TEST BANK - Strategic Management, 6th
Edition by Frank T. Rothaermel
ALL CHAPTERS 1-12| EXAM QUESTIONS
AND ANSWERS
ANSWERS ARE AT THE END OF EACH
CHAPTER
TB
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, Chapter 1: What Is Strategy?
1) A good strategy allows a firm to achieve superior performance and sustainable competitive advantage
without regard to the external environment.
⊚ true
⊚ false
2) The following statement by the chief executive of MegaFilms movie studio should not be used as a strategy:
―We will produce the greatest films of the 21st century.‖
⊚ true
⊚ false
3) The three tasks of the AFI strategy framework are to Assemble a prototype, Find a buyer, and Incorporate
feedback.
⊚ true
⊚ false
4) Questions asked during the strategy analysis stage of the AFI framework should include ―What effects do
forces in the external environment have on the firm’s potential to gain and sustain a competitive advantage?‖
⊚ true
⊚ false
5) Once a strategy has been formulated and implemented, it is important that the firm sticks to it no matter
what happens.
⊚ true
⊚ false
6) Because they are a crucial component of a firm’s success, customers are considered internal stakeholders.
⊚ true
⊚ false
TB
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,7) A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities.
⊚ true
⊚ false
8) Stakeholder impact analysis provides a decision tool that helps strategic leaders recognize the needs of
different stakeholders.
⊚ true
⊚ false
9) Juan wants to open his own hot dog restaurant but doesn’t know anything about business. He needs help
determining who his competition is, how he should craft his strategy to compete and how he’ll implement his
strategy to achieve a competitive advantage. He’s hired you to help him get started. As a result, you will
probably use which of the following?
A) AFI strategy framework
B) Red Queen effect
C) competitive benchmarking
D) Stakeholder Impact analysis
10) Roberta is interested in the concept of strategy and decides to create her own. As a result, Roberta says that
her strategy is to focus on competitive benchmarking to achieve competitive advantage. Which is the best
evaluation of Roberta’s statement?
A) Roberta’s strategy is clear, but she should provide more detail.
B) Roberta’s strategy reveals a clear strategic position and tradeoff, so she should proceed.
C) Roberta should reevaluate her statement because it fails to mention more than one strategy.
D) Roberta should reevaluate her statement because it fails to meet the principles of what a strategy should be.
11) Tony’s Pizza Shop is able to net $10,000 a week; this makes the shop profitable. Its number one
competitor, Leo’s Pies, is also profitable, netting $12,000 a week. Lil Anthony’s Pizza Palace nets $13,000 a
week. Since Tony’s Pizza Shop is profitable, we can conclude that it has a competitive advantage in its
industry.
A) True—competitive advantage is achieved through profitability alone.
B) True—competitive advantage is achieved since Tony has a positive net income.
TB
C) False—competitive advantage is only achieved by generating above average returns, relative to
competition.
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, D) False—Tony more than likely has a sustained competitive advantage since he’s been in business longer.
12) Bill’s Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week, which is
about the same as the income of a close competitor. As a result, we can conclude that the two businesses also
have a competitive parity in the industry.
A) Correct—competitive advantage is achieved through profitability alone.
B) Correct—competitive advantage is achieved since Bill’s Auto & Airplane Repair shop has a positive net
income.
C) Correct—competitive parity is a performance of two or more firms at the same level.
D) Incorrect—Bill’s Auto & Airplane Repair shop more than likely has a sustained competitive advantage
because the business is diversified.
13) To better achieve a competitive advantage, firms must now adopt a holistic approach towards satisfying
multiple stakeholders opposed to focusing on the needs of their shareholders. What term is used for this
approach?
A) stakeholder strategy
B) internal shareholder strategy
C) value creation strategy
D) shareholder relationship strategy
14) All of the following are external stakeholders except which of the following?
A) customers
B) creditors
C) alliance partners
D) competitors
15) John is a bit confused about the difference between stakeholders and stockholders. You meet with John
and inform him that the main difference is that
A) stakeholders are both internal and external to the firm while stockholders are considered external to the
firm.
B) stakeholders are considered internal to the firm while stockholders are external to the firm.
TB
C) stakeholders can be both internal and external while stockholders own shares of a firm and are classified as
internal to the firm.
Ac
4|Page
er
Edition by Frank T. Rothaermel
ALL CHAPTERS 1-12| EXAM QUESTIONS
AND ANSWERS
ANSWERS ARE AT THE END OF EACH
CHAPTER
TB
Ac
1|Page
er
, Chapter 1: What Is Strategy?
1) A good strategy allows a firm to achieve superior performance and sustainable competitive advantage
without regard to the external environment.
⊚ true
⊚ false
2) The following statement by the chief executive of MegaFilms movie studio should not be used as a strategy:
―We will produce the greatest films of the 21st century.‖
⊚ true
⊚ false
3) The three tasks of the AFI strategy framework are to Assemble a prototype, Find a buyer, and Incorporate
feedback.
⊚ true
⊚ false
4) Questions asked during the strategy analysis stage of the AFI framework should include ―What effects do
forces in the external environment have on the firm’s potential to gain and sustain a competitive advantage?‖
⊚ true
⊚ false
5) Once a strategy has been formulated and implemented, it is important that the firm sticks to it no matter
what happens.
⊚ true
⊚ false
6) Because they are a crucial component of a firm’s success, customers are considered internal stakeholders.
⊚ true
⊚ false
TB
Ac
2|Page
er
,7) A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities.
⊚ true
⊚ false
8) Stakeholder impact analysis provides a decision tool that helps strategic leaders recognize the needs of
different stakeholders.
⊚ true
⊚ false
9) Juan wants to open his own hot dog restaurant but doesn’t know anything about business. He needs help
determining who his competition is, how he should craft his strategy to compete and how he’ll implement his
strategy to achieve a competitive advantage. He’s hired you to help him get started. As a result, you will
probably use which of the following?
A) AFI strategy framework
B) Red Queen effect
C) competitive benchmarking
D) Stakeholder Impact analysis
10) Roberta is interested in the concept of strategy and decides to create her own. As a result, Roberta says that
her strategy is to focus on competitive benchmarking to achieve competitive advantage. Which is the best
evaluation of Roberta’s statement?
A) Roberta’s strategy is clear, but she should provide more detail.
B) Roberta’s strategy reveals a clear strategic position and tradeoff, so she should proceed.
C) Roberta should reevaluate her statement because it fails to mention more than one strategy.
D) Roberta should reevaluate her statement because it fails to meet the principles of what a strategy should be.
11) Tony’s Pizza Shop is able to net $10,000 a week; this makes the shop profitable. Its number one
competitor, Leo’s Pies, is also profitable, netting $12,000 a week. Lil Anthony’s Pizza Palace nets $13,000 a
week. Since Tony’s Pizza Shop is profitable, we can conclude that it has a competitive advantage in its
industry.
A) True—competitive advantage is achieved through profitability alone.
B) True—competitive advantage is achieved since Tony has a positive net income.
TB
C) False—competitive advantage is only achieved by generating above average returns, relative to
competition.
Ac
3|Page
er
, D) False—Tony more than likely has a sustained competitive advantage since he’s been in business longer.
12) Bill’s Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week, which is
about the same as the income of a close competitor. As a result, we can conclude that the two businesses also
have a competitive parity in the industry.
A) Correct—competitive advantage is achieved through profitability alone.
B) Correct—competitive advantage is achieved since Bill’s Auto & Airplane Repair shop has a positive net
income.
C) Correct—competitive parity is a performance of two or more firms at the same level.
D) Incorrect—Bill’s Auto & Airplane Repair shop more than likely has a sustained competitive advantage
because the business is diversified.
13) To better achieve a competitive advantage, firms must now adopt a holistic approach towards satisfying
multiple stakeholders opposed to focusing on the needs of their shareholders. What term is used for this
approach?
A) stakeholder strategy
B) internal shareholder strategy
C) value creation strategy
D) shareholder relationship strategy
14) All of the following are external stakeholders except which of the following?
A) customers
B) creditors
C) alliance partners
D) competitors
15) John is a bit confused about the difference between stakeholders and stockholders. You meet with John
and inform him that the main difference is that
A) stakeholders are both internal and external to the firm while stockholders are considered external to the
firm.
B) stakeholders are considered internal to the firm while stockholders are external to the firm.
TB
C) stakeholders can be both internal and external while stockholders own shares of a firm and are classified as
internal to the firm.
Ac
4|Page
er
