Deck 1: The Foundations of Strategic Management

Question 1

A company's mission defines the firm's core intent and the business or businesses in which it intends to operate.

Answer 1

True

Question 2

Companies use centralization to make sure that the people who are closest to the action are the ones who are making decisions and taking action.

Answer 2

False

Question 3

Effective communication is an essential aspect of successful strategy implementation.

Answer 3

True

Question 4

Managers can use the Industrial Organization (I/O) model to identify strengths and weaknesses in the external environment.

Question 5

Innovation is a competitive advantage for Gillette.

Question 6

A business' strategy is an action plan designed to help the organization move toward the achievement of its vision.

Question 7

According to the Resource-Based View of the Firm (RBV) model, effective management of a company's operations results in the creation of unique resources and capabilities.

Question 8

Only large companies that trade their stock on a major stock exchange need to use an effective strategic management process.

Question 9

Changes in economic conditions are an environmental threat that could affect any company in any industry.

Question 10

In order for a capability to be considered a distinctive competence, it must be performed BETTER than the competition.

Question 11

Every company possesses both tangible and intangible resources.

Question 12

In the fashion industry, Louis Vuitton's competitive advantages in product design and manufacturing are critical to the firm's success.

Question 13

Managers can use the Industrial Organization (I/O) model to identify opportunities and threats in their firm's external environment.

Question 14

In an organizational context, ethics reveal a value system that has been widely adopted by the firm's employees.

Question 15

According to the Industrial Organization (I/O) model, when a firm lacks control over conditions in the external environment, the company's strategic options are limited.

Question 16

The final responsibility for effective use of the strategic management process rests with the firm's top strategic leaders.

Question 17

An organization's culture has no impact on or relationship to the firm's strategic management process.

Question 18

Capabilities result when firms integrate several different resources.

Question 19

According to the Industrial Organization (I/O) model, effective management of a company's operations results in the creation of unique resources and capabilities.

Question 20

While inventory management and distribution are competitive advantages for Walmart's discount retailing business, they are of little value in their grocery business.

Question 21

The statement that defines a company's core intent and the business(es) in which it intends to operate is known as

A) mission
B) vision
C) strategy
D) tangible resource

Question 22

Firms need stakeholders but stakeholders do not need firms.

Question 23

A company's strengths, weaknesses and resources are conditions that affect its choice of strategies. All of these conditions are aspects of

A) the external environment
B) the global economy
C) the company's vision
D) the internal environment

Question 24

Resources and capabilities that allow a firm to complete important tasks are known as

A) strategy
B) vision
C) strengths
D) intangible assets

Question 25

Managing relationships between the firm and its stakeholders is difficult because satisfying one stakeholder's needs may come at the expense of another stakeholder.

Question 26

PetsMed.com uses the Internet and telemarketing to sell its products to customers. This set of actions taken by PetMed.com after it selected its strategy is known as

A) strategic leadership
B) indirect marketing
C) global expansion
D) strategy implementation

Question 27

Which of the following IS NOT part of the strategic management process?

A) Creating a vision.
B) Hiring and training employees.
C) Analyzing the internal and external environments.
D) Selecting strategies that create value for stakeholders.

Question 28

The MISSION of any company should focus on

A) avoiding litigation, such as product liability lawsuits filed by unhappy customers.
B) eliminating competition by acquiring competitors or driving them out of business.
C) identifying the markets the company wants to serve and the goods and services the company will provide.
D) understanding how economic forces, such as interest rates and tax policies might affect the firm's pricing decisions and profitability.

Question 29

Which of the following strategic management concepts consists of a company's mission and a picture of what the firm hopes to become in the future?

A) vision
B) core competence
C) strengths
D) strategy

Question 30

When a company creates value for customers by performing key activities BETTER than its competitors, the firm is said to possess a

A) competitive advantage
B) tangible resource
C) market share advantage
D) positive return for shareholders

Question 31

When a company has core competencies that are different than the capabilities of competitors, these core competencies are also known as

A) intangible assets
B) distinctive competencies
C) visionary capabilities
D) tangible assets

Question 32

When a firm creates value for customers by performing activities that its competitors can't perform, the firm is said to possess

A) a good reputation
B) positive return for shareholders
C) a competitive advantage
D) intangible values

Question 33

Firms that manage their relationships with internal and external stakeholders better than competitors might gain a competitive advantage.

Question 34

What do we call the action plan that is designed to help a company achieve its vision?

A) contingency plan
B) forecast
C) strategy
D) mission

Question 35

Distribution and inventory management are two capabilities that Walmart emphasizes and performs especially well in pursuit of its vision. For Walmart, distribution and inventory management are considered to be

A) weaknesses
B) core competencies
C) intangible resources
D) human resource practices

Question 36

Conditions in the external environment that can help a company reach its vision are known as

A) strengths
B) capabilities
C) opportunities
D) vision channels

Question 37

A company's strengths, weaknesses, opportunities and threats are all aspects of the internal environment that can affect the firm's choice and use of strategies.

Question 38

When a firm is able to integrate its resources and complete important tasks, the firm is said to possess

A) competitive advantage
B) capabilities
C) economic incentives
D) effective performance appraisal practices

Question 39

Population trends, income levels, and competition are conditions that can affect a firm's performance. All of these conditions are aspects of

A) the external environment
B) the internal environment
C) the economy
D) governmental policy

Question 40

Tangible assets, such as a strong balance sheet, and intangible assets like a company's reputation or knowledge are known as

A) resources
B) expertise
C) cultural values
D) stakeholders

Question 41

Individuals who practice strategic leadership, such as Steve Jobs of Apple are known as

A) entrepreneurs
B) insiders
C) strategic leaders
D) industrialists

Question 42

According to Table 1.2 in the text, McDonald's vision is "to give each customer, every time, an experience that sets new standards in value, service, friendliness, and quality." Given this vision, which of the following might be considered to be part of McDonald's DNA?

A) information about customer preferences for various menu items
B) employee training that focuses on friendliness and customer service
C) pricing policies that offer customers exceptional value for their money
D) All of these

Question 43

Respecting the contribution of each employee and continuous innovation are important values in 3M's ____.

A) code of conduct
B) corporate strategy
C) organizational culture
D) mission

Question 44

According to the industrial organization (I/O) model, when a firm is unable to control conditions in the external environment, what happens?

A) The company will be able to differentiate itself from competitors in a variety of ways.
B) The company's strategic options will be limited.
C) The company's strategic options will be unlimited.
D) The company will be unable to achieve a sustainable competitive advantage.

Question 45

Which of the following characteristics IS NOT a key feature of strategic management?

A) performance oriented
B) static rather than dynamic
C) ongoing in nature
D) concerned with satisfying stakeholders

Question 46

In contrast to the industrial organization (I/O) model, the resource-based view of the firm (RBV) model focuses attention on which of the following?

A) economic conditions, government policy and political tensions
B) resources, capabilities and core competencies
C) opportunities and threats in the external environment
D) conflicting expectations of competitors, suppliers, and customers

Question 47

Which of the following types of organizations WOULD NOT benefit from using the strategic management process?

A) Small, entrepreneurial firms
B) Large, multinational companies
C) Not-for-profit organizations
D) All of these would benefit from using the strategic management process

Question 48

Which of the following IS NOT considered a stakeholder group?

A) owners
B) external stakeholders
C) transitional stakeholders
D) internal stakeholders

Question 49

Individuals and groups who have an interest in how a firm performs and can influence a firm's actions are known as

A) competitors
B) cohorts
C) stakeholders
D) shareholders

Question 50

Imagine that you have been asked by firms in the airline industry to use the industrial organization (I/O) model to help them identify reasons for their current performance problems. Which of the following conclusions might you draw?

A) Poor economic conditions have caused customers to reduce the number of times they travel by air.
B) War and international tensions have impacted the demand for airline services.
C) Increasing fuel costs have hampered the profitability of a number of airlines.
D) All of these.

Question 51

CompUSA's decline illustrates the point that

A) competitive advantage is a myth.
B) success can be transitory.
C) it is impossible to compete against Walmart.
D) a company's brand and its financial performance are indistinguishable.

Question 52

According to the text, Louis Vuitton, the world's most profitable luxury brand, has skills that are superior to its competitors in which of the following areas?

A) product design and manufacturing
B) distribution and inventory management
C) logistics and purchasing
D) advertising and retail sales management

Question 53

Conditions in the external environment that can prevent a company from reaching its vision are known as

A) threats
B) weaknesses
C) opportunities
D) descending cycles

Question 54

According to the resource-based view of the firm (RBV) model, what is the most likely source of competitive advantage for any firm?

A) Ability to correctly identify opportunities and threats in the external environment.
B) Ability to effectively establish barriers to entry that keep competitors out of the industry.
C) Ability to use unique resources and capabilities to create value for customers.
D) Ability to lobby government agencies and reduce the amount of government regulation.

Question 55

The process of putting strategy into action is known as

A) environmental analysis.
B) strategic visioning.
C) strategy formulation.
D) strategy implementation.

Question 56

Inventory management and distribution competitive advantages have allowed ____ to become the largest grocer in the United States.

A) Walmart
B) Kroger
C) Tesco, PLC
D) Safeway

Question 57

Consolidation in the airline industry is the direct result of

A) customers determining the price they want to pay for goods and services.
B) managerial incompetence.
C) many significant environmental changes.
D) strategic paralysis.

Question 58

Imagine that you have been asked to apply the industrial organization (I/O) model to explain why a firm is performing poorly. What is the most likely explanation for the firm's poor performance according to this model?

A) Lack of core or distinctive competencies
B) Inability to achieve a sustainable competitive advantage
C) Failure to carefully examine opportunities and threats in the external environment
D) All of these

Question 59

Which of the following is the world's most profitable luxury brand?

A) Coach
B) Prada
C) Gucci
D) Louis Vuitton

Question 60

Tesco PLC's entry into the US market is causing Walmart to

A) panic.
B) find new ways to provide value to customers.
C) close stores that are located near Tesco stores.
D) look for expansion opportunities in Europe.

Question 61

Which of the following would be an example of a stakeholder withdrawing her/his support for a company's strategy?

A) Major shareholder sells all of his/her stock in the company.
B) Top manager leaves to join a competitor.
C) A large customer cancels an order and places it with a competitor.
D) All of these.

Question 62

Which of the following represents a decision that strategic leaders must make when using the strategic management process?

A) Determining what resources should be acquired by the firm.
B) Determining how much the firm should pay for the resources it needs.
C) Determining how to manage the resources that the firm acquires.
D) All of these.

Question 63

In your opinion, which of the following stakeholder groups is the most important - customers, employees, or shareholders? Please provide the rationale for your selection.

Question 64

From which of the following stakeholder groups do companies usually receive capital (i.e. money) to finance their continuing operations?

A) competitors and employees
B) customers and suppliers
C) investors and financial institutions
D) All of these

Question 65

What are core competencies and distinctive competencies and how do they lead to competitive advantage?

Question 66

According to the text, the final responsibility for effective strategic management lies with whom?

A) board of directors
B) customers
C) shareholders
D) strategic leaders

Question 67

Which of the following IS NOT considered to be an external stakeholder group?

A) institutional shareholders
B) suppliers
C) local communities
D) customers

Question 68

Chapter one introduces two different models that can help companies select and implement the most effective strategy. Which of these models suggests that managers should determine what the firm's resources allow it to do better than the competition?

A) The industrial organization (I/O) model of the firm
B) The competitive dynamics (CD) model
C) The resource-based view of the firm (RBV) model
D) The five forces model of competition (5F)

Question 69

Strategic leaders can use which of the following to stimulate employee creativity in the development of new products?

A) balance sheet
B) vision statement
C) competitive strength assessment
D) stakeholder analysis

Question 70

Chapter one introduces two different models that can help companies select and implement the most effective strategy. Which of these models suggests that managers should select the most attractive industry and then use the strategy called for by environmental conditions in that industry?

A) The resource-based view of the firm (RBV) model
B) The competitive dynamics (CD) model
C) The model of strengths, weaknesses, opportunities and threats (SWOT)
D) The industrial organization (I/O) model

Question 71

According to the text, under what condition can an organization's culture be a strong motivator of excellent performance by employees?

A) When the culture requires input on important decisions from all employees.
B) When the culture lets people know they are appreciated.
C) When the culture focuses on honesty and integrity.
D) When the culture emphasizes innovation and quality.