SM Chapter 1

3) A firm's ________ is its long-term purpose that defines both what it aspires to be in the long run and what it wants to avoid in the meantime. A) mission B) strategy C) objective D) goal

A

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

A

50) In many ways, the difference between traditional economics research and strategic management research is that the former attempts to explain why ________, while the latter attempts to explain ________. A) competitive advantages should not persist; when they can B) competitive advantages should persist; when they can C) competitive advantages should persist; why they should not D) competitive parity should not persist; why they should

A

8) Which of the following statements regarding firm mission is accurate? A) While some firms have used their missions to develop strategies that create significant competitive advantages, firm missions can hurt a firm's performance as well. B) Virtually all firms have used missions to develop strategies that create significant competitive advantages, while very few firms have used missions that can hurt their performance. C) It is very rare for firms to be able to use their missions to develop strategies that create significant competitive advantages, and most firm missions actually hurt their performance. D) Missions tend to have very little impact on a firm's ability to create significant competitive advantages.

A

89) Theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented are known as A) emergent strategies. B) objective strategies. C) planned strategies. D) ad hoc strategies.

A

91) Fed Ex entered their market with a well-defined mission and objectives, making strategic choices and implementing those strategies. This is an example of which type of strategy? A) intended B) economic C) emergent D) visionary

A

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

B

2) A sequential set of analyses and choices that can increase the likelihood that a firm will choose a strategy that generates competitive advantages is the A) organizational change process. B) strategic management process. C) mission statement process. D) goal setting process.

B

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

B

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

B

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

C

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

C

46) The difference between what customers are willing to pay for a firm's products or services and the full economic cost of these products or services is the A) value proposition. B) cost advantage. C) economic value. D) competitive advantage.

C

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

C

73) Thermacorp's weighted average cost of capital is 13.5. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning A) above normal economic performance. B) above normal accounting performance. C) below normal economic performance. D) below normal accounting performance.

C

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

D

17) Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, the strategic planning team had decided that financial performance is one of the company's top priorities. Which of the following is the best example of an objective the company might use to help it achieve its goal of superior financial performance? A) increasing profitability B) growing market share annually C) improving product quality every quarter D) growth in earnings per share averaging 15% or better annually for the next five years

D

66) A firm that is able to attract additional capital because debt holders and equity holders will scramble to make additional funds available for it is likely earning A) normal economic performance. B) average accounting performance. C) temporary advantage. D) above normal economic performance.

D

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

D

77) Applying accounting measures of competitive advantage for firms that are headquartered in different countries has become less challenging today with the globalization of business. T or F

F

80) When a firm earns above average accounting performance, it is said to enjoy competitive parity. T or F

F

86) The correlation between economic and accounting measures of competitive advantage is generally low. T or F

F

94) Emergent strategies are only important when a firm fails to implement the strategic management process effectively. T or F

F

23) For the purposes of this book, a firm's strategy is defined as its theory about how to gain competitive advantages. T or F

T

36) By conducting an external analysis, a firm identifies the critical threats and opportunities in the industry's competitive environment. T or F

T

39) Strategy implementation occurs when a firm adopts organizational policies and practices that are consistent with its strategy. T or F

T

81) A firm that earns below average accounting performance generally experiences a competitive disadvantage. T or F

T

83) Economic measures of competitive advantage compare a firm's level of return to its costs of capital instead of to the average level of return to the industry. T or F

T

92) Emergent strategies are theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented. T or F

T

98) Firms with strategies that are unlikely to be a source of competitive advantage will rarely provide the same career opportunities as firms with strategies that do generate such advantages. T or F

T

99) Strategic choices are generally limited to very experienced senior managers in large corporations; in smaller and entrepreneurial firms, many employees end up being involved in the strategic management process. T or F

T