EXAM 1 4720 unit 1

Which of the following could be a part of the analysis stage of the strategic management process? a. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers b. The collection of financial data used to track the success of the strategic plans the company is pursuing c. A mission and vision task force developing these foundational statements for the company d. The selection of strategies the company will pursue to achieve its financial goals and satisfy its shareholders

A

Equal Exchange has a unique way of managing and making company decisions. Each employee has Class A voting stock and a vote at the table. Each employee has only one vote, from the CEO to a new employee. Based on this arrangement, what aspect of its business model does Equal Exchange prioritize?

Corporate governance

Which of the following could be a definition of strategic competitiveness? a. A solid company with predictable sales and profitability every year, delivering predictability for its shareholders b. The status of a company with the largest top-line sales number in an industry c. A start-up company with an innovative new product that changes an industry d. The ability of a firm to outperform its rivals by forming and executing a strategy that creates value for its stakeholders

D

HD Construction, Inc. subscribes to the industrial organization (I/O) model of above-average returns. HD would most likely attribute which of the following factors to its success?

The degree of concentration of firms in the construction industry

Which of the following is an example of a disruptive technology? a. The introduction of television boxes that enable recording of shows and on-demand content for playback at the viewers' convenience b. The invention of laser eye surgery for corrective vision procedures c. The introduction of Global Positioning System (GPS) technology, which is used in standalone and handheld navigation tools, smartphone apps, and in-car navigation systems d. The use of touch screens on mobile phones and tablets for selecting apps, texting, and dialing

The introduction of Global Positioning System (GPS) technology, which is used in standalone and handheld navigation tools, smartphone apps, and in-car navigation systems

In order to analyze its external environment and internal organization, a firm should:

To analyze its external environment and internal organization, a firm should conduct a SWOT analysis. A SWOT analysis identifies an organization's strengths, weaknesses, opportunities, and threats. The results of the SWOT analysis provide the foundation for choosing one or more strategies and deciding which one(s) to implement.

A local community arts nonprofit organization is seeking to expand its programming and is considering putting just one new program in place this year. It may choose painting workshops, youth summer camps, a musical performing arts series, or classes for seniors. The organization's most committed volunteer is a kindergarten art teacher who has offered to be the leader of whichever new program the organization implements. If the nonprofit is utilizing the resource-based model of above-average returns, in which of the following ways should it expand its programming? a. Youth summer camps because the organization should use the knowledge of its passionate volunteer to its greatest advantage b. Workshops because they are not currently being offered by any other organizations in the community c. A musical performing arts series because it has the widest appeal in the community d. Classes for seniors because they can be hosted during the day and have good attendance among those who are retired

a

A vision statement differs from a mission statement in that it: a. speaks in broad terms of what the company ultimately would like to achieve. b. is realistic, achievable, and measurable. c. identifies which business and what customers the company intends to serve. d. should be completed after a company formulates its strategic plan

a

Core competencies are capabilities that serve as a source of competitive advantage for a firm against its rivals. Which of these is the strongest core competency that Equal Exchange could leverage to gain a competitive edge? a. Fair trade focus b. Superior marketing c. Corporate structure d. Human capital

a

Firms use the strategic management process to: a. achieve strategic competitiveness and earn above-average returns. b. plan financial resources and define annual budgets. c. identify the organization's stakeholders. d. make hiring decisions about key leadership positions.

a

Companies must be aware of technological advances within their industry and make strategic management decisions that take into account perpetual innovation and disruptive technologies. Which of the following is an example of a company that did not respond strategically to technological changes? a. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology. b. Samsung, LG, and other cell phone manufacturers continued to innovate their products after the introduction of the Apple iPhone to keep up with customer expectations of smartphones. c. Amazon's decided to enter into the online streaming video market with Amazon Instant Video to compete directly with Netflix. d. After Google introduced the concept of pay-per-click advertising, a competing search engine, Bing, introduced a similar advertising model.

a. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology.

Which of the following represents a criticism of the industrial organization (I/O) model of above-average returns? a. The model assumes that most firms operating in an industry have similar valuable resources that are mobile across companies, which is not necessarily true. b. The model puts too much emphasis on the effectiveness and personality of the firm's managers and not enough on the characteristics of the industry. c. Research indicates that 20 percent of a firm's profitability is explained by the industry in which it chooses to compete. d. The model suggests that firms must adopt strategies to address the structural characteristics of the industry in which they operate.

a. The model assumes that most firms operating in an industry have similar valuable resources that are mobile across companies, which is not necessarily true.

In the resource-based model of above-average returns, a core competency is something that: a. gives a company an edge over the competition, something that the company possesses that its competitors do not have, and something that is too difficult or costly for competitors to copy or produce an alternative. b. prevents a company from producing above-average returns. c. positions strategic leaders for success in managing people, processes, and resources. d. a company is really good at internally and for which customers are willing to pay a premium.

a. gives a company an edge over the competition, something that the company possesses that its competitors do not have, and something that is too difficult or costly for competitors to copy or produce an alternative.

The industrial organization (I/O) model of above-average returns:

a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.

The strategic management process is the:

a. way that businesses formulate initiatives to create superior value for customers, then implement those initiatives to out-perform competitors

Below are several statements from companies. Which of these is a vision statement? a. Disney: To be one of the world's leading producers and providers of entertainment and information. b. Habitat for Humanity: A world where everyone has a decent place to live. c. Allstate: You're in good hands with Allstate. d. Nike: Just Do It.

b

Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of the following correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company? a. McDonald's announced wage increases for employees at its corporate-owned stores after months of protests by employees. b. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds. c. During the Great Recession, the United Auto Workers (UAW) union agreed to a pension restructuring with the three big U.S. car manufacturers. d. AIG's shareholders sued the U.S. government, arguing that the bailout the company received wasn't beneficial enough to financial investors

b

The risks of participating outside a firm's domestic markets in the global economy are labeled a(n): "internationalization of domesticity." "liability of foreignness." "danger of competition." "disruption to knowledge." Feedback: Incorrect. Collectively, the risks of participating outside of a firm's domestic markets in the global economy are labeled a "liability of foreignness."

b

What aspect of business will need to be evaluated for Equal Exchange to determine how it can increase its strategic competiveness and earn above average returns? a. Marketing and distribution b. Strategic management c. Production and R&D d. Finance and accounting

b

Which of the following describes a company that has delivered above-average returns to its investors? a. A biotech firm that recently announced it has received FDA approval for its new orphan drug to treat a rare heart condition and will be able to sell the treatment for $10,000 per year per patient beginning in the fall b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets c. An airline that reported weaker-than-projected earnings this year because of increased maintenance costs for its aging fleet of planes d. A retail company that announced it saw growth in same-store sales from last year to this year and will open 250 new stores to capitalize on its growing popularity

b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets

A multidivisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the I/O model to develop its strategy. Which of the following decisions is consistent with this model? a. The company identifies a large steel tank it is currently selling to customers in the brewing industry and decides to begin selling it to customers in the transportation industry for transporting liquids. b. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand. c. The company decides to increase its investment in research and development to catch a competitor that has surpassed it in the technology it is using to produce steel tanks. d. The company determines that it has an internal asset in a piece of software it developed for scheduling manufacturing processes and decides to make the software the centerpiece of its new business unit, selling it to transportation companies to manage their schedules.

b. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand.

A mission statement can describe: a. the strategic direction of the company and its major goals. b. the competitive environment in which a company is choosing to conduct its business. c. what the company does in terms of its customers and their needs and what core competencies it utilizes to meet those needs. d. the company's marketing approach and slogan.

c

An organization can be confident that its strategy has resulted in one or more competitive advantages only after: its returns are enough to at least minimally satisfy its stakeholders. it becomes too complex to understand and manage. competitors' efforts to duplicate its strategy have failed. it has earned above-average returns for at least two years in a row.

c

Christopher is the CEO of a company. Recently, he scheduled a meeting with a challenging objective—to discuss with a team of his employees a project that is failing. It is costing a lot of investment in time and money and does not appear to have any return on investment in sight. Which of the following approaches would demonstrate successful strategic leadership? a. He should keep the project going despite its failure because he doesn't have any better projects for them to work on. b. He should blame the markets for making the project unsuccessful and announce that the company is shifting customer targets and will work on the project in the context of a new industry. c. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project. d. He should inform them that the project they are working on is no longer aligned with the company, that he's killing it, and that all of their work has been in vain.

c

Logan is an entrepreneur and president of his own company that makes a new software product that manages benefits administration for large multinational corporations. His start-up company grew quickly to a team of about 25. A new federal law recently passed by Congress will cause small-business owners to invest in software like his to manage employee healthcare. Logan announces that the company will be investing in training for employees to better understand small-business owners and research and development (R&D) to create a small-business version of the software. This is an example of: a. utilizing the industrial organization (I/O) model to determine the strategic direction of the firm. b. answering to demands made by capital market stakeholders for greater profitability. c. promoting exploratory and exploitative learning, as well as innovation as a strategic leader. d. revising a company's vision statement to reflect changes in the competitive environment

c

Marquis is the international operations manager for an athletic clothing line. As part of his responsibilities, he regularly tours the factories of the company's suppliers. He recently took a tour of one of the most efficient plants that delivers low-cost clothing. This gives his company a greater profit margin. However, on the tour, he noticed an 8-year-old child operating one of the machines. Which of the following best describes how Marquis should report back to his CEO about the plant tour?

c

Organizational culture is the: a. structure of a company's organizational chart of strategic leaders, including their roles and responsibilities. b. policies and procedures detailed in the company's employee handbook. c. complex set of ideologies, symbols, and core values that are shared throughout a firm that influence how the firm conducts business. d. attitude of a company's owners or shareholders

c

Strategic leaders: a. revise a company's vision statement on an annual basis. b. answer only to the demands made by capital market stakeholders for greater profitability. c. promote exploratory and exploitative learning, as well as innovation. d. can only be people in the C-suite of a company, such as the CEO, CFO, and COO.

c

Michael is the CEO of a manufacturer with plants in three countries. He currently has a product line that is manufactured only in the company's U.S. plant. That product has experienced a steady increase in its export sales to Europe over the last three years. The international sales director is recommending that the company expand manufacturing capabilities at the European plant to include this product line. Michael and his management team must consider whether to pursue this strategy. This is:

c. a decision that would benefit from using the entire strategic management process

Jonathan works for a multinational corporation (MNC) in a country that has the second-largest economy in the world. Jonathan works in:

china

Compared to a vision, a firm's mission deals more directly with:

customers.

According to Hitt et al., which of the following would be considered an important step in the A-S-P strategic management process? a. Utilizing an outside consultant to lead the company through the planning process b. Building the company's organizational chart of strategic leaders c. Acquiring a new business unit to gain access to new markets and product lines d. Defining the company's corporate mission and major corporate goals

d

Capital market stakeholders are most satisfied when a company's: a. product market stakeholders are dissatisfied. b. leadership team is earning performance-based compensation. c. employees have a low turnover rate and receive salaries that are higher than the labor market. d. returns align with the amount of risk they incurred by investing in a company or lending the company money.

d

In the resource-based model of above-average returns, differences in company performance can be attributed to the: a. structural characteristics of the company's industry. b. effective implementation of pricing strategies. c. strength and effectiveness of managers. d. unique capabilities and resources of the company

d

Resources have a greater likelihood of being a source of competitive advantage when they are: tangible in nature. intangible in nature. implemented by top management. formed into a capability.

d

Which of the following businesses would be most likely to measure its returns in terms of the amount of growth? Confectionery Connection, a candy maker that just declared its initial public offering (IPO) last year Smith Electronics, an electronics firm with international operations Barkley, Johnson & Pitt, LLP, an accounting firm with over 100 employees BizTech, a small computer-repair business with eight employees that began operations last year

d

Which of the following represents a product market stakeholder? a. A store manager of a retail chain b. A private equity firm investing in a biomedical firm c. A member of an ownership family in a privately-owned company d. A local pipefitters union dealing with a plumbing contractor

d

Which of the following would NOT be considered a resource? Finances An employee's skills A patent A competitor's skill

d

Which of the following represents a core competency for Alibaba as presented in the opening case in the chapter?

d. The company's diversification of web services tailored to the Chinese market directly, which has resulted in transactions that account for more than 2 percent of China's GDP

Which of the following is an example of the mobility of strategies and resources across firms in the mobile network industry, one of the assumptions of the industrial organization (I/O) model of above-average returns? a. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to achieve a broad geographic network, serving both urban and rural areas. b. A high-level engineer from AT&T is prevented from working for Verizon for five years by a non-compete agreement. c. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness compared to Verizon and AT&T. d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

The probability of forming an effective mission increases when employees have a strong sense of:

ethics

Core competencies are often visible in the form of organizational:

functions

Equal Exchange has a variety of products in a market that is extremely saturated with big brands and organizations that control a majority of the market share. How would you describe Equal Exchange's competitive landscape?

hypercompetitive

When a firm earns below-average returns:

it must make trade-off decisions in light of how important the support of each of its stakeholder groups is to the firm

Snowtrail Ski Resort has earned only average returns for the past year. As a result:

its objective should become one of at least minimally satisfying each stakeholder.

Equal Exchange's leaders are careful about the employees they choose to hire because of the power individuals can hold. Each employee has a Class A voting stock. Leaders ensure that the employee candidates hold the same values and recognize the importance of Equal Exchange's mission. After a year of probation, the company leaders vote on the new employee based on how he or she fits into the:

organizational culture

The main focus behind why Equal Exchange is in business is to help out the small farmers and be fair to their needs. This is exemplified by the slogan: "Small Farmers, Big Change." Who is Equal Exchange's main focus and target group to satisfy?

product market stakeholders

Given the competitive landscape in which Lululemon finds itself today, what would you do if you were Chip Wilson?

start a proxy fight against board of directors

Which element of strategic planning represents the greatest challenge for Equal Exchange?

strategic competitiveness

is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment.

strategic flexibility

For a strategic action to be successful, Equal Exchange will need to determine which individuals it will ask to participate in the strategic management process so that the process will align with the company's mission and vision. For a successful process, Equal Exchange will need to identify its:

strategic leaders

Equal Exchange is known for its commitment to fair trade standards. The firm oftentimes exceeds the traditional standards of suppliers to ensure it adheres to its standards. Equal Exchange successfully achieves this goal by utilizing its core competencies. What aspect of the strategic management process results in this success?

strategy

Toy Joy Company is a start-up toy company. Its owners have decided to use the industrial organization (I/O) model to pursue strategic competitiveness and earn above-average returns. Toy Joy's first step in using the model would be to:

study the external environment, especially the industry environment.

Hypercompetition describes a competitive landscape in which:

the industry is constantly changing with global competition and innovative competitors.

Equal Exchange's ambition is "... to change the way food is grown, bought, and sold around the world." What can this quote best be described as?

vision

Joplin Tires' corporate website states "Joplin Tires strives to be the top-selling tire manufacturer in the United States." This statement is Joplin Tires':

vision