Name: Class: Date:
TEST BANK
Chapter 01: Strategic Management and Strategic Competitiveness
TEST BANK
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,Name: Class: Date:
Chapter 01: Strategic Management and Strategic Competitiveness
True / False
1. Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.
a. True
b. False
ANSWER: True
2. Alligator Enterprises has earned above-average returns since its founding five years ago. No other firm has challenged
Alligator in its particular market niche; therefore, the firm's owners can feel secure that Alligator has established a
competitive advantage.
a. True
b. False
ANSWER: False
3. The goal of strategy implementation is to develop a permanent competitive advantage.
a. True
b. False
ANSWER: False
4. Risk in terms of financial returns reflects an investor's uncertainty about the economic gains or losses that will result
from a particular investment.
a. True
b. False
ANSWER: True
5. The difference between average and above-average returns is that average returns are returns that an investor expects to
earn from an investment as compared to other investments with similar stock prices, while above-average returns are in
excess of expectations for similarly priced stocks.
a. True
b. False
ANSWER: False
6. Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar
amount of risk.
a. True
b. False
ANSWER: True
7. Particularly when assessing investments in new venture firms, the most effective, and often the only, way to measure
the performance of the firms and determine their viability as an investment option is to examine financial metrics such as
returns on assets, and sales.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Strategic Management and Strategic Competitiveness
8. To implement a firm’s strategies, the firm takes actions to enact each strategy with the intent of achieving strategic
competitiveness and above-average returns.
a. True
b. False
ANSWER: True
9. Economies of scale and huge advertising budgets are more effective in the new competitive landscape than they were in
the past.
a. True
b. False
ANSWER: False
10. The two primary drivers of hypercompetition are the emergence of the global economy and technology.
a. True
b. False
ANSWER: True
11. The rate of technology diffusion has increased significantly over the last two decades.
a. True
b. False
ANSWER: True
12. RelTech is a firm in the electronics industry. It could protect its proprietary technology through patents. However, it
likely will not apply for patents to keep competitors from gaining access to the technological knowledge included in the
patent application.
a. True
b. False
ANSWER: True
13. Examples of incremental innovations include iPads, Wi-Fi, and the web browser.
a. True
b. False
ANSWER: False
14. The rapid rate of technological diffusion has increased the competitive benefits of patents.
a. True
b. False
ANSWER: False
15. Companies searching for opportunities in the global economy would likely conclude that the three leading European
economies of Germany, United Kingdom, and France would be good investments because they are predicted to continue
increasing in size.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 3
, Name: Class: Date:
Chapter 01: Strategic Management and Strategic Competitiveness
16. Since the 1980s, the basis for competition has shifted from intangible resources to hard assets.
a. True
b. False
ANSWER: False
17. The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO
should understand that the task is not easy, largely because of inertia that can build up over time.
a. True
b. False
ANSWER: True
18. The industrial organization (I/O) model suggests that above-average returns are determined primarily by the firm's
unique internal resources rather than by external capabilities.
a. True
b. False
ANSWER: False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in the firm to serve the
needs of the natural gardening community by providing rare and native plants to individuals and nurseries around the
United States. The perspective of the CEO of Twin Spires is consistent with the assumptions of the industrial organization
(I/O) model.
a. True
b. False
ANSWER: False
20. The five forces model suggests that firms should target the industry with the highest potential for above-average
returns and then implement either a cost-leadership strategy or a differentiation strategy.
a. True
b. False
ANSWER: True
21. The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and its ability to earn above-
average returns under the industrial organization (I/O) model.
a. True
b. False
ANSWER: False
22. Research shows that a greater percentage of a firm's profitability is explained by the I/O model rather than the
resource-based model.
a. True
b. False
ANSWER: False
23. All of a firm's resources and capabilities have the potential to be the foundation for a competitive advantage.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 4
TEST BANK
Chapter 01: Strategic Management and Strategic Competitiveness
TEST BANK
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: Strategic Management and Strategic Competitiveness
True / False
1. Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.
a. True
b. False
ANSWER: True
2. Alligator Enterprises has earned above-average returns since its founding five years ago. No other firm has challenged
Alligator in its particular market niche; therefore, the firm's owners can feel secure that Alligator has established a
competitive advantage.
a. True
b. False
ANSWER: False
3. The goal of strategy implementation is to develop a permanent competitive advantage.
a. True
b. False
ANSWER: False
4. Risk in terms of financial returns reflects an investor's uncertainty about the economic gains or losses that will result
from a particular investment.
a. True
b. False
ANSWER: True
5. The difference between average and above-average returns is that average returns are returns that an investor expects to
earn from an investment as compared to other investments with similar stock prices, while above-average returns are in
excess of expectations for similarly priced stocks.
a. True
b. False
ANSWER: False
6. Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar
amount of risk.
a. True
b. False
ANSWER: True
7. Particularly when assessing investments in new venture firms, the most effective, and often the only, way to measure
the performance of the firms and determine their viability as an investment option is to examine financial metrics such as
returns on assets, and sales.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: Strategic Management and Strategic Competitiveness
8. To implement a firm’s strategies, the firm takes actions to enact each strategy with the intent of achieving strategic
competitiveness and above-average returns.
a. True
b. False
ANSWER: True
9. Economies of scale and huge advertising budgets are more effective in the new competitive landscape than they were in
the past.
a. True
b. False
ANSWER: False
10. The two primary drivers of hypercompetition are the emergence of the global economy and technology.
a. True
b. False
ANSWER: True
11. The rate of technology diffusion has increased significantly over the last two decades.
a. True
b. False
ANSWER: True
12. RelTech is a firm in the electronics industry. It could protect its proprietary technology through patents. However, it
likely will not apply for patents to keep competitors from gaining access to the technological knowledge included in the
patent application.
a. True
b. False
ANSWER: True
13. Examples of incremental innovations include iPads, Wi-Fi, and the web browser.
a. True
b. False
ANSWER: False
14. The rapid rate of technological diffusion has increased the competitive benefits of patents.
a. True
b. False
ANSWER: False
15. Companies searching for opportunities in the global economy would likely conclude that the three leading European
economies of Germany, United Kingdom, and France would be good investments because they are predicted to continue
increasing in size.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 3
, Name: Class: Date:
Chapter 01: Strategic Management and Strategic Competitiveness
16. Since the 1980s, the basis for competition has shifted from intangible resources to hard assets.
a. True
b. False
ANSWER: False
17. The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO
should understand that the task is not easy, largely because of inertia that can build up over time.
a. True
b. False
ANSWER: True
18. The industrial organization (I/O) model suggests that above-average returns are determined primarily by the firm's
unique internal resources rather than by external capabilities.
a. True
b. False
ANSWER: False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and resources currently in the firm to serve the
needs of the natural gardening community by providing rare and native plants to individuals and nurseries around the
United States. The perspective of the CEO of Twin Spires is consistent with the assumptions of the industrial organization
(I/O) model.
a. True
b. False
ANSWER: False
20. The five forces model suggests that firms should target the industry with the highest potential for above-average
returns and then implement either a cost-leadership strategy or a differentiation strategy.
a. True
b. False
ANSWER: True
21. The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and its ability to earn above-
average returns under the industrial organization (I/O) model.
a. True
b. False
ANSWER: False
22. Research shows that a greater percentage of a firm's profitability is explained by the I/O model rather than the
resource-based model.
a. True
b. False
ANSWER: False
23. All of a firm's resources and capabilities have the potential to be the foundation for a competitive advantage.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 4
