Strategic Management Test 1 (Ch 1-6)

The final responsibility for forming the organization's mission lies with the

a. CEO

Which of the following statements about organizational knowledge is correct?

a. Knowledge is an intangible resource. b. The importance of knowledge is increasing. c. The value of knowledge as a proportion of shareholder value is increasing.

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

a. a capability

Generally speaking, product market stakeholders are satisfied when

a. a firm's profit margin yields the lowest return to capital market stakeholders that is acceptable to them

The strategic leader's work is characterized by

a. ambiguous decision situations which make effective decisions difficult to determine

Effective strategic leaders

a. are willing to be brutally honest

Before liquidating, Circuit City took several actions to try to satisfy its ________stakeholders.

a. capital market

Successful strategic leaders are

a. committed to helping the firm create value for all stakeholder groups. b. committed to nurturing those around them. c. decisive.

A prominent national accounting firm runs television advertisements showing an accountant working alone late in the office on a client's project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that this firm's accountants love their work. This ad seeks to convey a sense of the organization's to the viewers.

a. culture

If Southwest Airlines is considering the consequences of videoconferencing on business travel, it is in the profit pool analysis step known as

a. defining the pool's boundaries

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"

New markets created by iPods, PDAs, and Wi-Fi are a result of

a. disruptive technologies

McDonald's has been able to

a. earn above-average returns. b. achieve strategic competitiveness. c. use the strategic management process.

The resource-based view of the firm

a. emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone.

It is important to emphasize that, primarily because they are related to how a firm interacts with its stakeholders, almost all strategic management process decisions have

a. ethical dimensions

Managers must adopt a new mind-set that values _____ and the challenges that evolve from constantly changing conditions.

a. flexibility b. innovation c. speed

Knowledge is composed of all the following EXCEPT

a. insight

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.

The culmination of the strategic management process is

a. performance

______ innovation is a term used to describe how rapidly and consistently new, information-intensive technologies replace older ones.

a. perpetual

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

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

Dissatisfied capital market stakeholders may

a. sell their stock. b. tighten loan covenants. c. seek to increase their power.

A firm has achieved __________ when it successfully formulates and implements a value-creating strategy.

a. strategic competitiveness

Product market stakeholders include

a. suppliers

Essentially, ____________has become one of the world's largest markets with 700 million potential consumers.

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 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 on 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 stockholders and the organizational stakeholders

It is well known that the elected school board of a large city engages in unethical and illegal activities involving the awarding of major contracts. This behavior has existed for decades, even as the membership in the school board has changed over time. This behavior reflects

a. the core values of the school board as an organization

The industrial organization (I/O) model argues that

a. the key factor in success is choosing the correct industry in which to compete

Organizational culture refers to

a. the social energy that drives, or fails to drive, the organization. b. the complex set of ideologies, symbols, and core values that are shared throughout the firm. c. what people do when no one else is looking.

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

Wm. Wrigley Jr. Company once made only chewing gum. When Wrigley bought Life Savers (a line of candy mints) and Altoids (a line of breath mints) from Kraft, chewing gum then constituted less than 95 percent of revenues. Thus, Wrigley

a. was moving away from its traditional single-business strategy toward a dominant strategy

Usually a company is classified as a single business firm when revenues generated by the dominant business are greater than______ percent.

b. 95

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.

b. I/O resource-based

Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors higher returns than those earned by its direct competitors' investors. RNH has a reputation for providing high-paying managerial and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and inadequate patient-care staffing. Which statement best describes the situation?

b. RNH has prioritized the demands of capital market stakeholders over the demands of product market stakeholders.

The ability to effectively and efficiently access and use information is

b. an importance source of competitive advantage in virtually all industries

In the strategic management process ASP stands for

b. analyses, strategies, and performance

Although it closed stores, changed the top management team, and sought potential buyers, none of these_____ actions resulted in outcomes that allowed Circuit City to meet the expectations of its stakeholders.

b. capital market

The more sharing of resources and activities among businesses, the more ______ is the relatedness of the diversification.

b. constrained

______provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters changes.

b. continuos learning

PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision

b. has ethical implications for organizational stakeholders

Strategic leaders are

b. located in different areas and levels

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?

b. planning extensive employee training and hiring educated and experience employees

Strategic leaders,______ , often work long hours, and their work is filled with ambiguous decision situations.

b. regardless of their location in the organization

GE (Chapter 6 Opening Case) was diversified and manages businesses that have only a few links between them. This corporate-level strategy is best described as diversification.

b. related linked

All of the following are assumptions of the industrial organization (I/O) model EXCEPT

b. resources to implement strategies are firm-specific and attached to firms over the long-term

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 its concepts to make a decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization?

b. rexrich foods

Capital market stakeholders include

b. shareholders

In order to cope with hypercompetition, firms need to develop ______________ through continuous learning.

b. strategic flexibility

A ______ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.

b. strategy

The primary drivers of hypercompetition are

b. the emergence of a global economy and rapid technological change.

Although McDonald's is competing in an unattractive industry, it has improved its performance by focusing on product innovations and by enhancing existing facilities. This improved performance is best explained by

b. the resource-based model

As noted in the Chapter 6 Opening Case, GE is now a major player in the "clean energy" industry such as wind turbines and solar power. A major reason GE moved in this direction was

b. to overcome and correct its record in environmental issues.

The profit pool is the

b. total profits earned in an industry along all points of the value chain

Corporate-level strategy is concerned with ______ and how to manage these businesses.

b. what product markets and businesses the firm should be in

__________should establish a firm's individuality and should be inspiring and relevant to all stakeholders.

c. A mission

The firm's provide the foundation for choosing one or more ______ and deciding how to implement them.

c. analyses strategies

Strategic delegation helps

c. avoid too much managerial hubris

The ultimate test of the value of a corporate-level strategy is whether the

c. businesses in the portfolio are worth more under the management of the company in question that they would be under any other ownership

A competitive advantage

c. can be identified only if it has been unsuccessfully challenged by competitors.

All of the following are assumptions of the resource-based model EXCEPT

c. capabilities are highly more mobile across firms

Organizational stakeholders are usually satisfied when

c. companies provide a dynamic, stimulating, and rewarding work environment

When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n)

c. core competence

The steps for identifying the profit pools in an industry include all of the following EXCEPT

c. defining the competitors in the pool

In a diversified firm, corporate-level strategy is concerned with

c. determining in which businesses to compete and how resources will be allocated between businesses

Apple's iPod and iPad are examples of

c. disruptive technologies

The I/O model is grounded in

c. economics

Organizational stakeholders include

c. employees

If McDonald's is considering growing potatoes, the step of the profit pool analysis is the one that

c. estimates the size of the value-chain activity in the pool

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.

c. host communities

GE (Chapter 6 Opening Case) is unusual in that it

c. is one of the few large diversified large firms that have been successful over time.

Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is

c. obtaining reliable products at the lowest possible price

The "liability of foreignness" is the

c. overall risk of participating outside a firm's domestic country when entering global competition

To have the potential to become sources of competitive advantage, resources and capabilities must be non- substitutable, valuable, and

c. rare; costly to imitate

A major assumption about the strategic management process is that it is

c. rational

_______is an investor's uncertainty about the economic gains or losses that will result from a particular investment.

c. risk

Who typically develops a firm's mission statement?

c. the CEO and top managers

A business-level strategy describes

c. the firm's actions to exploit its competitive advantage over rivals

All of the following are characteristic of the global economy EXCEPT

c. the increased use of tariffs to protect industries.

The more "constrained" the relatedness of diversification,

c. the more links there are among the businesses owned by an organization

Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to

c. the profitability of the industry in which the firm competes

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

c. vision

All of the following are resources of an organization EXCEPT

c. weak competitors in the industry

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.

d. 20; 36

_____has become the second-largest economy in the world.

d. China

Greenleaf Property Management has been earning below-average returns for the last three years. Which of the following statements are true?

d. Greenleaf will not be able to minimally satisfy all stakeholders.

Firms use the five forces model to identify the of the industry as measured by its

d. attractiveness profitability

The economic interdependence among countries as reflected in the flow of goods, services, financial capital, and knowledge across country borders is defined as

d. globalization

Globalization has led to

d. higher product quality

The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market?

d. internet

Analysis of the industry's profit pool enables strategic managers to

d. locate the most promising areas of an industry's value chain

A company competing in a single product market has

d. one business-level strategy and one corporate-level strategy

The resource-based model of the firm argues that

d. resources that are valuable, rare, costly to imitate, and non-substitutable from the basis of a firm's core competencies

Above-average returns are

d. returns in excess of what an investor expects to earn from other investments with a similar level of risk.

If McDonald's were to map the profit pool in the quick-service restaurant industry, it would do all of the following EXCEPT

d. select the strategy to use where the largest profit pools are located

In the resource-based model, which of the following factors would be considered a key to organizational success?

d. skilled employees

SWOT stands for

d. strengths, weaknesses, opportunities, and threats

In smaller, new venture firms, returns are sometimes measured in terms of

d. the amount and speed of growth

The strategic management process is

d. the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.