Quiz 1: What is strategy and why is it important?
The pharmaceutical company Merck's new drug Vioxx was a blockbuster, generating revenues of $2.5 billion a year by 2002 and growing fast. When allegations began to surface in the medical community that the firm had suppressed evidence of negative side-effects during clinical trials, Merck announced the voluntary withdrawal of Vioxx from the market. In this case, Merck provides an example of what can happen if a company deviates from its _____.
core values
_____ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.
Strategic management
Which of the following scenarios illustrates a firm that has a sustainable competitive advantage?
TrueLink Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years.
Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.
Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.
When do employees fail to adopt the organizational values of a firm?
When the top managers in the firm are merely paying lip service to the firm's stated values
A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n) _____.
competitive advantage
New Communications Inc. is a newspaper publishing company whose average return on invested capital is approximately 5 percent. Because newspaper publishing is a declining industry, the industry average has been negative (-5 percent) for the last few years. In this scenario, New Communications Inc. has a _____.
competitive advantage
Exis Inc. and Stelma Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Exis Inc. and Stelma Inc. most likely have:
competitive parity with each other.
In contrast to an organization's vision, its mission should
encompass both the purpose of the company as well as the basis of competition.
A firm is said to gain a competitive advantage when it can:
provide products similar to its competitors, but at lower prices.
FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially low due to minimal investment in operation and administration. In this scenario, FindFor Inc. has most likely been able to provide superior value and cost control through _____.
strategic positioning
Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements are intended to
Be broad and abstract
If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies?
Comparing the return to the return on invested capital obtained by other firms in the industry
Which of the following statements is true of customer-oriented visions?
Customer-oriented vision statements are not the same as listening to your customer.
_____ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
Strategy
Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?
Strategy analysis
