MAN 4270 Chapter 1-3 TRUE/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. (T/F)

FALSE

Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity. (T/F)

FALSE

Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others in terms of ethical considerations. (T/F)

FALSE

An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, or low rivalry among firms. (T/F)

FALSE

An effective vision statement must specify the industry in which a company will operate. (T/F)

FALSE

Contrary to popular belief, the global segment of the external environment does not provide many opportunities for firms that recently experienced low growth and profits coming from emerging markets. (T/F)

FALSE

Corporate-level strategy in a diversified organization requires a common business strategy for each component business. (T/F)

FALSE

Costly-to-imitate capabilities are those which other firms cannot easily develop as they have no strategic equivalent. (T/F)

FALSE

Creating customer value is the source of the firm's potential to earn above-average returns. (T/F)

FALSE

Firms can directly control the elements of the seven segments of the general environment. (T/F)

FALSE

Firms should never outsource a primary activity because of the danger of the activity being Imitated by rivals. (T/F)

FALSE

Firms should seek to continually develop new core competencies because all core competencies guarantee above-average profit. (T/F)

FALSE

Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales. (T/F)

FALSE

The rate of technology diffusion has been steadily increasing over the last two decades. (T/F)

TRUE

Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work. (T/F)

TRUE

Exit barriers are especially low in the airline industry because aircraft are not particularly Specialized and can easily be sold to other airlines, air cargo companies, the military, or even to wealthy individuals who want to own a private jet. (T/F)

TRUE

Firms achieve strategic competitiveness and earn above-average returns by acquiring, bundling, and leveraging their resources for the purpose of taking advantage of opportunities in the external environment in ways that create value for customers. (T/F)

TRUE

Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders. (T/F)

TRUE

In today's global economy, some resources that were traditionally critical to firms' efforts to sell goods are now less likely to be a source of competitive advantage.​ (T/F)

TRUE

One criterion for a resource or capability to be a source of competitive advantage is that it must allow the firm to perform a value-creating activity that competitors cannot perform. (T/F)

TRUE

Organizational mission statements typically do not include statements about profitability and earning above-average returns. (T/F)

TRUE

PepsiCo's strategy called "capital performance with a purpose" links green efforts in businesses to the bottom line. This is an example of addressing concerns in the physical segment of the general environment. (T/F)

TRUE

Relative power is the most critical element for prioritizing the demands of stakeholders. (T/F)

TRUE

Resources are the source of capabilities, some of which lead to the development of core competencies. In turn, some core competencies may lead to competitive advantage. (T/F)

TRUE

Resources must be combined to form capabilities, as illustrated by Chipotle, which linked fresh ingredients with several other resources, including the marketing and training of employees, as the foundation for customer service as a capability (T/F)

TRUE

Risk in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment. (T/F)

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. (T/F)

TRUE

Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy (T/F)

TRUE

Strategic leaders must have a strong strategic orientation while embracing change in the dynamic competitive landscape. (T/F)

TRUE

Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing Industry, or switching costs are high. (T/F)

TRUE

Technology has made it more difficult for companies to find ways to develop competitive advantages. (T/F)

TRUE

The European sovereign-debt crisis and political upheavals in Egypt, Tunisia, Libya, and Syria illustrate uncertainties in the political/legal segment of the general environment that could affect the performance of business firms. (T/F)

TRUE

The bankruptcy filings by General Motors and Chrysler Corporation during the Great Recession illustrate that firms cannot directly control the general environment's segments. (T/F)

TRUE

The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and Lowe's, and Airbus and Boeing). (T/F)

TRUE

The five competitive forces model expands the arena of competitive analysis beyond direct competitors (i.e., rivals) to include buyers and suppliers who may also be a source of competition. (T/F)

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. (T/F)

TRUE

The foundation of many capabilities lies in the unique skills and knowledge of a firm's employees. (T/F)

TRUE

The industry environment directly influences a firm and its competitive actions and responses. (T/F)

TRUE

The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO feels that the employees of the company have the ability, training, and resources to engage in continuous learning. The CEO must encourage ambidextrous learning, absorbing new knowledge and building incremental knowledge. (T/F)

TRUE

The objective of assessing the external environment is to determine the timing and importance of the effects of environmental changes and trends on the strategic management of the firm. (T/F)

TRUE

The process of competitor analysis should examine the competitors' future objectives, current strategy, assumptions, and capabilities. (T/F)

TRUE

The rate of growth of Internet-based applications could be affected by strategies of Internet service providers charging users for downloading those applications. (T/F)

TRUE

The two primary drivers of hypercompetition are the emergence of the global economy and technology. (T/F)

TRUE

The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and determines its ability to earn above-average returns under the I/O view. (T/F)

TRUE

To implement a firm's strategies, the firm takes actions to with the goal of achieving strategic competitiveness and above average returns. (T/F)

TRUE

Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization. (T/F)

TRUE

Walmart uses core competencies, such as information technology and distribution channels, to create value for its customers through its "everyday low prices." (T/F)

TRUE

When Delta Air Lines wants to study Continental Airlines, it must examine both Continental and its complementor, Star Alliance. (T/F)

TRUE

While patents may be an effective way of protecting proprietary technology, many firms competing in the electronics industry do not apply for patents to prevent competitors from utilizing the technological knowledge that would be included in the patent application. (T/F)

TRUE

By themselves, resources can allow firms to create value for customers as the foundation for earning above-average returns. (T/F)

FALSE

Capabilities are usually developed separately from specific functional areas such as manufacturing, R&D, and marketing. (T/F)

FALSE

Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources. (T/F)

FALSE

Compared to tangible resources, intangible resources are an inferior source of core competencies. (T/F)

FALSE

Competitor analysis is focused on the factors and conditions influencing an industry's profitability (T/F)

FALSE

Customers, suppliers, unions, and local governments are examples of capital market stakeholders. (T/F)

FALSE

Developed countries still have major advantages in their access to information technology when compared to emerging economies because of the significant cost of the infrastructure needed for computing power. (T/F)

FALSE

Developing a political strategy by the newly formed General Motors would likely be ineffective as firms are generally unable to influence the political/legal environment. (T/F)

FALSE

Eavesdropping by the NSA on average Americans is ethical because it is a governmental organization instead of a for-profit company. (T/F)

FALSE

Eavesdropping is an ethical way to obtain information about competitors' actions. (T/F)

FALSE

Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past. (T/F)

FALSE

Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software. (T/F)

FALSE

Generally, industries with stronger competitive forces have higher profit potential. (T/F)

FALSE

Global warming and energy consumption are aspects of the technological environment segment that firms should monitor. (T/F)

FALSE

Globalfocusing is often used by firms with high levels of international operations who further increase their internationalization by focusing on global niche markets. (T/F)

FALSE

If a firm is dependent on a specific stakeholder group, that group has less influence on the firm's strategic decision making. (T/F)

FALSE

In recent times, business leaders have become more confident in the ability of economists to provide valid and reliable predictions about the world's economic environment. (T/F)

FALSE

Interpersonal relationships, trust, friendships, and a firm's reputation are all examples of complex social phenomena that make capabilities easy to imitate. (T/F)

FALSE

Monitoring involves the development of a forecast of what might happen at a future point in time. (T/F)

FALSE

Older employees are less valuable resources to firms than younger employees, because older employees have lower levels of knowledge. Consequently, employee layoffs should begin with early-retirement inducements. (T/F)

FALSE

Organizational stakeholders are the firm's internal resources, capabilities, and core competencies that are used to accomplish what may appear to be unattainable goals in the competitive environment. (T/F)

FALSE

Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource-based model. (T/F)

FALSE

Resources are considered rare when they have no structural equivalent. (T/F)

FALSE

Scanning involves detecting meaning through early signals of environmental trends. (T/F)

FALSE

Strategic groups are firms in different industries following the same or similar strategies. (T/F)

FALSE

Switching costs, access to distribution channels, economies of scale, large numbers of competing firms, and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry. (T/F)

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. (T/F)

FALSE

The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is the main source of above-average returns. (T/F)

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. (T/F)

FALSE

The external environment facing business stays relatively constant over time. (T/F)

FALSE

The firm with the most capabilities wins. (T/F)

FALSE

The goal of strategy implementation is to develop a permanent competitive advantage. (T/F)

FALSE

The learning generated by making and correcting mistakes is generally unimportant to efforts to create new capabilities and core competencies. (T/F)

FALSE

The legislation introduced in the U.S. Congress during the early tenure of the Obama administration intended to reduce the amount of work U.S. companies outsource and is an example of a potential change in the sociocultural segment of the general environment. (T/F)

FALSE

The more distant strategic groups are in terms of their strategies, the greater the likelihood of rivalry between the groups. (T/F)

FALSE

The need to meet quarterly earnings results causes managers to accurately examine the firm's internal organization. (T/F)

FALSE

The rapid rate of technological diffusion has increased the competitive benefits of patents. (T/F)

FALSE

The resource-based model assumes that firms must have resources that are rare or costly to imitate to form a basis for competitive advantage. (T/F)

FALSE

The strengths of the five competitive forces are similar across strategic groups within an Industry. (T/F)

FALSE

The value of tangible assets, such as the firm's borrowing capacity and its physical plant, is high because these assets can be easily leveraged to derive additional value. (T/F)

FALSE

Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment. (T/F)

FALSE

Value chain activities in the value chain create value, whereas support functions generate costs. (T/F)

FALSE

Value is measured by the variable and fixed costs associated with the production and marketing of a particular product compared with the revenue and profits the product generates. (T/F)

FALSE

When Google studies the internet user privacy policies of various nations, it is engaged in the forecasting component of the environmental analysis process. (T/F)

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. (T/F)

FALSE

When firms analyze the external environment, they typically have complete and unambiguous data. (T/F)

FALSE

"Motivating, empowering, and retaining employees" is an example of a capability that resides within the human resources functional area. (T/F)

TRUE

A firm should outsource only activities where it cannot create value or where it is at a substantial disadvantage compared to competitors. (T/F)

TRUE

Above average returns are those in excess of what an investor expects to earn from other investments with similar stock prices. (T/F)

TRUE

Although health care reform legislation was passed in the early part of the Obama administration, it continues to be a contentious issue for employers, employees, and politicians because of its increased expenses. These attitudes about health care reform make up the sociocultural segment of the general environment. (T/F)

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 ("putting a dent in the universe"). (T/F)

TRUE

An example of a government policy barrier to entry would be a scenario in which the Antitrust Division of the Department of Justice disallows a merger because it creates a firm that is too dominant and would thus create unfair competition. (T/F)

TRUE

An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values. (T/F)

TRUE

Analyzing the internal environment enables a firm to determine what it can do by identifying resources, capabilities, and core competencies in the internal organization. (T/F)

TRUE

Any core competency has the potential to lose its value-creating ability. (T/F)

TRUE

Apple has combined some of its tangible resources (such as financial resources and research laboratories) and intangible resources (such as scientists, engineers, and organizational routines) to create a capability in R&D that creates a core competence in innovation. (T/F)

TRUE

At IBM, human capital is critical to forming and using the firm's capabilities in customer relationships, scientific and research skills, and technical skills in hardware, software, and services. (T/F)

TRUE

At Southwest Airlines, the complex interrelationship between its culture and human capital adds value for customers in ways that other airlines cannot, such as jokes on flights by flight attendants and cooperation between gate personnel and pilots. (T/F)

TRUE

Capabilities may be costly to imitate if firms have unique and valuable organizational cultures, are causally ambiguous, and socially complex. (T/F)

TRUE

Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals. (T/F)

TRUE

Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven elements comprising the industry environment. (T/F)

TRUE

Early adopters of new technology often achieve higher market shares and higher returns than later adopters of the technology. (T/F)

TRUE

Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist. (T/F)

FALSE

Any competitor intelligence practice that is legal is also ethical. (T/F)

FALSE

Average returns are those in excess of what an investor expects to earn from other investments with a similar amount of risk. (T/F)

FALSE

Age structure, geographic distribution, income distribution, interest rates, and process innovations are all elements of concern when studying the demographic segment of the general environment. (T/F)

FALSE

A company can earn above-average returns only when the value it creates is less than the costs incurred to create that value. (T/F)

FALSE

A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions. (T/F)

FALSE