Deck 1: Strategic Management and Strategic Competitivenes

Question 1

While patents may be an effective way of protecting proprietary technology in some industries such as pharmaceuticals,many firms competing in the electronics industry do not apply for patents.

Answer 1

True

Question 2

Risk in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment.

Answer 2

True

Question 3

Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.

Answer 3

True

Question 4

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.

Question 5

Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past,but they must be reinforced by strategic flexibility.

Question 6

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.

Question 7

The two primary drivers of hypercompetition are the emergence of the global economy and technology.

Question 8

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

Question 9

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.

Question 10

The goal of strategic management is to develop a competitive advantage that is permanent.

Question 11

Examples of incremental innovations include iPods,PDAs,Wi-Fi,and web browser software.

Question 12

The rapid rate of technological diffusion has increased the competitive benefits of patents.

Question 13

The rate of technology diffusion has been steadily increasing over the last two decades.

Question 14

Average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk.

Question 15

Returns can only be measured in accounting terms such as return on assets,return on equity,or return on sales.

Question 16

Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche,the firm's owners can feel secure that Alligator has established a competitive advantage.

Question 17

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.

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.

Question 19

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.

Question 20

Developed countries still have major advantages in access to information technology over emerging economies because of the significant cost of the infrastructure needed for computing power.

Question 21

Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders.

Question 22

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

Question 23

When the firm earns lower-than-average returns,the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders.

Question 24

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

Question 25

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.

Question 26

Customers,suppliers,unions,and local governments are examples of capital market stakeholders.

Question 27

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

Question 28

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

Question 29

Corporate-level strategy in a diversified organization requires a common business strategy for each component business.

Question 30

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

Question 31

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.

Question 32

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

Question 33

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

Question 34

An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values.

Question 35

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.

Question 36

Resources are considered rare when they have no structural equivalent.

Question 37

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

Question 38

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.

Question 39

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

Question 40

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").

Question 41

The strategic management process is

A)a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm.
B)a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment.
C)a process directed by top-management with input from other stakeholders that seeks to achieve above- average returns for investors through effective use of the organization's resources.
D)the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.

Question 42

The economic interdependence among countries as reflected in the flow of goods,services,financial capital,and knowledge across country borders is defined as

A)hypercompetition.
B)boundaryless retailing.
C)strategic intensity.
D)globalization.

Question 43

A competitive advantage

A)can be permanent if the firm has successfully implemented the strategic management process.
B)entails reducing investors' risk to near zero.
C)can be identified only if it has been unsuccessfully challenged by competitors.
D)exists when competing firms are unable to find investors.

Question 44

Even for companies capable of succeeding in global markets,it is critical that they

A)remain committed to and strategically competitive in their domestic market.
B)introduce many new products immediately after entering a new market.
C)acquire a local competitor in each significant foreign market.
D)develop good negotiating skills in order to take advantage of local suppliers in the international market.

Question 45

Knowledge is composed of all the following EXCEPT

A)insight.
B)expertise.
C)information.
D)intelligence.

Question 46

The ability to effectively and efficiently access and use information is

A)vitally important at the point where a domestic firm enters the global market.
B)an important source of competitive advantage in virtually all industries.
C)the minimum required for survival in virtually any industry.
D)critically important mainly in high technology industries.

Question 47

New markets created by iPods,PDAs,and Wi-Fi are a result of

A)disruptive technologies.
B)global competition.
C)knowledge intensity.
D)hypercompetition.

Question 48

The "liability of foreignness" is the

A)inability of most U.S.managers to truly comprehend foreign cultures.
B)political disadvantage that U.S.firms have when doing business abroad.
C)overall risk of participating outside a firm's domestic country when entering global competition.
D)strong cultural preference for "buying local," which puts foreign firms at a disadvantage when competing in the U.S.market.

Question 49

The CEO of Ridgeway,Inc.,realizes that the company's survival depends on developing and acquiring knowledge.
Which of the following actions by the CEO would be most consistent with this need?

A)ensuring that all current unique knowledge of the firm is protected by patents
B)planning extensive employee training and hiring educated and experienced employees
C)investing in sophisticated databases in relevant knowledge areas
D)establishing a system of organizational intelligence gathering

Question 50

All of the following are characteristic of the global economy EXCEPT

A)the increasing importance of developing countries as sources of revenue growth.
B)the free movement of goods, services, people, skills, and ideas across geographic borders.
C)the increased use of tariffs to protect industries.
D)higher levels of opportunities and challenges.

Question 51

Essentially,has become one of the world's largest markets with 700 million potential consumers.

A)the European Union
B)the United States
C)China
D)Japan

Question 52

Above-average returns are

A)higher profits than the firm earned the previous year.
B)higher profits than the industry averaged over the last 10 years.
C)profits in excess of what an investor expects to earn from a historical pattern of performance of the firm.
D)returns in excess of what an investor expects to earn from other investments with a similar level of risk.

Question 53

has become the second-largest economy in the world.

A)The United States
B)The European Union
C)Japan
D)China

Question 54

Apple's iPod and iPad are examples of

A)the march of globalization.
B)rapid technological diffusion.
C)disruptive technologies.
D)products that were not imitated by competitors.

Question 55

The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market?

A)telephone
B)television
C)personal computer
D)Internet

Question 56

Globalization has led to

A)lower operational efficiency as firms must transport raw materials and finished goods farther.
B)increasing loyalty of customers for products made domestically.
C)declining returns from investment in research and development.
D)higher product quality.

Question 57

McDonald's has been able to

A)earn above-average returns.
B)achieve strategic competitiveness.
C)use the strategic management process.
D)All of these options are correct.

Question 58

Which of the following statements about organizational knowledge is correct?

A)Knowledge is an intangible resource.
B)The importance of knowledge is increasing.
C)The value of knowledge as a proportion of shareholder value is increasing.
D)All of these options are correct.

Question 59

A firm has achieved when it successfully formulates and implements a value-creating strategy.

A)strategic competitiveness
B)a permanently sustainable competitive advantage
C)substantial returns
D)legal and ethical core values

Question 60

The primary drivers of hypercompetition are

A)rising global socio-economic instability and increased inflation.
B)the emergence of a global economy and rapid technological change.
C)increased global competition and decreased tariffs.
D)increased availability of capital and increased competition.

Question 61

A firm's mission

A)is a statement of a firm's business in which it intends to compete and the customers it intends to serve.
B)is an internally focused affirmation of the organization's financial, social, and ethical goals.
C)is mainly intended to emotionally inspire employees and other stakeholders.
D)is developed by a firm before the firm develops its vision.

Question 62

The Princeton Alliance Church states in its website that "PAC exists to help you live life to the fullest by knowing God,developing community and bringing hope." This pronouncement is most precisely a statement of organizational

A)values.
B)mission.
C)vision.
D)culture.

Question 63

Firms use the five forces model to identify the of the industry as measured by its

A)size; number of competitors.
B)globalization; exports.
C)hypercompetition; technology diffusion.
D)attractiveness; profitability.

Question 64

When resources and capabilities serve as a source of competitive advantage for a firm,the firm has created a(n)

A)strategic mission.
B)inspiring vision.
C)core competence.
D)sustainable market niche.

Question 65

Who typically develops a firm's mission statement?

A)only the CEO
B)only top managers
C)the CEO and top managers
D)the CEO, COO, and CFO only

Question 66

To have the potential to become sources of competitive advantage,resources and capabilities must be non- substitutable,valuable______________,and

A)unique; easy to imitate.
B)easy to imitate; difficult to implement.
C)rare; costly to imitate.
D)easy to implement; unique.

Question 67

All of the following are assumptions of the resource-based model EXCEPT

A)each firm is a unique collection of resources and capabilities.
B)the industry's structural characteristics have little impact on a firm's performance over time.
C)capabilities are highly mobile across firms.
D)differences in resources and capabilities are the basis of competitive advantage.

Question 68

All of the following are resources of an organization EXCEPT

A)an hourly production employee's ability to catch subtle quality defects in products.
B)oil drilling rights in a promising region.
C)weak competitors in the industry.
D)a charity's endowment of $400 million.

Question 69

An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using its concepts to make a decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt,low sugar,high fiber,and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization?

A)Green Pastures Foods
B)RexRich Foods
C)Both firms are consistent with the I/O approach.
D)At the entrepreneurial stage, the model which companies follow is not important.

Question 70

In the resource-based model,which of the following factors would be considered a key to organizational success?

A)unique market niche
B)weak competition
C)economies of scale
D)skilled employees

Question 71

Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to

A)the power of the financial market stakeholders.
B)the resources the firm possesses.
C)the profitability of the industry in which the firm competes.
D)hypercompetition within the industry.

Question 72

The resource-based model of the firm argues that

A)all resources have the potential to be the basis of sustainable competitive advantage.
B)resources alone can be a source of sustainable competitive advantage.
C)the key to competitive success is the structure of the industry in which the firm competes.
D)resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.

Question 73

All of the following are assumptions of the industrial organization (I/O)model EXCEPT

A)organizational decision makers are rational and committed to acting in the firm's best interests.
B)resources to implement strategies are firm-specific and attached to firms over the long-term.
C)the external environment is assumed to impose pressures and constraints that determine the strategies that result in above-average returns.
D)firms in given industries, or given industry segments, are assumed to control similar strategically relevant resources.

Question 74

The goal of the organization's come.

A)vision
B)mission
C)culture
D)strategy is to point the firm in the direction of where it would like to be in the years to

Question 75

The industrial organization (I/O)model argues that

A)the key factor in success is choosing the correct industry in which to compete.
B)the firm's internal resources and capabilities represent the foundation for development of a value-creating strategy.
C)the key to earning above-average returns is strategic flexibility.
D)the internal structure of the organization must match the industry in which it competes in order to earn above-average returns on investment.

Question 76

In order to cope with hypercompetition,firms need to develop______through continuous learning.

A)competitive resilience
B)strategic flexibility
C)strategic power
D)competitive dominance

Question 77

is a capacity for a set of resources to perform a task or an activity in an integrative manner.

A)A capability
B)A core competence
C)Sustainable competitive advantage
D)Organizational intelligence

Question 78

Although McDonald's is competing in an unattractive industry,it has improved its performance by focusing on product innovations and by enhancing existing facilities. This improved performance is best explained by

A)globalization.
B)the resource-based model.
C)the I/O model.
D)hypercompetition.

Question 79

The final responsibility for forming the organization's mission lies with the

A)CEO.
B)top-management team.
C)employees.
D)organization's stakeholders.

Question 80

The resource-based view of the firm

A)emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone.
B)argues that the industry environment has a stronger influence on firms' ability to implement strategies successfully than does the competitor environment.
C)calls for firms to focus on their homogeneous capabilities to compete against their rivals.
D)suggests that vision and mission are closely linked to sustainable competitive advantage.