quiz 1
When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n):
core competence.
The global economy, globalization, rapid technological change, and the increasing importance of knowledge are creating the need to:
delegate strategic responsibilities to employees "closer to the action."
In a diversified firm, corporate-level strategy is concerned with:
determining in which businesses to compete and how resources will be allocated between businesses.
A firm's mission:
is a statement of a firm's business in which it intends to compete and the customers it intends to serve.
A key purpose of a mission statement is to inform _________what a firm is, what it seeks to accomplish and who it seeks to serve.
stakeholders
A firm has achieved ______ when it successfully formulates and implements a value-creating strategy.
strategic competitiveness
Customers, suppliers, unions, and local governments are examples of capital market stakeholders.
F
Developed countries still have major advantages in their access to information technology when compared to emerging economies because of the significant cost of the infrastructure needed for computing power.
F
Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software.
F
The goal of strategy implementation is to develop a permanent competitive advantage.
F
The rapid rate of technological diffusion has increased the competitive benefits of patents.
F
When a firm earns lower-than-average returns, the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders.
F
Greenleaf Property Management has been earning below-average returns for the last three years. Which one of the following statements is true?
Greenleaf will not be able to minimally satisfy all stakeholders.
The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market?
Internet
Generally speaking, product market stakeholders are satisfied when:
a firm achieves a balance between profit margins, costs paid to suppliers and prices set for customers.
The resource-based model assumes that firms must have resources that are rare or costly to imitate to form a basis for competitive advantage.
F
The ______ are those with the potential to be formed into core competencies as the foundation for creating value.
"right" resources
Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.
T
In the strategic management process ASP stands for
analyses, strategies, and performance.
The firm's ______ provide the foundation for choosing one or more ______ and deciding how to implement them.
analyses; strategies
Capabilities
are often developed in specific functional areas
Tangible resources include:
assets that can be observed and quantified.
All of the following are aspects of the political/legal segment of the general environment EXCEPT:
attitudes and values.
Counterfeiting goods and exporting them from Chiina is
unethical and illegal
. A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised:
judgment
Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT
lack of scientific transference.
Compared to tangible resources, intangible resources are ______ and ______.
less visible; more difficult to copy
Strategic leaders are:
located in different areas and levels.
. In order to cope with hypercompetition, firms need to develop ______ through continuous learning.
strategic flexibiliy
SWOT stands for
strengths, weaknesses, opportunities, and threats
Product market stakeholders include
suppliers.
Which of the following would NOT be identified in an analysis of the economic portion of the general environment?
The ability of Ford to issue new debt in light of its recent financial performance
Which of the following, identified in an analysis of the general environment, is an opportunity for an entrepreneur who wishes to open a business providing "Fitness for Life" physical conditioning services (strength, balance, and flexibility training) in a city of 100,000 people?
The average age of the population in his community is high.
Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one-third of sales. With profitability far above the industry average, this product is responsible for one-half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark?
The company should monitor the general environment for changes that might affect the revenue and profitability of all products.
A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for the project. Which of the following statements is most likely to be true?
The cost of the marble will be expensive because of the bargaining power of the supplier.
Clarissa is a sales representative for a large pharmaceutical firm. While calling on one of her major clients, the purchasing director of a hospital, the client told her confidential information that a sales representative from a competing firm had passed on to him. The information completely contradicts Clarissa's firm's understanding of the competitor's business strategy and would allow Clarissa's employer to gain many of the competitor's clients. What ethical implications may result from this situation?
The ethical dilemma here is the right of competitors not to reveal certain information.
Demographic changes include variations in income distribution. Which of the following statements is true?
The general loss in real income has been somewhat offset by the increase in dual-career couples
An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision?
The investor will find that the restaurant's financial statements undervalue the true value of its resources.
Golden Lotus, an exercise club targeting healthy individuals over 50, is located in a fast-growing city in the Southwest. Which of the following factors that may have an effect on the success of Golden Lotus is the most directly controllable by the company?
The power of the customers/buyers
. Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant just for the appetizer, and it was at the center of a recent highly positive review by a food critic. Preparation involves common ingredients and average culinary skills but requires a very high oven temperature, which significantly increases utility costs. Several competing restaurants have since added their own version of the appetizer to their menu. Which criterion for assessing capabilities/core competencies is met?
The restaurant has the capability to develop something that is valuable
ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit-board technology. ACME has protected its market leadership with continued advancements in this technology, which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based technology instead of circuit boards. ACME's technology leadership fails which capability test?
The substitutability test
Which of the following explains, in part, why rivalry among McDonald's, Wendy's, and Burger King is intense?
These companies are trying to find ways to differentiate their products.
______ is measured by a product's performance characteristics and its attributes for which customers are willing to pay
Value
An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, or low rivalry among firms
B
Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources.
B
Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity.
F
Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist.
F
Any competitor intelligence practice that is legal is also ethical.
F
By themselves, resources can allow firms to create value for customers as the foundation for earning above-average returns.
F
Capabilities are usually developed separately from specific functional areas such as manufacturing, R&D, and marketing
F
Compared to tangible resources, intangible resources are an inferior source of core competencies.
F
Competitor analysis is focused on the factors and conditions influencing an industry's profitability
F
Contrary to popular belief, the global segment of the external environment does not provide many opportunities for firms that recently experienced low growth and profits coming from emerging markets.
F
Costly-to-imitate capabilities are those which other firms cannot easily develop as they have no strategic equivalent.
F
Developing a political strategy by the newly formed General Motors would likely be ineffective as firms are generally unable to influence the political/legal environment.
F
Eavesdropping by the NSA on average Americans is ethical because it is a governmental organization instead of a for-profit company.
F
Eavesdropping is an ethical way to obtain information about competitors' actions.
F
Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past.
F
Firms can directly control the elements of the seven segments of the general environment.
F
Firms should never outsource a primary activity because of the danger of the activity being imitated by rivals.
F
Firms should seek to continually develop new core competencies because all core competencies guarantee above-average profit.
F
Generally, industries with stronger competitive forces have higher profit potential.
F
Global warming and energy consumption are aspects of the technological environment segment that firms should monitor.
F
Globalfocusing is often used by firms with high levels of international operations who further increase their internationalization by focusing on global niche markets.
F
If a firm is dependent on a specific stakeholder group, that group has less influence on the firm's strategic decision making.
F
Monitoring involves the development of a forecast of what might happen at a future point in time.
F
Older employees are less valuable resources to firms than younger employees, because older employees have lower levels of knowledge. Consequently, employee layoffs should begin with earlyretirement inducements.
F
Organizational stakeholders are the firm's internal resources, capabilities, and core competencies that are used to accomplish what may appear to be unattainable goals in the competitive environment.
F
Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource-based model.
F
Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales.
F
Scanning involves detecting meaning through early signals of environmental trends.
F
Strategic groups are firms in different industries following the same or similar strategies.
F
Switching costs, access to distribution channels, economies of scale, large numbers of competing firms, and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry
F
The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in the firm to serve the needs of the natural gardening community by providing rare and native plants to individuals and nurseries around the United States. The perspective of the CEO of Twin Spires is consistent with the assumptions of the industrial organization (I/O) model
F
Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here?
Substitutes
"Motivating, empowering, and retaining employees" is an example of a capability that resides within the human resources functional area.
T
. Above average returns are those in excess of what an investor expects to earn from other investments with similar stock prices.
T
. An effective vision stretches and challenges people and can result in increased innovation. This is illustrated by Apple's CEO Steve Jobs, who was known to think bigger and differently than most people ("putting a dent in the universe")
T
. An example of a government policy barrier to entry would be a scenario in which the Antitrust Division of the Department of Justice disallows a merger because it creates a firm that is too dominant and would thus create unfair competition.
T
. Apple has combined some of its tangible resources (such as financial resources and research laboratories) and intangible resources (such as scientists, engineers, and organizational routines) to create a capability in R&D that creates a core competence in innovation.
T
. In today's global economy, some resources that were traditionally critical to firms' efforts to sell goods are now less likely to be a source of competitive advantage.
T
A firm should outsource only activities where it cannot create value or where it is at a substantial disadvantage compared to competitors.
T
Although health care reform legislation was passed in the early part of the Obama administration, it continues to be a contentious issue for employers, employees, and politicians because of its increased expenses. These attitudes about health care reform make up the sociocultural segment of the general environment.
T
Analyzing the internal environment enables a firm to determine what it can do by identifying resources, capabilities, and core competencies in the internal organization.
T
Any core competency has the potential to lose its value-creating ability.
T
At Southwest Airlines, the complex interrelationship between its culture and human capital adds value for customers in ways that other airlines cannot, such as jokes on flights by flight attendants and cooperation between gate personnel and pilots.
T
Capabilities may be costly to imitate if firms have unique and valuable organizational cultures, are causally ambiguous, and socially complex.
T
Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.
T
Creating customer value is the source of the firm's potential to earn above-average returns
T
Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven elements comprising the industry environment.
T
Early adopters of new technology often achieve higher market shares and higher returns than later adopters of the technology
T
Exit barriers are especially low in the airline industry because aircraft are not particularly specialized and can easily be sold to other airlines, air cargo companies, the military, or even to wealthy individuals who want to own a private jet.
T
Firms achieve strategic competitiveness and earn above-average returns by acquiring, bundling, and leveraging their resources for the purpose of taking advantage of opportunities in the external environment in ways that create value for customers.
T
Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders
T
One criterion for a resource or capability to be a source of competitive advantage is that it must allow the firm to perform a value-creating activity that competitors cannot perform.
T
Organizational mission statements typically do not include statements about profitability and earning above-average returns.
T
PepsiCo's strategy called "capital performance with a purpose" links green efforts in businesses to the bottom line. This is an example of addressing concerns in the physical segment of the general environment.
T
Relative power is the most critical element for prioritizing the demands of stakeholders
T
Resources are the source of capabilities, some of which lead to the development of core competencies. In turn, some core competencies may lead to competitive advantage.
T
Resources must be combined to form capabilities, as illustrated by Chipotle, which linked fresh ingredients with several other resources, including the marketing and training of employees, as the foundation for customer service as a capability.
T
Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing industry, or switching costs are high
T
Technology has made it more difficult for companies to find ways to develop competitive advantages.
T
The European sovereign-debt crisis and political upheavals in Egypt, Tunisia, Libya, and Syria illustrate uncertainties in the political/legal segment of the general environment that could affect the performance of business firms.
T
The bankruptcy filings by General Motors and Chrysler Corporation during the Great Recession illustrate that firms cannot directly control the general environment's segments.
T
The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and Lowe's, and Airbus and Boeing).
T
The five competitive forces model expands the arena of competitive analysis beyond direct competitors (i.e., rivals) to include buyers and suppliers who may also be a source of competition.
T
The five forces model suggests that firms should target the industry with the highest potential for above-average returns and then implement either a cost-leadership strategy or a differentiation strategy.
T
The foundation of many capabilities lies in the unique skills and knowledge of a firm's employees.
T
The industry environment directly influences a firm and its competitive actions and responses
T
The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO feels that the employees of the company have the ability, training, and resources to engage in continuous learning. The CEO must encourage ambidextrous learning, absorbing new knowledge and building incremental knowledge.
T
The objective of assessing the external environment is to determine the timing and importance of the effects of environmental changes and trends on the strategic management of the firm.
T
The process of competitor analysis should examine the competitors' future objectives, current strategy, assumptions, and capabilities.
T
The rate of technology diffusion has been steadily increasing over the last two decade
T
The two primary drivers of hypercompetition are the emergence of the global economy and technology.
T
Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work.
T
Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization.
T
Walmart uses core competencies, such as information technology and distribution channels, to create value for its customers through its "everyday low prices.
T
When Delta Air Lines wants to study Continental Airlines, it must examine both Continental and its complementor, Star Alliance.
T
The likelihood of entry of new competitors is affected by ______ and ______.
barriers to entry; expected retaliation of current industry organizations
To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT:
be technologically innovative
Product differentiation refers to the
belief by customers that a product is unique.
The communications industry is broadly defined as encompassing all of the following EXCEPT
book retailers.
All of the following are assumptions of the resource-based model EXCEPT
capabilities are highly mobile across firms.
Because firms combine tangible and intangible resources to create capabilities:
capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital
All of the following are forces that create high rivalry within an industry EXCEPT
fast industry growth
For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent of scale would be if
favorable locations are not available.
A major reason outsourcing is effective is that
few firms possess superior capability in all primary and support activities.
By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of:
firm-specific differences.
Competitor analysis focuses on
firms with which the company competes directly
Exit barriers to a firm include all of the following EXCEPT:
generic assets.
New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people moving out compared to people moving into the state. This impacts the ______ aspect of demographic analysis.
geographic distribution
The observation that China reached automotive production overcapacity in 2015, and has a glut of extra cars, is an aspect of the ______ segment of the general environment.
global
The recent joint ventures formed by BP with Russian and Indian partners show the importance of the ______ segment of the general environment in those countries that BP and other oil firms have to manage when contending with scarce resources.
global
The economic interdependence among countries which is reflected in the flow of goods, services, financial capital, and knowledge across country borders is defined as:
globalization
. The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an example of a ______ barrier to entry.
government policy
The competition within each strategic group is:
more intense than the competition between strategic groups.
. Compared to intangible resources, tangible resources are ______ constrained because they are ______ to leverage.
more; harder
Buyers are powerful when:
switching costs are low
At IBM, human capital is critical to forming and using the firm's capabilities in customer relationships, scientific and research skills, and technical skills in hardware, software, and services.
t
The corporate research division of Siemens files, on average, 25 patents a day. The patents are a(n) ______ resource.
technological
Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ______ segment of the general environment.
technological
A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be
temporary.
In smaller, new venture firms, returns are sometimes measured in terms of:
the amount and speed of growth
2. William Ackman is a hedge fund manager who owned a large share of J.C. Penney stock. He was also a member of the J.C. 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 about 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:
the capital market stakeholders and the organizational stakeholders.
High-level maintenance on aircraft is performed by the manufacturer. This service after the sale means that in the aircraft industry:
the competitive rivalry in the industry is severe.
The highest amount a firm can charge for its products is most directly affected by
the cost of substitute products
Competitor intelligence is
the data that the firm gathers to understand competitors' objectives, strategies, assumptions, and capabilities.
Which of the following is NOT a factor affecting sustainability of a competitive advantage?
the length of time the core competence has existed
______ has become the second-largest economy in the world.
China
All core competencies have the potential to become core:
rigidities
The next critical technological opportunity for organizations is predicted to be
wireless communications
The proper matching of what a firm can do with what it might do:
yields insights the firm requires to select its strategy.
Which of the following intelligence-gathering techniques is most likely to be legal and ethical?
Attending trade show presentations given by a competitor's employees
Internal analysis enables a firm to determine what the firm
can do.
Which of the following is NOT an external event that reveals the "dark side" of core capabilities?
A firm changes its focus to a new core competence.
. ______ is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context.
A global mind-set
. ______ should establish a firm's individuality and should be inspiring and relevant to all stakeholders.
A mission
Environmental scanning would be most important for which of the following organizations?
A web design company catering to small businesses
Managers must adopt a new mind-set that values ______ and the challenges that evolve from constantly changing conditions.
All of these options are correct.
Organizational culture refers to
All of these options are correct.
Successful strategic leaders are
All of these options are correct.
. Which of the following represents a competitive intelligence practice that is both legal and ethical?
An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products.
. Which of the following is NOT a component of internal analysis leading to competitive advantage?
Analysis of supplier power
How is consolidation among fuel providers serving airport facilities viewed in the five forces model of competition?
As an increase in the bargaining power of suppliers of a critical input
Which of the following is NOT an entry barrier to an industry?
Bargaining power of suppliers
Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement about donors is accurate?
Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank.
Which of the following is a true statement about capabilities?
Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.
Circuit Inc. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component that is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely?
Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes.
. ______ provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters changes.
Continuous learning
______ can be viewed as the capacity to take action.
Core competencies
Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies?
Core competencies must be internationalized.
McDonald's culture, with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics, illustrates which of the following criteria for sustainable competitive advantage?
Costly to imitate
Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples illustrate which of the following criteria for sustainable competitive advantage?
Costly to imitate
Which of the following is NOT an activity used in the external environmental analysis process
Decrypting
______ is an example of a capability that is based in the functional area of distribution.
Effective use of logistics management techniques
Which of the following is NOT a reputational resource?
Employees' opinions of the firm as a terrible place to work
. In recent times, business leaders have become more confident in the ability of economists to provide valid and reliable predictions about the world's economic environment.
F
. Interpersonal relationships, trust, friendships, and a firm's reputation are all examples of complex social phenomena that make capabilities easy to imitate.
F
. The external environment facing business stays relatively constant over time.
F
A company can earn above-average returns only when the value it creates is less than the costs incurred to create that value.
F
Age structure, geographic distribution, income distribution, interest rates, and process innovations are all elements of concern when studying the demographic segment of the general environment.
F
The firm with the most capabilities wins.
F
The learning generated by making and correcting mistakes is generally unimportant to efforts to create new capabilities and core competencies
F
The legislation introduced in the U.S. Congress during the early tenure of the Obama administration intended to reduce the amount of work U.S. companies outsource and is an example of a potential change in the sociocultural segment of the general environment.
F
The more distant strategic groups are in terms of their strategies, the greater the likelihood of rivalry between the groups.
F
The need to meet quarterly earnings results causes managers to accurately examine the firm's internal organization.
F
The strengths of the five competitive forces are similar across strategic groups within an industry.
F
The value of tangible assets, such as the firm's borrowing capacity and its physical plant, is high because these assets can be easily leveraged to derive additional value.
F
Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment.
F
Value chain activities in the value chain create value, whereas support functions generate costs.
F
Value is measured by the variable and fixed costs associated with the production and marketing of a particular product compared with the revenue and profits the product generates.
F
When Google studies the internet user privacy policies of various nations, it is engaged in the forecasting component of the environmental analysis process.
F
When firms analyze the external environment, they typically have complete and unambiguous data.
F
. 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.
I/O; resource-based
The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry?
It will make the airline industry more attractive because of decreased supplier power
Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis?
Netflix and Microsoft
A manufacturer of washing machines has expanded its plant and has created excess capacity, just as the general economy has taken a downturn. The company is likely to:
Offer rebates and incentives for customers who purchase washing machines
Which of the following is TRUE about outsourcing?
Outsourcing allows firms to concentrate on those areas in which they can create value.
. ______ innovation is a term used to describe how rapidly and consistently new, informationintensive technologies replace older ones.
Perpetual
The large amount of advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry?
Product differentiation
. ______ are the source of a firm's ______, which are the source of the firm's ______.
Resources; capabilities; core competencies
. ______ is an investor's uncertainty about the economic gains or losses that will result from a particular investment.
Risk
Which of the following would be an example of the application of the next major technological opportunity for organizations?
SpaceX's reusable space vehicle
Characteristics of the current economic segment include all of the following EXCEPT:
a clear understanding of future economic opportunities and threats
All of the following are ethical sources of data for external analysis EXCEPT:
a competitor's confidential memos
Charmed by Claire is a successful retail boutique that sells women's accessories. Claire, the owner/manager, knows that women have many options when buying jewelry. When customers enter her store they are greeted by name and given prompt, friendly attention. Customers return to the store because the service is excellent. Claire says the most important decision she makes is hiring the best staff because customer service is vital to her business. Customer service is:
a core competency.
All of the following are tangible resources EXCEPT
a firm's reputation.
An industry is defined as
a group of firms producing products that are close substitutes.
All of the following were traditional sources of competitive advantage EXCEPT:
a highly educated labor market.
All competitive advantages have:
a limited life.
Value consists of:
a product's performance characteristics and attributes for which customers are willing to pay.
Once a firm has determined its competitors' future objectives, current strategy, assumptions, and strengths and weaknesses, its next step is to develop:
a response profile
Compared to tangible resources, intangible resources are:
a superior source of capabilities
DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale the products must be sold in retail outlets as well. The main barrier to entry DWK is likely to encounter here is:
access to distribution channels
Value chain activities are:
activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers.
Valuable capabilities:
allow the firm to exploit opportunities or neutralize threats in its external environment.
One reason executive judgment can be a particularly important source of competitive advantage is that judgment:
allows a firm to build a strong reputation.
A decision that results in failure:
allows for learning
Strategic delegation helps
avoid too much managerial hubris.
Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent's success is
causally ambiguous
Capabilities typically come from:
combining resources.
Applications developed for iPhones make the phone more valuable to iPhone users. App developers are ______ to Apple.
complementors
Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15 years. Acme maintained its strategy and product characteristics over this time period. However, the company has experienced declines in sales and profits over the last four quarters. The CEO of Acme should
conduct an analysis of the external environment
The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of:
core competencies that have become core rigidities.
Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G performs well and are examples of the company's:
core competencies.
Capabilities that other firms cannot develop easily are classified as:
costly to imitate
In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT:
cultural values
A food bank in Florida was struggling to serve its customers. It asked Walmart for help. Walmart sent a team of managers who reorganized storage and transportation. The food bank was able to increase the number of clients served by tenfold. Walmart shared its expertise in:
distribution
A firm's core competencies, integrated with an understanding of the results of studying the conditions in the external environment, should:
drive the selection of strategies.
Firms that achieve competitive parity can expect to:
earn average returns.
Competitor intelligence could ethically come from all of the following EXCEPT
eavesdropping.
The I/O model is grounded in:
economics.
Organizational stakeholders include
employees
When firms lay off employees, they are:
eroding the organization's knowledge resources
. It is important to emphasize that almost all strategic management process decisions have ______ because they are related to how a firm interacts with its stakeholders.
ethical dimensions.
The U.S. Hispanic market is the third-largest "Latin American" economy behind Brazil and Mexico. This impacts the ______ aspect of demographic segment analysis.
ethnic mix
Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should:
focus on developing Acme's future competitive advantages.
Because of threats and risks in the global environment, some firms choose to take a more cautious approach by:
focusing on global niche markets.
Firms within strategic groups:
follow similar strategies across certain dimensions.
. Examples of support activities include all of the following EXCEPT:
follow-up service.
When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are: engaged in
forecasting
The ______ environment is composed of dimensions in the broader society that can influence an industry and the firms within it.
general
The three parts of the external environment that affect a firm's strategic actions are:
general, industry, and competitor.
. If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will:
have a temporary competitive advantage
An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of:
high barriers to exit
A product's value is created by each of the following EXCEPT:
high cost and highly differentiated features.
The political/legal segment of an environment represents:
how organizations and governments mutually try to influence each other.
A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are:
imitable.
An analysis of the economic segment of the external environment would include all of the following EXCEPT:
income distribution.
Customer loyalty programs such as airline frequent-flyer miles are an attempt to:
increase customers' switching costs
All of the following are examples of efforts by firms to address the physical segment of the general:
increase in hiring of women and minorities at Microsoft.
The technological segment of environmental analysis includes
institutions and activities involved with creating new knowledge and translating that knowledge into new outputs.
. The concepts of Guanxi, Wa, and Inhwa all convey the general idea of:
interpersonal relationships
Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green:
is likely to raise the level of competitive rivalry in the industry.
After Amazon lowered the price on its tablets, Samsung eventually lowered the price on its tablets. Samsung needed to do this because:
it is in the same strategic group.
According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT
low barriers to entry.
According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT:
low supplier power due to commodity inputs.
The critical executive skill of the current business age is the ability to:
manage human intellect
Value chain activities include all of the following EXCEPT:
management information systems.
Judgment is the capacity for making a successful decision when:
no obviously correct model or rule is available
Organizational culture is
not easily imitable
A general environmental analysis can be expected to produce all of the following EXCEPT
objective answers
As customers come to believe that a firm's product is unique, this allows the firm to:
obtain loyal customers
A company competing in a single product market has
one business-level strategy and one corporate-level strategy.
The challenge and difficulty of making effective decisions are implied by preliminary evidence that ______ of organizational decisions fail.
one-half
When consumers change mobile phone and data service providers, they may be required to maintain service with the provider for a specified time period. This is an example of a
one-time cost customers incur when buying from a different supplier
. Government agencies are known for having so many layers and rules that decisions are made slowly and inefficiently. In this case the ______ resource is a detriment to taxpayers using and paying for the bureaucracy.
organizational
Tools such as ______ help the firm focus on its core competencies as the source of its competitive advantages.
outsourcing
A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive:
parity.
The culmination of the strategic management process is:
performance.
Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a(n) ______ resource.
physical
Global warming and energy consumption trends are aspects of the ______ segment of the general environment that firms should monitor.
physical
Green design, sustainable packaging, waste management, and energy efficiency are aspects of the ______ segment of the general environment that companies have sought to address with environmental sustainability initiatives.
physical
BP, in response to the Deepwater Horizon oil spill, expected increased scrutiny from which of the following segments of the general environment?
political/legal
One popular approach to taking care of the physical environment is:
producing and selling additional green products
New entrants to an industry are more likely when:
product differentiation in the industry is low.
Outsourcing is the:
purchase of a value-creating activity from an external supplier.
Economies of scale refers to the fact that as the
quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases.
One capability that can be learned from failure is when to:
quit.
The Obama administration sought to pursue policies that would:
reduce the amount of work U.S. companies outsource to firms in other nations
Strategic leaders, ______, often work long hours, and their work is filled with ambiguous decision situations.
regardless of their location in the organization
A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is:
research and development
The most numerous of the following organizational characteristics are
resources.
. The use of the Internet by Netflix to collect data on customer preferences is an example of
scanning
When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of:
slow industry growth
Firms that have strong positive relationships with suppliers and customers are said to have ______, an essential ingredient to creating value.
social capital
Knowledge transfer and access to resources within the value chain are enhanced by:
social capital
A financial management firm has existed for more than 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its
social complexity
An analysis of society's attitudes and values would be conducted when studying the ______ segment of the general environment.
sociocultural
Coca-Cola and PepsiCo have been accused of contributing to the obesity problem in the United States. This accusation comes from the ______segment of the general environment.
sociocultural
A ______ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.
strategy
. The environmental segments that make up the general environment typically will NOT include:
substitute products or services.
Many firms outsource the payroll function of paying employees to firms such as ADP. Payroll is a(n):
support function.
The economic environment refers to:
the nature and direction of the economy in which a firm competes or may compete.
It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and:
the rapid development of the Internet's capabilities
In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owners fail to take into account when they began selling the lingerie?
the sociocultural segment
. All of the following are implications of strategic groups EXCEPT:
the strength of the five forces is the same across strategic groups.
The threat from substitutes is high when
the substitute product's price is lower than the industry product's price
Effective strategic leaders are chosen based on:
their capabilities and accumulation of human capital over time
All of the following are true about the strategic decisions managers make about their firm's internal organization EXCEPT that:
they are directly correlated to executive compensation.
Suppliers are powerful when:
they offer a credible threat of forward integration
A competitor analysis includes all of the following about competitors EXCEPT:
traditions.
To build social capital whereby resources such as knowledge are transferred across organizations requires ______ between the parties.
trust
Subscriptions to the New York Times have been decreasing as more customers receive their news through other media. At the same time, advertisers have shifted portions of their spending to other media. The NYT's managers are making decisions under:
uncertainty
The three conditions that characterize difficult managerial decisions concerning resources, capabilities, and core competencies are
uncertainty, complexity, and intraorganizational conflicts.
Value chain analysis is a tool used to:
understand the parts of the firm's operation that create value and those that do not
. A large corporation has earned a reputation for being a challenging work environment for employees, placing demands on employees' time and pushing them to accomplish tasks, sometimes with little recognition. A recent audit found that the company was denying employees overtime pay despite the extra work. This is a reflection of the company's:
unethical corporate culture.
From a customer's point of view, for an organization's capability to be a core competence it must be:
valuable and unique
In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are ______ but no longer _____.
valuable; rare
The capabilities used to create the sustainability/green initiatives at Walmart and Target are ______ but less likely to be ______.
valuable; rare
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.
vision
. 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 organizational:
vision.
An analysis of income distribution would include all of the following EXCEPT:
wage differentials between male and female employees working for a large manufacturer.
All of the following are resources of an organization EXCEPT:
weak competitors in the industry
. The key to achieving competitiveness, earning above-average returns, and remaining ahead of competitors in the long run is to manage current core competencies:
while simultaneously developing new ones
Corporate-level strategy in a diversified organization requires a common business strategy for each component business.
F
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.
20; 36
. ______ is a capacity for a set of resources to perform a task or an activity in an integrative manner.
A capability
9. Which of the following statements about organizational knowledge is correct?
All of these options are correct
Dissatisfied capital market stakeholders may
All of these options are correct.
Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others in terms of ethical considerations.
B
According to Hitt, the final responsibility for forming the organization's mission lies with th
CEO.
. Resources are considered rare when they have no structural equivalent.
F
. The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is the main source of above-average returns.
F
. The assumptions of the industrial organization model and the resource-based model are contradictory. Therefore, organizational strategists must choose one or the other model as the basis for developing a strategic plan.
F
A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions.
F
Alligator Enterprises has earned above-average returns since its founding five years ago. No other firm has challenged Alligator in its particular market niche; therefore, the firm's owners can feel secure that Alligator has established a competitive advantage.
F
An effective vision statement must specify the industry in which a company will operate.
F
Average returns are those in excess of what an investor expects to earn from other investments with a similar amount of risk.
F
. 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?
Planning extensive employee training and hiring educated and experienced employees
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?
RNH has prioritized the demands of capital market stakeholders and organizational stakeholders, over the demands of product market stakeholders.
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 that as a guideline to make a decision. Both start-up companies propose to manufacture health-focused foods with 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 healthfoods industry because of its internal culture and commitment to healthy lifestyles, but it does not have any executives with experience in food production. Which firm will the investor feel is most consistent with the model of industrial organization?
RexRich Foods
In the resource-based model, which of the following factors would be considered a key to organizational success?
Skilled employees
. Six years ago, Colette Smith founded a successful catering company that specializes in providing a wide assortment of miniature cheesecakes for corporate and social events. Although Ms. Smith is no longer active in the actual production of the cheesecakes, she continues as president of the catering company. Ms. Smith could be considered a strategic leader of this firm.
T
. Strategic leaders must have a strong strategic orientation while embracing change in the dynamic competitive landscape.
T
. The rate of growth of Internet-based applications could be affected by strategies of Internet service providers charging users for downloading those applications
T
An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values.
T
Risk in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment.
T
The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and determines its ability to earn above-average returns under the I/O view.
T
To implement a firm's strategies, the firm takes actions to with the goal of achieving strategic competitiveness and above average returns.
T
While patents may be an effective way of protecting proprietary technology, many firms competing in the electronics industry do not apply for patents to prevent competitors from utilizing the technological knowledge that would be included in the patent application.
T
The strategic leader's work is characterized by:
ambiguous decision situations where the best course of action is not always easy to identify.
A company's ability to acquire knowledge is
an important source of competitive advantage in virtually all industries.
Firms use the five forces model of competition to identify the ______ of the industry. It is measured by its _______.
attractiveness; profitability.
A competitive advantage
can be identified when competitors are unable to duplicate or find it too costly to try to imitate
A retail outlet can attempt several remedies to improve profitability to meet the expectations of its _______ stakeholders, including closing stores, changing the top management team, and seeking potential buyers.
capital market
Before liquidating during a bankruptcy, a company will take several actions to try to satisfy its ______ stakeholders.
capital market
Organizational stakeholders are usually satisfied when
companies provide a dynamic, stimulating, and rewarding work environment.
New markets created by iPods, PDAs, and Wi-Fi are a result of:
disruptive technologies
Henry Ford once said, "If I had asked people what they wanted, they would have said faster horses." The invention of the car is an early example of:
disruptive technologies.
The resource-based view of the firm:
emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone.
PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision:
has ethical implications for organizational stakeholders.
Globalization has led to
higher performance standards including quality and cost.
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.
host communities
Knowledge is composed of all the following EXCEPT:
insight.
A prominent national website services company runs Super Bowl advertisements showing a small business owner working alone in the office on a project, during the big game. The message of the ad is that the company understands the sacrifices of its customers. This ad seeks to convey a sense of the organization's ____ to the product market stakeholders.
mission to radically shift the global economy toward small businesses
Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is
obtaining reliable products at the lowest possible price.
. The "liability of foreignness" is the
overall risk of participating outside a firm's domestic country when entering global competition
. 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.
power of each stakeholder
To have the potential to become sources of competitive advantage, resources and capabilities must be non-substitutable, valuable, ______, and ______.
rare; costly to imitate.
A major assumption about the strategic management process is that it is:
rational
Even for companies capable of succeeding in global markets, it is critical that they
remain committed to and strategically competitive in their domestic market.
The resource-based model argues that:
resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
All of the following are assumptions of the industrial organization (I/O) model EXCEPT
resources to implement strategies are firm-specific and attached to firms over the long-term
Above-average returns are
returns in excess of what an investor expects to earn from other investments with a similar level of risk.
Capital market stakeholders include
shareholders.
7. Essentially, _______ has become one of the world's largest markets with 700 million potential consumers.
the European Union
A business-level strategy describes
the business unit's actions to exploit its competitive advantage over rivals.
According to Hitt, the primary drivers of hypercompetition are:
the emergence of a global economy and rapid technological change
The strategic management process is;
the formulation and implementation of a full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.
All of the following are characteristics of the global economy EXCEPT
the increased use of tariffs to protect industries.
The industrial organization (I/O) model argues that
the key factor in success is choosing the correct industry in which to compete
Which of the following statements is most consistent with the I/O view? Performance of a firm is most directly attributable to:
the profitability of the industry in which the firm competes.
. Although Alibaba is competing in the internet services industry, it has improved its performance by focusing on innovation and service diversification. This improved performance is best explained by:
the resource-based model