Strategic Management Concepts Competetiveness and Globalization by Hitt 11th Edition A+ Graded

Chapter 1 Quiz Strategic Management and Strategic Competitiveness (Complete Chapter 1)

 

True / False

 

1. Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.

a. True

b. False

 

Answer

 

2. Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche, the firm's owners can feel secure that Alligator has established a competitive advantage.

a. True

b. False

 

Answer

 

3. The goal of strategic management is to develop a competitive advantage that is permanent. a. True

b. False

 

Answer


4. Risk in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment.

a. True

b. False

 

Answer

 

5. 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

 

6. Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales. a. True

b. False

 

Answer


7. Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past, but they must be reinforced by strategic flexibility.

a. True

b. False

 

Answer

 

8. The two primary drivers of hypercompetition are the emergence of the global economy and technology. a. True

b. False

 

Answer

 

9. The rate of technology diffusion has been steadily increasing over the last two decades. a. True

b. False

 

Answer


10. While patents may be an effective way of protecting proprietary technology in some industries such as pharmaceuticals, many firms competing in the electronics industry do not apply for patents.

a. True

b. False

 

Answer

11. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web browser software. a. True

b. False

 

Answer

12. The rapid rate of technological diffusion has increased the competitive benefits of patents. a. True

b. False

 

Answer


13. Developed countries still have major advantages in access to information technology over emerging economies because of the significant cost of the infrastructure needed for computing power.

a. True

b. False

 

Answer

 

14. The rate of growth of Internet-based applications could be affected by the possibility of Internet service providers charging users for downloading those applications.

a. True

b. False

 

Answer

15. The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO feels that the employees of the company have the ability, training, and resources to engage in continuous learning. The main obstacle the CEO must face is inertia.

a. True

b. False

 

Answer

16. The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is its main source of above-average returns.

a. True

b. False

 

Answer

17. The CEO of Twin Spires, Inc., is emotionally and intellectually committed to using the resources of 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. This commitment has carried the CEO through long periods of below-average returns on investment. 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

18. Although the fast food (or quick-service) industry is unattractive, McDonald's has earned above-average returns through product innovations, enhancing existing facilities, and buying properties outside the United States.

a. True

b. False

 

Answer


19. 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

20. The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and determines its ability to earn above-average returns under the I/O view.

a. True

b. False

 

Answer

 

21. Research shows that a greater percentage of a firm's profitability is explained by the I/O rather than the resource- based model.

a. True

b. False

 

Answer


22. The resource-based model assumes that if firms have resources that are rare or costly to imitate, this is sufficient to form a basis for competitive advantage.

a. True

b. False

 

Answer

 

23. Resources are considered rare when they have no structural equivalent. a. True

b. False

 

Answer

 

24. The assumptions of the industrial organization model and the resource-based model are contradictory. Therefore, organizational strategists must choose one or the other model as the basis for developing a strategic plan.

a. True

b. False

 

Answer


25. An effective vision statement will specify the market to be served. a. True

b. False

 

Answer

 

26. An effective vision stretches and challenges people and can result in increased innovation as illustrated by Apple's CEO Steve Jobs, who was known to think bigger and differently than most people ("putting a dent in the universe"). a. True

b. False

 

Answer

27. Organizational mission statements typically do not include statements about profitability and earning above-average returns.

a. True

b. False

 

Answer


28. A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions. a. True

b. False

 

Answer

 

29. Organizational stakeholders are the firm's internal resources, capabilities, and core competencies that are used to accomplish what may at first appear to be unattainable goals in the competitive environment.

a. True

b. False

 

Answer

 

30. The degree to which the firm is dependent on a stakeholder group gives that stakeholder less influence. a. True

b. False

 

Answer


31. Relative power is the most critical criterion for prioritizing the demands of stakeholders. a. True

b. False

 

Answer

32. Hourly workers on the production line of a chicken-processing plant are considered organizational stakeholders. a. True

b. False

 

Answer

 

33. Customers, suppliers, unions, and local governments are examples of capital market stakeholders. a. True

b. False

 

Answer


34. When the firm earns lower-than-average returns, the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders.

a. True

b. False

 

Answer

 

35. Six years ago, Colette Smith founded a successful catering company that specializes in providing a wide assortment of miniature cheesecakes for corporate and social events. Although Ms. Smith is no longer active in the actual production of the cheesecakes, she continues as president of the catering company. Ms. Smith could be considered a strategic leader of this firm.

a. True

b. False

 

Answer

 

36. Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others.

a. True

b. False

 

Answer


37. Strategic leaders must have a strong strategic orientation while embracing change in the dynamic competitive landscape.

a. True

b. False

 

Answer

 

38. Profit pools allow strategic leaders to predict the outcomes of their decisions before taking efforts to implement them.

a. True

b. False

 

Answer

39. Corporate-level strategy in a diversified organization requires a common business strategy for each component business.

a. True

b. False

 

Answer


40. An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values. a. True

b. False

 

Answer

Multiple Choice

 

41. McDonald's has been able to

a. earn above-average returns.

b. achieve strategic competitiveness.

c. use the strategic management process. d. All of these options are correct.

 

Answer

 

42. A firm has achieved           when it successfully formulates and implements a value-creating strategy. a. strategic competitiveness

b. a permanently sustainable competitive advantage c. substantial returns

d. legal and ethical core values

 

Answer


43. A competitive advantage

a. can be permanent if the firm has successfully implemented the strategic management process. b. entails reducing investors' risk to near zero.

c. can be identified only if it has been unsuccessfully challenged by competitors. d. exists when competing firms are unable to find investors.

 

Answer

44. Above-average returns are

a. higher profits than the firm earned the previous year.

b. higher profits than the industry averaged over the last 10 years.

c. profits in excess of what an investor expects to earn from a historical pattern of performance of the firm. d. returns in excess of what an investor expects to earn from other investments with a similar level of risk.

 

Answer

 

45. The strategic management process is

a. a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm.

b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment.

c. a process directed by top-management with input from other stakeholders that seeks to achieve above- average returns for investors through effective use of the organization's resources.

d. the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.

 

Answer


46. The primary drivers of hypercompetition are

a. rising global socio-economic instability and increased inflation.

b. the emergence of a global economy and rapid technological change. c. increased global competition and decreased tariffs.

d. increased availability of capital and increased competition.

 

Answer

47. All of the following are characteristic of the global economy EXCEPT

a. the increasing importance of developing countries as sources of revenue growth.

b. the free movement of goods, services, people, skills, and ideas across geographic borders. c. the increased use of tariffs to protect industries.

d. higher levels of opportunities and challenges.

 

Answer

48. Essentially,            has become one of the world's largest markets with 700 million potential consumers. a. the European Union

b. the United States c. China

d. Japan

 

Answer


49.            has become the second-largest economy in the world. a. The United States

b. The European Union c. Japan

d. China

 

Answer

 

50. The economic interdependence among countries as reflected in the flow of goods, services, financial capital, and knowledge across country borders is defined as

a. hypercompetition.

b. boundaryless retailing. c. strategic intensity.

d. globalization.

 

Answer

51. Globalization has led to

a. lower operational efficiency as firms must transport raw materials and finished goods farther. b. increasing loyalty of customers for products made domestically.

c. declining returns from investment in research and development. d. higher product quality.

 

Answer


52. The "liability of foreignness" is the

a. inability of most U.S. managers to truly comprehend foreign cultures.

b. political disadvantage that U.S. firms have when doing business abroad.

c. overall risk of participating outside a firm's domestic country when entering global competition.

d. strong cultural preference for "buying local," which puts foreign firms at a disadvantage when competing in the U.S. market.

 

Answer

53. Even for companies capable of succeeding in global markets, it is critical that they a. remain committed to and strategically competitive in their domestic market.

b. introduce many new products immediately after entering a new market. c. acquire a local competitor in each significant foreign market.

d. develop good negotiating skills in order to take advantage of local suppliers in the international market.

 

Answer

54. The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market?

a. telephone b. television

c. personal computer d. Internet

 

Answer


55. New markets created by iPods, PDAs, and Wi-Fi are a result of a. disruptive technologies.

b. global competition.

c. knowledge intensity. d. hypercompetition.

 

Answer

 

56. Apple's iPod and iPad are examples of a. the march of globalization.

b. rapid technological diffusion. c. disruptive technologies.

d. products that were not imitated by competitors.

 

Answer

 

57. The ability to effectively and efficiently access and use information is

a. vitally important at the point where a domestic firm enters the global market. b. an important source of competitive advantage in virtually all industries.

c. the minimum required for survival in virtually any industry. d. critically important mainly in high technology industries.

 

Answer


58. 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?

a. ensuring that all current unique knowledge of the firm is protected by patents

b. planning extensive employee training and hiring educated and experienced employees c. investing in sophisticated databases in relevant knowledge areas

d. establishing a system of organizational intelligence gathering

 

Answer

59. Knowledge is composed of all the following EXCEPT

a. insight.

b. expertise.

c. information. d. intelligence.

 

Answer

 

60. Which of the following statements about organizational knowledge is correct?

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. d. All of these options are correct.

 

Answer

 


61. In order to cope with hypercompetition, firms need to develop    through continuous learning. a. competitive resilience

b. strategic flexibility c. strategic power

d. competitive dominance

 

Answer

 

62. All of the following are assumptions of the industrial organization (I/O) model EXCEPT

a. organizational decision makers are rational and committed to acting in the firm's best interests. b. resources to implement strategies are firm-specific and attached to firms over the long-term.

c. the external environment is assumed to impose pressures and constraints that determine the strategies that result in above-average returns.

d. firms in given industries, or given industry segments, are assumed to control similar strategically relevant resources.

 

Answer

63. The industrial organization (I/O) model argues that

a. the key factor in success is choosing the correct industry in which to compete.

b. the firm's internal resources and capabilities represent the foundation for development of a value-creating strategy.

c. the key to earning above-average returns is strategic flexibility.

d. the internal structure of the organization must match the industry in which it competes in order to earn above-average returns on investment.

 

Answer


64. Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to

a. the power of the financial market stakeholders. b. the resources the firm possesses.

c. the profitability of the industry in which the firm competes. d. hypercompetition within the industry.

 

Answer

65. Firms use the five forces model to identify the         of the industry as measured by its a. size; number of competitors.

b. globalization; exports.

c. hypercompetition; technology diffusion. d. attractiveness; profitability.

 

Answer

66. 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

a. globalization.

b. the resource-based model. c. the I/O model.

d. hypercompetition.

 

Answer


67. 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?

a. Green Pastures Foods b. RexRich Foods

c. Both firms are consistent with the I/O approach.

d. At the entrepreneurial stage, the model which companies follow is not important.

 

Answer

 


68. Research shows that approximately


percent of a firm's profitability is explained by the industry in which it


competes, whereas a. 90; 10

b. 60; 40 c. 36; 20

d. 20; 36


percent is explained by the firm's characteristics and actions.


 

Answer

69. All of the following are resources of an organization EXCEPT

a. an hourly production employee's ability to catch subtle quality defects in products. b. oil drilling rights in a promising region.

c. weak competitors in the industry.

d. a charity's endowment of $400 million.

 

Answer


70. All of the following are assumptions of the resource-based model EXCEPT

a. each firm is a unique collection of resources and capabilities.

b. the industry's structural characteristics have little impact on a firm's performance over time. c. capabilities are highly mobile across firms.

d. differences in resources and capabilities are the basis of competitive advantage.

 

Answer

 

71.            is a capacity for a set of resources to perform a task or an activity in an integrative manner. a. A capability

b. A core competence

c. Sustainable competitive advantage d. Organizational intelligence

 

Answer

 

72. When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n)

a. strategic mission. b. inspiring vision.

c. core competence.

d. sustainable market niche.

 

Answer


73. In the resource-based model, which of the following factors would be considered a key to organizational success?

a. unique market niche b. weak competition

c. economies of scale d. skilled employees

 

Answer

 

74. To have the potential to become sources of competitive advantage, resources and capabilities must be non- substitutable, valuable,   , and

a. unique; easy to imitate.

b. easy to imitate; difficult to implement. c. rare; costly to imitate.

d. easy to implement; unique.

 

Answer

75. The resource-based model of the firm argues that

a. all resources have the potential to be the basis of sustainable competitive advantage. b. resources alone can be a source of sustainable competitive advantage.

c. the key to competitive success is the structure of the industry in which the firm competes.

d. resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.

 

Answer


76. The resource-based view of the firm

a. emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone. b. argues that the industry environment has a stronger influence on firms' ability to implement strategies

successfully than does the competitor environment.

c. calls for firms to focus on their homogeneous capabilities to compete against their rivals. d. suggests that vision and mission are closely linked to sustainable competitive advantage.

 

Answer

 

 


77. The goal of the organization's come.

a. vision

b. mission c. culture d. strategy


is to point the firm in the direction of where it would like to be in the years to


 

Answer

 

78. 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 organizational a. values.

b. mission. c. vision.

d. culture.

 

Answer


79. A firm's mission

a. is a statement of a firm's business in which it intends to compete and the customers it intends to serve. b. is an internally focused affirmation of the organization's financial, social, and ethical goals.

c. is mainly intended to emotionally inspire employees and other stakeholders. d. is developed by a firm before the firm develops its vision.

 

Answer

80. The final responsibility for forming the organization's mission lies with the a. CEO.

b. top-management team. c. employees.

d. organization's stakeholders.

 

Answer

135. Describe and discuss the resource-based model of above-average returns.

 

ANSWER:                            

136. What are a firm's vision and mission? What is the value to the firm of having a specified vision and mission?

 

ANSWER:                            


137. Describe an organization's various stakeholders and their different interests. Under what condition can the firm most easily satisfy all stakeholders? If the firm cannot satisfy all stakeholders, which ones must it satisfy in order to survive?

 

ANSWER:                            

138. Who are the firm's strategic leaders? How do strategic leaders predict the profit outcomes of different strategic decisions?

 

ANSWER:                            


139. Explain the relationship of the strategic management process to organizational ethics.

 

ANSWER


140. What are the primary aspects of the strategic management process? You may reference specific chapters from the text in formulating your response.

 

ANSWER:                            


141. Define globalization and describe some of its consequences.

 

ANSWER:


  • Item #: 130

Hitt 11th Edition A+ Graded - Chapter 1 Quiz and Exam

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