Question 1

Managers should create two sets of core values, one for employees and one for themselves.

Accepted Answer

Employees tend to follow values practiced by strategic leaders. They observe the day-to-day decisions of top managers and quickly decide whether managers are merely paying lip service to the company's stated values. Organizational core values must be lived with integrity, especially by the top management team.

Question 2

In ________, a firm frames a guiding policy to address the competitive challenge.

Accepted Answer

A good strategy includes a guiding policy to address the competitive challenge. This element is accomplished through strategy formulation, resulting in the firm's corporate, business, and functional strategies.

Question 3

A mission describes how a firm will accomplish the broad goals set out in a vision statement.

Accepted Answer

A mission describes what an organization actually does-that is, the products and services it plans to provide, and the markets in which it will compete. It defines how the vision is accomplished and is often introduced with the preposition by.

Question 4

Once a strategy has been formulated and implemented, it is important that the firm sticks to it no matter what happens.

Accepted Answer

Strategic leaders make decisions under conditions of uncertainty and complexity. They must carefully monitor and evaluate the progress toward key strategic objectives and make adjustments by fine-tuning any strategy as necessary.

Question 5

The three tasks of the AFI strategy framework are to Assemble a prototype, Find a buyer, and Incorporate feedback.

Accepted Answer

The three tasks of the AFI strategy framework are to Analyze, Formulate, and Implement. This framework (1) explains and predicts differences in firm performance, and (2) helps managers formulate and implement a strategy grounded in internal and external analysis that can result in superior performance.

Question 6

A vision describes in broad, inspirational terms what an organization hopes to accomplish in the future.

Accepted Answer

A vision captures an organization's aspiration and spells out what it ultimately wants to accomplish. An effective vision pervades the organization with a sense of winning and motivates employees at all levels to aim for the same target, while leaving room for individual and team contributions.

Question 7

A good strategy is a set of actions that enables a firm to achieve its own internal goals without regard to the external environment.

Accepted Answer

The success of a strategy heavily depends on the external environment. A good strategy is a set of actions that enables a firm to achieve superior performance relative to its competitors. In this light, a strategy which produces only a minor loss of revenues while competitors suffer heavy losses can be seen as successful.

Question 8

Core values provide ethical guidelines for how individual employees will behave.

Accepted Answer

Organizational core values are the ethical standards and norms that govern the behavior of individuals within a firm or organization.

Question 9

The following statement by the chief executive of SunStar movie studio is an effective strategy: "We will produce the greatest films of the 21st century."

Accepted Answer

Grandiose statements are not strategy. Although SunStar's vision of producing the highest-quality films among all studios may lay the foundation for an effective strategy, it must be backed up by a clear set of actions that will allow the firm to address the competitive challenge with clear consideration of value creation and costs.

Question 10

Which of the following is an element of good strategy?

Accepted Answer

A good strategy consists of a diagnosis of the competitive challenge, a guiding policy to address the competitive challenge, and a set of coherent actions to implement the firm's guiding policy.

Question 11

Through ________, a firm puts its guiding policy into practice by employing a set of coherent actions.

Accepted Answer

A good strategy includes a set of coherent actions to implement the firm's guiding policy. This element is accomplished through strategy implementation.

Question 12

Product-oriented vision statements are better suited than customer-oriented vision statements for helping companies to adapt to changes in the external environment.

Accepted Answer

Product-oriented vision statements often constrain the ability of a firm to respond to changes in the external environment by focusing employees on improving existing products and services without consideration of underlying customer problems to be solved. A customer-oriented vision helps firms respond to changes in the external environment by defining the business in terms of providing solutions to customer needs.

Question 13

Green Jeans, Inc. had a mission to become the leading producer of environmentally friendly blue jeans, an emerging and in-demand category in the apparel industry. Its strategy involved leveraging a network of organic cotton farmers and suppliers of environmentally responsible synthetic materials to create a product that is durable, attractive, affordable, and 100% recyclable. However, because it did not upgrade its outdated production facilities, Green Jeans could not assemble its products at a low-enough cost to offer the jeans at a price that was attractive to customers. Green Jeans' strategy failed because

Accepted Answer

A formulated strategy must be backed up with strategic commitments, or actions to achieve the mission that are costly, long-term oriented, and difficult to reverse. Green Jeans failed to invest in upgrading its production facilities, leaving it unable to produce its jeans at a low-enough cost to achieve a competitive advantage.

Question 14

Which of the following strategies does Tesla need to implement or achieve to gain a competitive advantage?

Accepted Answer

As mentioned in Chapter Case 1, Tesla has consistently reinvested its profits to build successively better models of electric cars while keeping its strategy secret from competitors.

Question 15

Which of the following is an example of competitive parity?

Accepted Answer

Two or more firms performing at the same level have competitive parity. Therefore, a firm has competitive parity if it produces wall clocks at the same rate as its competitors.

Question 16

________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Accepted Answer

Strategic management is the integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage. Mastery of strategic management enables an individual to view a firm in its entirety. It also enables an individual to think like a general manager to help position his or her firm for superior performance.

Question 17

Questions asked during the strategy analysis stage of the AFI framework include "How does the firm make money?" and "What effects do forces in the external environment have on the firm's potential to gain and sustain a competitive advantage?"

Accepted Answer

Strategy analysis involves consideration of both the firm's internal and external environments, and the role that strategic managers play in establishing and maintaining a competitive advantage.

Question 18

A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n)

Accepted Answer

A firm that achieves superior performance relative to other competitors in the same industry or the industry average has a competitive advantage.

Question 19

________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

Accepted Answer

Strategy is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

Question 20

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?

Accepted Answer

A good strategy consists of a diagnosis of the competitive challenge. This element is accomplished through strategy analysis of the firm's external and internal environments.

Quiz 1: What Is Strategy