(Ch 1-6) Strategic Management Test 1
Questions And Answers
McDonald's has been able to - CORRECT ANSWER-a. earn above-average returns.
b. achieve strategic competitiveness.
c. use the strategic management process.
A firm has achieved __________ when it successfully formulates and implements a
value-creating strategy. - CORRECT ANSWER-a. strategic competitiveness
A competitive advantage - CORRECT ANSWER-c. can be identified only if it has been
unsuccessfully challenged by competitors.
Above-average returns are - CORRECT ANSWER-d. returns in excess of what an
investor expects to earn from other investments with a similar level of risk.
The strategic management process is - CORRECT ANSWER-d. the full set of
commitments, decisions, and actions required for the firm to achieve above-average
returns and strategic competitiveness.
The primary drivers of hypercompetition are - CORRECT ANSWER-b. the emergence
of a global economy and rapid technological change.
All of the following are characteristic of the global economy EXCEPT - CORRECT
ANSWER-c. the increased use of tariffs to protect industries.
Essentially, ____________has become one of the world's largest markets with 700
million potential consumers. - CORRECT ANSWER-a. the European Union
_____has become the second-largest economy in the world. - CORRECT ANSWER-d.
China
The economic interdependence among countries as reflected in the flow of goods,
services, financial capital, and knowledge across country borders is defined as -
CORRECT ANSWER-d. globalization
Globalization has led to - CORRECT ANSWER-d. higher product quality
The "liability of foreignness" is the - CORRECT ANSWER-c. overall risk of participating
outside a firm's domestic country when entering global competition
,Even for companies capable of succeeding in global markets, it is critical that they -
CORRECT ANSWER-a. remain committed to and strategically competitive in their
domestic market
The rate of technological diffusion is increasing. Which of the following was fastest in
penetrating 25 percent of homes in the U.S. market? - CORRECT ANSWER-d. internet
New markets created by iPods, PDAs, and Wi-Fi are a result of - CORRECT ANSWER-
a. disruptive technologies
Apple's iPod and iPad are examples of - CORRECT ANSWER-c. disruptive
technologies
The ability to effectively and efficiently access and use information is - CORRECT
ANSWER-b. an importance source of competitive advantage in virtually all industries
The CEO of Ridgeway, Inc., realizes that the company's survival depends on
developing and acquiring knowledge.
Which of the following actions by the CEO would be most consistent with this need? -
CORRECT ANSWER-b. planning extensive employee training and hiring educated and
experience employees
Knowledge is composed of all the following EXCEPT - CORRECT ANSWER-a. insight
Which of the following statements about organizational knowledge is correct? -
CORRECT ANSWER-a. Knowledge is an intangible resource.
b. The importance of knowledge is increasing.
c. The value of knowledge as a proportion of shareholder value is increasing.
In order to cope with hypercompetition, firms need to develop ______________ through
continuous learning. - CORRECT ANSWER-b. strategic flexibility
All of the following are assumptions of the industrial organization (I/O) model EXCEPT -
CORRECT ANSWER-b. resources to implement strategies are firm-specific and
attached to firms over the long-term
The industrial organization (I/O) model argues that - CORRECT ANSWER-a. the key
factor in success is choosing the correct industry in which to compete
Which of the following statements is most consistent under the I/O view? Performance
of the firm is most directly attributable to - CORRECT ANSWER-c. the profitability of the
industry in which the firm competes
Firms use the five forces model to identify the of the industry as measured by its -
CORRECT ANSWER-d. attractiveness profitability
,Although McDonald's is competing in an unattractive industry, it has improved its
performance by focusing on product innovations and by enhancing existing facilities.
This improved performance is best explained by - CORRECT ANSWER-b. the
resource-based model
An investor is considering in which of two start-up companies to invest. The investor has
faith in the industrial organization model of above-average returns and is using its
concepts to make a decision. Both start-up companies propose to manufacture health-
focused foods with such characteristics as low salt, low sugar, high fiber, and no
artificial additives. RexRich Foods has a business strategy of producing a differentiated
product for which consumers will pay more. Green Pastures Foods is in the health-
foods industry because of its internal culture and commitment to healthful lifestyles.
Which firm will the investor feel is most consistent with the model of industrial
organization? - CORRECT ANSWER-b. rexrich foods
Research shows that approximately ______ percent of a firm's profitability is explained
by the industry in which it competes, whereas ______ percent is explained by the firm's
characteristics and actions. - CORRECT ANSWER-d. 20; 36
All of the following are resources of an organization EXCEPT - CORRECT ANSWER-c.
weak competitors in the industry
All of the following are assumptions of the resource-based model EXCEPT - CORRECT
ANSWER-c. capabilities are highly more mobile across firms
________is a capacity for a set of resources to perform a task or an activity in an
integrative manner. - CORRECT ANSWER-a. a capability
When resources and capabilities serve as a source of competitive advantage for a firm,
the firm has created a(n) - CORRECT ANSWER-c. core competence
In the resource-based model, which of the following factors would be considered a key
to organizational success? - CORRECT ANSWER-d. skilled employees
To have the potential to become sources of competitive advantage, resources and
capabilities must be non- substitutable, valuable, and - CORRECT ANSWER-c. rare;
costly to imitate
The resource-based model of the firm argues that - CORRECT ANSWER-d. resources
that are valuable, rare, costly to imitate, and non-substitutable from the basis of a firm's
core competencies
The resource-based view of the firm - CORRECT ANSWER-a. emphasizes that it is
difficult to develop and sustain a competitive advantage based on resources alone.
, The goal of the organization's is to point the firm in the direction of where it would like to
be in the years to come. - CORRECT ANSWER-a. vision
The Princeton Alliance Church states in its website that "PAC exists to help you live life
to the fullest by knowing God, developing community and bringing hope." This
pronouncement is most precisely a statement of - CORRECT ANSWER-c. vision
A firm's mission - CORRECT ANSWER-a. is a statement of a firm's business in which it
intends to compete and the customers it intends to serve.
The final responsibility for forming the organization's mission lies with the - CORRECT
ANSWER-a. CEO
Who typically develops a firm's mission statement? - CORRECT ANSWER-c. the CEO
and top managers
Organizational stakeholders include - CORRECT ANSWER-c. employees
The interests of an organization's stakeholders often conflict, and the organization must
prioritize its stakeholders if it cannot satisfy them all. The is the most critical criterion in
prioritizing stakeholders. - CORRECT ANSWER-a. power of each stakeholder
Capital market stakeholders include - CORRECT ANSWER-b. shareholders
Dissatisfied capital market stakeholders may - CORRECT ANSWER-a. sell their stock.
b. tighten loan covenants.
c. seek to increase their power.
Greenleaf Property Management has been earning below-average returns for the last
three years. Which of the following statements are true? - CORRECT ANSWER-d.
Greenleaf will not be able to minimally satisfy all stakeholders.
Product market stakeholders include the firm's customers, and the principal concern of
this stakeholder group is - CORRECT ANSWER-c. obtaining reliable products at the
lowest possible price
Generally speaking, product market stakeholders are satisfied when - CORRECT
ANSWER-a. a firm's profit margin yields the lowest return to capital market stakeholders
that is acceptable to them
Before liquidating, Circuit City took several actions to try to satisfy its
________stakeholders. - CORRECT ANSWER-a. capital market
The Chambers of Commerce of cities and towns often implore citizens to buy from local
businesses. This is because the organization's role as a taxpayer is most important to
______as stakeholders. - CORRECT ANSWER-c. host communities
Questions And Answers
McDonald's has been able to - CORRECT ANSWER-a. earn above-average returns.
b. achieve strategic competitiveness.
c. use the strategic management process.
A firm has achieved __________ when it successfully formulates and implements a
value-creating strategy. - CORRECT ANSWER-a. strategic competitiveness
A competitive advantage - CORRECT ANSWER-c. can be identified only if it has been
unsuccessfully challenged by competitors.
Above-average returns are - CORRECT ANSWER-d. returns in excess of what an
investor expects to earn from other investments with a similar level of risk.
The strategic management process is - CORRECT ANSWER-d. the full set of
commitments, decisions, and actions required for the firm to achieve above-average
returns and strategic competitiveness.
The primary drivers of hypercompetition are - CORRECT ANSWER-b. the emergence
of a global economy and rapid technological change.
All of the following are characteristic of the global economy EXCEPT - CORRECT
ANSWER-c. the increased use of tariffs to protect industries.
Essentially, ____________has become one of the world's largest markets with 700
million potential consumers. - CORRECT ANSWER-a. the European Union
_____has become the second-largest economy in the world. - CORRECT ANSWER-d.
China
The economic interdependence among countries as reflected in the flow of goods,
services, financial capital, and knowledge across country borders is defined as -
CORRECT ANSWER-d. globalization
Globalization has led to - CORRECT ANSWER-d. higher product quality
The "liability of foreignness" is the - CORRECT ANSWER-c. overall risk of participating
outside a firm's domestic country when entering global competition
,Even for companies capable of succeeding in global markets, it is critical that they -
CORRECT ANSWER-a. remain committed to and strategically competitive in their
domestic market
The rate of technological diffusion is increasing. Which of the following was fastest in
penetrating 25 percent of homes in the U.S. market? - CORRECT ANSWER-d. internet
New markets created by iPods, PDAs, and Wi-Fi are a result of - CORRECT ANSWER-
a. disruptive technologies
Apple's iPod and iPad are examples of - CORRECT ANSWER-c. disruptive
technologies
The ability to effectively and efficiently access and use information is - CORRECT
ANSWER-b. an importance source of competitive advantage in virtually all industries
The CEO of Ridgeway, Inc., realizes that the company's survival depends on
developing and acquiring knowledge.
Which of the following actions by the CEO would be most consistent with this need? -
CORRECT ANSWER-b. planning extensive employee training and hiring educated and
experience employees
Knowledge is composed of all the following EXCEPT - CORRECT ANSWER-a. insight
Which of the following statements about organizational knowledge is correct? -
CORRECT ANSWER-a. Knowledge is an intangible resource.
b. The importance of knowledge is increasing.
c. The value of knowledge as a proportion of shareholder value is increasing.
In order to cope with hypercompetition, firms need to develop ______________ through
continuous learning. - CORRECT ANSWER-b. strategic flexibility
All of the following are assumptions of the industrial organization (I/O) model EXCEPT -
CORRECT ANSWER-b. resources to implement strategies are firm-specific and
attached to firms over the long-term
The industrial organization (I/O) model argues that - CORRECT ANSWER-a. the key
factor in success is choosing the correct industry in which to compete
Which of the following statements is most consistent under the I/O view? Performance
of the firm is most directly attributable to - CORRECT ANSWER-c. the profitability of the
industry in which the firm competes
Firms use the five forces model to identify the of the industry as measured by its -
CORRECT ANSWER-d. attractiveness profitability
,Although McDonald's is competing in an unattractive industry, it has improved its
performance by focusing on product innovations and by enhancing existing facilities.
This improved performance is best explained by - CORRECT ANSWER-b. the
resource-based model
An investor is considering in which of two start-up companies to invest. The investor has
faith in the industrial organization model of above-average returns and is using its
concepts to make a decision. Both start-up companies propose to manufacture health-
focused foods with such characteristics as low salt, low sugar, high fiber, and no
artificial additives. RexRich Foods has a business strategy of producing a differentiated
product for which consumers will pay more. Green Pastures Foods is in the health-
foods industry because of its internal culture and commitment to healthful lifestyles.
Which firm will the investor feel is most consistent with the model of industrial
organization? - CORRECT ANSWER-b. rexrich foods
Research shows that approximately ______ percent of a firm's profitability is explained
by the industry in which it competes, whereas ______ percent is explained by the firm's
characteristics and actions. - CORRECT ANSWER-d. 20; 36
All of the following are resources of an organization EXCEPT - CORRECT ANSWER-c.
weak competitors in the industry
All of the following are assumptions of the resource-based model EXCEPT - CORRECT
ANSWER-c. capabilities are highly more mobile across firms
________is a capacity for a set of resources to perform a task or an activity in an
integrative manner. - CORRECT ANSWER-a. a capability
When resources and capabilities serve as a source of competitive advantage for a firm,
the firm has created a(n) - CORRECT ANSWER-c. core competence
In the resource-based model, which of the following factors would be considered a key
to organizational success? - CORRECT ANSWER-d. skilled employees
To have the potential to become sources of competitive advantage, resources and
capabilities must be non- substitutable, valuable, and - CORRECT ANSWER-c. rare;
costly to imitate
The resource-based model of the firm argues that - CORRECT ANSWER-d. resources
that are valuable, rare, costly to imitate, and non-substitutable from the basis of a firm's
core competencies
The resource-based view of the firm - CORRECT ANSWER-a. emphasizes that it is
difficult to develop and sustain a competitive advantage based on resources alone.
, The goal of the organization's is to point the firm in the direction of where it would like to
be in the years to come. - CORRECT ANSWER-a. vision
The Princeton Alliance Church states in its website that "PAC exists to help you live life
to the fullest by knowing God, developing community and bringing hope." This
pronouncement is most precisely a statement of - CORRECT ANSWER-c. vision
A firm's mission - CORRECT ANSWER-a. is a statement of a firm's business in which it
intends to compete and the customers it intends to serve.
The final responsibility for forming the organization's mission lies with the - CORRECT
ANSWER-a. CEO
Who typically develops a firm's mission statement? - CORRECT ANSWER-c. the CEO
and top managers
Organizational stakeholders include - CORRECT ANSWER-c. employees
The interests of an organization's stakeholders often conflict, and the organization must
prioritize its stakeholders if it cannot satisfy them all. The is the most critical criterion in
prioritizing stakeholders. - CORRECT ANSWER-a. power of each stakeholder
Capital market stakeholders include - CORRECT ANSWER-b. shareholders
Dissatisfied capital market stakeholders may - CORRECT ANSWER-a. sell their stock.
b. tighten loan covenants.
c. seek to increase their power.
Greenleaf Property Management has been earning below-average returns for the last
three years. Which of the following statements are true? - CORRECT ANSWER-d.
Greenleaf will not be able to minimally satisfy all stakeholders.
Product market stakeholders include the firm's customers, and the principal concern of
this stakeholder group is - CORRECT ANSWER-c. obtaining reliable products at the
lowest possible price
Generally speaking, product market stakeholders are satisfied when - CORRECT
ANSWER-a. a firm's profit margin yields the lowest return to capital market stakeholders
that is acceptable to them
Before liquidating, Circuit City took several actions to try to satisfy its
________stakeholders. - CORRECT ANSWER-a. capital market
The Chambers of Commerce of cities and towns often implore citizens to buy from local
businesses. This is because the organization's role as a taxpayer is most important to
______as stakeholders. - CORRECT ANSWER-c. host communities
