Test Bank For
Strategic management Theory and Practice, Seventh Edition John A. Parnell
Chapters 1-12 Answers are at the End of Each Chapters
Chapter 1
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) A good strategy is a set of actions that enables a firm to achieve its own internal goals
without regard to the external environment.
⊚ true
⊚ false
2) The following statement by the chief executive of GoFlix movie studio is an effective
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 include ―How
does the firm make money?‖ and ―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
7) A firm is required by society and its shareholders to meet its ethical and philanthropic
responsibilities.
⊚ true
⊚ false
8) Under the strategy as a planned emergence model, even entry-level employees can help
generate strategic initiatives.
⊚ true
⊚ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
9) Tommy wants to open his own food truck 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 know that you will probably use the
A) AFI strategy framework.
B) business model analysis.
C) Six Sigma tool.
D) Stakeholder Impact analysis.
10) Jill is interested in the concept of strategy and decides to create her own. As a result, Jill
says that her strategy is to focus on growth and marketing to achieve competitive advantage.
How would you evaluate Jill‘s statement?
, A) Jill‘s strategy makes sense and she should move forward with it.
B) Jill‘s strategy reveals a clear strategic position and tradeoff, so she should proceed.
C) Jill should reevaluate her statement because it fails to mention human resources and
finance.
D) Jill 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 his shop profitable. His
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
he has a competitive advantage in the industry.
A) True—competitive advantage is achieved through profitability alone.
B) True—competitive advantage is achieved since Tony has a positive net income.
C) False—competitive advantage is only achieved by generating above average returns,
relative to competition.
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; this is the industry average. We can conclude that since he has a positive net income, he
also has 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 achieved by generating average returns, relative to
competition in a given industry.
D) Incorrect—Bill‘s Auto & Airplane Repair shop more than likely has a sustained
competitive advantage since his business is diversified.
, 13) In order 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
stockholders. This integrative approach is referred to as
A) stakeholder strategy.
B) internal shareholder strategy.
C) integration strategy.
D) exchange 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.
C) stakeholders can be both internal and external while stockholders own shares of a
firm and are classified as internal to the firm.
D) stakeholders are external to the firm while stockholders are considered internal to
the firm.
16) Which of the following three important stakeholder attributes should managers pay
special close attention to in order to better understand stakeholder impact analysis?
Strategic management Theory and Practice, Seventh Edition John A. Parnell
Chapters 1-12 Answers are at the End of Each Chapters
Chapter 1
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) A good strategy is a set of actions that enables a firm to achieve its own internal goals
without regard to the external environment.
⊚ true
⊚ false
2) The following statement by the chief executive of GoFlix movie studio is an effective
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 include ―How
does the firm make money?‖ and ―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
7) A firm is required by society and its shareholders to meet its ethical and philanthropic
responsibilities.
⊚ true
⊚ false
8) Under the strategy as a planned emergence model, even entry-level employees can help
generate strategic initiatives.
⊚ true
⊚ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
9) Tommy wants to open his own food truck 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 know that you will probably use the
A) AFI strategy framework.
B) business model analysis.
C) Six Sigma tool.
D) Stakeholder Impact analysis.
10) Jill is interested in the concept of strategy and decides to create her own. As a result, Jill
says that her strategy is to focus on growth and marketing to achieve competitive advantage.
How would you evaluate Jill‘s statement?
, A) Jill‘s strategy makes sense and she should move forward with it.
B) Jill‘s strategy reveals a clear strategic position and tradeoff, so she should proceed.
C) Jill should reevaluate her statement because it fails to mention human resources and
finance.
D) Jill 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 his shop profitable. His
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
he has a competitive advantage in the industry.
A) True—competitive advantage is achieved through profitability alone.
B) True—competitive advantage is achieved since Tony has a positive net income.
C) False—competitive advantage is only achieved by generating above average returns,
relative to competition.
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; this is the industry average. We can conclude that since he has a positive net income, he
also has 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 achieved by generating average returns, relative to
competition in a given industry.
D) Incorrect—Bill‘s Auto & Airplane Repair shop more than likely has a sustained
competitive advantage since his business is diversified.
, 13) In order 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
stockholders. This integrative approach is referred to as
A) stakeholder strategy.
B) internal shareholder strategy.
C) integration strategy.
D) exchange 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.
C) stakeholders can be both internal and external while stockholders own shares of a
firm and are classified as internal to the firm.
D) stakeholders are external to the firm while stockholders are considered internal to
the firm.
16) Which of the following three important stakeholder attributes should managers pay
special close attention to in order to better understand stakeholder impact analysis?
