Strat. MGMT

76) The U in U form structure stands for

B) "unitary."

82) Accounts receivable turnover is an example of which type of ratio?

B) activity

45) When activity in an economy is relatively low for a short period of time, the economy is said to be in a

A) recession.

89) If Sematech were to choose to narrow its product line in an effort to reduce costs, this would be an example of

) a policy choice.

79) Firms implementing cost leadership strategies will have ________ layers in their reporting structure.

) relatively few

50) To the extent that a firm's resources and capabilities enhance a firm's competitive position by enabling a firm to exploit its opportunities or neutralize its threats, these resources and capabilities are valuable and are known as

) strengths.

47) In the SC-P model, ________ refers to the strategies that firms in an industry implement.

- C) conduct

48) The theoretical roots of the resource based view can be traced to research done by

A) David Ricardo.

43) ________ is/are the distribution of individuals in a society in terms of age, sex, marital status, income, ethnicity, and other personal attributes that may determine buying patterns.

A) Demographics

80) One of the first scholars to examine the longevity of competitive advantage was

A) Dennis Mueller.

69) ________ measures of competitive advantage compare a firm's level of return to its cost of capital instead of to the average level of return in the industry.

A) Economic

52) ________ focus(es) on the relationship between the volume of production at a given point in time and average unit costs, the ________ focus(es) on the relationship between the cumulative volume of production and average unit costs.

A) Economies of scale; learning curve

49) ________ levels of production are associated with ________ levels of employee specialization.

A) High, high

63) Which of the following statements about cost leadership and the threat of buyers is accurate?

A) If buyers demand increased quality or service, cost leaders can absorb these costs and may still have a cost advantage over the competition.

61) Which of the following statements regarding substitutes is accurate?

A) In the extreme, substitutes can ultimately replace an industry's products or services.

76) Which of the following statements regarding competitive parity and competitive advantage is accurate?

A) Some firms develop valuable, rare, and costly-to-imitate resources and capabilities in being efficient second movers, that is, in rapidly imitating and improving on the product and technological innovations of other firms.

78) ________ are resources required to successfully compete in an industry.

A) Strategically valuable assets

63) Which of the following attributes makes suppliers a stronger threat?

A) The supplier's industry is dominated by a small number of firms.

48) Which of the following statements regarding firm mission is accurate?

A) While some firms have used their missions to develop strategies that create significant competitive advantages, firm missions can hurt a firm's performance as well.

53) Actions firms take to gain competitive advantages in a single market or industry are known as

A) business level strategies.

41) Actions that firms take to gain competitive advantage in a single market or industry are known as

A) business-level strategies.

62) In many ways, the difference between traditional economics research and strategic management research is that the former attempts to explain why ________, while the latter attempts to explain ________.

A) competitive advantages should not persist; when they can

80) If one of LaserTech's rivals were to decide to divest its industrial laser manufacturing business in response to LaserTech's new technology, this would be an example of

A) competitive dynamics.

87) For BidBuy, services such as those offered by DollarDog that make BidBuy's services more valuable for customers who use the services of both companies are best described as

A) complementors.

54) Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

A) corporate level strategies.

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. 80) Sematech is pursuing which strategy?

A) cost-leadership business strategy

86) Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project. It wants to ensure that it performs the process correctly and so intends to start the process with the first step of the strategic planning process, which is

A) defining its mission.

47) As the volume of production in a firm increases, the average cost per unit decreases until some optimal volume of production is reached, after which the average costs of production begin to rise because of

A) diseconomies of scale.

75) Theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented are known as

A) emergent strategies.

64) Which of the following is likely to be a rare source of cost advantage?

A) technological software

53) A(n) ________ is any individual, group, or organization outside a firm that seeks to reduce the level of that firm's performance.

A) environmental threat

61) According to the research in strategic human resources management,

A) firms that are able to use human resource practices to develop socially complex human and organizational resources are able to gain competitive advantage over firms that do not engage in these practices.

70) The advantages that come to firms that make important strategic and technological decisions early in the development of an industry are known as ________ advantages.

A) first-mover

68) An industry in which a large number of small or medium sized firms operate and no small set of firms has dominant market share or creates dominant technologies is known as a(n) ________ industry.

A) fragmented

75) Industries in which a large number of small or medium sized firms operate and no small set of firms has dominant market share or creates dominant technologies are called ________ industries.

A) fragmented

71) In a functional structure, each of the major business functions is managed by a

A) functional manager.

65) Southwest Airlines' strong internal culture that helps ensure that employees act in ways consistent with the company's strategy is an example of a(n)

A) informal management control.

78) Fed Ex entered their market with a well defined mission and objectives, making strategic choices and implementing those strategies. This is an example of which type of strategy?

A) intended

89) Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog undertook an analysis to help it understand which of its resources and capabilities are likely to be sources of competitive advantage and which are less likely to sources of such advantages it would be performing a(n)

A) internal analysis.

66) Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as

A) leverage ratios.

82) The threat of suppliers in the hardwood furniture can best be described as

A) low because there are a large number of suppliers selling an undifferentiated product.

43) A firm's ________ is its long term purpose that defines both what it aspires to be in the long run and what it wants to avoid in the meantime.

A) mission

50) Firms in industries characterized by ________ can expect to earn only competitive parity.

A) perfect competition

72) An important limitation of comparing a firm's performance to its cost of capital occurs when a firm is

A) privately held.

69) Cost advantages based on learning curve economies are

A) rare, but they usually are not costly to duplicate.

83) The inability of rivals to develop or acquire technology similar to that of LaserTech is an illustration of

A) resource immobility.

88) If Sematech decided to focus on building its technological hardware, it would focus on elements such as

A) robots.

60) Resources and capabilities, such as interpersonal relations among managers and a firm's culture, that may be costly to imitate because they are beyond the ability of firms to systematically manage and influence are referred to as

A) socially complex.

84) In this example, composite wood furniture would be an example of a(n)

A) substitute.

47) The mission statements of visionary firms

A) suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence.

71) Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in an industry to directly communicate or negotiate with each other can be thought of as

A) tacit cooperation.

59) A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.

A) temporary

75) Cost leadership firms are typically characterized by very ________ cost control systems.

A) tight

50) High quality objectives are those that are

A) tightly connected to elements of a firm's mission and are relatively easy to measure and track over time.

54) Most firms have a resource base that is composed primarily of resources and capabilities that are

A) valuable but not rare.

51) The set of business activities in which a firm engages to develop, produce, and market its products or services is known as its

A) value chain.

73) A firm that earns its cost of capital is said to be earning

B) normal economic performance.

42) A sequential set of analyses and choices that can increase the likelihood that a firm will choose a strategy that generates competitive advantages is the A) organizational change process. B) strategic management process. C) mission statement process. D) goal setting process.

B

72) The only person in a functional organization who has to have a multifunctional perspective is the

B) CEO.

41) ________ are a subset of a firm's resources and are defined as tangible and intangible assets that enable a firm to take full advantage of other resources it controls.

B) Capabilities

46) ________ are said to exist when the increase in firm size (measured in terms of volume of production) are associated with lower costs (measured in terms of average costs per unit of production).

B) Economies of scale

61) Which of the following statements is accurate?

B) Firms with a low-cost position can reduce the threat of rivalry in an industry.

76) ________ are advantages that come to firms that make important strategic and technological decisions early in the development of an industry.

B) First-mover advantages

52) ________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage.

B) Internal analysis

62) Which of the following statements regarding patents is accurate?

B) Patents may decrease, rather than increase, the costs of imitation.

55) ________ are any supplies used by a firm in conducting its business activities.

B) Productive inputs

85) Given Sematech's business level strategy, which organizational structure is the most appropriate?

B) U-form structure

53) Which of the following statements regarding the learning curve and economies of scale is accurate?

B) Where diseconomies of scale are presumed to exist if a firm gets too large, there is no corresponding increase in costs in the learning-curve model as the cumulative volume of production grows.

64) Which of the following is the best example of forward vertical integration?

B) a car company opening its own dealerships to sell its products directly to customers

64) A firm's ________ is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements.

B) accounting performance

59) The products or services provided by a firm's direct competitors meet ________ customer needs in ________ ways as the product provided by the firm itself.

B) approximately the same; the same

73) The most promising opportunity for a firm in a declining industry is to

B) become a market leader in the pre-shakeout industry.

59) If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage, this competitive advantage is said to be protected from imitation by

B) causal ambiguity.

56) When a firm is able to create more economic value than rival firms it is said to have a(n)

B) competitive advantage.

67) If your customers value your products more when they have your product and another firm's product rather than when they have your product alone, the other firm is considered to be a

B) complementor.

49) Within the five forces framework, the five most common threats facing firms from their competitive environment include each of the following except

B) complementors.

42) Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

B) corporate-level strategies.

44) The strategic management process begins when a firm

B) defines its mission.

51) If Temper Company, a manufacturer of mattresses, was considering moving its production facilities to China but decided against it because the additional costs of shipping the mattresses back to the U.S. would offset the cost savings associated with moving the production facilities, the increased costs associated with shipping would be an example of

B) diseconomies of scale.

66) Perhaps the only time economies of scale are not subject to low cost duplication is when the ________ size of operations is a significant percentage of ________ in an industry.

B) efficient; total demand

83) If Sematech's expansion plans did not produce the desired cost savings but the company decided to continue production expansion in an effort to capture cost reductions, this would be an example of

B) escalation of commitment.

88) Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a(n)

B) external analysis.

52) If in the process of maximizing its performance, a firm engages in activities that pollute the environment, the impact of that pollution is a(n)

B) externality.

80) Based on the above description, the hardwood furniture industry can best be described as a(n) ________ industry.

B) fragmented

41) The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choices.

B) general environment

43) The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of

B) human resources.

49) Inputs whose quantity of supply is fixed and does not respond to price increases are said to be

B) inelastic in supply.

79) Which type of ratios focus on the ability of a firm to meet its short term financial obligations?

B) liquidity ratios

51) Which type of competition is characterized by a large number of firms, heterogeneous products and low cost of entry and exit?

B) monopolistic competition

54) Firms that have either recently begun operations in an industry or that threaten to begin operations in an industry soon are considered to be ________ in the five forces framework

B) new competitors

78) A process is said to be ________ when events early in the evolution of a process have significant effects on subsequent events.

B) path dependent

44) Computer hardware and software technology, robots used in manufacturing and automated warehouses are examples of which type of resources?

B) physical resources

82) LaserTech's new technology is an example of

B) physical resources.

59) Choices which firms make about the kinds of products and services they will sell that impact their relative cost position are known as

B) policy choices.

84) Thermacorp's 17.3% ROE is an example of a(n) ________ ratio.

B) profitability

56) In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered ________ and a potential source of competitive advantage.

B) rare

74) The view that equity holders only receive payment on their investment in a firm after all legitimate claims by a firm's other stakeholders are satisfied is known as the ________ view of equity holders.

B) residual claimants

46) Civil wars, political coups, terrorism, wars between countries, famines, and country or regional economic recessions are all examples of which element of the general environment?

B) specific international events

46) From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms.

B) substantially higher

58) The quality of relations among labor and management, an organization's culture, and the quality of management controls are all examples of

B) technological software.

60) The center of Osterwalder and Pigneur's business model canvas is the

B) value proposition.

70) The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital; or equity times the cost of equity is the

B) weighted average cost of capital.

79) ________ costs exist when customers make investments in order to use a firm's particular products or services.

C) Customer-switching

55) ________ exist when a firm's costs rise as a function of its volume of production.

C) Diseconomies of scale

40) ________ in the RBV are defined as the tangible and intangible assets that a firm controls that it can use to conceive and implement its strategies.

C) Resources

45) The best example of a firm following a cost leadership business strategy is

C) Ryanair.

55) ________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.

C) Strategy implementation

62) ________ make a wide variety of raw materials, labor and other critical assets available to firms.

C) Suppliers

76) The realized strategy of most firms tends to be

C) a combination of both intended and emergent strategies.

72) Mature industries are characterized by

C) a slowdown in the introduction of new products or services.

67) Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.

C) above average accounting performance

85) If the average ROE in the heating and cooling industry is 10.1%, and Thermacorp's ROE is 17.3%, Thermacorp is said to have

C) above average accounting performance.

63) The two types of measures of competitive advantage include

C) accounting measures and economic measures.

81) By increasing production volume in an effort to reduce costs, Sematech is pursuing which sources of cost advantage?

C) size differences and economies of scale

74) Which of the following compensation policies is most likely to enhance a firm's ability to pursue a low cost strategy?

C) awarding employees bonuses that are equal to 50% of the total cost savings achieved based on employee suggestions and initiatives

83) Thermacorp's weighted average cost of capital is 13.5. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning

C) below normal economic performance.

64) Which of the following is an example of formal management controls?

C) budgeting and reporting activities

70) If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of

C) competitive dynamics.

81) Which ratio signals a greater risk of bankruptcy as it increases?

C) debt to assets

61) Firms that generate less economic value than their rivals experience a competitive

C) disadvantage.

57) The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic cost of these products or services is the (Note: Porter was deleted from this edition)

C) economic value.

68) When managers committed to an incorrect course of action increase their commitment to this action even as its limitations become manifest, this is known as

C) escalation of commitment.

51) By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment.

C) external analysis

58) The threat of direct competition tends to be high when

C) firms are unable to differentiate their products.

89) BidBuy has a ________ advantage.

C) first-mover

77) A consolidation strategy is a good option in what type of industry?

C) fragmented

78) A marketing manager leading the marketing department is an example of a(n) ________ manager.

C) functional

70) Firms implementing cost leadership strategies will generally adopt a

C) functional organizational structure.

43) Cost leadership and product differentiation strategies are so widely recognized that they are often called

C) generic business strategies.

81) The level of direct competition in the hardwood furniture industry can best be described as

C) high because of the numerous firms in the industry and the slowing growth rate.

57) Frequent price cutting by firms in an industry, frequent introduction of new products by firms in an industry and intense advertising campaigns are indications of

C) high levels of direct competition.

57) If firms that do not possess valuable and rare resources or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed

C) imperfectly imitable.

42) All of the following are elements of the general environment except

C) industrial trends.

56) In order to create a cost advantage, the cost of acquiring low cost productive inputs must be ________ the cost savings generated by these factors.

C) less than

87) By employing a low cost competitive strategy, Sematech has made itself

C) less vulnerable to the power of suppliers.

85) The threat of buyers in this industry is best described as

C) low because there are many suppliers, none of which represents a significant portion of the hardwood furniture industry's sales.

52) Which type of competition is characterized by a small number of firms, homogeneous products and costly entry and exit?

C) oligopoly

86) Which of the following best describes the competition in the U.S. online auction industry?

C) oligopoly

66) Resources that are valuable but not rare can be categorized as

C) organizational strengths.

60) Firms for whom the price of the products or services they sell is determined by market conditions and not by the individual decision of the firms are known as

C) price takers.

46) The VRIO assumption that some of the resource and capability differences among firms may be long lasting because it may be very costly for firms without certain resources and capabilities to develop or acquire them is known as

C) resource immobility.

68) If a resource or capability is valuable and rare but not costly to imitate, exploiting this resource will generate a(n)

C) temporary competitive advantage.

65) Buyers tend to have less power when

C) the supplies they purchase are an insignificant portion of the costs of their final products.

73) Tacit cooperation is only a viable strategy when

C) there is a strong market share leader in the industry.

41) A firm's ________ is defined as its theory about how to gain competitive advantages.A) objective B) mission C) vision D) strategy

D

86) If Lucy Sullivan were a Sematech manager who oversaw the finance operations in the company's functional structure, Lucy would be considered a

D) functional manager.

77) Which of the following is a reason why it is important for students to study strategy and the strategic management process?

D) All of the above : A) Studying strategy and the strategic management process can give students tools to evaluate the strategies of firms that may employ them. B) It can be very important to a new hire's career success to understand the strategies of the firm that hired them and their place in implementing these strategies. C) While strategic choices are generally limited to very experienced senior managers in large organizations, in smaller and entrepreneurial firms many employees end up being involved in the strategic management process.

67) Which of the following statements is accurate?

D) In general, both economies of scale and diseconomies of scale are relatively easy-to-duplicate bases of cost leadership.

49) ________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission.

D) Objectives

65) ________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator.

D) Profitability ratios

56) All other things being equal, which of the following would lead to lower barriers to entry in an industry?

D) Raw materials are widely and readily available at a competitive price.

47) ________ implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms.

D) Resource heterogeneity

71) A firm that is able to attract additional capital because debt holders and equity holders will scramble to make additional funds available for it is likely earning

D) above normal economic performance.

60) The products or services provided by a firm's substitutes meet ________ customer needs in ________ ways as the product provided by the firm itself.

D) approximately the same; different

42) A firm's marketing skills and teamwork as well as its cooperation among managers are examples of

D) capabilities.

73) Firms pursuing a cost leadership strategy are typically characterized by

D) close supervision of labor, raw materials,inventory, and other costs.

58) If TechnoGeek and VarsityBlue compete in the same market for the same customer and TechnoGeek generates $900 of economic value each time it sells a product or service while VarsityBlue generates $400 of economic value each time it sells a product or service, TechnoGeek has a(n) ________ of $500.

D) competitive advantage

90) Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog were considering expanding beyond the cosmetics industry into pharmaceuticals in order to gain competitive advantages by operating in multiple markets and industries, this would be an example of which type of strategy?

D) corporate level strategy

68) The ________ is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm.

D) cost of capital

44) A firm that chooses a ________ focuses on gaining advantages by reducing its cost below all of its competitors.

D) cost-leadership business strategy

44) The values, beliefs and norms that guide behavior in a society are known as

D) culture.

88) Factors such as BidBuy's feedback rating system that are valuable to the company's customers but which are not useful on other online auction sites are examples of

D) customer-switching costs.

83) If Hickory Divine were to open its own chain of furniture stores, this would be an example of

D) forward vertical integration.

87) Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, the strategic planning team had decided that financial performance is one of the company's top priorities. Which of the following is the best example of an objective the company might use to help it achieve its goal of superior financial performance?

D) growth in earnings per share averaging 15% or better annually for the next five years

74) Firms in a declining industry that engage in a long, systematic phased withdrawal from the industry, extracting as much value as possible during the withdrawal period, are following a(n) ________ strategy.

D) harvest

55) Which of the following is not one of the six distinct activities in McKinsey and Company's value chain model?

D) inbound logistics

48) In a perfectly competitive industry,

D) it is not very costly for firms to enter or exit the industry.

50) Which of the following is not a potential source of diseconomies of scale?

D) learning-curve economies

63) The range of formal and informal mechanisms to ensure that managers are behaving in ways consistent with a firm's strategies are referred to as

D) management control systems.

82) If Sematech's efforts to increase its production capacity resulted in increased complexity and an inability of managers to control and operate the firm efficiently, this would be an example of

D) managerial diseconomies.

77) In ________ structures, employees report to two or more people.

D) matrix

54) Learning curve cost advantages are

D) not restricted to manufacturing.

45) A firm's formal reporting structure, its formal and informal planning and its controlling and coordinating systems are examples of which type of resources?

D) organizational resources

65) Which of the following is less likely to be a rare source of cost advantage?

D) policy choices

48) The link between volume of production and the cost of building manufacturing operations is particularly important in industries characterized by

D) process manufacturing.

53) ESPN's development of an extensive offering of XGames coverage that is unmatched by any other sports outlet is an example of which element of the VRIO framework?-

D) rarity

84) If Sematech were to continue seeking methods to maintain the company's cost leadership position that would be costly to duplicate, which of the following is most likely to be a basis of cost leadership that may be costly to duplicate?

D) securing differential access to low-cost productive inputs

62) If the potential responses of competing firms are likely to be very detrimental to the costs advantages of cost leaders, firms pursuing a cost leadership competitive strategy should

D) set their prices equal to competitors' prices, sacrificing some market share for increased profit margins.

69) Resources and capabilities that are valuable, rare, and costly to imitate are best described as

D) sustainable distinctive competencies.

72) When tacit cooperation has the effect of reducing supply and increasing prices, it is known as

D) tacit collusion.

74) The specific actions a firm takes to implement its strategies are known as

D) tactics.

57) Machines and robots are examples of

D) technological hardware.

69) The major opportunity facing firms in fragmented industries is

D) the implementation of strategies that began to consolidate the industry into a smaller number of firms.

77) If there is a conflict between the resources a firm controls and that firm's organization, ________ should be changed.

D) the organization

66) Overall, the average level of performance in an industry is likely to be highest when

D) the threat level of all five forces is low.

71) In general, first mover advantages can arise from any of these sources except

D) using an imitative strategy to introduce improved versions of competitors' new products.

67) Resources that generate a temporary competitive advantage are

D) valuable and rare but not costly to imitate.

LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech's executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech's system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company's new technology and its competitive advantage. 79) LaserTech's new technology appears to be

D) valuable, rare and costly to imitate.

45) Firms whose mission is central to all they do are known as ________ firms.

D) visionary

1) One of the central questions that all strategic managers must address, regardless of the industry they work in, is "How is the industry likely to evolve?"

TRUE

13) Mission statements that are very inwardly focused and are defined only with reference to the personal values and priorities of its founders and top managers can hurt a firm's performance.

TRUE

14) Objectives are the specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission.

TRUE

16) By conducting an external analysis, a firm identifies the critical threats and opportunities in the industry's competitive environment.

TRUE

19) Strategy implementation occurs when a firm adopts organizational policies and practices that are consistent with its strategy.

TRUE

20) The ultimate objective of the strategic management process is to enable a firm to choose and implement a strategy that leads to a competitive advantage.

TRUE

23) Waring found that firms that operate in industries that are informationally complex, require customers to know a great deal in order to use the industry's products, require a great deal of R & D, and have significant economies of scale are more likely to have sustained competitive advantage than those firms in industries without those characteristics.

TRUE

24) A firm's accounting performance is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements.

TRUE

27) Liquidity ratios are ratios that focus on the firm's ability to meet its short-term financial obligations.

TRUE

29) A firm that earns below average accounting performance generally experiences a competitive disadvantage.

TRUE

3) For the purposes of this book, a firm's strategy is defined as its theory about how to gain competitive advantages.

TRUE

31) Economic measures of competitive advantage compare a firm's level of return to its costs of capital instead of to the average level of return to the industry.

TRUE

35) Emergent strategies are theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented.

TRUE

38) Firms with strategies that are unlikely to be a source of competitive advantage will rarely provide the same career opportunities as firms with strategies that do generate such advantages.

TRUE

39) Strategic choices are generally limited to very experienced senior managers in large corporations; in smaller and entrepreneurial firms, many employees end up being involved in the strategic management process.

TRUE

5) The greater the extent to which a firm's assumptions and hypotheses accurately describe how the competition in the industry is likely to evolve, and how that evolution can be exploited to earn a profit, the more likely it is that a firm will gain a competitive advantage from implementing its strategies.

TRUE

7) The strategic management process is a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy that generates competitive advantages.

TRUE

9) A firm's mission defines both what it wants to be in the long run and what it wants to avoid in the meantime.

TRUE

75) Which of the following statements regarding the resource

based view is accurate?- D) Competitive advantage is too important to remain the sole property of senior management.

81) If LaserTech's new technological development were due to proprietary investments the company made when it was first founded twenty years ago, this would be an example of

path dependence.

58) Firms that possess and exploit costly

to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of- D) sustained competitive advantage.