Test Bank for Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts, 22th Edition by Thompson, Peteraf, Gamble, Strickland

1) Thestrategicallyrelevantfactorsoutsideacompany’sindustryboundaries —economicconditions,politicalfactors,socioculturalforces,technological factors,environmentalfactors,andlegal/regulatoryconditions—areknownas 1.A) theindustryandthecompetitivearenainwhichthecompany operates. 2.B)generaleconomicconditionsplusthefactorsdrivingchangeinthe marketswhereacompanyoperates. 3.C)acompany’smacro-environment. 4.D)thecompetitivemarketenvironmentthatexistsbetweenacompany anditscompetitors. 5.E)thedominanteconomicfeaturesofacompany’sindustry. Answer:C Explanation:Sixprincipalcomponents—politicalfactors,economicconditions inthefirm’sgeneralenvironment(local,country,regional,worldwide), socioculturalforces,technologicalfactors,environmentalfactors(concerning thenaturalenvironment),andlegal/regulatoryconditions—constitutea company’smacro-environment. Difficulty:1Easy Topic:UnderstandingaFirm’sExternalEnvironment LearningObjective:03-01Howtorecognizethefactorsinacompany’sbroad macro-environmentthatmayhavestrategicsignificance. Bloom’s:Remember AACSB:KnowledgeApplication Accessibility:KeyboardNavigation 2) Managersmustchartacompany’sstrategiccourseby 1.A)focusingonthelocalenvironmentinwhichtheyareoperating. 2.B)ensuringexcessproductioncapacityand/orinventory. 3.C)competingfiercelyforashareinthemarket. 4.D)buildingabiggerdealernetwork. 5.E)developingathoroughunderstandingofthecompany’sexternaland internalenvironment. Answer:E Explanation:Inordertochartacompany’sstrategiccoursewisely,managers mustfirstdevelopadeepunderstandingofthecompany’spresentsituation. Twofacetsofacompany’ssituationareespeciallypertinent:(1)itsexternal environment,mostnotably,thecompetitiveconditionsoftheindustryinwhich thecompanyoperates,and(2)itsinternalenvironment,particularlythe company’sresourcesandorganizationalcapabilities. Difficulty:1Easy