1. Strategic competitiveness is achieved when a firm successfully formulates and implements a
value-creating strategy.
a. True
b. False
ANSWER: True
2. Alligator Enterprises has earned above-average returns since its founding five years ago. No
other firm has challenged Alligator in its particular market niche; therefore, the firm's owners can
feel secure that Alligator has established a competitive advantage.
a. True
b. False
ANSWER: False
3. The goal of strategy implementation is to develop a permanent competitive advantage.
a. True
b. False
ANSWER: False
4. Risk in terms of financial returns reflects an investor's uncertainty about economic gains or
losses that will result from a particular investment.
a. True
b. False
ANSWER: True
5. Average returns are those in excess of what an investor expects to earn from other investments
with a similar amount of risk.
a. True
b. False
ANSWER: False
,6. Above average returns are those in excess of what an investor expects to earn from other
investments with similar stock prices.
a. True
b. False
ANSWER: True
7. Returns can only be measured in accounting terms such as return on assets, return on equity, or
return on sales.
a. True
b. False
ANSWER: False
8. To implement a firm’s strategies, the firm takes actions to with the goal of achieving strategic
competitiveness and above average returns.
a. True
b. False
ANSWER: True
9. Economies of scale and huge advertising budgets are just as effective in the new competitive
landscape as they were in the past.
a. True
b. False
ANSWER: False
10. The two primary drivers of hypercompetition are the emergence of the global economy and
technology.
a. True
b. False
ANSWER: True
,11. The rate of technology diffusion has been steadily increasing over the last two decades.
a. True
b. False
ANSWER: True
12. While patents may be an effective way of protecting proprietary technology, many firms
competing in the electronics industry do not apply for patents to prevent competitors from
utilizing the technological knowledge that would be included in the patent application.
a. True
b. False
ANSWER: True
13. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software.
a. True
b. False
ANSWER: False
14. The rapid rate of technological diffusion has increased the competitive benefits of patents.
a. True
b. False
ANSWER: False
15. Developed countries still have major advantages in their access to information technology
when compared to emerging economies because of the significant cost of the infrastructure
needed for computing power.
a. True
b. False
ANSWER: False
, 16. The rate of growth of Internet-based applications could be affected by strategies of Internet
service providers charging users for downloading those applications.
a. True
b. False
ANSWER: True
17. 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 CEO must encourage ambidextrous
learning, absorbing new knowledge and building incremental knowledge.
a. True
b. False
ANSWER: True
18. The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and
capabilities is the main source of above-average returns.
a. True
b. False
ANSWER: False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in
the firm to serve the needs of the natural gardening community by providing rare and native
plants to individuals and nurseries around the United States. The perspective of the CEO of Twin
Spires is consistent with the assumptions of the industrial organization (I/O) model.
a. True
b. False
ANSWER: False
20. The 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.
value-creating strategy.
a. True
b. False
ANSWER: True
2. Alligator Enterprises has earned above-average returns since its founding five years ago. No
other firm has challenged Alligator in its particular market niche; therefore, the firm's owners can
feel secure that Alligator has established a competitive advantage.
a. True
b. False
ANSWER: False
3. The goal of strategy implementation is to develop a permanent competitive advantage.
a. True
b. False
ANSWER: False
4. Risk in terms of financial returns reflects an investor's uncertainty about economic gains or
losses that will result from a particular investment.
a. True
b. False
ANSWER: True
5. Average returns are those in excess of what an investor expects to earn from other investments
with a similar amount of risk.
a. True
b. False
ANSWER: False
,6. Above average returns are those in excess of what an investor expects to earn from other
investments with similar stock prices.
a. True
b. False
ANSWER: True
7. Returns can only be measured in accounting terms such as return on assets, return on equity, or
return on sales.
a. True
b. False
ANSWER: False
8. To implement a firm’s strategies, the firm takes actions to with the goal of achieving strategic
competitiveness and above average returns.
a. True
b. False
ANSWER: True
9. Economies of scale and huge advertising budgets are just as effective in the new competitive
landscape as they were in the past.
a. True
b. False
ANSWER: False
10. The two primary drivers of hypercompetition are the emergence of the global economy and
technology.
a. True
b. False
ANSWER: True
,11. The rate of technology diffusion has been steadily increasing over the last two decades.
a. True
b. False
ANSWER: True
12. While patents may be an effective way of protecting proprietary technology, many firms
competing in the electronics industry do not apply for patents to prevent competitors from
utilizing the technological knowledge that would be included in the patent application.
a. True
b. False
ANSWER: True
13. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software.
a. True
b. False
ANSWER: False
14. The rapid rate of technological diffusion has increased the competitive benefits of patents.
a. True
b. False
ANSWER: False
15. Developed countries still have major advantages in their access to information technology
when compared to emerging economies because of the significant cost of the infrastructure
needed for computing power.
a. True
b. False
ANSWER: False
, 16. The rate of growth of Internet-based applications could be affected by strategies of Internet
service providers charging users for downloading those applications.
a. True
b. False
ANSWER: True
17. 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 CEO must encourage ambidextrous
learning, absorbing new knowledge and building incremental knowledge.
a. True
b. False
ANSWER: True
18. The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and
capabilities is the main source of above-average returns.
a. True
b. False
ANSWER: False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in
the firm to serve the needs of the natural gardening community by providing rare and native
plants to individuals and nurseries around the United States. The perspective of the CEO of Twin
Spires is consistent with the assumptions of the industrial organization (I/O) model.
a. True
b. False
ANSWER: False
20. The 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.
