MAN4720 Test 1

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. 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. (A) True (B) False

True

Above average returns are those in excess of what an investor expects to earn from other investments with similar stock prices. (A) True (B) False

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"). (A) True (B) False

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. (A) True (B) False

True

Capabilities may be costly to imitate if firms have unique and valuable organizational cultures, are causally ambiguous, and socially complex. (A) True (B) False

True

Early adopters of new technology often achieve higher market shares and higher returns than later adopters of the technology. (A) True (B) False

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. (A) True (B) False

True

Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy. (A) True (B) False

True

Strategic leaders must have a strong strategic orientation while embracing change in the dynamic competitive landscape. (A) True (B) False

True

Technology has made it more difficult for companies to find ways to develop competitive advantages. (A) True (B) False

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). (A) True (B) False

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. (A) True (B) False

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

True

The foundation of many capabilities lies in the unique skills and knowledge of a firm's employees. (A) True (B) False

True

The industry environment directly influences a firm and its competitive actions and responses. (A) True (B) False

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. (A) True (B) False

True

To implement a firm's strategies, the firm takes actions to with the goal of achieving strategic competitiveness and above average returns. (A) True (B) False

True

According to Hitt, the final responsibility for forming the organization's mission lies with the: (A) CEO. (B) top-management team. (C) employees. (D) organization's stakeholders.

(A) CEO.

______ is an example of a capability that is based in the functional area of distribution. (A) Effective use of logistics management techniques (B) Effective control of inventories through point-of-purchase data collection (C) Effective organizational structure (D) Product and design quality

(A) Effective use of logistics management techniques

Competitor analysis focuses on: (A) firms with which the company competes directly. (B) firms that produce products that are substitutes. (C) all firms in the industry. (D) companies that might enter the industry.

(A) firms with which the company competes directly

An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of: (A) high barriers to exit. (B) high switching costs. (C) high fixed costs. (D) low levels of competitive rivalry.

(A) high barriers to exit.

Knowledge is composed of all the following EXCEPT: (A) insight. (B) expertise. (C) information. (D) intelligence.

(A) insight.

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and: (A) the rapid development of the Internet's capabilities. (B) extensive use of outsourcing within the borders of the United States. (C) the declining number of inventions and patents developed by U.S. citizens. (D) the simultaneous erosion of the U.S. work ethic and the U.S. education system

(A) the rapid development of the Internet's capabilities.

Effective strategic leaders are chosen based on: (A) their capabilities and accumulation of human capital over time. (B) their single-minded focus on strategy formation. (C) their aptitude for strategy implementation. (D) their focus on innovation.

(A) their capabilities and accumulation of human capital over time.

All of the following are true about the strategic decisions managers make about their firm's internal organization EXCEPT that: (A) they are directly correlated to executive compensation. (B) they are non-routine. (C) they have ethical implications. (D) they significantly influence the firm's ability to earn above-average returns.

(A) they are directly correlated to executive compensation

Which of the following is NOT an activity used in the external environmental analysis process? (A) Scanning (B) Decrypting (C) Monitoring (D) Assessing

(B) Decrypting

Which of the following is NOT a reputational resource? (A) Customers' opinions that the firm's products are high quality (B) Employees' opinions of the firm as a terrible place to work (C) Suppliers' opinions that the firm pays its bills in a timely manner (D) Customers' opinions that using the firm's products makes them attractive

(B) Employees' opinions of the firm as a terrible place to work

. Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here? (A) Buyers (B) Substitutes (C) Entry barriers (D) Suppliers

(B) Substitutes

. Characteristics of the current economic segment include all of the following EXCEPT: (A) general uncertainty. (B) a clear understanding of future economic opportunities and threats. (C) the inability of economists to provide valid and reliable predictions. (D) an expanding economy in Vietnam.

(B) a clear understanding of future economic opportunities and threats.

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

Firms that achieve competitive parity can expect to: (A) earn below-average returns. (B) earn average returns. (C) earn above-average returns. (D) initially earn above-average returns, declining to average returns.

(B) earn average returns.

A major reason outsourcing is effective is that: (A) it increases the innovative potential of the firm. (B) few firms possess superior capability in all primary and support activities. (C) it permits unlimited access to capital resources. (D) competitors do not have access to the same external sources.

(B) few firms possess superior capability in all primary and support activities.

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should: (A) concentrate on maintaining Acme's current core competencies. (B) focus on developing Acme's future competitive advantages. (C) place more emphasis on tangible resources, which are less vulnerable to obsolescence than intangible resources. (D) recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resources

(B) focus on developing Acme's future competitive advantages.

The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an example of a ______ barrier to entry. (A) cost disadvantage independent of scale (B) government policy (C) capital requirements (D) product differentiation

(B) government policy

The highest amount a firm can charge for its products is most directly affected by: (A) expected retaliation from competitors. (B) the cost of substitute products. (C) variable costs of production. (D) customers' high switching costs.

(B) the cost of substitute product

. According to Hitt, the primary drivers of hypercompetition are: (A) rising global socio-economic instability and increased inflation. (B) the emergence of a global economy and rapid technological change. (C) increased global competition and decreased tariffs. (D) increased availability of capital and increased competition.

(B) the emergence of a global economy and rapid technological change.

Although Alibaba is competing in the internet services industry, it has improved its performance by focusing on innovation and service diversification. This improved performance is best explained by: (A) globalization. (B) the resource-based model. (C) the I/O model. (D) hypercompetition.

(B) the resource-based model

. The threat from substitutes is high when: (A) switching costs are high. (B) the substitute product's price is lower than the industry product's price. (C) the quality of the substitute product is lower than the quality of the industry's product. (D) the substitute product stimulates new process innovations within the industry.

(B) the substitute product's price is lower than the industry product's price.

Subscriptions to the New York Times have been decreasing as more customers receive their news through other media. At the same time, advertisers have shifted portions of their spending to other media. The NYT's managers are making decisions under: (A) certainty. (B) uncertainty. (C) intraorganizational conflict. (D) interorganizational conflict.

(B) uncertainty

. In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are ______ but no longer _____. (A) rare; valuable (B) valuable; rare (C) socially complex; rare (D) valuable; causally ambiguous

(B) valuable; rare

The capabilities used to create the sustainability/green initiatives at Walmart and Target are ______ but less likely to be ______. (A) rare; valuable (B) valuable; rare (C) socially complex; rare (D) valuable; causally ambiguous

(B) valuable; rare

The key to achieving competitiveness, earning above-average returns, and remaining ahead of competitors in the long run is to manage current core competencies: (A) in a way that uniquely bundles and leverages the firm's existing resources. (B) while simultaneously developing new ones. (C) and imitate the core competencies of successful competitors. (D) in order to preserve and enhance them against the firm's competitors

(B) while simultaneously developing new ones.

. The ______ are those with the potential to be formed into core competencies as the foundation for creating value. (A) "most" knowledge resources (B) "most" capabilities (C) "right" resources (D) "dark side" resources

. ______ should establish a firm's individuality and should be inspiring and relevant to all stakeholders. (A) A strategy (B) A vision (C) A mission (D) A goal

______ can be viewed as the capacity to take action. (A) Strategic assets (B) Human capital (C) Core competencies (D) Functional capabilities

______ 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

Once a firm has determined its competitors' future objectives, current strategy, assumptions, and strengths and weaknesses, its next step is to develop: (A) an environmental assessment. (B) a marketing plan. (C) a response profile. (D) a task force to implement the plan.

In 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 in which businesses to compete and how resources will be allocated between businesses. (D) coordinating the vision and mission of each subsidiary firm.

When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are: engaged in (A) scanning. (B) monitoring. (C) forecasting. (D) assessing.

The political/legal segment of an environment represents: (A) the political preferences of different ethnic groups in the society. (B) the technological values of different political entities in society. (C) how organizations and governments mutually try to influence each other. (D) the system of regulations governments at all levels place on businesses.

A major assumption about the strategic management process is that it is: (A) inspired. (B) team-based. (C) rational. (D) inclusive

7. Value chain analysis is a tool used to: (A) analyze a firm's external environment for value-creating opportunities. (B) analyze a firm's value chain activities and support functions in isolation from its competitors' value chain. (C) understand the parts of the firm's operation that create value and those that do not. (D) identify the firm's core competencies in each of the primary activities of the firm

The Princeton Alliance Church states in 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.

The proper matching of what a firm can do with what it might do: (A) balances the internal characteristics of the firm with the characteristics of the external environment. (B) overcomes the rigidity and inertia resulting from a history of success. (C) yields insights the firm requires to select its strategy. (D) develops core competencies based on human knowledge.

______ has become the second-largest economy in the world. (A) The United States (B) The European Union (C) Japan (D) China

(D) China

Capabilities typically come from: (A) individual resources. (B) one unique resource. (C) several outstanding resources used independently. (D) combining resources.

(D) combining resources.

Competitor intelligence could ethically come from all of the following EXCEPT: (A) court records. (B) financial reports. (C) trade show discussions. (D) eavesdropping

(D) eavesdropping

The challenge and difficulty of making effective decisions are implied by preliminary evidence that ______ of organizational decisions fail. (A) one-fourth (B) one-fifth (C) one-tenth (D) one-half

(D) one-half

One capability that can be learned from failure is when to: (A) repeat with a modification. (B) add more resources. (C) dig in. (D) quit

(D) quit

. A competitor analysis includes all of the following about competitors EXCEPT: (A) future objectives. (B) current strategy. (C) assumptions. (D) traditions.

(D) traditions.

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

False

. Eavesdropping is an ethical way to obtain information about competitors' actions. (A) True (B) False

False

. Firms can directly control the elements of the seven segments of the general environment. (A) True (B) False

False

. Generally, industries with stronger competitive forces have higher profit potential. (A) True (B) False

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. (A) True (B) False

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. (A) True (B) False

False

Average returns are those in excess of what an investor expects to earn from other investments with a similar amount of risk. (A) True (B) False

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. (A) True (B) False

False

Corporate-level strategy in a diversified organization requires a common business strategy for each component business. (A) True (B) False

False

Customers, suppliers, unions, and local governments are examples of capital market stakeholders. (A) True (B) False

False

Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software. (A) True (B) False

False

Global warming and energy consumption are aspects of the technological environment segment that firms should monitor. (A) True (B) False

False

Globalfocusing is often used by firms with high levels of international operations who further increase their internationalization by focusing on global niche markets. (A) True (B) False

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. (A) True (B) False

False

Resources are considered rare when they have no structural equivalent. (A) True (B) False

False

The firm with the most capabilities wins. (A) True (B) False

False

Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment. (A) True (B) False

False

Value chain activities in the value chain create value, whereas support functions generate costs. (A) True (B) False

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. (A) True (B) False

False

Research shows that approximately ______ percent of a firm's profitability is explained by the industry in which it competes, 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

A key purpose of a 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

______ is a 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

Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement about donors is accurate? (A) Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank. (B) Blood donors are suppliers and are powerful because of their concentration relative to the blood bank. (C) Blood donors are buyers and are not powerful because switching costs to change to alternative inputs are low. (D) Blood donors are buyers and are powerful because of the volume of blood needed.

(A) Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank.

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry? (A) It will make the airline industry more attractive because of decreased supplier power. (B) It will make the airline industry less attractive because of decreased supplier power. (C) It will make the airline industry more attractive because of increased supplier power. (D) It will make the airline industry more attractive because of a new entrant.

(A) It will make the airline industry more attractive because of decreased supplier power.

______ innovation is a term used to describe how rapidly and consistently new, informationintensive technologies replace older ones. (A) Perpetual (B) Disruptive (C) Global (D) Diffusion

(A) Perpetual

Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past. (A) True (B) False

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. (A) True (B) False

False

Interpersonal relationships, trust, friendships, and a firm's reputation are all examples of complex social phenomena that make capabilities easy to imitate. (A) True (B) False

False

Monitoring involves the development of a forecast of what might happen at a future point in time. (A) True (B) False

False

Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource-based model. (A) True (B) False

False

Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales. (A) True (B) False

False

Scanning involves detecting meaning through early signals of environmental trends. (A) True (B) False

False

The learning generated by making and correcting mistakes is generally unimportant to efforts to create new capabilities and core competencies. (A) True (B) False

False

The need to meet quarterly earnings results causes managers to accurately examine the firm's internal organization. (A) True (B) False

False

The rapid rate of technological diffusion has increased the competitive benefits of patents. (A) True (B) False

False

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. (A) True (B) False

True

Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven elements comprising the industry environment. (A) True (B) False

True

"Motivating, empowering, and retaining employees" is an example of a capability that resides within the human resources functional area. (A) True (B) False

True

. A firm should outsource only activities where it cannot create value or where it is at a substantial disadvantage compared to competitors. (A) True (B) False

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. (A) True (B) False

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. (A) True (B) False

True

. Risk in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment. (A) True (B) False

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. (A) True (B) False

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. (A) True (B) False

True

An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values. (A) True (B) False

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. (A) True (B) False

True

Any core competency has the potential to lose its value-creating ability. (A) True (B) False

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. (A) True (B) False

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. (A) True (B) False

True

Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals. (A) True (B) False

True

Creating customer value is the source of the firm's potential to earn above-average returns. (A) True (B) False

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. (A) True (B) False

True

Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders. (A) True (B) False

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. (A) True (B) False

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. (A) True (B) False

True

Organizational mission statements typically do not include statements about profitability and earning above-average returns. (A) True (B) False

True

Relative power is the most critical element for prioritizing the demands of stakeholders. (A) True (B) False

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. (A) True (B) False

True

The process of competitor analysis should examine the competitors' future objectives, current strategy, assumptions, and capabilities. (A) True (B) False

True

The rate of growth of Internet-based applications could be affected by strategies of Internet service providers charging users for downloading those applications. (A) True (B) False

True

The rate of technology diffusion has been steadily increasing over the last two decades. (A) True (B) False

True

The two primary drivers of hypercompetition are the emergence of the global economy and technology. (A) True (B) False

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. (A) True (B) False

True

Walmart uses core competencies, such as information technology and distribution channels, to create value for its customers through its "everyday low prices." (A) True (B) False

True

When Delta Air Lines wants to study Continental Airlines, it must examine both Continental and its complementor, Star Alliance. (A) True (B) False

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. (A) True (B) False

True

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.

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

. 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. (A) True (B) False

False

. Any competitor intelligence practice that is legal is also ethical. (A) True (B) False

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. (A) True (B) False

False

An effective vision statement must specify the industry in which a company will operate. (A) True (B) False

False

Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist. (A) True (B) False

False

By themselves, resources can allow firms to create value for customers as the foundation for earning above-average returns. (A) True (B) False

False

Capabilities are usually developed separately from specific functional areas such as manufacturing, R&D, and marketing. (A) True (B) False

False

Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources. (A) True (B) False

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. (A) True (B) False

False

The goal of strategy implementation is to develop a permanent competitive advantage. (A) True (B) False

False

______ are the source of a firm's ______, which are the source of the firm's ______. (A) Resources; capabilities; core competencies (B) Capabilities; resources; core competencies (C) Capabilities; resources; above-average returns (D) Core competencies; resources; competitive advantage

(A) Resources; capabilities; core competencies

Which of the following, identified in an analysis of the general environment, is an opportunity for an entrepreneur who wishes to open a business providing "Fitness for Life" physical conditioning services (strength, balance, and flexibility training) in a city of 100,000 people? (A) The average age of the population in his community is high. (B) The level of unemployment in his community is high. (C) A chiropractor and two independent physical therapists are located in his community. (D) The average education level of the population in his community is low

(A) The average age of the population in his community is high.

. A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for the project. Which of the following statements is most likely to be true? (A) The cost of the marble will be expensive because of the bargaining power of the supplier. (B) The cost of the marble will be moderate because of the bargaining power of the buyer. (C) The cost of the marble will be moderate because of economies of scale. (D) The cost of the marble will be expensive because of the high strategic stakes involved.

(A) The cost of the marble will be expensive because of the bargaining power of the supplier.

Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant just for the appetizer, and it was at the center of a recent highly positive review by a food critic. Preparation involves common ingredients and average culinary skills but requires a very high oven temperature, which significantly increases utility costs. Several competing restaurants have since added their own version of the appetizer to their menu. Which criterion for assessing capabilities/core competencies is met? (A) The restaurant has the capability to develop something that is valuable. (B) The restaurant has the capability to develop something that is rare. (C) The restaurant has the capability to develop something that is costly to imitate. (D) All of these criteria are met.

(A) The restaurant has the capability to develop something that is valuable.

All competitive advantages have: (A) a limited life. (B) an expiration date. (C) the ability to earn above-average returns indefinitely. (D) the ability to lead to more competitive advantages.

(A) a limited life

One reason executive judgment can be a particularly important source of competitive advantage is that judgment: (A) allows a firm to build a strong reputation. (B) gains the loyalty of shareholders. (C) increases human intellectual capacity. (D) allows for superior bundling of resources.

(A) allows a firm to build a strong reputation.

The strategic leader's work is characterized by: (A) ambiguous decision situations where the best course of action is not always easy to identify. (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 where the best course of action is not always easy to identify.

The likelihood of entry of new competitors is affected by ______ and ______. (A) barriers to entry; expected retaliation of current industry organizations (B) the power of existing suppliers; buyers (C) the profitability of the industry; the market share of its leading firm (D) the demand for the product; the profitability of the competitors

(A) barriers to entry; expected retaliation of current industry organizations

To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT: (A) be technologically innovative. (B) be hard for competing firms to duplicate. (C) be without good substitutes. (D) be valuable to customers.

(A) be technologically innovative.

Internal analysis enables a firm to determine what the firm: (A) can do. (B) should do. (C) will do. (D) might do.

(A) can do.

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

Capabilities that other firms cannot develop easily are classified as: (A) costly to imitate. (B) rare. (C) valuable. (D) nonsubstitutable.

(A) costly to imitate.

. The global economy, globalization, rapid technological change, and the increasing importance of knowledge 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 iPods, PDAs, and Wi-Fi are a result of: (A) disruptive technologies. (B) global competition. (C) knowledge intensity. (D) hypercompetition.

(A) disruptive technologies.

A food bank in Florida was struggling to serve its customers. It asked Walmart for help. Walmart sent a team of managers who reorganized storage and transportation. The food bank was able to increase the number of clients served by tenfold. Walmart shared its expertise in: (A) distribution. (B) human resources. (C) marketing. (D) manufacturing.

(A) distribution.

. The resource-based view of the firm: (A) emphasizes that it is difficult to develop 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 develop and sustain a competitive advantage based on resources alone.

It is important to emphasize that almost all strategic management process decisions have ______ because they are related to how a firm interacts with its stakeholders. (A) ethical dimensions. (B) local dimensions. (C) political dimensions. (D) global dimensions.

(A) ethical dimensions.

For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent of scale would be if: (A) favorable locations are not available. (B) other competitors have proprietary product technology. (C) access to food and ingredients is difficult. (D) other competitors have government subsidies.

(A) favorable locations are not available.

The ______ environment is composed of dimensions in the broader society that can influence an industry and the firms within it. (A) general (B) competitor (C) sociocultural (D) industry

(A) general

Exit barriers to a firm include all of the following EXCEPT: (A) generic assets. (B) loyalty to employees. (C) governmental concern about job loss. (D) restrictive labor agreements.

(A) generic assets.

. A product's value is created by each of the following EXCEPT: (A) high cost and highly differentiated features. (B) low cost. (C) highly differentiated features. (D) low cost and highly differentiated features.

(A) high cost and highly differentiated features.

The technological segment of environmental analysis includes: (A) institutions and activities involved with creating new knowledge and translating that knowledge into new outputs. (B) the determination of when machinery will need to be replaced in a given firm. (C) the need for new technology used by a firm to gain a competitive advantage. (D) places where a firm's technology will allow that firm to dominate a given market.

(A) institutions and activities involved with creating new knowledge and translating that knowledge into new outputs.

A firm's mission: (A) is a statement of a firm's business in which it intends to compete and the customers it intends to serve. (B) is an internally focused affirmation of the organization's financial, social, and ethical goals. (C) is mainly intended to emotionally inspire employees and other stakeholders. (D) is developed by a firm before the firm develops its vision.

(A) is a statement of a firm's business in which it intends to compete and the customers it intends to serve

Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green: (A) is likely to raise the level of competitive rivalry in the industry. (B) probably has top management who are affected by emotional barriers to exit. (C) has decided that long-run above-average returns are not important. (D) will probably embark on an acquisition strategy.

(A) is likely to raise the level of competitive rivalry in the industry.

After Amazon lowered the price on its tablets, Samsung eventually lowered the price on its tablets. Samsung needed to do this because: (A) it is in the same strategic group. (B) it is outside the strategic group. (C) of inter-strategic group competition. (D) of strategic distinctiveness.

(A) it is in the same strategic group.

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT: (A) lack of scientific transference. (B) social complexity. (C) unique historical conditions. (D) causal ambiguity.

(A) lack of scientific transference.

Compared to tangible resources, intangible resources are ______ and ______. (A) less visible; more difficult to copy. (B) less visible; less difficult to copy. (C) more visible; more difficult to copy. (D) more visible; less difficult to copy.

(A) less visible; more difficult to copy

According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT: (A) low barriers to entry. (B) suppliers and buyers with little bargaining power. (C) a moderate degree of rivalry among competitors. (D) few good product substitutes.

(A) low barriers to entry.

A general environmental analysis can be expected to produce all of the following EXCEPT: (A) objective answers. (B) recognition of environmental trends. (C) identification of organizational opportunities. (D) identification of organizational threats.

(A) objective answers.

The culmination of the strategic management process is: (A) performance. (B) strategy implementation. (C) strategy formulation. (D) analysis.

(A) performance.

BP, in response to the Deepwater Horizon oil spill, expected increased scrutiny from which of the following segments of the general environment? (A) political/legal (B) global (C) technological (D) sociocultural

(A) political/legal

The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders if it cannot satisfy them all. The ______ is the most critical criterion in prioritizing stakeholders. (A) power of each stakeholder (B) urgency of satisfying each stakeholder (C) vulnerability of organizational stakeholders (D) social value of each stakeholder

(A) power of each stakeholder

One popular approach to taking care of the physical environment is: (A) producing and selling additional green products. (B) lobbying the government to reduce environmental regulations. (C) making donations to the Sierra Club and other environmental organizations. (D) increasing health benefits for employees.

(A) producing and selling additional green products.

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.

. The most numerous of the following organizational characteristics are: (A) resources. (B) capacities. (C) capabilities. (D) core competencies.

(A) resources.

All core competencies have the potential to become core: (A) rigidities. (B) stagnations. (C) inefficiencies. (D) weaknesses.

(A) rigidities.

. An analysis of society's attitudes and values would be conducted when studying the ______ segment of the general environment. (A) sociocultural (B) global (C) demographic (D) economic

(A) sociocultural

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

. Product market stakeholders include (A) suppliers. (B) shareholders. (C) employees. (D) the firm's chief executive officer.

(A) suppliers.

Essentially, _______ has become one of the world's largest markets with 700 million potential consumers. (A) the European Union (B) the United States (C) China (D) Japan

(A) the European Union

. 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 the stakeholders

(A) the capital market stakeholders and the organizational stakeholders.

The industrial organization (I/O) model argues that: (A) the key factor in success is choosing the correct industry in which to compete. (B) the firm's internal resources and capabilities represent the foundation for development of a value-creating strategy. (C) the key to earning above-average returns is strategic flexibility. (D) the internal structure of the organization must match the industry in which it competes for it to earn above-average returns on investment.

(A) the key factor in success is choosing the correct industry in which to compete.

The economic environment refers to: (A) the nature and direction of the economy in which a firm competes or may compete. (B) the economic outlook of the world provided by the World Bank. (C) an analysis of how the environmental movement and world economy interact. (D) an analysis of how new environmental regulations will affect the U.S. economy

(A) the nature and direction of the economy in which a firm competes or may compete.

In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owners fail to take into account when they began selling the lingerie? (A) the sociocultural segment (B) the economic segment (C) the demographic segment (D) the political/legal segment

(A) the sociocultural segment

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

______ is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context. (A) Strategic thinking (B) A global mind-set (C) Profit-pooling (D) Competency-discovering

(B) A global mind-set

8. Environmental scanning would be most important for which of the following organizations? (A) A provider of hospice services for the terminally ill (B) A web design company catering to small businesses (C) A neighborhood sewer and water utility (D) A manufacturer of household linens

(B) A web design company catering to small businesses

Which of the following represents a competitive intelligence practice that is both legal and ethical? (A) A firm hires a competitor's employees and asks them to share the names and addresses of business contacts from their previous company. (B) An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products. (C) A city council member shares information about the decision process for selecting a contractor to build a new city council building with his wife, an executive with a construction firm bidding on the contract. (D) A marketing manager sells confidential plans for a company's expansion into the Far East to a firm that is not a direct competitor.

(B) An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products.

Which of the following is NOT a component of internal analysis leading to competitive advantage? (A) Tangible and intangible resources (B) Analysis of supplier power (C) Capabilities (D) Core competencies

(B) Analysis of supplier power

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 choices are important to consider.

(B) has ethical implications for organizational stakeholders.

. The concepts of Guanxi, Wa, and Inhwa all convey the general idea of: (A) entrepreneurial risk-taking. (B) interpersonal relationships. (C) the value of hard work. (D) personal achievement.

(B) interpersonal relationships.

Circuit Inc. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component that is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely? (A) Circuit will likely continue to manufacture the component, even at a loss, due to low supplier power. (B) Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes. (C) Circuit will likely discontinue manufacture of the component due to low strategic stakes. (D) Circuit will likely discontinue manufacture of the component due to high supplier stakes

(B) Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes.

______ 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

. Firms use both the ______ and ______ models. In fact, these models complement each other in that one focuses outside the firm while the other focuses inside the firm. (A) industry; capability (B) I/O; resource-based (C) competition; competency (D) industry; competency

(B) I/O; resource-based

Which of the following is TRUE about outsourcing? (A) Outsourcing allows firms to be more flexible and requires minimal coordination. (B) Outsourcing allows firms to concentrate on those areas in which they can create value. (C) Outsourcing strengthens the creative and innovative functions within the firm. (D) Outsourcing is effective only when it includes all support activities.

(B) Outsourcing allows firms to concentrate on those areas in which they can create value.

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

An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization 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 healthfoods industry because of its internal culture and commitment to healthy lifestyles, but it does not have any executives with experience in food production. Which firm will the investor feel is most consistent with the model of industrial organization? (A) Green Pastures Foods (B) RexRich Foods (C) Both firms are consistent with the I/O approach. (D) At the entrepreneurial stage, the model that companies follow is not important

(B) RexRich Foods

Which of the following would NOT be identified in an analysis of the economic portion of the general environment? (A) The willingness of Chrysler's buyers to purchase large vehicles in light of an increase in oil prices (B) The ability of Ford to issue new debt in light of its recent financial performance (C) The ability of BMW's buyers to finance car purchases in light of a change in interest rates (D) The willingness of GM buyers to purchase new vehicles in light of the threat of recession

(B) The ability of Ford to issue new debt in light of its recent financial performance

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision? (A) The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. (B) The investor will find that the restaurant's financial statements undervalue the true value of its resources. (C) The investor should be aware that intangible assets are difficult to leverage into additional businesses. (D) The investor should search for a firm that has competitive advantages based on tangible resources.

(B) The investor will find that the restaurant's financial statements undervalue the true value of its resources.

. Value consists of: (A) a product's proprietary characteristics and attributes for which customers are willing to pay. (B) a product's performance characteristics and attributes for which customers are willing to pay. (C) a product's proprietary characteristics and attributes for which customers consider paying. (D) a product's performance characteristics and attributes for which customers consider paying.

(B) a product's performance characteristics and attributes for which customers are willing to pay.

DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets as well. The main barrier to entry DWK is likely to encounter here is: (A) government licensing and permits. (B) access to distribution channels. (C) consumers' switching costs. (D) cost disadvantages independent of scale.

(B) access to distribution channels.

Value chain activities are: (A) the activities most likely to be imitated by competitors. (B) activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers. (C) the core competencies of the organization. (D) the activities most crucial to implementing the firm's business strategy.

(B) activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers.

A company's ability to acquire knowledge is: (A) less important in the 21st century than in previous periods of business history. (B) an important source of competitive advantage in virtually all industries. (C) not considered an asset or resource for businesses. (D) only important in high technology industries

(B) an important source of competitive advantage in virtually all industries.

In the strategic management process ASP 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.

Tangible resources include: (A) assets that are people-dependent, such as know-how. (B) assets that can be observed and quantified. (C) organizational culture. (D) a firm's reputation

(B) assets that can be observed and quantified

All of the following are aspects of the political/legal segment of the general environment EXCEPT: (A) lobby groups. (B) attitudes and values. (C) taxation laws. (D) industries chosen for deregulation.

(B) attitudes and values.

Because firms combine tangible and intangible resources to create capabilities: (A) these capabilities are fragile and subject to sudden loss of value. (B) capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital. (C) capabilities are easily transferred from one firm to another as employees change jobs. (D) these types of capabilities are considered primary activities in the value chain.

(B) capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital.

Firms within strategic groups: (A) follow dissimilar strategies. (B) follow similar strategies across certain dimensions. (C) typically engage in greater intergroup rivalry than intragroup rivalry. (D) exist almost exclusively in the manufacturing sector

(B) follow similar strategies across certain dimensions.

The three parts of the external environment that affect a firm's strategic actions are: (A) economic, political, and legal. (B) general, industry, and competitor. (C) industry, business, and product. (D) local, national, and global.

(B) general, industry, and competitor.

New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people moving out compared to people moving into the state. This impacts the ______ aspect of demographic analysis. (A) age structure (B) geographic distribution (C) income distribution (D) ethnic mix

(B) geographic distribution

The observation that China reached automotive production overcapacity in 2015, and has a glut of extra cars, is an aspect of the ______ segment of the general environment. (A) demographic (B) global (C) physical (D) technological

(B) global

. A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised: (A) foresight. (B) judgment. (C) effective strategic thinking. (D) decisiveness.

(B) judgment.

According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT: (A) low economies of scale needed for new firms to enter. (B) low supplier power due to commodity inputs. (C) high threat of substitute products due to a large number of low-cost alternatives. (D) high bargaining power of buyers due to low switching costs

(B) low supplier power due to commodity inputs.

. The critical executive skill of the current business age is the ability to: (A) manage technological innovation. (B) manage human intellect. (C) initiate change and overcome inertia. (D) coordinate tangible and intangible resources.

(B) manage human intellect.

. A prominent national website services company runs Super Bowl advertisements showing a small business owner working alone in the office on a project, during the big game. The message of the ad is that the company understands the sacrifices of its customers. This ad seeks to convey a sense of the organization's ____ to the product market stakeholders. (A) culture of recognition and reward (B) mission to radically shift the global economy toward small businesses (C) leadership as a technology company (D) personality as sports lovers

(B) mission to radically shift the global economy toward small businesses

. Judgment is the capacity for making a successful decision when: (A) there are multiple decision criteria. (B) no obviously correct model or rule is available. (C) cognitive biases create barriers to rationality. (D) there are contradictions between the firm's vision and its implemented strategy.

(B) no obviously correct model or rule is available.

Organizational culture is: (A) amorphous and changeable. (B) not easily imitable. (C) so difficult to analyze that most firms should choose to ignore it. (D) typically fragile in the face of changes in the external environment.

(B) not easily imitable.

. Government agencies are known for having so many layers and rules that decisions are made slowly and inefficiently. In this case the ______ resource is a detriment to taxpayers using and paying for the bureaucracy. (A) financial (B) organizational (C) physical (D) technological

(B) organizational

A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive: (A) advantage. (B) parity. (C) disadvantage. (D) neutrality.

(B) parity.

Global warming and energy consumption trends are aspects of the ______ segment of the general environment that firms should monitor. (A) technological (B) physical (C) sociocultural (D) economic

(B) physical

Strategic leaders, ______, often work long hours, and their work is filled with ambiguous decision situations. (A) at the top of the organization (B) regardless of their location in the organization (C) in the finance area (D) in the operations area

(B) regardless of their location in the organization

A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is: (A) operations. (B) research and development. (C) supply-chain management. (D) distribution

(B) research and development.

All of the following are assumptions of the industrial organization (I/O) model EXCEPT: (A) organizational decision makers are 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 result in above-average returns. (D) every firm in an industry controls similar strategically relevant 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.

. Firms that have strong positive relationships with suppliers and customers are said to have ______, an essential ingredient to creating value. (A) customer value (B) social capital (C) effective marketing (D) an attractive industry

(B) social capital

. Knowledge transfer and access to resources within the value chain are enhanced by: (A) guidelines for sharing knowledge and resources. (B) social capital. (C) penalties for not sharing knowledge and resources. (D) training employees on how to cooperate.

(B) social capital.

All of the following are implications of strategic groups EXCEPT: (A) the strength of the five forces differs across strategic groups. (B) the strength of the five forces is the same across strategic groups. (C) competitive rivalry within strategic groups is greater than between strategic groups. (D) the closer the strategic groups are in terms of strategies, the greater is the likelihood of rivalry.

(B) the strength of the five forces is the same across strategic groups.

The three conditions that characterize difficult managerial decisions concerning resources, capabilities, and core competencies are (A) complexity, rarity, and human intellectual capital. (B) uncertainty, complexity, and intraorganizational conflicts. (C) imitability, complexity, and interorganizational conflicts. (D) imitability, comparability, and human intellectual capital.

(B) uncertainty, complexity, and intraorganizational conflicts.

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 corporate culture. (C) lack of an organizational mission. (D) search for its core competencies

(B) unethical corporate culture.

From a customer's point of view, for an organization's capability to be a core competence it must be: (A) inimitable and unique. (B) valuable and unique. (C) inimitable and nonsubstitutable. (D) valuable and nonsubstitutable.

(B) valuable and unique.

Which of the following is NOT an external event that reveals the "dark side" of core capabilities? (A) A new competitor figures out a better way to serve the firm's customers. (B) New technologies emerge and replace those used by the firm. (C) A firm changes its focus to a new core competence. (D) Political or social events shift the foundation of current core capabilities.

. How is consolidation among fuel providers serving airport facilities viewed in the five forces model of competition? (A) As a reduction of the airlines' ability to benefit from economies of scale. (B) As an increase in switching costs because the airlines have no choice but to use jet fuel and other oil products. (C) As an increase in the bargaining power of suppliers of a critical input. (D) As an increase in the intensity of rivalry among airlines for scarce resources.

McDonald's culture, with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics, illustrates which of the following criteria for sustainable competitive advantage? (A) Valuable (B) Rare (C) Costly to imitate (D) Nonsubstitutable

Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis? (A) Wendy's and Taco Bell (B) Samsung and Apple (C) Netflix and Microsoft (D) Coca-Cola and PepsiCo

Clarissa is a sales representative for a large pharmaceutical firm. While calling on one of her major clients, the purchasing director of a hospital, the client told her confidential information that a sales representative from a competing firm had passed on to him. The information completely contradicts Clarissa's firm's understanding of the competitor's business strategy and would allow Clarissa's employer to gain many of the competitor's clients. What ethical implications may result from this situation? (A) There is no ethical or legal concern here for Clarissa. (B) The ethical dilemma is not Clarissa's but her client's, since he passed on confidential information to her voluntarily. (C) The ethical dilemma here is the right of competitors not to reveal certain information. (D) This is an example of ethical competitor intelligence obtained as eavesdropping.

Demographic changes include variations in income distribution. Which of the following statements is true? (A) Firms are most interested in the consumers in the top 10 percent of household income. (B) In general, living standards have deteriorated over time. (C) The general loss in real income has been somewhat offset by the increase in dual-career couples. (D) Workforce diversity is making the concept of average income obsolete.

ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit-board technology. ACME has protected its market leadership with continued advancements in this technology, which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based technology instead of circuit boards. ACME's technology leadership fails which capability test? (A) The value test (B) The rareness test (C) The substitutability test (D) The costly-to-imitate test

Compared to tangible resources, intangible resources are: (A) of less strategic value to the firm. (B) less likely to be the focus of strategic analysis. (C) a superior source of capabilities. (D) more likely to be reflected on the firm's balance sheet.

Valuable capabilities: (A) allow the firm to exploit opportunities in its external environment. (B) allow the firm to neutralize threats in its internal environment. (C) allow the firm to exploit opportunities or neutralize threats in its external environment. (D) allow the firm to neutralize opportunities in its internal environment.

The firm's ______ provide the foundation for choosing one or more ______ and deciding how to implement them. (A) analyses; strengths (B) abilities; strengths (C) analyses; strategies (D) abilities; strategies

. Strategic delegation helps: (A) overload middle managers. (B) executives control strategy implementation. (C) avoid too much managerial hubris. (D) emphasize profit maximization

Product differentiation refers to the: (A) ability of the buyer of a product to negotiate a lower price. (B) response of incumbent firms to new entrants. (C) belief by customers that a product is unique. (D) fact that as more of a product is produced the cheaper it becomes per unit.

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 or find it too costly to try to imitate. (D) exists when competing firms are unable to find investors.

All of the following are assumptions of the resource-based model EXCEPT: (A) each firm is a unique collection of resources and capabilities. (B) the industry's structural characteristics have little impact on a firm's performance over time. (C) capabilities are highly mobile across firms. (D) differences in resources and capabilities are the basis of competitive advantage.

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.

Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15 years. Acme maintained its strategy and product characteristics over this time period. However, the company has experienced declines in sales and profits over the last four quarters. The CEO of Acme should (A) continue with the proven strategy because its returns over the long run are important. (B) focus on improving efficiency of production and cost control. (C) conduct an analysis of the external environment. (D) immediately begin making incremental adjustments to the traditional business strategy in an effort to improve sales.

When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n): (A) strategic mission. (B) inspiring vision. (C) core competence. (D) sustainable market niche.

Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G performs well and are examples of the company's: (A) tangible resources. (B) intangible resources. (C) core competencies. (D) capabilities.

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.

The I/O model is grounded in: (A) anthropology. (B) psychology. (C) economics. (D) accounting.

Organizational stakeholders include: (A) unions. (B) host communities. (C) employees. (D) suppliers of capita

When firms lay off employees, they are: (A) treating employees as an intangible resource. (B) recognizing the reduced value of labor in the value chain. (C) eroding the organization's knowledge resources. (D) temporarily sacrificing a tangible asset that is easily replaced.

All of the following are forces that create high rivalry within an industry EXCEPT: (A) numerous or equally balanced competitors. (B) high fixed costs. (C) fast industry growth. (D) high storage costs.

By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of: (A) intangible resources. (B) their primary activities. (C) firm-specific differences. (D) efficiency of production.

Because of threats and risks in the global environment, some firms choose to take a more cautious approach by: (A) avoiding global markets altogether. (B) expanding only to developed countries. (C) focusing on global niche markets. (D) acquiring already established firms in foreign markets.

Examples of support activities include all of the following EXCEPT: (A) finance. (B) human resources. (C) follow-up service. (D) management information systems.

If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will: (A) achieve competitive parity. (B) have a competitive disadvantage. (C) have a temporary competitive advantage. (D) gain a sustainable competitive advantage.

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

A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are: (A) causally ambiguous. (B) unobservable. (C) imitable. (D) common.

. Customer loyalty programs such as airline frequent-flyer miles are an attempt to: (A) decrease competitors' access to distribution channels. (B) develop a cost advantage independent of scale. (C) increase customers' switching costs. (D) overcome the perishability of the hotel "product."

Value chain activities include all of the following EXCEPT: (A) supply-chain management. (B) operations. (C) management information systems. (D) distribution.

Compared to intangible resources, tangible resources are ______ constrained because they are ______ to leverage. (A) less; easier (B) less; harder (C) more; harder (D) more; easier

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 price. (D) increasing the profitability of the firm.

. Tools such as ______ help the firm focus on its core competencies as the source of its competitive advantages. (A) marketing (B) manufacturing (C) outsourcing (D) imitation

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) overall risk of participating outside a firm's domestic country when entering global competition. (D) preference for "buying local," which always puts foreign firms at a disadvantage when competing in the U.S. market.

Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a(n) ______ resource. (A) financial (B) organizational (C) physical (D) technological

New entrants to an industry are more likely when: (A) it is difficult to gain access to distribution channels. (B) economies of scale in the industry are high. (C) product differentiation in the industry is low. (D) capital requirements in the industry are high.

. Outsourcing is the: (A) spinning off of a value-creating activity to create a new firm. (B) selling of a value-creating activity to other firms. (C) purchase of a value-creating activity from an external supplier. (D) use of computers to obtain value-creating data from the Internet.

Economies of scale refers to the fact that as the: (A) quantity of product produced in a given time period increases, the cost of manufacturing each unit increases. (B) quantity of product produced in a given time period increases, the cost of manufacturing each unit remains constant. (C) quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases. (D) quantity of product produced in a given time period decreases, the cost of manufacturing each unit decreases.

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.

When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of: (A) an industry with low exit barriers. (B) increasing economies of scale. (C) slow industry growth. (D) high bargaining power among buyers.

A financial management firm has existed for more than 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its (A) access to large amounts of financial capital. (B) causally ambiguous core competencies. (C) social complexity. (D) unique historical conditions.

The environmental segments that make up the general environment typically will NOT include: (A) demographic factors. (B) sociocultural factors. (C) substitute products or services. (D) technological factors.

Many firms outsource the payroll function of paying employees to firms such as ADP. Payroll is a(n): (A) value-chain activity. (B) operation function. (C) support function. (D) supply-chain function.

Buyers are powerful when: (A) there is a threat of forward integration. (B) they purchase a small proportion of the supplier's output. (C) switching costs are low. (D) the buyers' industry is fragmented.

Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ______ segment of the general environment. (A) economic (B) political/legal (C) technological (D) global

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be: (A) permanent. (B) sustainable. (C) temporary. (D) defensible.

: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 business unit's actions to exploit its competitive advantage over rivals. (D) a firm's resources, intent, and mission.

High-level maintenance on aircraft is performed by the manufacturer. This service after the sale means that in the aircraft industry: (A) customers are relatively weak because of the high switching costs created by frequent-flyer programs. (B) the industry is moving toward differentiation of services. (C) the competitive rivalry in the industry is severe. (D) the economic segment of the external environment has shifted, but airline strategies have not changed.

All of the following are characteristics of the global economy EXCEPT: (A) the increasing importance of developing countries 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.

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.

Suppliers are powerful when: (A) satisfactory substitutes are available. (B) they sell a commodity product. (C) they offer a credible threat of forward integration. (D) they are in a highly fragmented industry.

An analysis of income distribution would include all of the following EXCEPT: (A) the purchasing power of various age groups. (B) the discretionary income of various ethnic groups. (C) wage differentials between male and female employees working for a large manufacturer. (D) how income is distributed among regions of the United States.

. 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.

Dissatisfied capital market stakeholders may: (A) sell their stock. (B) tighten loan covenants. (C) seek to increase their power. (D) All of these options are correct.