,Chapter 1: Strategic Management – Creating Competitive
Advantages
Section A: Multiple Choice Questions (40 Questions)
1. Which of the following best defines a firm's "strategy" according to the 11th edition?
A) The detailed operational plan for the next fiscal year
B) A set of goal-directed actions a firm takes to gain and sustain superior performance
C) A company's mission statement posted on its website
D) The total amount of financial resources allocated to marketing
Answer: B
Rationale: The 11th edition defines strategy as the integrated set of goal-directed
actions a firm takes to gain and sustain superior performance relative to competitors.
Options A, C, and D are too narrow or incomplete.
2. The strategic management process consists of three ongoing processes. Which of
the following correctly lists them in the proper sequence?
A) Actions → Analysis → Decisions
B) Analysis → Decisions → Actions
C) Decisions → Actions → Analysis
D) Actions → Decisions → Analysis
Answer: B
Rationale: The strategic management process begins with analysis (internal/external
environment), moves to strategic decisions (formulation), and concludes with actions
(implementation).
3. The "romantic view" of leadership emphasizes that:
A) External economic conditions determine organizational success
B) Industry structure is the primary driver of profitability
C) The leader is the key force behind organizational success or failure
D) Organizational culture is irrelevant to strategic outcomes
,Answer: C
Rationale: The romantic view attributes organizational outcomes primarily to the
leader's actions, decisions, and vision. The external view (Options A and B) emphasizes
environmental factors.
4. When a firm's success is attributed to favorable industry conditions, market growth,
or government policies, this reflects the:
A) Romantic view of leadership
B) External control view of leadership
C) Strategic intent perspective
D) Resource-based view
Answer: B
Rationale: The external control view holds that external factors (industry conditions,
regulations, economic cycles) primarily determine organizational success, not leadership
actions.
5. A CEO successfully navigates her company through a recession by cutting costs,
acquiring a struggling competitor at a low price, and launching new products. This
scenario best illustrates:
A) External control view
B) Strategic determinism
C) Romantic view of leadership
D) Industry organization perspective
Answer: C
Rationale: The CEO's actions are credited as the key force driving success during a
difficult period, which is the essence of the romantic view of leadership.
6. Which of the following is an example of a strategic "action" rather than a "decision"
in the strategic management process?
A) Deciding to enter the European market
B) Choosing between cost leadership and differentiation
, C) Allocating $10 million to build a new factory
D) Analyzing competitor pricing strategies
Answer: C
Rationale: Actions are the actual implementation steps—resource allocation, hiring,
capacity changes. Decisions are choices about direction (Options A and B). Analysis is
diagnostic (Option D).
7. Operational effectiveness refers to:
A) Performing different activities from rivals
B) Performing similar activities better than rivals
C) Entering entirely new industries
D) Outsourcing all core functions
Answer: B
Rationale: Operational effectiveness means performing similar activities more efficiently
than rivals (lower cost, higher quality). Strategic positioning (Option A) means
performing different activities.
8. According to the 11th edition, why is operational effectiveness alone insufficient for
sustainable competitive advantage?
A) It is always more expensive than strategic positioning
B) Best practices diffuse rapidly and are easily imitated
C) Employees resist operational improvements
D) It ignores customer needs
Answer: B
Rationale: Operational improvements are quickly copied by competitors, leading to
"competitive convergence" where no firm gains lasting advantage. Strategic positioning
is harder to imitate.
9. Which of the following best describes "strategic positioning"?
A) Performing similar activities more efficiently than competitors
B) Achieving the lowest possible cost in the industry
Advantages
Section A: Multiple Choice Questions (40 Questions)
1. Which of the following best defines a firm's "strategy" according to the 11th edition?
A) The detailed operational plan for the next fiscal year
B) A set of goal-directed actions a firm takes to gain and sustain superior performance
C) A company's mission statement posted on its website
D) The total amount of financial resources allocated to marketing
Answer: B
Rationale: The 11th edition defines strategy as the integrated set of goal-directed
actions a firm takes to gain and sustain superior performance relative to competitors.
Options A, C, and D are too narrow or incomplete.
2. The strategic management process consists of three ongoing processes. Which of
the following correctly lists them in the proper sequence?
A) Actions → Analysis → Decisions
B) Analysis → Decisions → Actions
C) Decisions → Actions → Analysis
D) Actions → Decisions → Analysis
Answer: B
Rationale: The strategic management process begins with analysis (internal/external
environment), moves to strategic decisions (formulation), and concludes with actions
(implementation).
3. The "romantic view" of leadership emphasizes that:
A) External economic conditions determine organizational success
B) Industry structure is the primary driver of profitability
C) The leader is the key force behind organizational success or failure
D) Organizational culture is irrelevant to strategic outcomes
,Answer: C
Rationale: The romantic view attributes organizational outcomes primarily to the
leader's actions, decisions, and vision. The external view (Options A and B) emphasizes
environmental factors.
4. When a firm's success is attributed to favorable industry conditions, market growth,
or government policies, this reflects the:
A) Romantic view of leadership
B) External control view of leadership
C) Strategic intent perspective
D) Resource-based view
Answer: B
Rationale: The external control view holds that external factors (industry conditions,
regulations, economic cycles) primarily determine organizational success, not leadership
actions.
5. A CEO successfully navigates her company through a recession by cutting costs,
acquiring a struggling competitor at a low price, and launching new products. This
scenario best illustrates:
A) External control view
B) Strategic determinism
C) Romantic view of leadership
D) Industry organization perspective
Answer: C
Rationale: The CEO's actions are credited as the key force driving success during a
difficult period, which is the essence of the romantic view of leadership.
6. Which of the following is an example of a strategic "action" rather than a "decision"
in the strategic management process?
A) Deciding to enter the European market
B) Choosing between cost leadership and differentiation
, C) Allocating $10 million to build a new factory
D) Analyzing competitor pricing strategies
Answer: C
Rationale: Actions are the actual implementation steps—resource allocation, hiring,
capacity changes. Decisions are choices about direction (Options A and B). Analysis is
diagnostic (Option D).
7. Operational effectiveness refers to:
A) Performing different activities from rivals
B) Performing similar activities better than rivals
C) Entering entirely new industries
D) Outsourcing all core functions
Answer: B
Rationale: Operational effectiveness means performing similar activities more efficiently
than rivals (lower cost, higher quality). Strategic positioning (Option A) means
performing different activities.
8. According to the 11th edition, why is operational effectiveness alone insufficient for
sustainable competitive advantage?
A) It is always more expensive than strategic positioning
B) Best practices diffuse rapidly and are easily imitated
C) Employees resist operational improvements
D) It ignores customer needs
Answer: B
Rationale: Operational improvements are quickly copied by competitors, leading to
"competitive convergence" where no firm gains lasting advantage. Strategic positioning
is harder to imitate.
9. Which of the following best describes "strategic positioning"?
A) Performing similar activities more efficiently than competitors
B) Achieving the lowest possible cost in the industry
