Question 1

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

Accepted Answer

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

Question 2

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 3

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 4

The needs and desires of organizational stakeholders are inherently contradictory.

Accepted Answer

This is because different stakeholders have different interests and goals, and what may benefit one stakeholder (e.g. shareholders) may not necessarily benefit another (e.g. employees). Balancing these conflicting needs and desires is a key challenge for organizational leaders.

Question 5

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 the industry with the highest potential for above-average returns, but it does not necessarily recommend implementing either a cost-leadership or a differentiation strategy. These strategies are examples of ways that a firm could gain a competitive advantage, but the model does not prescribe which strategy to choose.

Question 6

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 passage states that the new CEO wants to make the company strategically flexible and believes that the employees have the ability to engage in continuous learning. The main obstacle mentioned is inertia, which suggests resistance to change and a tendency to maintain the status quo.

Question 7

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 I/O model focuses on external factors and industry structure as determinants of firm performance, rather than individual commitments or internal resources.

Question 8

Resources are considered rare when they have no structural equivalent.

Accepted Answer

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

Question 9

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 10

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 I/O model emphasizes the importance of the external environment and industry structure over the firm's internal resources and capabilities in determining above-average returns.

Question 11

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

This statement is incorrect. Organizational stakeholders are actually individuals or groups that have an interest in the firm's activities, such as customers, employees, shareholders, suppliers, and government agencies. They do not refer to the firm's internal resources and capabilities.

Question 12

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

The statement is true. A clear and ambitious vision can inspire and motivate individuals towards greater creativity and innovation, as seen with Steve Jobs and Apple's success in disrupting markets and pushing boundaries.

Question 13

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

Accepted Answer

Organizational mission statements typically focus on the company's purpose, values, and goals, rather than financial objectives such as profitability and earning above-average returns. However, these financial goals may be included in a company's overall strategic plan or vision statement.

Question 14

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

Accepted Answer

Relative power refers to the level of influence a stakeholder holds over a decision-making process or a project outcome. Prioritizing the demands of stakeholders based on their power can help ensure that the needs of influential stakeholders are met first. Therefore, relative power is a critical criterion for prioritizing stakeholder demands.

Question 15

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

Accepted Answer

A firm with strategic flexibility has the ability to learn from new experiences, adapt to changing environments and acquire new knowledge and skills that can help them navigate through challenges and take advantage of emerging opportunities. Therefore, learning is a key capability characteristic of such firms.

Question 16

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 17

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 describes the RBV (Resource-Based View) of the firm's strategy, not the I/O (Industrial Organization) view. The RBV argues that a firm's unique resources and capabilities give it a competitive advantage and the potential to earn above-average returns. The I/O view, on the other hand, focuses on external factors such as industry structure and market conditions as the main drivers of firm's performance.

Question 18

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 19

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. The more dependent the firm is on a stakeholder group, the more power that group has to affect the firm's actions and decisions.

Question 20

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 users have to pay additional fees to download Internet-based applications, they may be less likely to adopt new applications and this could hinder the growth of the industry.

Quiz 1: Strategic Management and Strategic Competitiveness