MBA 621 Midterm Study guide with detailed questions
and answers
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 - CORRECT ANSWERS-C) can be identified
only if it has been unsuccessfully challenged by competitors
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 - CORRECT ANSWERS-D) returns in excess of what an investor expects to earn from other
investments with a similar level of risk
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 resournces, 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 - CORRECT ANSWERS-D) the full set of commitments, decisions,
and actions required for the firm to achieve above-average returns and strategic competitiveness
,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 a global competition
D) strong cultural preference for "buying local," which puts foreign firms at a disadvantage when
competing in the U.S. market - CORRECT ANSWERS-C) overall risk of participating outside a firm's
domestic country when entering a global competition
The industrial organization (I/O) model argues that:
A) the key factor is success in 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 - CORRECT ANSWERS-A) the key factor is success in choosing
the correct industry in which to compete
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) hyper-competition; technology diffusion
D) attractiveness; profitability - CORRECT ANSWERS-D) attractiveness; profitability
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 competitve advantage - CORRECT ANSWERS-
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 - CORRECT ANSWERS-C) core competence
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 - CORRECT ANSWERS-A) is a statement of a
firm's business in which it intends to compete and the customers it intends to serve
Capital market stakeholders include:
A) industry competitors
B) shareholders
C) employees
D) government regulators - CORRECT ANSWERS-B) shareholders
Dissatisfied capital market stakeholders may:
A) sell their stock
B) tighten loan covenants
C) seek to increase their power
and answers
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 - CORRECT ANSWERS-C) can be identified
only if it has been unsuccessfully challenged by competitors
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 - CORRECT ANSWERS-D) returns in excess of what an investor expects to earn from other
investments with a similar level of risk
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 resournces, 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 - CORRECT ANSWERS-D) the full set of commitments, decisions,
and actions required for the firm to achieve above-average returns and strategic competitiveness
,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 a global competition
D) strong cultural preference for "buying local," which puts foreign firms at a disadvantage when
competing in the U.S. market - CORRECT ANSWERS-C) overall risk of participating outside a firm's
domestic country when entering a global competition
The industrial organization (I/O) model argues that:
A) the key factor is success in 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 - CORRECT ANSWERS-A) the key factor is success in choosing
the correct industry in which to compete
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) hyper-competition; technology diffusion
D) attractiveness; profitability - CORRECT ANSWERS-D) attractiveness; profitability
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 competitve advantage - CORRECT ANSWERS-
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 - CORRECT ANSWERS-C) core competence
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 - CORRECT ANSWERS-A) is a statement of a
firm's business in which it intends to compete and the customers it intends to serve
Capital market stakeholders include:
A) industry competitors
B) shareholders
C) employees
D) government regulators - CORRECT ANSWERS-B) shareholders
Dissatisfied capital market stakeholders may:
A) sell their stock
B) tighten loan covenants
C) seek to increase their power
