WPC 480 Midterm ACTUAL Questions
and CORRECT Answers
Strategic Competitiveness - CORRECT ANSWER - achieved when a firm successfully
formulates and implements a value-creating strategy
Strategy - CORRECT ANSWER - integrated and coordinated set of commitments and
actions designed to exploit core competencies and gain a competitive advantage
Competitive Advantage - CORRECT ANSWER - when it implements a strategy that
creates superior value for customers and competitors are unable to duplicate or find too costly to
try to imitate.
Above average returns - CORRECT ANSWER - returns in excess of what an investor
expects to earn from other investments with a similar amount of risk
Risk - CORRECT ANSWER - investors uncertainty about the economic gains or losses
that will result from a particular investment
Average returns - CORRECT ANSWER - returns equal to those an investor expects to
earn from other investments with a similar amount of risk
Strategic Management Process - CORRECT ANSWER - full set of commitment,
decisions, and actions required for a firm to achieve strategic competitiveness and earn above-
average returns
first step is to ANALYZE (external and internal resources, capabilities, core competencies), next
STRATEGIZE (formulation and implementation), then take action to enact strategy to have good
PERFORMANCE
Todays competitive markets: - CORRECT ANSWER - 1. The global economy
,2. Globalization
3. Rapid technological change
4. Increasing importance of knowledge and people
Hypercompetition - CORRECT ANSWER - -A term often used to capture the realities of
the competitive landscape.
-Emergence of GLOBAL ECONOMY and TECHNOLOGY (rapid change) are two primary
drivers of hyper-competitive environments and nature of todays competitive landscape
Other strategic options:
-Use of
price-quality positioning to build market presence
-Creation of new know-how and
use of first-mover advantage
-Protection or invasion of established geographic or product markets
The Global competitive landscape - CORRECT ANSWER - Increasing:
-Market volatility and instability due to
the rapid pace of change in markets
-Globalized flow of financial capital
-Strategic and operational complexity
of global-scale competition
-Need for flexibility, speed, innovation,
and integration in the use of technology
-Rising product quality standards
Decreasing:
-Time for adapting to change
,-Traditional sources of competitive advantage
-Traditional managerial mindset
Technology and Technological Changes - CORRECT ANSWER - Technology trends
impacting the global competitive environment
-Increasing rate of technology diffusion and the emergence
of disruptive technologies
-The information age: Internet and the global proliferation of low-cost computing power
-Increasing knowledge intensity
as an intangible source of competitive advantage
In order to cope with new marketplace... - CORRECT ANSWER - Strategic Flexibility
-coping with the uncertainty and risks of hypercompetitive environments.
-requires continuous learning and applying the new and updated skills sets and competencies to
the firm's competitive advantage.
--must overcome built-up organizational inertia.
What is the marketplace like for today's firms? - CORRECT ANSWER - •A piece of it has
moved online
•Globalization, firms were competing with local firms, now you're competing with national firms
•Omni-channel
•More regulations trying to hold CEO's more accountable
•Consumers are more demanding because there are so many other options so they want better
quality for cheaper price
•Pressure to innovate
-Hypercompetition
Where do firm profits come from? - CORRECT ANSWER - o Sales revenue, brand
recognition
o Firms that have something valuable internally make a lot of money (resources, capabilities)
, o The nature of the industry (some just picked an industry that just isn't very profitable)
o Firm performance comes from
♣ 1. Industry (I/O, Porters 5 Forces)
♣ 2. Firm (e.g., Resource-Based Model)
Can we model this? - CORRECT ANSWER - o Yes, the I/O Model = industry becomes
homogeneous
The I/O Model of Above Average Returns - CORRECT ANSWER - Model on pg. 15
The External Environment --> An Attractive Industry --> Strategy Formulation --> Assets and
Skills --> Strategy Implementation --> Superior Returns
The external environment - CORRECT ANSWER - -The external environment imposes
pressures and constraints that determine strategic choices
--Similarity in resources causes competitors to pursue similar strategies
--Resource differences among competitors are short-lived due to resource mobility across firms
-Above average performance will be competed away quickly
--Industry attractiveness (average industry returns) is what matters
Resources - CORRECT ANSWER - inputs into a firm's production process, such as capital
equipment, the skills of individual employees, patents, finances, and talented managers.
Capability - CORRECT ANSWER - capacity for a set of resources to perform a task or an
activity in an integrative manner
Core competencies - CORRECT ANSWER - capabilities that serve as a source of
competitive advantage for a firm over its rivals
and CORRECT Answers
Strategic Competitiveness - CORRECT ANSWER - achieved when a firm successfully
formulates and implements a value-creating strategy
Strategy - CORRECT ANSWER - integrated and coordinated set of commitments and
actions designed to exploit core competencies and gain a competitive advantage
Competitive Advantage - CORRECT ANSWER - when it implements a strategy that
creates superior value for customers and competitors are unable to duplicate or find too costly to
try to imitate.
Above average returns - CORRECT ANSWER - returns in excess of what an investor
expects to earn from other investments with a similar amount of risk
Risk - CORRECT ANSWER - investors uncertainty about the economic gains or losses
that will result from a particular investment
Average returns - CORRECT ANSWER - returns equal to those an investor expects to
earn from other investments with a similar amount of risk
Strategic Management Process - CORRECT ANSWER - full set of commitment,
decisions, and actions required for a firm to achieve strategic competitiveness and earn above-
average returns
first step is to ANALYZE (external and internal resources, capabilities, core competencies), next
STRATEGIZE (formulation and implementation), then take action to enact strategy to have good
PERFORMANCE
Todays competitive markets: - CORRECT ANSWER - 1. The global economy
,2. Globalization
3. Rapid technological change
4. Increasing importance of knowledge and people
Hypercompetition - CORRECT ANSWER - -A term often used to capture the realities of
the competitive landscape.
-Emergence of GLOBAL ECONOMY and TECHNOLOGY (rapid change) are two primary
drivers of hyper-competitive environments and nature of todays competitive landscape
Other strategic options:
-Use of
price-quality positioning to build market presence
-Creation of new know-how and
use of first-mover advantage
-Protection or invasion of established geographic or product markets
The Global competitive landscape - CORRECT ANSWER - Increasing:
-Market volatility and instability due to
the rapid pace of change in markets
-Globalized flow of financial capital
-Strategic and operational complexity
of global-scale competition
-Need for flexibility, speed, innovation,
and integration in the use of technology
-Rising product quality standards
Decreasing:
-Time for adapting to change
,-Traditional sources of competitive advantage
-Traditional managerial mindset
Technology and Technological Changes - CORRECT ANSWER - Technology trends
impacting the global competitive environment
-Increasing rate of technology diffusion and the emergence
of disruptive technologies
-The information age: Internet and the global proliferation of low-cost computing power
-Increasing knowledge intensity
as an intangible source of competitive advantage
In order to cope with new marketplace... - CORRECT ANSWER - Strategic Flexibility
-coping with the uncertainty and risks of hypercompetitive environments.
-requires continuous learning and applying the new and updated skills sets and competencies to
the firm's competitive advantage.
--must overcome built-up organizational inertia.
What is the marketplace like for today's firms? - CORRECT ANSWER - •A piece of it has
moved online
•Globalization, firms were competing with local firms, now you're competing with national firms
•Omni-channel
•More regulations trying to hold CEO's more accountable
•Consumers are more demanding because there are so many other options so they want better
quality for cheaper price
•Pressure to innovate
-Hypercompetition
Where do firm profits come from? - CORRECT ANSWER - o Sales revenue, brand
recognition
o Firms that have something valuable internally make a lot of money (resources, capabilities)
, o The nature of the industry (some just picked an industry that just isn't very profitable)
o Firm performance comes from
♣ 1. Industry (I/O, Porters 5 Forces)
♣ 2. Firm (e.g., Resource-Based Model)
Can we model this? - CORRECT ANSWER - o Yes, the I/O Model = industry becomes
homogeneous
The I/O Model of Above Average Returns - CORRECT ANSWER - Model on pg. 15
The External Environment --> An Attractive Industry --> Strategy Formulation --> Assets and
Skills --> Strategy Implementation --> Superior Returns
The external environment - CORRECT ANSWER - -The external environment imposes
pressures and constraints that determine strategic choices
--Similarity in resources causes competitors to pursue similar strategies
--Resource differences among competitors are short-lived due to resource mobility across firms
-Above average performance will be competed away quickly
--Industry attractiveness (average industry returns) is what matters
Resources - CORRECT ANSWER - inputs into a firm's production process, such as capital
equipment, the skills of individual employees, patents, finances, and talented managers.
Capability - CORRECT ANSWER - capacity for a set of resources to perform a task or an
activity in an integrative manner
Core competencies - CORRECT ANSWER - capabilities that serve as a source of
competitive advantage for a firm over its rivals
