MGMT411_CH1

A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage. A) temporary B) sustained C) transient D) perpetual

A

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 B) strategy C) objective D) goal

A

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as A) corporate level strategies. B) diversification strategies. C) business level strategies. D) strategic alliance strategies.

A

Actions firms take to gain competitive advantages in a single market or industry are known as A) business level strategies. B) corporate level strategies. C) diversification strategies. D) strategy implementation.

A

An important limitation of comparing a firm's performance to its cost of capital occurs when a firm is A) privately held. B) an IPO. C) an entrepreneurial venture. D) experiencing below normal economic performance.

A

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 B) economic C) emergent D) visionary

A

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. B) setting objectives. C) measuring performance. D) defining its business level strategy.

A

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. B) external analysis. C) WACC analysis. D) economic analysis.

A

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. B) difficult to measure and track over time. C) non-existent. D) not quantitative.

A

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 B) competitive advantages should persist; when they can C) competitive advantages should persist; why they should not D) competitive parity should not persist; why they should

A

One of the first scholars to examine the longevity of competitive advantage was A) Dennis Mueller. B) Geoffrey Waring. C) Peter Roberts. D) Rich Houston.

A

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. B) liquidity ratios. C) activity ratios. D) profitability ratios.

A

The mission statements of visionary firms A) suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence. B) suggest that profit maximizing is neither an important corporate objective nor their primary reason for existence. C) suggest that profit maximizing is their primary reason for existence. D) suggest that value maximizing is their primary reason of existence.

A

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. B) objective strategies. C) planned strategies. D) ad hoc strategies.

A

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. B) Virtually all firms have used missions to develop strategies that create significant competitive advantages, while very few firms have used missions that can hurt their performance. C) It is very rare for firms to be able to use their missions to develop strategies that create significant competitive advantages, and most firm missions actually hurt their performance. D) Missions tend to have very little impact on a firm's ability to create significant competitive advantages.

A

________ 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 B) Accounting C) Strategic D) Sustainable

A

A firm that earns its cost of capital is said to be earning A) above normal economic performance. B) normal economic performance. C) below normal economic performance. D) normal accounting performance.

B

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. A) economic performance B) accounting performance C) strategic performance D) sustainable performance

B

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

Accounts receivable turnover is an example of which type of ratio? A) profitability B) activity C) liquidity D) leverage

B

From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms. A) substantially lower B) substantially higher C) marginally lower D) equivalent

B

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) A) internal analysis. B) external analysis. C) WACC analysis. D) economic analysis.

B

The center of Osterwalder and Pigneur's business model canvas is the A) parity point. B) value proposition. C) competitive advantage. D) strategy box.

B

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 A) weighted cost of capital. B) weighted average cost of capital. C) cost of capital. D) average cost of capital.

B

The strategic management process begins when a firm A) determines its objectives. B) defines its mission. C) makes a strategic choice. D) implements its strategy.

B

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. A) stakeholder B) residual claimants C) legitimate claimants D) extraordinary claims

B

Thermacorp's 17.3% ROE is an example of a(n) ________ ratio. A) liquidity B) profitability C) activity D) leverage

B

When a firm is able to create more economic value than rival firms it is said to have a(n) A) comparative advantage. B) competitive advantage. C) residual advantage. D) economic advantage.

B

Which type of ratios focus on the ability of a firm to meet its short-term financial obligations? A) activity ratios B) liquidity ratios C) leverage ratios D) profitability ratios

B

________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage. A) Competitive analysis B) Internal analysis C) Strategic choice D) External analysis

B

By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment. A) internal analysis B) competitive analysis C) external analysis D) strategic choice

C

Firms that generate less economic value than their rivals experience a competitive A) advantage. B) parity. C) disadvantage. D) perceived benefit.

C

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 A) below average accounting performance. B) above average economic performance. C) above average accounting performance. D) below average economic performance.

C

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) A) value proposition. B) cost advantage. C) economic value. D) competitive advantage.

C

The realized strategy of most firms tends to be A) almost exclusively a reflection of their intended strategy. B) almost exclusively a reflection of their emergent strategy. C) a combination of both intended and emergent strategies. D) reflective of neither the firms' intended nor emergent strategy.

C

The two types of measures of competitive advantage include A) accounting measures and strategic measures. B) strategic measures and economic measures. C) accounting measures and economic measures. D) qualitative measures and quantitative measures.

C

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 A) above normal economic performance. B) above normal accounting performance. C) below normal economic performance. D) below normal accounting performance.

C

Using ratio analysis, a firm earns ________ when its performance is greater than the industry average. A) above average economic performance B) below average accounting performance C) above average accounting performance D) below average economic performance

C

Which ratio signals a greater risk of bankruptcy as it increases? A) debt to equity B) quick ratio C) debt to assets D) cash flow per share

C

________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy. A) Strategy formulation B) Strategic choice C) Strategy implementation D) Strategic control

C

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 A) normal economic performance. B) average accounting performance. C) temporary advantage. D) above normal economic performance.

D

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

D

Firms whose mission is central to all they do are known as ________ firms. A) missionary B) emergent C) parity D) visionary

D

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? A) increasing profitability B) growing market share annually C) improving product quality every quarter D) growth in earnings per share averaging 15% or better annually for the next five years

D

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? A) business level strategy B) cost leadership strategy C) product differentiation strategy D) corporate level strategy

D

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. A) perceived benefit B) economic value C) cost advantage D) competitive advantage

D

The ________ is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm. A) cost of debt B) cost of advantage C) cost of parity D) cost of capital

D

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

D

________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator. A) Liquidity ratios B) Leverage ratios C) Activity ratios D) Profitability ratios

D

________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission. A) Strategies B) Missions C) Competitive advantages D) Objectives

D