Exam 1: What Is Strategy and the Strategic Management Process

Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a(n)

The cost of equity is equal to the interest a firm must pay its debt holders in order to induce those debt holders to lend money to the firm.

By conducting an external analysis, a firm identifies the critical threats and opportunities in the industry's competitive environment.

Strategic choices are generally limited to very experienced senior managers in large corporations; in smaller and entrepreneurial firms, many employees end up being involved in the strategic management process.

A firm's ________ is its long-term purpose that defines both what it aspires to be in the long run and what it wants to avoid in the meantime.

If TechnoGeek and VarsityBlue compete in the same market for the same customer and TechnoGeek generates $900 of economic value each time it sells a product or service while VarsityBlue generates $400 of economic value each time it sells a product or service, TechnoGeek has a competitive advantage of

When a firm earns above average accounting performance, it is said to enjoy competitive parity.

A firm's accounting performance is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements.

Which of the following is a reason why it is important for students to study strategy and the strategic management process?

In general, a firm has a competitive advantage when it is able to create more economic value than rival firms.

The residual claimants' view of equity holders argues that the interests of equity holders and a firm's other stakeholders often collide.

Applying accounting measures of competitive advantage for firms that are headquartered in different countries is not complicated by issues such as differences in accounting practices and exchange rates.

Mission statements that are very inwardly focused and are defined only with reference to the personal values and priorities of its founders and top managers can hurt a firm's performance.

A firm that earns its cost of capital is said to be earning

What are objectives, what role do they play in the strategic management process and what differentiates high quality objectives from low quality objectives?

________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.

High quality objectives are those that are

________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator.

Firms that create the same economic value as their rivals experience competitive parity.

Business level strategies are actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously.