Chapter 1 - The Foundations of Strategic Management
TRUE/FALSE
1. Only large companies that trade their stock on a major stock exchange need to use an effective
strategic management process.
ANS: F PTS: 1 REF: Page 6 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
2. A company’s mission defines the firm’s core intent and the business or businesses in which it
intends to operate.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Definition | Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
3. In order for a capability to be considered a distinctive competence, it must be performed
BETTER than the competition.
ANS: F PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
4. Capabilities result when firms integrate several different resources.
, ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
5. Every company possesses both tangible and intangible resources.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
6. According to the Industrial Organization (I/O) model, when a firm lacks control over conditions
in the external environment, the company’s strategic options are limited.
ANS: T PTS: 1 REF: Page 9 | Page 11
OBJ: Learning Objective 2 KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
7. Managers can use the Industrial Organization (I/O) model to identify strengths and weaknesses in
the external environment.
ANS: F PTS: 1 REF: Page 9 | Page 11
OBJ: Learning Objective 2 KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
8. Changes in economic conditions are an environmental threat that could affect any company in
any industry.
, ANS: T PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
9. Innovation is a competitive advantage for Gillette.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 3
KEY: Application
MSC: AACSB: Reflective Thinking | Management: Strategy | Dierdorff & Rubin: Managing
Strategy & Innovation
10. According to the Industrial Organization (I/O) model, effective management of a company’s
operations results in the creation of unique resources and capabilities.
ANS: F PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
11. According to the Resource-Based View of the Firm (RBV) model, effective management of a
company’s operations results in the creation of unique resources and capabilities.
ANS: T PTS: 1 REF: Page 13 OBJ: Learning Objective 3
KEY: Comprehension
MSC: AACSB: Analytic | Management: Creation of Value | Dierdorff & Rubin: Managing
Strategy & Innovation
12. Managers can use the Industrial Organization (I/O) model to identify opportunities and threats in
their firm’s external environment.
, ANS: T PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
13. An organization’s culture has no impact on or relationship to the firm’s strategic management
process.
ANS: F PTS: 1 REF: Page 16-17 OBJ: Learning Objective 5
KEY: Comprehension
MSC: AACSB: Analytic | Management: Group Dynamics | Dierdorff & Rubin: Managing
Human Capital
14. Companies use centralization to make sure that the people who are closest to the action are the
ones who are making decisions and taking action.
ANS: F PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Managing Human Capital
15. In an organizational context, ethics reveal a value system that has been widely adopted by the
firm’s employees.
ANS: T PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Conceptual
MSC: AACSB: Ethics | Management: Ethical Responsibilities | Dierdorff & Rubin: Managing
Human Capital
16. The final responsibility for effective use of the strategic management process rests with the firm’s
top strategic leaders.
TRUE/FALSE
1. Only large companies that trade their stock on a major stock exchange need to use an effective
strategic management process.
ANS: F PTS: 1 REF: Page 6 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
2. A company’s mission defines the firm’s core intent and the business or businesses in which it
intends to operate.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Definition | Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
3. In order for a capability to be considered a distinctive competence, it must be performed
BETTER than the competition.
ANS: F PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
4. Capabilities result when firms integrate several different resources.
, ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
5. Every company possesses both tangible and intangible resources.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems
Skills
6. According to the Industrial Organization (I/O) model, when a firm lacks control over conditions
in the external environment, the company’s strategic options are limited.
ANS: T PTS: 1 REF: Page 9 | Page 11
OBJ: Learning Objective 2 KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
7. Managers can use the Industrial Organization (I/O) model to identify strengths and weaknesses in
the external environment.
ANS: F PTS: 1 REF: Page 9 | Page 11
OBJ: Learning Objective 2 KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
8. Changes in economic conditions are an environmental threat that could affect any company in
any industry.
, ANS: T PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
9. Innovation is a competitive advantage for Gillette.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 3
KEY: Application
MSC: AACSB: Reflective Thinking | Management: Strategy | Dierdorff & Rubin: Managing
Strategy & Innovation
10. According to the Industrial Organization (I/O) model, effective management of a company’s
operations results in the creation of unique resources and capabilities.
ANS: F PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
11. According to the Resource-Based View of the Firm (RBV) model, effective management of a
company’s operations results in the creation of unique resources and capabilities.
ANS: T PTS: 1 REF: Page 13 OBJ: Learning Objective 3
KEY: Comprehension
MSC: AACSB: Analytic | Management: Creation of Value | Dierdorff & Rubin: Managing
Strategy & Innovation
12. Managers can use the Industrial Organization (I/O) model to identify opportunities and threats in
their firm’s external environment.
, ANS: T PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic
& Systems Skills
13. An organization’s culture has no impact on or relationship to the firm’s strategic management
process.
ANS: F PTS: 1 REF: Page 16-17 OBJ: Learning Objective 5
KEY: Comprehension
MSC: AACSB: Analytic | Management: Group Dynamics | Dierdorff & Rubin: Managing
Human Capital
14. Companies use centralization to make sure that the people who are closest to the action are the
ones who are making decisions and taking action.
ANS: F PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Managing Human Capital
15. In an organizational context, ethics reveal a value system that has been widely adopted by the
firm’s employees.
ANS: T PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Conceptual
MSC: AACSB: Ethics | Management: Ethical Responsibilities | Dierdorff & Rubin: Managing
Human Capital
16. The final responsibility for effective use of the strategic management process rests with the firm’s
top strategic leaders.
