Question 1

You are the manager in charge of setting the strategy for a new frozen yogurt company. Which of the following questions would be appropriate for you to ask during the analysis phase of the AFI strategy framework?

Accepted Answer

A)  Should we open our first location in Los Angeles or New York City? 
B)  How have consumer preferences in frozen yogurt flavors changed in the last five years? 
C)  Should we be competing nationally or internationally? 
D)  Can we secure relationships with enough organic dairy farmers to meet our commitment to using the healthiest ingredients?

Question 2

Cobalt Sodas has seen its market share erode in recent years, as consumers increasingly turn toward healthier beverage choices such as unsweetened sparkling water. Hoping to rekindle interest in sugary sodas, Cobalt decides to produce a limited run of "throwback" cans using labeling first introduced in the 1980s. What is wrong with this strategy?

Accepted Answer

A)  It fails to face the competitive challenge. 
B)  It does not involve concrete actions. 
C)  It lacks strategic commitments. 
D)  It tries to be everything to everybody.

Question 3

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

Accepted Answer

A)  choosing a distinct but different strategic position in the industry 
B)  working toward increasing the difference between value creation and cost 
C)  trying to be everything to everybody by combining different competitive strategies 
D)  focusing on creating value for customers rather than destroying rivals

Question 4

Managers use the AFI strategy framework to

Accepted Answer

A)  help their business achieve and sustain competitive parity. 
B)  minimize the wealth of their shareholders. 
C)  help reduce the economic contribution of their business. 
D)  explain and predict differences in firm performance.

Question 5

To be effective, firms need to

Accepted Answer

A)  back up their visions with strategic commitments that are costly and difficult to reverse. 
B)  increase their strategic flexibility by developing product-oriented vision statements. 
C)  isolate top managers from the organizational values. 
D)  pursue visions that are exclusively financial and not aspirational.

Question 6

How do strong ethical values benefit a firm?

Accepted Answer

A)  They lay the groundwork for a quick increase of profits and short-term success. 
B)  They serve as the guardrails put in place to keep the company on track when pursuing its mission. 
C)  They provide strong public relations, which can either benefit or hinder competitive advantage. 
D)  They emphasize benefiting stakeholders by significantly increasing profit.

Question 7

What is the relationship between economic contribution and competitive advantage?

Accepted Answer

The answer of What is the relationship between economic contribution...

Question 8

The management of Toshi Manufacturing showed a commitment to ________ by increasing the salary of many female employees to meet its goal of having equal pay for women and men who perform comparable work.

Accepted Answer

A)  scenario planning 
B)  upper-echelons theory 
C)  product-oriented vision 
D)  organizational core values

Question 9

Managers should create two sets of core values, one for employees and one for themselves.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following tasks in the AFI strategy framework involves putting the formulated strategy into practice through organizational structure, culture, and controls?

Accepted Answer

A)  strategy formulation 
B)  strategy implementation 
C)  strategy analysis 
D)  strategy evaluation

Question 11

During an AFI planning session, the managers of the Fukuhara Motorcycle Corporation decided to place various stages of production in different countries in order to implement the strategy of cutting overhead costs. By doing this, what issue did the firm address?

Accepted Answer

A)  philanthropic strategy 
B)  business ethics 
C)  corporate governance 
D)  organizational design

Question 12

When do employees fail to adopt the organizational values of a firm?

Accepted Answer

A)  when the internal stakeholders of the firm are involved in designing the values 
B)  when the top managers in the firm are merely paying lip service to the firm's stated values 
C)  when the strategic leaders in the firm propagate and exhibit the same values 
D)  when the organizational structure, such as its strategic decision making, is aligned with its values

Question 13

Questions asked during the strategy analysis stage of the AFI framework include "How does the firm make money?" and "What effects do forces in the external environment have on the firm's potential to gain and sustain a competitive advantage?"

Accepted Answer

A) True 
 B)False

Question 14

If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally

Accepted Answer

A)  execute an integrated cost-leadership and differentiation position. 
B)  copy the strategies of other firms through competitive benchmarking. 
C)  provide goods or services similar to its competitors at higher prices. 
D)  stake out a unique position within the industry.

Question 15

Which of the following summarizes the difference between a firm's vision and mission?

Accepted Answer

A)  A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision. 
B)  A vision states the ethical values of a firm; a mission states the monetary goals of a firm. 
C)  A vision states how much a firm wants to earn; a mission states how these earnings will be accomplished. 
D)  A vision states the management values of a firm; a mission states the values of the other workers.

Question 16

In the AFI strategy framework, strategy analysis primarily involves

Accepted Answer

A)  evaluating the effects of internal resources and core competencies on a firm's potential to gain and sustain a competitive advantage. 
B)  designing a business, corporate, and global strategy to gain and sustain a competitive advantage. 
C)  organizing a firm in order to effectively put the formulated strategy into practice. 
D)  deciding the type of corporate governance that would be most effective in the implementation of a strategy.

Question 17

Rapida Inc. and Click Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most likely have

Accepted Answer

A)  competitive advantage over other firms in their industry. 
B)  competitive parity with each other. 
C)  strategic alliance with each other. 
D)  economies of scope instead of economies of scale.

Question 18

Which of the following is a customer-oriented vision?

Accepted Answer

A)  to be the most progressive insurance company 
B)  to be the best automobile company in the world 
C)  to enable businesses to improve their employee communications 
D)  to manufacture innovative products through continuous learning

Question 19

Describe the three broad tasks of the AFI strategy framework and provide examples of the topics and questions that managers address in relation to each task.

Accepted Answer

The answer of Describe the three broad tasks of the...

Question 20

Core values provide ethical guidelines for how individual employees will behave.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Strategy

You are the manager in charge of setting the strategy for a new frozen yogurt company. Which of the following questions would be appropriate for you to ask during the analysis phase of the AFI strategy framework?

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

Managers use the AFI strategy framework to

To be effective, firms need to

How do strong ethical values benefit a firm?

What is the relationship between economic contribution and competitive advantage?

The management of Toshi Manufacturing showed a commitment to ________ by increasing the salary of many female employees to meet its goal of having equal pay for women and men who perform comparable work.

Managers should create two sets of core values, one for employees and one for themselves.

Which of the following tasks in the AFI strategy framework involves putting the formulated strategy into practice through organizational structure, culture, and controls?

During an AFI planning session, the managers of the Fukuhara Motorcycle Corporation decided to place various stages of production in different countries in order to implement the strategy of cutting overhead costs. By doing this, what issue did the firm address?

When do employees fail to adopt the organizational values of a firm?

Questions asked during the strategy analysis stage of the AFI framework include "How does the firm make money?" and "What effects do forces in the external environment have on the firm's potential to gain and sustain a competitive advantage?"

If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally

Which of the following summarizes the difference between a firm's vision and mission?

In the AFI strategy framework, strategy analysis primarily involves

Which of the following is a customer-oriented vision?

Describe the three broad tasks of the AFI strategy framework and provide examples of the topics and questions that managers address in relation to each task.

Core values provide ethical guidelines for how individual employees will behave.