Chapter 1—Strategic Management and Strategic Competitiveness
TRUE/FALSE
3. Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.
5. The goal of strategic management is to develop a competitive advantage that is permanently sustainable.
6. Risk in terms of financial returns reflects an investor’s uncertainty about economic gains that will result from a particular investment.
11. Wal-Mart is trying to achieve a boundaryless retailing empire by implementing global pricing, sourcing, and logistics.
14. created a competitive advantage and an entirely new industry by making u of disruptive technology.
18. Tangible asts, such as land and capital equipment, are losing their value as sources of competitive advantage in comparison to intangible asts.
20. One capability characteristic of a firm with strategic flexibility is effective management information systems.
24. 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.
26. Core competencies can be formed only around production or rvice-provision activities of the firm rather than in support activities such as accounting and marketing.
31. Organizational mission statements typically do not include statements about profitability and earning above-average returns.
33. Organizational stakeholders are the firm’s internal resources, capabilities, and core competencies that are ud to accomplish what may at first appear to be unattainable goals in the competitive environment.
36. Relative power is the most critical criteria for prioritizing the demands of stakeholders.
38. Customers, suppliers, unions, and local governments are examples of capital market stakeholders.
42. Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others.
MULTIPLE CHOICE
2. 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. |
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4. Investors in an established firm judge the adequacy of the returns on their investment in relation to:
a. | the returns on other investments of similar risk. |
b. | the stock market’s overall performance. |
c. | the industry’s profit pool. |
d. | the prime interest rate. |
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7. The primary drivers of hypercompetition are
a. | rising global socio-economic instability and incread inflation. |
b. | the emergence of a global economy and rapid technological change. |
c. | incread global competition and decreasing tariffs. |
d. | incread availability of capital and incread competition. |
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11. 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 rearch and development. |
d. | higher product quality. |
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19. 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 the above are correct. |
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24. The five forces model suggests that an industry’s profitability is a function of all the following factors EXCEPT
a. | buyers. |
b. | competitive rivalry. |
c. | suppliers. |
d. | the economic environment. |
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27. 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. |
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29. ____ is a capacity for a t 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 |
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30. When resources and capabilities rve 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. |
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