. The company determines that it has an internal asset in a piece of software it developed for scheduling manufacturing processes and decides to make the software the centerpiece of its new business unit, selling it to transportation companies to manage their schedules. b. The company identifies a large steel tank it is currently selling to customers in the brewing industry and decides to begin selling it to customers in the transportation industry for transporting liquids. c. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand. d. The company decides to increase its investment in research and development to catch a competitor that has surpassed it in the technology it is using to produce steel tanks.

c. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand.

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.

According to your textbook, which of the following would be considered an important step in the A-S-P strategic management process? a. Building the company's organizational chart of strategic leaders b. Acquiring a new business unit to gain access to new markets and product lines c. Utilizing an outside consultant to lead the company through the planning process d. Identifying marketplace opportunities and threats in the external environment

d. Identifying marketplace opportunities and threats in the external environment

Michael is the CEO of a manufacturer with plants in three countries. He currently has a product line that is manufactured only in the company's U.S. plant. That product has experienced a steady increase in its export sales to Europe over the last three years. The international sales director is recommending that the company expand manufacturing capabilities at the European plant to include this product line. Michael and his management team must consider whether to pursue this strategy. This is: a. a decision driven by the industrial organization (I/O) model of above-average returns. b. a conflict between two of the company's stakeholder groups. c. the diffusion of technology and perpetual innovation to help the company achieve its goals. d. a decision that would benefit from using the entire strategic management process.

d. a decision that would benefit from using the entire strategic management process.