WPC480 Lacey || All Answers are Valid
Ackbar, Inc. has had high growth in profits for several years, and each year it has had the highest
profits ever. As a strategic analyst can you conclude the firm has a strategic competitive
advantage? correct answers No more information is needed; the evidence shows the firm has a
strategic advantage.
T/F A firm has a sustainable competitive advantage when it can outperform its competitors in the
long term. correct answers True
A firm pursuing sustainable competitive advantage uses strategic positioning for what purpose?
correct answers To try to avoid direct competition.
How can you identify that a firm seeking a strong strategic position has been making
strategically helpful tradeoffs? correct answers The firm does not pursue some market
opportunities.
T/F Most of the statistical variance in profitability is due to differences at the level of the firm;
the differences across industries only explains about half as much of the variance in firm
profitability. correct answers T
T/F A black swan event refers to an entirely unpredictable occurrence that has a big impact.
correct answers T
T/F The best way to measure strategic competitive advantages is by shareholder value creation.
correct answers F
T/F It says in the textbook that the "three [main] performance dimensions tend to be correlated,
particularly over time" because each element affects the other. Given the correlation between the
three, it won't matter much which one is used to evaluate competitive advantage. correct answers
F
,T/F The higher proportion of assets that are tangible, the more accurate accounting profit as a
measure of competitive advantage. correct answers T
T/F A major difficulty in using the economic value approach to measuring competitive advantage
is estimating the counterfactual of what people would have been willing to pay. correct answers
T
Which of the following ways of measuring and evaluating competitive advantage of a firm are
most likely to be the focus of the CEO of a public firm? correct answers Shareholder Value
"Halo Effect": CEO of a successful firm has proven skills at making a firm successful. correct
answers High performance of the firm forms a "halo" that is reflected onto the CEO's reputation
and causes people to believe the CEO cause the firm's performance.
"Halo Effect": Theories can be created about how to achieve high firm performance that are
equally accurate and useful in all contexts. correct answers Managerial theories help understand
better how to sort important from unimportant data to make better decisions.
"Halo Effect": A firm that makes huge profits is a success. correct answers The successfulness of
firm performance is always defined relative to competitors and/or opportunity costs.
"Halo Effect": Managers can best learn by studying successful firms. correct answers It is easy to
be misled when studying complex subjects if you don't study both successful and unsuccessful
cases.
Porter's Five Force correct answers 1. Bargaining power of customer
2. Bargaining power of supplier
3. Threat of new entry
4. Threat of substitute
5. Competitor rivalry
, PESTEL Analysis correct answers - Political: non-market strategy
- Economic: macro-economic condition of a country or a region
- Sociocultual: cultures, norms, & values
- Technological: application of new knowledge
- Environmental: nature
- Legal: governing laws, mandates, & regulations
What is the value to a strategic analyst of doing a PESTEL analysis? correct answers Identifies
stable "rules" of the competitive game.
What does a five forces (or industry structure) analysis help a strategic analyst discover? correct
answers Who gets the profits produced by the industry members.
An industry has a new technological change that lowers the overall price of producing its
products by as much as 40% and this has led to very high profits in the short term for everyone in
the industry. In the longer term, what are likely to happen to the industry structure? correct
answers - Bargaining power of suppliers will not be affected.
- Bargaining power of buyers will decrease.
- Threat of substitutes will decrease.
- Rivalry among competitors will increase.
- Threat of entry will increase.
T/F High exit barriers are likely to lower the profitability of an industry on average. correct
answers T
T/F Network effects (also known as network externalities) can decrease the threat of new
entrants, decrease the threat of substitutes, and decrease the power of buyers. correct answers T
T/F A strategic group is a set of companies that compete against one another. correct answers F
Ackbar, Inc. has had high growth in profits for several years, and each year it has had the highest
profits ever. As a strategic analyst can you conclude the firm has a strategic competitive
advantage? correct answers No more information is needed; the evidence shows the firm has a
strategic advantage.
T/F A firm has a sustainable competitive advantage when it can outperform its competitors in the
long term. correct answers True
A firm pursuing sustainable competitive advantage uses strategic positioning for what purpose?
correct answers To try to avoid direct competition.
How can you identify that a firm seeking a strong strategic position has been making
strategically helpful tradeoffs? correct answers The firm does not pursue some market
opportunities.
T/F Most of the statistical variance in profitability is due to differences at the level of the firm;
the differences across industries only explains about half as much of the variance in firm
profitability. correct answers T
T/F A black swan event refers to an entirely unpredictable occurrence that has a big impact.
correct answers T
T/F The best way to measure strategic competitive advantages is by shareholder value creation.
correct answers F
T/F It says in the textbook that the "three [main] performance dimensions tend to be correlated,
particularly over time" because each element affects the other. Given the correlation between the
three, it won't matter much which one is used to evaluate competitive advantage. correct answers
F
,T/F The higher proportion of assets that are tangible, the more accurate accounting profit as a
measure of competitive advantage. correct answers T
T/F A major difficulty in using the economic value approach to measuring competitive advantage
is estimating the counterfactual of what people would have been willing to pay. correct answers
T
Which of the following ways of measuring and evaluating competitive advantage of a firm are
most likely to be the focus of the CEO of a public firm? correct answers Shareholder Value
"Halo Effect": CEO of a successful firm has proven skills at making a firm successful. correct
answers High performance of the firm forms a "halo" that is reflected onto the CEO's reputation
and causes people to believe the CEO cause the firm's performance.
"Halo Effect": Theories can be created about how to achieve high firm performance that are
equally accurate and useful in all contexts. correct answers Managerial theories help understand
better how to sort important from unimportant data to make better decisions.
"Halo Effect": A firm that makes huge profits is a success. correct answers The successfulness of
firm performance is always defined relative to competitors and/or opportunity costs.
"Halo Effect": Managers can best learn by studying successful firms. correct answers It is easy to
be misled when studying complex subjects if you don't study both successful and unsuccessful
cases.
Porter's Five Force correct answers 1. Bargaining power of customer
2. Bargaining power of supplier
3. Threat of new entry
4. Threat of substitute
5. Competitor rivalry
, PESTEL Analysis correct answers - Political: non-market strategy
- Economic: macro-economic condition of a country or a region
- Sociocultual: cultures, norms, & values
- Technological: application of new knowledge
- Environmental: nature
- Legal: governing laws, mandates, & regulations
What is the value to a strategic analyst of doing a PESTEL analysis? correct answers Identifies
stable "rules" of the competitive game.
What does a five forces (or industry structure) analysis help a strategic analyst discover? correct
answers Who gets the profits produced by the industry members.
An industry has a new technological change that lowers the overall price of producing its
products by as much as 40% and this has led to very high profits in the short term for everyone in
the industry. In the longer term, what are likely to happen to the industry structure? correct
answers - Bargaining power of suppliers will not be affected.
- Bargaining power of buyers will decrease.
- Threat of substitutes will decrease.
- Rivalry among competitors will increase.
- Threat of entry will increase.
T/F High exit barriers are likely to lower the profitability of an industry on average. correct
answers T
T/F Network effects (also known as network externalities) can decrease the threat of new
entrants, decrease the threat of substitutes, and decrease the power of buyers. correct answers T
T/F A strategic group is a set of companies that compete against one another. correct answers F
