Mgmt 493 Final - Woo (Chapter 1)

Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource- based model. a. True b. False

False

Resources are considered rare when they have no structural equivalent. a. True b. False

False

An effective vision stretches and challenges people and can result in increased innovation as illustrated by Apple's CEO Steve Jobs, who was known to think bigger and differently than most people ("putting a dent in the universe"). a. True b. False

True

Profit pools allow strategic leaders to predict the outcomes of their decisions before taking efforts to implement them. a. True b. False

True

Organizational mission statements typically do not include statements about profitability and earning above-average returns. a. True b. False

True

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. a. True b. False

True

Although the fast food (or quick-service) industry is unattractive, McDonald's has earned above-average returns through product innovations, enhancing existing facilities, and buying properties outside the United States. a. True b. False

False

An effective vision statement will specify the market to be served. a. True b. False

False

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. a. industry; capability b. I/O; resource-based c. competition; competency d. industry; competency

b. I/O; resource-based

Strategic leaders are a. located only at the executive level. b. located in different areas and levels. c. the CEO, COO, and CFO only. d. located at different levels, but only in the operating area of the organization.

b. located in different areas and levels

Strategic leaders, ______ , often work long hours, and their work is filled with ambiguous decision situations. a. at the top of the organization b. regardless of their location in the organization c. in the finance area d. in the operations area

b. regardless of their location in the organization

A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions. a. True b. False

False

Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others. a. True b. False

False

The CEO of Twin Spires, Inc., is emotionally and intellectually committed to using the resources of 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. This commitment has carried the CEO through long periods of below-average returns on investment. The perspective of the CEO of Twin Spires is consistent with the assumptions of the industrial organization (I/O) model. a. True b. False

False

The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is its main source of above-average returns. a. True b. False

False

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. a. True b. False

False

The resource-based model assumes that if firms have resources that are rare or costly to imitate, this is sufficient to form a basis for competitive advantage. a. True b. False

False

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. a. True b. False

True

Strategic leaders must have a strong strategic orientation while embracing change in the dynamic competitive landscape. a. True b. False

True

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. a. True b. False

True

Effective strategic leaders a. are willing to be brutally honest. b. focus on strategy formation. c. focus on strategy implementation. d. focus on innovation.

a. are willing to be brutally honest.

If Southwest Airlines is considering the consequences of videoconferencing on business travel, it is in the profit pool analysis step known as a. defining the pool's boundaries. b. estimating the pool's overall size. c. estimating the size of the value-chain activity in the pool. d. reconciling the calculations.

a. defining the pool's boundaries.

________ should establish a firm's individuality and should be inspiring and relevant to all stakeholders. a. A strategy b. A vision c. A mission d. A goal

c. A mission

Strategic delegation helps a. overload middle managers. b. executives control strategy implementation. c. avoid too much managerial hubris. d. emphasize profit maximization.

c. avoid too much managerial hubris.

The I/O model is grounded in a. anthropology. b. psychology. c. economics. d. accounting.

c. economics.

If McDonald's is considering growing potatoes, the step of the profit pool analysis is the one that a. defines the pool's boundaries. b. estimates the pool's overall size. c. estimates the size of the value-chain activity in the pool. d. reconciles the calculations.

c. estimates the size of the value-chain activity in the pool.

Organizational culture refers to a. the social energy that drives, or fails to drive, the organization. b. the complex set of ideologies, symbols, and core values that are shared throughout the firm. c. what people do when no one else is looking. d. All of these options are correct.

d. All of these options are correct.

Successful strategic leaders are a. committed to helping the firm create value for all stakeholder groups. b. committed to nurturing those around them. c. decisive. d. All of these options are correct.

d. All of these options are correct.