MAN 4720, Chapter 1, Exam 1 Review

13. If a firm has a 10% return on invested capital while the industry average return on invested capital is 18%, the firm has a a. Competitive disadvantage b. Over-performing norm c. Competitive parity d. Purchasing parity

a. Competitive disadvantage

10. A competitive advantage ______ a. Is assessed relative to other competition in the industry b. Takes into consideration globalization and rival factors c. Places a firm at a disadvantage in regards to its ROI d. Is based on the return of invested capital over a 15-year period

a. Is assessed relative to other competition in the industry

3. In order for a firm such as Threadless to benefit from the "wisdom of the crowds," the crows must be a. Large and diverse b. Small and homogeneous c. Large and homogeneous d. Small and diverse

a. Large and diverse

4. Firm effects refers to the way in which a. Management affects the performance of a firm b. Firms react to the strategic moves of rival firms c. The structure of an industry affects individual firm performance d. Firm the performance of the firm affects the overall economy

a. Management affects the performance of a firm

12. Researches have determined that a firm's strategy can explain up to ____% of its performance a. 30 b. 55 c. 75 d. 15

b. 55

8. Which of the following could accurately be called a strategy? a. Choosing to ignore competitors and focus on traditional strengths b. A set of activities designed to achieve a sustainable competitive advantage c. Detailed analysis of operation effectiveness d. A stated intention to become the industry sales leader

b. A set of activities designed to achieve a sustainable competitive advantage

19. As a CEO, Maya's actions influence company performance far more than any forces exerted by the external environment. Maya's actions are classified as a. Environmental effects b. Firm effects c. Industry effect d. General effects

b. Firm effects

16. The Bright Bulb light bulb company produces a line of LED bulbs that customers consider very similar to competitors' LED bulbs. Which of the following conditions must be true for Bright Bulb to have a competitive advantage? a. The bulbs must be more expensive than the competitors' offerings b. The bulbs must have a lower cost than competitors' bulbs c. The bulbs must be sold by online retailers only d. The bulbs must be on the market for a longer period of time than competitors' bulbs

b. The bulbs must have a lower cost than competitors' bulbs

20. The most important factor in determining firm performance is a. The intensity of competition b. The firm's strategy c. Network effects d. Industry structure

b. The firm's strategy

17. Industry effects refer to a. The organizational structure of rival firms b. The way in which the structure of an industry affects the performance of individual firms c. The effects of management decisions on firm performance d. The extent to which consumer preferences influence the types of products that a firm produces

b. The way in which the structure of an industry affects the performance of individual firms

11. Competitive parity occurs when a. Two or more firms rely on international outsourcing to remain competitive b. Two or more firms achieve the same performance results c. Two or more firms enter into a strategic alliance d. The performance of two or more firms is superior to the industry average

b. Two or more firms achieve the same performance results

6. The industry a firm is in determines about _____ of a firm's profitability. a. 100% b. 80% c. 20% d. 2%

c. 20%

15. A good strategy consists of three elements. The first element is accomplished through analysis of the firm's external and internal environments. We also call this: a. A guiding policy to address the competitive advantage b. A set of coherent actions to implement the firms' guiding policy c. A diagnosis of the competitive advantage

c. A diagnosis of the competitive advantage

What is the overall purpose of strategic management? a. Respond to globalization b. Create competitive transparency c. Gain competitive advantage d. Perform risk analysis e. Calculate parity performance measures

c. Gain competitive advantage

The overall purpose of a firm's strategy is to... a. Determine demand for new product ideas b. Generate significant interest from foreign investors c. Perform better than other companies in the same industry d. See all existing inventory of a given product

c. Perform better than other companies in the same industry

14. Strategic positioning allows mangers to a. Balance foreign and domestic sales b. Provide superior customer value regardless of costs c. Provide customer value while controlling costs d. Eliminate competition in a given industry

c. Provide customer value while controlling costs

9. Managers often have to make decisions between two conflicting strategic options, otherwise known as a. Hot-points b. Managerial dilemmas c. Trade-offs d. Bad choices

c. Trade-offs

18. A successful business strategy creates _______ for both producers and consumers a. Equity b. Profits c. Value d. Wealth

c. Value

7. Which of the following is a term used to describe a highly unlikely event that has a significant impact on society? a. Unicorn event b. Blue bird event c. White knight event d. Black swan event

d. Black swan event

5. A competitive advantage that lasts for a long period of time is said to be a. Topical b. Geographic c. Theoretical d. Sustainable e. Accurate

d. Sustainable