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