Unformatted text preview: CHAPTER 1:
41. Mc Donald'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.
42. A firm has achieved when it successfully for mulates and implements a valuecreating strategy.
a. strategic competitiveness
b. a permanently sustainable competitive advantage
c. substantial returns
d.legaland ethical core values
43.A competitive advantage
a. can be permanent if the firm has successfully implemented the strategic
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.
44. Above-average returns are
a. higher profits than the firm earned the previous year.
b. higher profits than the industry averaged over the last10 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.
45.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
c. a process directed by top-management within put from other stakeholders that
seeks to achieve above-average returns for investors through effective use of the
d. the full set of commitments, decisions, and actions required for the firm to
achieve above-average returns and strategic competitiveness. ANSWER: d
46.The primary drivers of hyper competition are
a. rising global socio-economic in stability 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.
47. All of the following are characteristic of the global economy EXCEPT
a. the increasing importance of developing countries as sources of revenue
b. the free movement of goods, services, people, skills, and ideas across
c. the increased use of tariffs to protect industries.
d. higher levels of opportunities and challenges.
48.Essentially, has become one of the world's largest markets with 700 million
a. the European Union
b. the United States
49. has become the second- largest economy in the world.
a. The United States
b. The European Union
50.The economic interdependence among countries as reflected in the flow of
goods, services, financial capital, and knowledge a cross country borders is
a. hyper competition.
b. boundary less retailing.
c. strategic intensity.
51. 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.
2.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
d. strong cultural preference for "buying local," which puts foreign firms at
adisadvantage when competing in the U.S. market.
53. Even for companies capable of succeeding in global markets, it is critical that
a. remain committed to and strategically competitive in their domestic market.
b. introduce many new products immediately after entering a new market.
c. acquirea local competitor in each significant foreign market.
d. develop good negotiating skills in order to take advantage of local suppliers in
54. The rate of technological diffusion is increasing. Which of the following was
fastest inpenetrating 25 percent of homes in the U.S. market?
c. personal computer
55.New markets created by iPods, PDAs, and Wi-Fi are a result of
a. disruptive technologies.
b. global competition.
c. knowledge intensity.
d. hyper competition.
56. 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. ANSWER: c
57.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.
58. The CEO of Ridge way, 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
c. investing in sophisticated databases in relevant knowledge areas
d. establishing a system of organizational in telligence gathering
59. Knowledge is composed of all the following EXCEPT
60. Which of the following statements about organizational knowledge is
a. Knowledge is an intangible resource.
b. The importance of knowledge is increasing.
c. The value of knowledge as aproportion of shareholder value is increasing.
d. All of these options are correct.
61. In order to cope with hyper competition, firms need to develop
through continuous learning.
a. competitive resilience
b. strategic flexibility
c. strategic power
d. competitive dominance
62. 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
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
63. 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
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.
64. 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. hyper competition within the industry.
65. Firms use the five forces model to identify the of the industry as measured by
a. size; number of competitors.
b. globalization; exports.
c. hyper competition; technology diffusion.
d. attractiveness; profitability.
66. Although Mc Donald'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
b. theresource-based model.
c. the I/O model.
d. hyper competition. ANSWER: b
67. 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 isusing its concepts to make a decision. Bothstart-up companies propose to
manufacture health focused foods with such characteristics as low salt, low sugar,
high fiber, and no artificial additives. Rex Rich 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 life styles. Which firm will the investor feel is most
consistent with the model of industrial organization ?
a. Green Pastures Foods
b. Rex Rich Foods
c. Both firms are consistent with the I/O approach.
d. At the entrepreneurial stage, the model which companies follow is not
68. Research shows that approximately percent of a firm's profitability is
explained by the industry in which it competes, whereas
a. 90; 10
b. 60; 40
c. 36; 20
d. 20; 36
percent is explained by the firm's characteristics and actions.
69. All of the following are resources of an organization EXCEPT
a. an hourly production employee's ability to catch subtle quality defects in
b. oil drilling rights in a promising region.
c. weak competitors in the industry.
d. a charity's endowment of $400 million.
70. 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
ANSWER: c 71. is a capacity for a set of resources to perform a task or an activity in an
a. A capability
b. A core competence
c. Sustainable competitive advantage
d. Organizational intelligence
72.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.
73. 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
74.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.
75. The resource-based model of the firm argues that
a. all resources have the potential to be the basis of sustainable competitive
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
d. resources that are valuable, rare, costly to imitate, and non- substitutable form
the basis of a firm's core competencies.
76.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
d.suggests that vision and mission are closely linked to sustainable competitive
77. The goal of the organization's come.
is to point the firm in the direction of where it would like to be in the years to
78.The Princeton Alliance Church states in its web site that "PA Cexists 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
79. A firm's mission
a. is a statement of a firm's business in which it in tends to compete and the
customers it intends to serve.
b. is an internally focused affirmation of the organization's financial, social, and
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
80. The final responsibility for forming the organization's mission lies with the
b. top-management team.
d. organization's stakeholders.
81.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
82. Organizational stakeholders include
b. host communities.
d. suppliers of capital.
83. The interests of an organization's stakeholders often conflict, and the
organization must prioritize its stake holders if it cannot satisfy the mall. The is
the most critical criterion in prioritizing stakeholders.
a. power of each stakeholder
b. urgency of satisfying each stakeholder
c. vulnerability of organizational stakeholders
d. social value of each stakeholder
84. Capital market stake holders include
a. industry competitors.
d. government regulators.
85. Dissatisfied capital market stakeholders may
a. sell their stock.
b. tighten loan covenants.
c. seek to increase their power.
d. All of these options are correct.
86. Green leaf Property Management has been earning below- average returns
for the last three years. Which of the following statements are true?
a. Green leaf will be able to satisfy its multiple stakeholders easily as long as the
stakeholders are committed to the strategic mission of the firm.
b. Green leaf will be able to at least minimally satisfy the demands of each
c. Green leaf will need to prioritize the demands of its stake holders based on the
political influence each wields.
d.Green leaf will not be able to minimally satisfy all stakeholders.
87. Product market stake holders include the firm's customers, and the principal
concern of this stake holder group is a. maximizing the firm's return on investment.
b. receiving the highest- quality products and services in the industry.
c. obtaining reliable products at the lowest possible price.
d. increasing the profitability of the firm.
88. Generally speaking, product market stake holders are satisfied when
a. afirm's profit margin yields the lowest return to capital markets take holders
that is acceptable to them.
b. a firm's profit margin yields an above-average return to its capital market
c. the interests of the firm's organizational stake holders have been maximized.
d. the interests of all stake holders have been at least minimally satisfied.
89. Before liquidating, Circuit City took several actions to try to satisfy its
a. capital market
b. product market
90. The Chambers of Commerce of cities and towns often implore citizens to buy
from local businesses. This is because the organization's role a satax payer is
most important to
a. majör suppliers of capital
c. host communities
91. Although it closed stores, changed the top management team, and sought
potential buyers, none of these actions resulted in outcomes that allowed Circuit
City to meet the expectations of its
a. product market
b. capital market
92. Organizational stakeholders are usually satisfied when
a. the irreturn on investment has been maximized.
b. customers pay the highest sustainable price for the goods and services they
c. companies provide a dynamic, stimulating, and rewarding work environment.
d. companies are paying the highest prices to suppliers.
ANSWER: c 93. Product market stakeholders include
d. the firm's chief executive officer.
94. Refuge Nursing Homes,Inc., (RNH) has been highly profitable in the past 10
years, providing its investors higher returns than those earned by its direct
competitors' investors. RNH has a reputation for providing high-paying
managerial and hourly- employee jobs. However, recent investigations have
revealed that the nursing home residents have been provided sub standard care,
including non-nutritious and unappetizing meals, non-functional medical
equipment, and inadequate patient-care staffing. Which statement best describes
a. RNH has been earning below- average returns, so it has had to prioritize the
demands of its various stakeholders.
b. RNH has prioritized the demands of capital market stake holders over the
demands of product market stake holders.
c. RNH has earned above-averagere turns and so has satisfied the needs of all
d. RNH has been attempting to minimally satisfy the demands of all of its
95. A prominent national accounting firm runs television advertisements
showing an accountant working alone late in the Office on aclient's project, while
clenching along stemmed rose in his teet hand grinning ecstatically. The message
of the adis that this firm's accountants love their work. This adseeks to convey a
sense of the organization's to the viewers.
96. The global economy, globalization, rapid technological change, and the
increasing importance of knowledge are creating the need to
a. delegate strategic responsibilities to employees" closer to the action."
b. split responsibilities between the CEO and the board of directors as a result of
triggered by unethical CEOs.
c. re-centralize the responsibility for strategy to the CEO.
d. expand the strategic responsibilities to all organizational stakeholders.
97. The strategic leader's work is characterized by a. ambiguous decision situations which make effectiv edecisions difficult to
b. a willingness to unify stake holders through skillful manipulation.
c. an ability to identify the correct solutions to long-range problems.
d. concentration on the practical day-to-day aspects of the organization's
98. The profit pool is the
a. pool of assets that is distributed to investors.
b. total profits earned in an industry along all points of the value chain.
c. profits that are accrued when a firm earnsabove-average returns.
d. total profits that can be divided among the competitors within an industry.
99.The steps for identifying the profit pools in an industry include all of the
a. defining the boundaries of the pool.
b. estimating the overall size of the pool.
c. defining the competitors in the pool.
d. estimating the size of the value-chain activity in the pool.
100. Analysis of the industry's profit pool enables strategic managers to
a. predict future revenue streams for the organization.
b. predict growth in sales over the medium to long range.
c. determine whether an industry will be viable in the long term.
d. locate the most promising areas of an industry's value chain.
101. If Mc Donald's were to map the profit pool in the quick service restaurant
industry, it would do all of the following EXCEPT
a. define the industry's boundaries and size.
b. estimate the profit potential in each part of the value chain.
c. focus on unattractive industries ignored by ...
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