Question 1

Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.

Accepted Answer

A)  above average economic performance 
B)  below average accounting performance 
C)  above average accounting performance 
D)  below average economic performance 
A)  above average economic performance 
B)  below average accounting performance 
C)  above average accounting performance 
D)  below average economic performance

Question 2

A "good strategy" does not necessarily have to create a competitive advantage.

Accepted Answer

A) True 
 B)False

Question 3

Why is it important to understand a firm's strategy, even if you are not a senior manager in a firm?

Accepted Answer

First, studying strategy and the strateg

Question 4

A firm's ________ is defined as its theory about how to gain competitive advantages.

Accepted Answer

A)  objectives 
B)  mission 
C)  vision 
D)  strategy 
A)  objectives 
B)  mission 
C)  vision 
D)  strategy

Question 5

Firms with strategies that are unlikely to be a source of competitive advantage will rarely provide the same career opportunities as firms with strategies that do generate such advantages.

Accepted Answer

A) True 
 B)False

Question 6

The mission statements of visionary firms

Accepted Answer

A)  suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence. 
B)  suggest that profit maximizing is neither an important corporate objective nor their primary reason for existence. 
C)  suggest that profit maximizing is their primary reason for existence. 
D)  suggest that profit maximizing is an important corporate objective and is their primary reason of existence. 
A)  suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence. 
B)  suggest that profit maximizing is neither an important corporate objective nor their primary reason for existence. 
C)  suggest that profit maximizing is their primary reason for existence. 
D)  suggest that profit maximizing is an important corporate objective and is their primary reason of existence.

Question 7

Thermacorp's cost of equity is 13.6. If the after tax cost of debt is 4.6, what is the weighted average cost of capital?

Accepted Answer

A)  15.85 
B)  11.35 
C)  11.2 
D)  13.2 
A)  15.85 
B)  11.35 
C)  11.2 
D)  13.2

Question 8

Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?

Accepted Answer

A)  Activity ratios 
B)  Liquidity ratios 
C)  Leverage ratios 
D)  Profitability ratios 
A)  Activity ratios 
B)  Liquidity ratios 
C)  Leverage ratios 
D)  Profitability ratios

Question 9

The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital that is equity times the cost of equity is the

Accepted Answer

A)  weighted cost of capital. 
B)  weighted average cost of capital. 
C)  unweighted average cost of capital. 
D)  average cost of capital. 
A)  weighted cost of capital. 
B)  weighted average cost of capital. 
C)  unweighted average cost of capital. 
D)  average cost of capital.

Question 10

Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, the strategic planning team had decided that financial performance is one of the company's top priorities. Which of the following is the best example of an objective the company might use to help it achieve its goal of superior financial performance?

Accepted Answer

A)  Increasing profitability. 
B)  Growing market share annually. 
C)  Improving product quality every quarter. 
D)  Growth in earnings per share averaging 15% or better annually for the next five years 
A)  Increasing profitability. 
B)  Growing market share annually. 
C)  Improving product quality every quarter. 
D)  Growth in earnings per share averaging 15% or better annually for the next five years

Question 11

Thermacorp's weighted average cost of capital is 11.35. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning

Accepted Answer

A)  above normal economic performance. 
B)  above normal accounting performance. 
C)  below normal economic performance. 
D)  below normal accounting performance. 
A)  above normal economic performance. 
B)  above normal accounting performance. 
C)  below normal economic performance. 
D)  below normal accounting performance.

Question 12

The realized strategy of most firms tends to be

Accepted Answer

A)  almost exclusively a reflection of their intended strategy. 
B)  almost exclusively a reflection of their emergent strategy. 
C)  a combination of both intended and emergent strategies. 
D)  reflective of neither the firms' intended nor emergent strategy. 
A)  almost exclusively a reflection of their intended strategy. 
B)  almost exclusively a reflection of their emergent strategy. 
C)  a combination of both intended and emergent strategies. 
D)  reflective of neither the firms' intended nor emergent strategy.

Question 13

Emergent strategies are theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented.

Accepted Answer

A) True 
 B)False

Question 14

If the risk free rate of return is 4%, the market rate of return is 9%, and a firm's beta is 2.0, what is the firm's cost of equity?

Accepted Answer

A)  30 
B)  6 
C)  18 
D)  14 
A)  30 
B)  6 
C)  18 
D)  14

Question 15

The correlation between economic and accounting measures of competitive advantage is generally low.

Accepted Answer

A) True 
 B)False

Question 16

What is the residual claimants view of equity holders?

Accepted Answer

The residual claimants view is that equi

Question 17

Differentiate between business level and corporate level strategies and give examples of each.

Accepted Answer

Business level strategies are actions fi

Question 18

The strategic management process is a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy that generates competitive advantages.

Accepted Answer

A) True 
 B)False

Question 19

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

Accepted Answer

A)  corporate level strategies. 
B)  functional strategies. 
C)  business level strategies. 
D)  macro level strategies. 
A)  corporate level strategies. 
B)  functional strategies. 
C)  business level strategies. 
D)  macro level strategies.

Question 20

Describe the difference between emergent and intended strategies. Why might firms employ an emergent strategy?

Accepted Answer

Intended strategies can best be describe

Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.

A "good strategy" does not necessarily have to create a competitive advantage.

Why is it important to understand a firm's strategy, even if you are not a senior manager in a firm?

A firm's ________ is defined as its theory about how to gain competitive advantages.

Firms with strategies that are unlikely to be a source of competitive advantage will rarely provide the same career opportunities as firms with strategies that do generate such advantages.

The mission statements of visionary firms

Thermacorp's cost of equity is 13.6. If the after tax cost of debt is 4.6, what is the weighted average cost of capital?

Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?

The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital that is equity times the cost of equity is the

Thermacorp's weighted average cost of capital is 11.35. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning

The realized strategy of most firms tends to be

Emergent strategies are theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented.

If the risk free rate of return is 4%, the market rate of return is 9%, and a firm's beta is 2.0, what is the firm's cost of equity?

The correlation between economic and accounting measures of competitive advantage is generally low.

What is the residual claimants view of equity holders?

Differentiate between business level and corporate level strategies and give examples of each.

The strategic management process is a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy that generates competitive advantages.

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

Describe the difference between emergent and intended strategies. Why might firms employ an emergent strategy?

Evaluating a Firms External Environment

Evaluating a Firms Internal Capabilities

Cost Leadership

Product Differentiation

Vertical Integration

Corporate Diversification

Organizing to Implement Corporate Diversification

Strategic Alliances

Mergers and Acquisitions

International Strategies

Filters

Exam 1: What Is Strategy and the Strategic Management Process

Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.

A "good strategy" does not necessarily have to create a competitive advantage.

Why is it important to understand a firm's strategy, even if you are not a senior manager in a firm?

A firm's ________ is defined as its theory about how to gain competitive advantages.

Firms with strategies that are unlikely to be a source of competitive advantage will rarely provide the same career opportunities as firms with strategies that do generate such advantages.

The mission statements of visionary firms

Thermacorp's cost of equity is 13.6. If the after tax cost of debt is 4.6, what is the weighted average cost of capital?

Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?

The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital that is equity times the cost of equity is the

Thermacorp's weighted average cost of capital is 11.35. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning

The realized strategy of most firms tends to be

Emergent strategies are theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented.

If the risk free rate of return is 4%, the market rate of return is 9%, and a firm's beta is 2.0, what is the firm's cost of equity?

The correlation between economic and accounting measures of competitive advantage is generally low.

What is the residual claimants view of equity holders?

Differentiate between business level and corporate level strategies and give examples of each.

The strategic management process is a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy that generates competitive advantages.

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

Describe the difference between emergent and intended strategies. Why might firms employ an emergent strategy?

Evaluating a Firms External Environment

Evaluating a Firms Internal Capabilities

Cost Leadership

Product Differentiation

Vertical Integration

Corporate Diversification

Organizing to Implement Corporate Diversification

Strategic Alliances

Mergers and Acquisitions

International Strategies

Filters