Exam 1: What Is Strategy and the Strategic Management Process

From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms.

A firm that earns below average accounting performance, performance that is less than the industry average, generally experiences a competitive disadvantage.

If a firm has total assets of $10 million, stockholder's equity of $6 million, a cost of equity of 10, and an after tax cost of debt of 5%, what is the firm's weighted average cost of capital?

________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage.

The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic costs of these products or services is known as

The view that equity holders only receive payment on their investment in a firm after all legitimate claims by a firm's other stakeholders are satisfied is known as the ________ view of equity holders.

Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project. It wants to ensure that it performs the process correctly and so intends to start the process with the first step of the strategic planning process, which is

When a firm is able to create more economic value than rival firms it is said to have a(n)

Thermacorp's 17.3% ROE is an example of a(n) ________ ratio.

There is complete consensus among strategic managers and academic researchers about what a "strategy" is.

Liquidity ratios are ratios that focus on the firm's ability to meet its short-term financial obligations.

Activity ratios are ratios with some measure of profit in the numerator and some measure of firm size or assets in the denominator.

It is usually possible to know for sure that a firm is choosing the right strategy.

Firms whose mission is central to all they do are known as ________ firms.

A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.

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 are known as

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

One of the first scholars to examine the longevity of competitive advantage was

Thermacorp is in the heating and cooling industry and has total assets of $20 million, with stockholders' equity of $15 million, an ROE of 17.3%, and a firm Beta of 1.6. If the risk free rate of return is 4 and the market rate of return is 10, what is the cost of equity?

The size of a firm's competitive advantage is the sum of the economic value a firm is able to create and the economic value rivals are able to create.