Strategic Management: Text and Cases, 9e (Dess)
Chapter 1 Strategic Management: Creating Competitive Advantages
1) Lands' End's failure under the leadership of Ms. Frederica Marchionni was said to be a
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
direct result of the quality of her leadership. According to the text, this would be an
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
example of the "romantic" perspective of leadership.
Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: TRUE Y 5
Explanation: In the romantic view of leadership, the implicit assumption is that the leader is
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
the key force in determining an organization's success or lack thereof. Under Ms.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Marchionni's leadership, the company reported a 19.5-million-dollar loss for 2016 after
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
having reported a 73.8-million-dollar profit for the previous year under its previous CEO.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Understand
Y5 Y 5
AACSB: Analytical Thinking
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
2) Strategic management consists of the analyses, decisions, and actions an
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
organization undertakes in order to create and sustain competitive advantages.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: TRUE Y 5
Explanation: According to the textbook, this is the definition of strategic management.
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 1 Easy
Y5 Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Remember
Y5 Y 5
AACSB: Knowledge Application
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
3) Management innovations such as total quality, just-in-time, benchmarking, business
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
process reengineering, and outsourcing are important but not enough for building sustainable
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
competitive advantage.
Y5 Y5
Answer: TRUE Y 5
Explanation: Sustainable competitive advantage cannot be achieved through operational
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
effectiveness alone. Popular management innovations of the last two decades like total
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
quality, just-in-time, benchmarking, business process reengineering, and outsourcing are
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
concerned with operational effectiveness.
Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Understand
Y5 Y 5
AACSB: Analytical Thinking
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
4) Trade-off decisions between effectiveness and efficiency are important in the practice of
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
,strategic management. Y5
Answer: TRUE Y 5
Explanation: The fourth attribute of strategic management is that it involves the
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
recognition of trade-offs between effectiveness and efficiency. Some authors have referred
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
to this as the difference between doing the right thing (effectiveness) and doing things
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
right (efficiency).
Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Understand
Y5 Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
5) According to Henry Mintzberg, a management scholar, most firms do not realize their
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
original intended strategy.
Y5 Y5 Y5
Answer: TRUE Y 5
Explanation: Henry Mintzberg states that the intended strategy rarely survives in its original
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
form. Unforeseen environmental developments, unanticipated resource constraints, or changes
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
in managerial preferences may result in at least some parts of the intended strategy
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
remaining unrealized. On the other hand, good managers will want to take advantage of a
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
new opportunity presented by the environment, even if it was not part of the original set of
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
intentions.
Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Analytical
Y5 Y 5
Thinking
Y5
Accessibility: Keyboard Navigation Y 5 Y5
6) The final realized strategy of a firm is a combination of deliberate and time-tested
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
strategies only.
Y5 Y5
Answer: FALSE Y 5
Explanation: Realized strategy is that strategy of a firm in which organizational decisions are
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
determined by both analysis and unforeseen environmental developments, unanticipated
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
resource constraints, and/or changes in managerial preferences.
Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Knowledge Application Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
,7) Strategy analysis is the study of only the big picture external environments of the firm.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: Strategy analysis is the study of the external and internal environments of a
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
firm, and their fit with organizational vision and goals.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Knowledge Application
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
8) All successful firms compete and outperform their rivals by developing bases for
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
competitive advantage, which can be achieved only through cost leadership.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: Successful firms strive to develop bases for competitive advantage, which can be
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
achieved through cost leadership and/or differentiation as well as by focusing on a narrow or
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
industrywide market segment.
Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Analytical
Y5 Y 5
Thinking
Y5
Accessibility: Keyboard Navigation Y 5 Y5
9) The three primary participants in corporate governance are: (1) the shareholders, (2)
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
the management (led by the chief executive officer), and (3) the employees.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: The primary participants are: (1) the shareholders, (2) the management (led by
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
the chief executive officer), and (3) the board of directors.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Governance
Y 5 Y5
Learning Objective: 01-03 The strategic role of corporate governance and stakeholder
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
management, as well as how "symbiosis" can be achieved among an organization's
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
stakeholders. Bloom's: Understand
Y5 Y5 Y 5
AACSB: Knowledge Application
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
, 10) Decisions by boards of directors are always consistent with shareholder interests.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: The board of directors (BOD) are the elected representatives of the
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
shareholders, charged with ensuring that the interests and motives of management are aligned
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
with those of the owners (i.e., shareholders). Recent scandals have resulted in criticism and
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
cynicism that the BOD fulfills this charge.
Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Governance
Y 5 Y5
Learning Objective: 01-03 The strategic role of corporate governance and stakeholder
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
management, as well as how "symbiosis" can be achieved among an organization's
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
stakeholders. Bloom's: Understand
Y5 Y5 Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
11) Ensuring effective corporate governance requires an effective and engaged board
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
of directors, uninvolved shareholders, and proper managerial rewards and
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
incentives.
Y5
Answer: FALSE Y 5
Explanation: We focus on three important mechanisms to ensure effective corporate
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
governance: (1) an effective and engaged board of directors, (2) shareholder activism, and
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
(3) proper managerial rewards and incentives.
Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Governance
Y 5 Y5
Learning Objective: 01-03 The strategic role of corporate governance and stakeholder
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
management, as well as how "symbiosis" can be achieved among an organization's
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
stakeholders. Bloom's: Understand
Y5 Y5 Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
12) Social responsibility is the idea that organizations are only accountable to stockholders.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: Social responsibility is the expectation that businesses or individuals will strive
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
to improve the overall welfare of society. From the perspective of a business, this means
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
that managers must take active steps to make society better by virtue of the business being
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
in existence.
Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Social Responsibility and Sustainability
Y 5 Y5 Y5 Y5 Y5
Learning Objective: 01-04 The importance of social responsibility, including environmental
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
sustainability, and how it can enhance a corporation's innovation strategy.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Analyze Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
Chapter 1 Strategic Management: Creating Competitive Advantages
1) Lands' End's failure under the leadership of Ms. Frederica Marchionni was said to be a
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
direct result of the quality of her leadership. According to the text, this would be an
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
example of the "romantic" perspective of leadership.
Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: TRUE Y 5
Explanation: In the romantic view of leadership, the implicit assumption is that the leader is
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
the key force in determining an organization's success or lack thereof. Under Ms.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Marchionni's leadership, the company reported a 19.5-million-dollar loss for 2016 after
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
having reported a 73.8-million-dollar profit for the previous year under its previous CEO.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Understand
Y5 Y 5
AACSB: Analytical Thinking
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
2) Strategic management consists of the analyses, decisions, and actions an
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
organization undertakes in order to create and sustain competitive advantages.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: TRUE Y 5
Explanation: According to the textbook, this is the definition of strategic management.
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 1 Easy
Y5 Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Remember
Y5 Y 5
AACSB: Knowledge Application
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
3) Management innovations such as total quality, just-in-time, benchmarking, business
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
process reengineering, and outsourcing are important but not enough for building sustainable
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
competitive advantage.
Y5 Y5
Answer: TRUE Y 5
Explanation: Sustainable competitive advantage cannot be achieved through operational
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
effectiveness alone. Popular management innovations of the last two decades like total
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
quality, just-in-time, benchmarking, business process reengineering, and outsourcing are
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
concerned with operational effectiveness.
Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Understand
Y5 Y 5
AACSB: Analytical Thinking
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
4) Trade-off decisions between effectiveness and efficiency are important in the practice of
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
,strategic management. Y5
Answer: TRUE Y 5
Explanation: The fourth attribute of strategic management is that it involves the
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
recognition of trade-offs between effectiveness and efficiency. Some authors have referred
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
to this as the difference between doing the right thing (effectiveness) and doing things
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
right (efficiency).
Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-01 The definition of strategic management and its four key attributes.
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Understand
Y5 Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
5) According to Henry Mintzberg, a management scholar, most firms do not realize their
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
original intended strategy.
Y5 Y5 Y5
Answer: TRUE Y 5
Explanation: Henry Mintzberg states that the intended strategy rarely survives in its original
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
form. Unforeseen environmental developments, unanticipated resource constraints, or changes
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
in managerial preferences may result in at least some parts of the intended strategy
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
remaining unrealized. On the other hand, good managers will want to take advantage of a
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
new opportunity presented by the environment, even if it was not part of the original set of
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
intentions.
Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Analytical
Y5 Y 5
Thinking
Y5
Accessibility: Keyboard Navigation Y 5 Y5
6) The final realized strategy of a firm is a combination of deliberate and time-tested
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
strategies only.
Y5 Y5
Answer: FALSE Y 5
Explanation: Realized strategy is that strategy of a firm in which organizational decisions are
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
determined by both analysis and unforeseen environmental developments, unanticipated
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
resource constraints, and/or changes in managerial preferences.
Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Knowledge Application Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
,7) Strategy analysis is the study of only the big picture external environments of the firm.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: Strategy analysis is the study of the external and internal environments of a
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
firm, and their fit with organizational vision and goals.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Knowledge Application
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
8) All successful firms compete and outperform their rivals by developing bases for
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
competitive advantage, which can be achieved only through cost leadership.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: Successful firms strive to develop bases for competitive advantage, which can be
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
achieved through cost leadership and/or differentiation as well as by focusing on a narrow or
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
industrywide market segment.
Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Strategy and the Strategic Management Process
Y 5 Y5 Y5 Y5 Y5 Y5
Learning Objective: 01-02 The strategic management process and its three interrelated and
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
principal activities.
Y5 Y5
Bloom's: Understand Y 5
AACSB: Analytical
Y5 Y 5
Thinking
Y5
Accessibility: Keyboard Navigation Y 5 Y5
9) The three primary participants in corporate governance are: (1) the shareholders, (2)
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
the management (led by the chief executive officer), and (3) the employees.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: The primary participants are: (1) the shareholders, (2) the management (led by
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
the chief executive officer), and (3) the board of directors.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Governance
Y 5 Y5
Learning Objective: 01-03 The strategic role of corporate governance and stakeholder
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
management, as well as how "symbiosis" can be achieved among an organization's
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
stakeholders. Bloom's: Understand
Y5 Y5 Y 5
AACSB: Knowledge Application
Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
, 10) Decisions by boards of directors are always consistent with shareholder interests.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: The board of directors (BOD) are the elected representatives of the
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
shareholders, charged with ensuring that the interests and motives of management are aligned
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
with those of the owners (i.e., shareholders). Recent scandals have resulted in criticism and
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
cynicism that the BOD fulfills this charge.
Y5 Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Governance
Y 5 Y5
Learning Objective: 01-03 The strategic role of corporate governance and stakeholder
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
management, as well as how "symbiosis" can be achieved among an organization's
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
stakeholders. Bloom's: Understand
Y5 Y5 Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
11) Ensuring effective corporate governance requires an effective and engaged board
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
of directors, uninvolved shareholders, and proper managerial rewards and
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
incentives.
Y5
Answer: FALSE Y 5
Explanation: We focus on three important mechanisms to ensure effective corporate
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
governance: (1) an effective and engaged board of directors, (2) shareholder activism, and
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
(3) proper managerial rewards and incentives.
Y5 Y5 Y5 Y5 Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Governance
Y 5 Y5
Learning Objective: 01-03 The strategic role of corporate governance and stakeholder
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
management, as well as how "symbiosis" can be achieved among an organization's
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
stakeholders. Bloom's: Understand
Y5 Y5 Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
12) Social responsibility is the idea that organizations are only accountable to stockholders.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Answer: FALSE Y 5
Explanation: Social responsibility is the expectation that businesses or individuals will strive
Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
to improve the overall welfare of society. From the perspective of a business, this means
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
that managers must take active steps to make society better by virtue of the business being
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
in existence.
Y5 Y5
Difficulty: 2 Medium Y5 Y5
Topic: Corporate Social Responsibility and Sustainability
Y 5 Y5 Y5 Y5 Y5
Learning Objective: 01-04 The importance of social responsibility, including environmental
Y5 Y 5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
sustainability, and how it can enhance a corporation's innovation strategy.
Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5 Y5
Bloom's: Analyze Y 5
AACSB: Analytical Thinking Y 5 Y5
Accessibility: Keyboard Navigation
Y5 Y 5 Y5
