CHAPTER 1
Leadership, Strategy & Competitive
Advantage
1. T F A strategy can be defined as a set of related actions that managers take to
increase their company's performance.
Ans: True Objective: 1 Page: 3
2. T F One of the keys to Dell's success is the way it manages its supply chain to
maximize the costs of holding inventory.
Ans: False Objective: 1 Page: 3
3. T F Strategic leadership is concerned with how to most effectively manage a
company's strategy-making process to create competitive advantage.
Ans: True Objective: 2 Page: 3
4. T F To increase shareholder value, managers must pursue strategies that both
increase profitability and grow profits.
Ans: True Objective: 2 Page: 4
5. T F A firm obtains competitive advantage when its strategy results in superior
performance relative to its competitors.
Ans: True Objective: 2 Page: 4
6. T F Profitability is the result of how efficiently and effectively managers use the
capital at their disposal to produce goods and services that satisfy consumer needs.
Ans: True Objective: 3 Page: 5
7. T F The profit growth of a company can be measured by the increase in its stock
price over time.
Ans: False Objective: 3 Page: 5
8. T F A business model is managers' conception of how the set of strategies their
company pursues should mesh together into a congruent whole, thus enabling the
company to gain a competitive advantage and achieve superior profitability and profit
growth.
Ans: True Objective: 4 Page: 6
9. T F One of the factors that distinguishes organizations in the nonprofit sector from
businesses is the lack of competition.
Ans: False Objective: 4 Page: 7
10. T F Dell's business model had little or no effect on its average return on invested
capital during 2001–2004.
, Ans: False Objective: 4 Page: 1
11. T F Time Inc. experienced an increase in its subscriber base because of early entry
into Web publishing.
Ans: False Objective: 4 Page: 17
12. T F General managers bear responsibility for the overall performance of the
company or for one of its major self-contained subunits or divisions.
Ans: True Objective: 5 Page: 8
13. T F The CEO is a company's principal general manager.
Ans: True Objective: 5 Page: 8
14. T F The first component of the strategic management process is crafting the
organization's mission statement, which provides the framework or context within
which strategies are formulated.
Ans: True Objective: 6 Page: 11
15. T F The concepts vision and mission can be used interchangeably.
Ans: False Objective: 6 Page: 14
16. T F The vision of a company lays out some desired future state and articulates what
the company would like to achieve.
Ans: True Objective: 6 Page: 14
17. T F Values are commonly seen as the bedrock of a company's organizational
culture.
Ans: True Objective: 6 Page: 14
18. T F Well-constructed goals provide a means by which the performance of managers
can be evaluated.
Ans: True Objective: 7 Page: 15
19. T F The various levels of strategy that a company employs must be congruent with
each other.
Ans: True Objective: 8 Page: 19
20. T F Strategy implementation entails designing the best organization structure,
culture, and control systems to put a chosen strategy into action.
Ans: True Objective: 8 Page: 19
21. T F The feedback loop in the model of the strategic management process indicates
that the process is ongoing; it never ends.
Ans: True Objective: 8 Page: 19
22. T F The traditional planning model suggests that a company's strategies are the
result of a plan from a highly structured process orchestrated by top management.
Ans: True Objective: 8 Page: 20
23. T F A company's realized strategy is the product of whatever planned strategies are
actually put into action—deliberate and emergent.
, Ans: True Objective: 8 Page: 22
24. T F Because the future is uncertain, successful strategies are often those that are
flexible and allow for adjustment.
Ans: True Objective: 8 Page: 23
25. T F In practice, the strategies of most organizations are probably a combination of
the intended and emergent strategies.
Ans: True Objective: 8 Page: 24
26. T F Strategic intent is concerned with the alignment of existing resources with
current opportunities.
Ans: False Objective: 8 Page: 27
27. T F Groupthink occurs when a group of decisionmakers embarks on a course of
action without questioning underlying assumptions.
Ans: True Objective: 8 Page: 29
28. T F Leaders who exhibit a high degree of emotional intelligence tend to be more
effective than those who do not.
Ans: True Objective: 8 Page: 34
29. T F Starbucks's entry into selling CDs and downloading music is an example of the
impact low-level managers can have on overall corporate strategy.
Ans: True Objective: 9 Page: 21
30. T F There is little or no information to support the contention that U.S. intelligence
agencies engaged in groupthink prior to the U.S. invasion of Iraq in 2003.
Ans: False Objective: 14 Page: 30
31. The principal driver(s) of shareholder value is (are)
A) profitability.
B) profit growth.
C) market share.
D) profitability and profit growth.
E) all of the above.
Ans: D Objective: 1 Page: 5
32. A competitive advantage is considered to be a sustained competitive advantage when
the
A) advantage endures for a long time.
B) firm is able to spread the advantage to all of its business units.
C) advantage is very large.
D) advantage was gained at a low cost.
E) managers who developed the advantage are still employed at the firm.
Ans: A Objective: 1 Page: 6
, 33. Which of the following dimensions are encompassed by a company's business model?
A) Selecting customers
B) Defining and differentiating its product offerings
C) Determining how it will produce goods and services
D) Determining how it will grow the business over time
E) All of the above
Ans: E Objective: 1 Page: 6
34. The strategies that a company's managers pursue
A) have a major impact on the company's performance relative to its competitors.
B) have little or no effect on overall profitability.
C) typically result in higher per-unit cost of production.
D) result in significant industry structural changes.
E) none of the above.
Ans: A Objective: 1 Page: 8
35. Which of the following is the organization's principal general manager?
A) Board of directors
B) Division head
C) CFO
D) CEO
E) Controller
Ans: D Objective: 2 Page: 8
36. Within a diversified company, the responsibilities of corporate-level strategic
managers include
A) translating the corporate mission statement into concrete strategies for
individual business units.
B) closely supervising the formulation of strategies at the functional level that
support the company's business- and corporate-level strategies.
C) allocating resources to functions within business units.
D) overseeing the development of strategies for the total organization and allocating
resources among its different business areas.
E) identifying and establishing relationships with supplier firms.
Ans: D Objective: 2 Page: 9
37. General managers are found
A) only at the corporate level.
B) only at the business level.
C) only at the functional and business levels.
D) at the functional, business, and corporate levels.
E) only at the corporate and business levels.
Ans: E Objective: 2 Page: 10
Leadership, Strategy & Competitive
Advantage
1. T F A strategy can be defined as a set of related actions that managers take to
increase their company's performance.
Ans: True Objective: 1 Page: 3
2. T F One of the keys to Dell's success is the way it manages its supply chain to
maximize the costs of holding inventory.
Ans: False Objective: 1 Page: 3
3. T F Strategic leadership is concerned with how to most effectively manage a
company's strategy-making process to create competitive advantage.
Ans: True Objective: 2 Page: 3
4. T F To increase shareholder value, managers must pursue strategies that both
increase profitability and grow profits.
Ans: True Objective: 2 Page: 4
5. T F A firm obtains competitive advantage when its strategy results in superior
performance relative to its competitors.
Ans: True Objective: 2 Page: 4
6. T F Profitability is the result of how efficiently and effectively managers use the
capital at their disposal to produce goods and services that satisfy consumer needs.
Ans: True Objective: 3 Page: 5
7. T F The profit growth of a company can be measured by the increase in its stock
price over time.
Ans: False Objective: 3 Page: 5
8. T F A business model is managers' conception of how the set of strategies their
company pursues should mesh together into a congruent whole, thus enabling the
company to gain a competitive advantage and achieve superior profitability and profit
growth.
Ans: True Objective: 4 Page: 6
9. T F One of the factors that distinguishes organizations in the nonprofit sector from
businesses is the lack of competition.
Ans: False Objective: 4 Page: 7
10. T F Dell's business model had little or no effect on its average return on invested
capital during 2001–2004.
, Ans: False Objective: 4 Page: 1
11. T F Time Inc. experienced an increase in its subscriber base because of early entry
into Web publishing.
Ans: False Objective: 4 Page: 17
12. T F General managers bear responsibility for the overall performance of the
company or for one of its major self-contained subunits or divisions.
Ans: True Objective: 5 Page: 8
13. T F The CEO is a company's principal general manager.
Ans: True Objective: 5 Page: 8
14. T F The first component of the strategic management process is crafting the
organization's mission statement, which provides the framework or context within
which strategies are formulated.
Ans: True Objective: 6 Page: 11
15. T F The concepts vision and mission can be used interchangeably.
Ans: False Objective: 6 Page: 14
16. T F The vision of a company lays out some desired future state and articulates what
the company would like to achieve.
Ans: True Objective: 6 Page: 14
17. T F Values are commonly seen as the bedrock of a company's organizational
culture.
Ans: True Objective: 6 Page: 14
18. T F Well-constructed goals provide a means by which the performance of managers
can be evaluated.
Ans: True Objective: 7 Page: 15
19. T F The various levels of strategy that a company employs must be congruent with
each other.
Ans: True Objective: 8 Page: 19
20. T F Strategy implementation entails designing the best organization structure,
culture, and control systems to put a chosen strategy into action.
Ans: True Objective: 8 Page: 19
21. T F The feedback loop in the model of the strategic management process indicates
that the process is ongoing; it never ends.
Ans: True Objective: 8 Page: 19
22. T F The traditional planning model suggests that a company's strategies are the
result of a plan from a highly structured process orchestrated by top management.
Ans: True Objective: 8 Page: 20
23. T F A company's realized strategy is the product of whatever planned strategies are
actually put into action—deliberate and emergent.
, Ans: True Objective: 8 Page: 22
24. T F Because the future is uncertain, successful strategies are often those that are
flexible and allow for adjustment.
Ans: True Objective: 8 Page: 23
25. T F In practice, the strategies of most organizations are probably a combination of
the intended and emergent strategies.
Ans: True Objective: 8 Page: 24
26. T F Strategic intent is concerned with the alignment of existing resources with
current opportunities.
Ans: False Objective: 8 Page: 27
27. T F Groupthink occurs when a group of decisionmakers embarks on a course of
action without questioning underlying assumptions.
Ans: True Objective: 8 Page: 29
28. T F Leaders who exhibit a high degree of emotional intelligence tend to be more
effective than those who do not.
Ans: True Objective: 8 Page: 34
29. T F Starbucks's entry into selling CDs and downloading music is an example of the
impact low-level managers can have on overall corporate strategy.
Ans: True Objective: 9 Page: 21
30. T F There is little or no information to support the contention that U.S. intelligence
agencies engaged in groupthink prior to the U.S. invasion of Iraq in 2003.
Ans: False Objective: 14 Page: 30
31. The principal driver(s) of shareholder value is (are)
A) profitability.
B) profit growth.
C) market share.
D) profitability and profit growth.
E) all of the above.
Ans: D Objective: 1 Page: 5
32. A competitive advantage is considered to be a sustained competitive advantage when
the
A) advantage endures for a long time.
B) firm is able to spread the advantage to all of its business units.
C) advantage is very large.
D) advantage was gained at a low cost.
E) managers who developed the advantage are still employed at the firm.
Ans: A Objective: 1 Page: 6
, 33. Which of the following dimensions are encompassed by a company's business model?
A) Selecting customers
B) Defining and differentiating its product offerings
C) Determining how it will produce goods and services
D) Determining how it will grow the business over time
E) All of the above
Ans: E Objective: 1 Page: 6
34. The strategies that a company's managers pursue
A) have a major impact on the company's performance relative to its competitors.
B) have little or no effect on overall profitability.
C) typically result in higher per-unit cost of production.
D) result in significant industry structural changes.
E) none of the above.
Ans: A Objective: 1 Page: 8
35. Which of the following is the organization's principal general manager?
A) Board of directors
B) Division head
C) CFO
D) CEO
E) Controller
Ans: D Objective: 2 Page: 8
36. Within a diversified company, the responsibilities of corporate-level strategic
managers include
A) translating the corporate mission statement into concrete strategies for
individual business units.
B) closely supervising the formulation of strategies at the functional level that
support the company's business- and corporate-level strategies.
C) allocating resources to functions within business units.
D) overseeing the development of strategies for the total organization and allocating
resources among its different business areas.
E) identifying and establishing relationships with supplier firms.
Ans: D Objective: 2 Page: 9
37. General managers are found
A) only at the corporate level.
B) only at the business level.
C) only at the functional and business levels.
D) at the functional, business, and corporate levels.
E) only at the corporate and business levels.
Ans: E Objective: 2 Page: 10
