Chapter 1—Strategic Leadership: Managing the Strategy-Making Process for
Competitive Advantage
TRUE/FALSE
1. A strategy can be defined as a set of related actions that managers take to increase their
company's performance.
ANS: T PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
2. Strategic leadership is concerned with how to most effectively manage a company's strategy-
making process to create competitive advantage.
ANS: T PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
3. To increase shareholder value, managers must pursue strategies that increase revenue and market
share, whether the results are profitable or not.
ANS: F PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
4. A firm obtains competitive advantage when its strategy results in superior performance relative to
its competitors.
ANS: T PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Stategy
KEY: Comprehension
5. ROIC is a measure of how efficiently and effectively managers use the capital at their disposal to
produce profitability.
ANS: T PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
6. The profit growth of a company can be measured by the increase in its stock price over time.
ANS: F PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
7. 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: T PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
8. One of the factors that distinguishes organizations in the nonprofit sector from for-profit
businesses is the lack of concern for strategic management.
, ANS: F PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "strategic management" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
9. General managers bear responsibility for the overall performance of the company or for one of its
major self-contained subunits or divisions.
ANS: T PTS: 1 DIF: Moderate
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Leadership Principles KEY: Knowledge
10. The CEO is a company's principal general manager.
ANS: T PTS: 1 DIF: Easy
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Leadership Principles KEY: Knowledge
11. The final 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: F PTS: 1 DIF: Moderate
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Reflective Thinking | Strategy KEY: Comprehension
12. Fortunately, the concepts vision and mission can be used interchangeably.
ANS: F PTS: 1 DIF: Moderate
OBJ: 3 -Identify the primary steps in a strategic planning process
NAT: AACSB Reflective Thinking | Strategy KEY: Knowledge
13. The mission of a company lays out some desired future state and articulates what the company
would like to achieve.
ANS: F PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Analytic | Strategy KEY: Knowledge
14. Unfortunately, values are personal and have little to do with organizational culture or competitive
advantage.
ANS: F PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Analytic | Strategy KEY: Knowledge
15. Well-constructed goals provide a means by which the performance of managers can be evaluated.
ANS: T PTS: 1 DIF: Moderate
OBJ: 3 - Identify the primary steps in a strategic planning process
KEY: Knowledge
16. SWOT analysis is implemented to fine-tune strategies.
ANS: T PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
KEY: Knowledge
17. SWOT analysis concerns identifying strengths, weaknesses, options, and threats.
ANS: F PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
KEY: Knowledge
18. The feedback loop in the model of the strategic management process indicates that the process is
ongoing; it never ends.
ANS: T PTS: 1 DIF: Moderate
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Analytic | Strategy TOP: Knowledge
, 19. 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: T PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
20. Mintzberg's model suggests a company's realized strategy is the product of whatever strategies
are actually put into actionintended and emergent.
ANS: T PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
21. Honda redefined the U.S. motorcycle industry with a brilliantly conceived intented strategy.
ANS: F PTS: 1 DIF: Difficult
OBJ: 4 - Discuss the common pitfalls of planning, and those pitfalls can be avoided
NAT: AACSB Reflective Thinking | Strategy KEY: Application
22. In practice, the strategies of most organizations are probably a combination of the intended and
emergent strategies.
ANS: T PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy KEY: Knowledge
23. Emergent strategies arise in a company with careful long-term planning.
ANS: F PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
24. The great virtue of scenario planning is that managers must think outside the box to anticipate
what they might do in different situations.
ANS: T PTS: 1 DIF: Easy
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
25. Research finds that leaders who exhibit a high degree of emotional intelligence tend to be
significantly less effective than those who do not.
ANS: F PTS: 1 DIF: Moderate
OBJ: 6 - Discuss the role strategic leaders play in the strategy-making process
NAT: AACSB Analytic | Leadership Principles TOP: Knowledge
26. Given that they are developed through years of experience, rules of thumb rarely if ever lead to
severe errors in the decision making process.
ANS: F PTS: 1 DIF: Moderate
OBJ: 5 - Outline the cognitive biases that might lead to poor strategic decisions, and explain
how these biases can be overcome NAT: AACSB Analytic | Individual Dynamics
TOP: Knowledge
MULTIPLE CHOICE
27. 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 these choices.
ANS: D PTS: 1 DIF: Moderate
, OBJ: 1 - Explain what is meant by "competitive advantage"
NAT: AACSB Reflective Thinking | Strategy KEY: Comprehension
28. A competitive advantage is considered to be a sustained competitive advantage when the
a. advantage endures for a number of years.
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 PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
29. Which of the following dimension(s) is (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 these.
ANS: E PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Comprehension
30. Which of the following is the organization's principal general manager?
a. The Board of Director
b. Marketing division head
c. CFO
d. CEO
e. Controller
ANS: D PTS: 1 DIF: Easy
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Strategy KEY: Knowledge
31. 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 PTS: 1 DIF: Moderate
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Strategy KEY: Comprehension
32. General managers are found
a. only at the corporate level.
b. only at the business level.
c. only at the functional and business levels.
Competitive Advantage
TRUE/FALSE
1. A strategy can be defined as a set of related actions that managers take to increase their
company's performance.
ANS: T PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
2. Strategic leadership is concerned with how to most effectively manage a company's strategy-
making process to create competitive advantage.
ANS: T PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
3. To increase shareholder value, managers must pursue strategies that increase revenue and market
share, whether the results are profitable or not.
ANS: F PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
4. A firm obtains competitive advantage when its strategy results in superior performance relative to
its competitors.
ANS: T PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Stategy
KEY: Comprehension
5. ROIC is a measure of how efficiently and effectively managers use the capital at their disposal to
produce profitability.
ANS: T PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
6. The profit growth of a company can be measured by the increase in its stock price over time.
ANS: F PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
7. 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: T PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
8. One of the factors that distinguishes organizations in the nonprofit sector from for-profit
businesses is the lack of concern for strategic management.
, ANS: F PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "strategic management" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
9. General managers bear responsibility for the overall performance of the company or for one of its
major self-contained subunits or divisions.
ANS: T PTS: 1 DIF: Moderate
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Leadership Principles KEY: Knowledge
10. The CEO is a company's principal general manager.
ANS: T PTS: 1 DIF: Easy
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Leadership Principles KEY: Knowledge
11. The final 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: F PTS: 1 DIF: Moderate
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Reflective Thinking | Strategy KEY: Comprehension
12. Fortunately, the concepts vision and mission can be used interchangeably.
ANS: F PTS: 1 DIF: Moderate
OBJ: 3 -Identify the primary steps in a strategic planning process
NAT: AACSB Reflective Thinking | Strategy KEY: Knowledge
13. The mission of a company lays out some desired future state and articulates what the company
would like to achieve.
ANS: F PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Analytic | Strategy KEY: Knowledge
14. Unfortunately, values are personal and have little to do with organizational culture or competitive
advantage.
ANS: F PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Analytic | Strategy KEY: Knowledge
15. Well-constructed goals provide a means by which the performance of managers can be evaluated.
ANS: T PTS: 1 DIF: Moderate
OBJ: 3 - Identify the primary steps in a strategic planning process
KEY: Knowledge
16. SWOT analysis is implemented to fine-tune strategies.
ANS: T PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
KEY: Knowledge
17. SWOT analysis concerns identifying strengths, weaknesses, options, and threats.
ANS: F PTS: 1 DIF: Easy
OBJ: 3 - Identify the primary steps in a strategic planning process
KEY: Knowledge
18. The feedback loop in the model of the strategic management process indicates that the process is
ongoing; it never ends.
ANS: T PTS: 1 DIF: Moderate
OBJ: 3 - Identify the primary steps in a strategic planning process
NAT: AACSB Analytic | Strategy TOP: Knowledge
, 19. 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: T PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
20. Mintzberg's model suggests a company's realized strategy is the product of whatever strategies
are actually put into actionintended and emergent.
ANS: T PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
21. Honda redefined the U.S. motorcycle industry with a brilliantly conceived intented strategy.
ANS: F PTS: 1 DIF: Difficult
OBJ: 4 - Discuss the common pitfalls of planning, and those pitfalls can be avoided
NAT: AACSB Reflective Thinking | Strategy KEY: Application
22. In practice, the strategies of most organizations are probably a combination of the intended and
emergent strategies.
ANS: T PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy KEY: Knowledge
23. Emergent strategies arise in a company with careful long-term planning.
ANS: F PTS: 1 DIF: Moderate
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
24. The great virtue of scenario planning is that managers must think outside the box to anticipate
what they might do in different situations.
ANS: T PTS: 1 DIF: Easy
OBJ: 4 - Discuss the common pitfalls of planning, and how those pitfalls can be avoided
NAT: AACSB Analytic | Strategy TOP: Knowledge
25. Research finds that leaders who exhibit a high degree of emotional intelligence tend to be
significantly less effective than those who do not.
ANS: F PTS: 1 DIF: Moderate
OBJ: 6 - Discuss the role strategic leaders play in the strategy-making process
NAT: AACSB Analytic | Leadership Principles TOP: Knowledge
26. Given that they are developed through years of experience, rules of thumb rarely if ever lead to
severe errors in the decision making process.
ANS: F PTS: 1 DIF: Moderate
OBJ: 5 - Outline the cognitive biases that might lead to poor strategic decisions, and explain
how these biases can be overcome NAT: AACSB Analytic | Individual Dynamics
TOP: Knowledge
MULTIPLE CHOICE
27. 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 these choices.
ANS: D PTS: 1 DIF: Moderate
, OBJ: 1 - Explain what is meant by "competitive advantage"
NAT: AACSB Reflective Thinking | Strategy KEY: Comprehension
28. A competitive advantage is considered to be a sustained competitive advantage when the
a. advantage endures for a number of years.
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 PTS: 1 DIF: Easy
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Knowledge
29. Which of the following dimension(s) is (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 these.
ANS: E PTS: 1 DIF: Moderate
OBJ: 1 - Explain what is meant by "competitive advantage" NAT: AACSB Analytic |
Strategy
KEY: Comprehension
30. Which of the following is the organization's principal general manager?
a. The Board of Director
b. Marketing division head
c. CFO
d. CEO
e. Controller
ANS: D PTS: 1 DIF: Easy
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Strategy KEY: Knowledge
31. 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 PTS: 1 DIF: Moderate
OBJ: 2 - Discuss the strategic role of managers at different levels within an organization
NAT: AACSB Analytic | Strategy KEY: Comprehension
32. General managers are found
a. only at the corporate level.
b. only at the business level.
c. only at the functional and business levels.
