Question 1

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.

Accepted Answer

The answer of Although the fast food (or quick-service) industry...

Question 2

Resources are considered rare when they have no structural equivalent.

Accepted Answer

The answer of Resources are considered rare when they have...

Question 3

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 organizational (I/O) model.

Accepted Answer

The CEO's commitment to serving the needs of the natural gardening community and willingness to accept below average returns on investment is more consistent with the assumptions of the Stakeholder model, which emphasizes the interests of various stakeholders beyond just shareholders. The I/O model focuses on maximizing shareholder value through strategic management practices.

Question 4

Organizational stakeholders are the firm's internal resources, capabilities, and core competencies that are used to accomplish what may at first appear to be unattainable goals in the competitive environment.

Accepted Answer

Organizational stakeholders are actually external individuals or groups who have a stake or interest in the performance and success of the organization, such as customers, suppliers, shareholders, and society as a whole.

Question 5

The rate of growth of Internet-based applications could be affected by the possibility of Internet service providers charging users for downloading those applications.

Accepted Answer

If Internet service providers start charging users for downloading internet-based applications, users may be deterred from downloading them, which could slow down the rate of growth of these applications.

Question 6

The needs and desires of organizational stakeholders are inherently contradictory.

Accepted Answer

This is because stakeholders have different interests, goals, and expectations from the organization. For example, employees may want higher salaries and better benefits, while shareholders may want higher profits and dividends. Balancing these competing interests and priorities is a challenge for organizations.

Question 7

One capability characteristic of a firm with strategic flexibility is the capacity to learn.

Accepted Answer

A firm with strategic flexibility must have the ability to adapt and learn in response to changes in the environment or market conditions. This includes learning from both internal and external sources, such as customer feedback, competitor actions, and new technologies. Without this capacity to learn and evolve, the firm may become stagnant and lose its competitive advantage.

Question 8

Relative power is the most critical criteria for prioritizing the demands of stakeholders.

Accepted Answer

Prioritizing demands from stakeholders based on their relative power is a commonly followed approach in stakeholder management. Stakeholders with higher power, such as key customers or powerful government officials, are given greater priority compared to those with relatively lesser power, such as the general public or local interest groups. However, other factors such as the urgency, legitimacy, and proximity of stakeholder demands may also be considered while prioritizing.

Question 9

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

Accepted Answer

The answer of Research shows that a greater percentage of...

Question 10

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

Accepted Answer

An effective vision should stretch and challenge people, and can lead to increased innovation. Steve Jobs is a prime example of a leader who had a clear, bold vision and inspired his team to achieve remarkable success. One of his famous phrases was "putting a dent in the universe," which encapsulates the ambition and audacity of his vision.

Question 11

An effective vision statement will specify the market to be served.

Accepted Answer

The answer of An effective vision statement will specify the...

Question 12

The degree to which the firm is dependent on a stakeholder group gives that stakeholder less influence.

Accepted Answer

The degree to which the firm is dependent on a stakeholder group actually gives that stakeholder more influence, as the firm is more likely to prioritize that stakeholder's needs and wants in order to maintain the relationship and avoid negative consequences.

Question 13

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.

Accepted Answer

The five forces model does suggest that firms should target industries with high potential for above-average returns, but it does not specify which strategy (cost-leadership or differentiation) should be implemented. The choice of strategy depends on several factors, including the firm's capabilities, resources, and competitive environment.

Question 14

The assumptions of the industrial organizational 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.

Accepted Answer

The industrial organizational model and the resource-based model are not necessarily contradictory, but rather offer different perspectives on strategic planning. Some organizations may choose to incorporate aspects of both models into their overall strategy.

Question 15

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

Accepted Answer

The answer of A firm's mission tends to be enduring...

Question 16

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

Accepted Answer

The answer of The I/O (industrial organization) model assumes that...

Question 17

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 main obstacle the CEO must face is inertia.

Accepted Answer

The statement indicates that the CEO believes in the abilities, training, and resources of the employees for continuous learning, but the main obstacle mentioned is inertia, which implies that the company may have a resistance to change.

Question 18

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.

Accepted Answer

The statement is actually reflecting the Resource-Based View (RBV) of strategy, not the I/O (Industrial Organization) view. Under the RBV, a firm's unique resources and capabilities determine its ability to earn above-average returns. The I/O view, on the other hand, maintains that the external environment and industry structure are the primary drivers of a firm's strategy and success.

Question 19

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.

Accepted Answer

The answer of The resource-based model assumes that if firms...

Question 20

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

Accepted Answer

The answer of Organizational mission statements typically do not include...

Quiz 1: Strategic Management and Competitiveness