Chapter 1
_____ is best described as a framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time. Corporate social responsibility Integrated social network Strategic positioning Strategy formulation
Corporate social responsibility
Which of the following is an example of a firm's external stakeholder? Employees Customers Shareholders Board members
Customers
The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario? It has a competitive advantage in the industry. It has a competitive disadvantage in the industry. It has competitive parity with other firms in the industry. It has formed a strategic alliance with other firms in the industry.
It has a competitive advantage in the industry.
Which of the following statements should ideally reflect a firm's strategy for competitive advantage? Our strategy is to win at any cost. We will be number one in the industry. Our aim is to create superior customer value while controlling costs. We want to be the market leader by exactly replicating our competitor's strategy.
Our aim is to create superior customer value while controlling costs.
Which of the following responsibilities results from a society's mere expectations of a business and not because the society and the shareholders mandatorily require the business to demonstrate it? Economic responsibilities Legal responsibilities Contract responsibilities Philanthropic responsibilities
Philanthropic responsibilities
According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified? Strategy control Strategy analysis Strategy formulation Strategy implementation
Strategy analysis
Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments? Strategy analysis Strategy implementation Strategy formulation Strategy control
Strategy analysis
Which of the following groups is considered to be the primary stakeholder for public-stock companies? Suppliers of capital Employees Suppliers Potential customers
Suppliers of capital
In the United States, which of the following was born out of dissatisfaction with the capitalist system in 2011? The Sarbanes-Oxley Act The Occupy movement The Tea Party movement The Taft-Hartley Act
The Occupy movement
Which of the following forces tends to be more important in determining a firm's performance? The underlying economic structure The entry barriers in the industry The actions of managers within the firm The number and size of other firms in the industry
The actions of managers within the firm
Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking? No firm would face direct competition from others in the industry; hence, profit potential would be high. Each firm would be catering to a different customer segment. The firms would eventually have no resources to invest in product and process improvements. Each firm would be in a better position to gain a competitive advantage.
The firms would eventually have no resources to invest in product and process improvements.
Shortly after the small island of Balamia experienced multiple unexpected high-intensity earthquakes that caused massive destruction, many banks and insurance companies filed for bankruptcy. This left the economy of the country in a poor state. The natural calamity in Balamia best exemplifies _____. a black swan event a wild card event skewness risk kurtosis risk
a black swan event
Exis Inc. and Stelma Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Exis Inc. and Stelma Inc. most likely have: competitive advantage over other firms in their industry. competitive parity with each other. strategic alliance with each other. economies of scope instead of economies of scale.
competitive parity with each other.
The interaction between a firm and its diverse internal and external stakeholders is best described as a(n): ergonomic relationship. cartel arrangement. exchange relationship. fiduciary responsibility.
exchange relationship.
State-level government agencies that check whether firms are meeting statutory safety measures in their production units are considered to be the firms' _____. stockholders shareholders internal stakeholders external stakeholders
external stakeholders
A firm's economic responsibilities are primarily directed toward: minimizing shareholders' wealth. acting as a good corporate citizen. doing what is right, just, and fair. gaining and sustaining competitive advantage.
gaining and sustaining competitive advantage.
A core tenet of stakeholder strategy is that a: firm should isolate its internal stakeholders from its external stakeholders. single-minded focus on shareholders alone exposes a firm to undue risks that can threaten the very survival of the enterprise. multifaceted exchange relationship with internal and external stakeholders can lead to a firm's competitive disadvantage. firm should work toward competitive parity rather than gaining and sustaining a competitive advantage.
single-minded focus on shareholders alone exposes a firm to undue risks that can threaten the very survival of the enterprise.
Derek, a retired CEO, invests capital in a start-up company that creates mobile applications. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Derek is the start-up company's _____. headhunter category captain employee stakeholder
stakeholder
