Chapter 1—Strategic Management and Competitiveness
TRUE/FALSE
1. The Chapter 1 Opening Case shows that Borders was unsuccessful in competing in Internet book
sales, but not against brick-and-mortar stores.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Environmental
Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application
2. According to the Chapter 1 Opening Case, Barnes & Noble and Amazon were more competitive
than Borders and adjusted more effectively to changes in the retail book market.
ANS: T PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy| Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
3. The Chapter 1 Opening Case illustrates that while Borders was able to achieve strategic
competitiveness, it did not achieve above-average returns because of conditions beyond the
control of of its top management.
ANS: F PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
4. According to the Chapter 1 Opening Case, Barnes & Noble and Amazon were more effective
than Borders in using the strategic management process as the foundation for the commitments,
decisions, and actions they took to pursue strategic competitiveness and above-average returns.
ANS: T PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
5. Strategic competitiveness is achieved when a firm successfully formulates and implements a
value-creating strategy.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Knowledge
, 6. Alligator Enterprises has earned above-average returns since its founding five years ago. Since no
other firm has challenged Alligator in its particular market niche, the firm’s owners can feel
secure that Alligator has established a competitive advantage.
ANS: F PTS: 1 DIF: Hard OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing the task environment | Bloom: Application
7. The goal of strategic management is to develop a competitive advantage that is permanent.
ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Comprehension
8. Risk in terms of financial returns reflects an investor’s uncertainty about economic gains or losses
that will result from a particular investment.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Foundational skills | Bloom: Knowledge
9. Average returns are returns in excess of what an investor expects to earn from other investments
with a similar amount of risk.
ANS: F PTS: 1 DIF: Medium OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Foundational skills | Bloom: Knowledge
10. Returns can only be measured in accounting terms such as return on assets, return on equity, or
return on sales.
ANS: F PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Foundational skills | Bloom: Knowledge
11. According to the Chapter 1 Strategic Focus, Huawei was successful in the US market primarily
because of its ability to build Guanxi with the US government.
ANS: F PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
,12. The Chapter 1 Strategic Focus shows that while Guanxi is an important element of doing business
in China, it is unimportant in doing business in the United States as Huawei discovered when it
entered US markets.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
13. Economies of scale and huge advertising budgets are just as effective in the new competitive
landscape as they were in the past, but they must be reinforced by strategic flexibility.
ANS: F PTS: 1 DIF: Hard OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Management:
Creation of Value | Bloom: Comprehension
14. The two primary drivers of hypercompetition are the emergence of the global economy and
technology.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Knowledge
15. The rate of technology diffusion has been steadily increasing over the last two decades.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Information Technology | Management: Information Technology | Dierdorff &
Rubin: Knowledge of technology, design, & production | Bloom: Knowledge
16. While patents may be an effective way of protecting proprietary technology in some industries
such as pharmaceuticals, many firms competing in the electronics industry do not apply for
patents.
ANS: T PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Information Technology | Management: Information Technology | Dierdorff &
Rubin: Knowledge of technology, design, & production | Bloom: Application
17. Examples of incremental innovations include iPods, PDAs, WiFi, and web browser software.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value |
Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application
18. The rapid rate of technological diffusion has increased the competitive benefits of patents.
, ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value |
Dierdorff & Rubin: Knowledge of technology, design, & production | Bloom: Comprehension
19. Apple (Chapter 1 Strategic Focus) is a source of hypercompetition through its development and
introduction of disruptive technologies such as the iPod.
ANS: T PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
20. Developed countries still have major advantages in access to information technology over
emerging economies because of the significant cost of the infrastructure needed for computing
power.
ANS: F PTS: 1 DIF: Hard OBJ: Knowledge
NOT: AACSB: Multicultural & Diversity | Management: Information Technology | Dierdorff &
Rubin: Knowledge of technology, design, & production | Bloom: Knowledge
21. The rate of growth of Internet-based applications could be affected by the possibility of Internet
service providers charging users for downloading those applications.
ANS: T PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Information Technology | Management: Creation of Value | Dierdorff & Rubin:
Managing logistics & technology | Bloom: Comprehension
22. The new CEO of Opacity Enterprises is determined to make the long-established firm
strategically flexible. The CEO feels that the employees of the company have the ability, training,
and resources to engage in continuous learning. The main obstacle the CEO must face is inertia.
ANS: T PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value |
Dierdorff & Rubin: Managing administration & control | Bloom: Application
23. One capability characteristic of a firm with strategic flexibility is the capacity to learn.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Reflective Thinking Skills | Management: Creation of Value | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Knowledge
24. The I/O (industrial organization) model assumes that the uniqueness of a firm’s resources and
capabilities are its main source of above-average returns.
ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
TRUE/FALSE
1. The Chapter 1 Opening Case shows that Borders was unsuccessful in competing in Internet book
sales, but not against brick-and-mortar stores.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Environmental
Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application
2. According to the Chapter 1 Opening Case, Barnes & Noble and Amazon were more competitive
than Borders and adjusted more effectively to changes in the retail book market.
ANS: T PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy| Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
3. The Chapter 1 Opening Case illustrates that while Borders was able to achieve strategic
competitiveness, it did not achieve above-average returns because of conditions beyond the
control of of its top management.
ANS: F PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
4. According to the Chapter 1 Opening Case, Barnes & Noble and Amazon were more effective
than Borders in using the strategic management process as the foundation for the commitments,
decisions, and actions they took to pursue strategic competitiveness and above-average returns.
ANS: T PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
5. Strategic competitiveness is achieved when a firm successfully formulates and implements a
value-creating strategy.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Knowledge
, 6. Alligator Enterprises has earned above-average returns since its founding five years ago. Since no
other firm has challenged Alligator in its particular market niche, the firm’s owners can feel
secure that Alligator has established a competitive advantage.
ANS: F PTS: 1 DIF: Hard OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing the task environment | Bloom: Application
7. The goal of strategic management is to develop a competitive advantage that is permanent.
ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Comprehension
8. Risk in terms of financial returns reflects an investor’s uncertainty about economic gains or losses
that will result from a particular investment.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Foundational skills | Bloom: Knowledge
9. Average returns are returns in excess of what an investor expects to earn from other investments
with a similar amount of risk.
ANS: F PTS: 1 DIF: Medium OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Foundational skills | Bloom: Knowledge
10. Returns can only be measured in accounting terms such as return on assets, return on equity, or
return on sales.
ANS: F PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Foundational skills | Bloom: Knowledge
11. According to the Chapter 1 Strategic Focus, Huawei was successful in the US market primarily
because of its ability to build Guanxi with the US government.
ANS: F PTS: 1 DIF: Easy OBJ: Application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
,12. The Chapter 1 Strategic Focus shows that while Guanxi is an important element of doing business
in China, it is unimportant in doing business in the United States as Huawei discovered when it
entered US markets.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
13. Economies of scale and huge advertising budgets are just as effective in the new competitive
landscape as they were in the past, but they must be reinforced by strategic flexibility.
ANS: F PTS: 1 DIF: Hard OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Management:
Creation of Value | Bloom: Comprehension
14. The two primary drivers of hypercompetition are the emergence of the global economy and
technology.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Knowledge
15. The rate of technology diffusion has been steadily increasing over the last two decades.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Information Technology | Management: Information Technology | Dierdorff &
Rubin: Knowledge of technology, design, & production | Bloom: Knowledge
16. While patents may be an effective way of protecting proprietary technology in some industries
such as pharmaceuticals, many firms competing in the electronics industry do not apply for
patents.
ANS: T PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Information Technology | Management: Information Technology | Dierdorff &
Rubin: Knowledge of technology, design, & production | Bloom: Application
17. Examples of incremental innovations include iPods, PDAs, WiFi, and web browser software.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value |
Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application
18. The rapid rate of technological diffusion has increased the competitive benefits of patents.
, ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value |
Dierdorff & Rubin: Knowledge of technology, design, & production | Bloom: Comprehension
19. Apple (Chapter 1 Strategic Focus) is a source of hypercompetition through its development and
introduction of disruptive technologies such as the iPod.
ANS: T PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Application
20. Developed countries still have major advantages in access to information technology over
emerging economies because of the significant cost of the infrastructure needed for computing
power.
ANS: F PTS: 1 DIF: Hard OBJ: Knowledge
NOT: AACSB: Multicultural & Diversity | Management: Information Technology | Dierdorff &
Rubin: Knowledge of technology, design, & production | Bloom: Knowledge
21. The rate of growth of Internet-based applications could be affected by the possibility of Internet
service providers charging users for downloading those applications.
ANS: T PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Information Technology | Management: Creation of Value | Dierdorff & Rubin:
Managing logistics & technology | Bloom: Comprehension
22. The new CEO of Opacity Enterprises is determined to make the long-established firm
strategically flexible. The CEO feels that the employees of the company have the ability, training,
and resources to engage in continuous learning. The main obstacle the CEO must face is inertia.
ANS: T PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value |
Dierdorff & Rubin: Managing administration & control | Bloom: Application
23. One capability characteristic of a firm with strategic flexibility is the capacity to learn.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Reflective Thinking Skills | Management: Creation of Value | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Knowledge
24. The I/O (industrial organization) model assumes that the uniqueness of a firm’s resources and
capabilities are its main source of above-average returns.
ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
