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59. ______ is a capacity for a set of resources to perform a task or an activity in an integrative manner.
a.
A capability
b.
A core competence
c.
Sustainable competitive advantage
d.
Organizational intelligence
60. ______ provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters
changes.
a.
Strategic flexibility
b.
Continuous learning
c.
Knowledge
d.
The Internet
61. Firms use both the ______ and ______ models. In fact, these models complement each other in that one focuses
outside the firm while the other focuses inside the firm.
a.
industry; capability
b.
I/O; resource-based
c.
competition; competency
d.
industry; competency
62. All of the following are resources of an organization EXCEPT:
a.
an hourly production employee’s ability to catch subtle quality defects in products.
b.
oil drilling rights in a promising region.
c.
weak competitors in the industry.
d.
a charity’s board of directors of experienced executives.
63. The interests of an organization’s stakeholders often conflict, and the organization must prioritize its stakeholders if it
cannot satisfy them all. The ______ is the most critical criterion in prioritizing stakeholders.
a.
power of each stakeholder
b.
urgency of satisfying each stakeholder
c.
vulnerability of organizational stakeholders
d.
social value of each stakeholder
64. SWOT stands for
a.
strategy, wealth, organization, and threats.
b.
success, weakness, opportunities, and taxes.
c.
strength, wealth, organization, and taxes.
d.
strengths, weaknesses, opportunities, and threats.
65. A ______ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and
gain a competitive advantage.
a.
goal
b.
strategy
c.
tactic
d.
mission
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66. The resource-based model argues that:
a.
all resources have the potential to be the basis of sustainable competitive advantage.
b.
resources alone can be a source of sustainable competitive advantage.
c.
the key to competitive success is the structure of the industry in which the firm competes.
d.
resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm’s core
competencies.
67. PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to
consider that the decision:
a.
should be based solely on the results of the CEO’s approval of the mine’s general manager.
b.
has ethical implications for organizational stakeholders.
c.
need not be socially responsible if the firm is making below-average returns from the mine.
d.
All of these choices are important to consider.
68. Generally speaking, product market stakeholders are satisfied when:
a.
a firm achieves a balance between profit margins, costs paid to suppliers and prices set for customers.
b.
a firm’s profit margin yields an above-average return to its capital market stakeholders.
c.
the interests of the firm’s organizational stakeholders have been maximized.
d.
the interests of all stakeholders have been at least minimally satisfied.
69. Organizational stakeholders include:
a.
unions.
b.
host communities.
c.
employees.
d.
suppliers of capital.
70. A major assumption about the strategic management process is that it is:
a.
inspired.
b.
team-based.
c.
rational.
d.
inclusive.
71. Organizational culture refers to:
a.
the social energy that drives, or fails to drive, the organization.
b.
the complex set of ideologies, symbols, and core values that are shared throughout the firm.
c.
what people do when no one else is looking.
d.
All of these options are correct.
72. Organizational stakeholders are usually satisfied when
a.
their return on investment has been maximized.
b.
customers pay the highest sustainable price for the goods and services they receive.
c.
companies provide a dynamic, stimulating, and rewarding work environment.
d.
companies are paying the highest prices to suppliers.
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73. The goal of the organization’s ______ is to point the firm in the direction of where it would like to be in the years to
come.
a.
vision
b.
mission
c.
culture
d.
strategy
74. Knowledge is composed of all the following EXCEPT:
a.
insight.
b.
expertise.
c.
information.
d.
intelligence.
75. The “liability of foreignness” is the:
a.
inability of most U.S. managers to truly comprehend foreign cultures.
b.
political disadvantage that U.S. firms have when doing business abroad.
c.
overall risk of participating outside a firm’s domestic country when entering global competition.
d.
preference for “buying local,” which always puts foreign firms at a disadvantage when competing in the U.S.
market.
76. In a diversified firm, corporate-level strategy is concerned with:
a.
operating each individual business under the corporate umbrella.
b.
determining how each functional department of the firm will operate.
c.
determining in which businesses to compete and how resources will be allocated between businesses.
d.
coordinating the vision and mission of each subsidiary firm.
77. The I/O model is grounded in:
a.
anthropology.
b.
psychology.
c.
economics.
d.
accounting.
78. When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n):
a.
strategic mission.
b.
inspiring vision.
c.
core competence.
d.
sustainable market niche.
79. Firms use the five forces model of competition to identify the ______ of the industry. It is measured by its _______.
a.
size; number of competitors.
b.
globalization; export percentages.
c.
hypercompetition; technology diffusion.
d.
attractiveness; profitability.
80. A company’s ability to acquire knowledge is:
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a.
less important in the 21st century than in previous periods of business history.
b.
an important source of competitive advantage in virtually all industries.
c.
not considered an asset or resource for businesses.
d.
only important in high technology industries.
81. Successful strategic leaders are:
a.
committed to helping the firm to create value for all stakeholder groups.
b.
committed to nurturing those around them.
c.
decisive.
d.
All of these options are correct.
82. Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors higher
returns than those earned by its direct competitors’ investors. RNH has a reputation for providing high-paying managerial
and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been
provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and
inadequate patient-care staffing. Which statement best describes the situation?
a.
RNH has been earning below-average returns, so it has had to prioritize the demands of its various
stakeholders.
b.
RNH has prioritized the demands of capital market stakeholders and organizational stakeholders, over the
demands of product market stakeholders.
c.
RNH has earned above-average returns and so has satisfied the needs of all relevant stakeholders.
d.
RNH has been attempting to minimally satisfy the demands of all of its stakeholders.
83. The firm’s ______ provide the foundation for choosing one or more ______ and deciding how to implement them.
a.
analyses; strengths
b.
abilities; strengths
c.
analyses; strategies
d.
abilities; strategies
84. The Chambers of Commerce of cities and towns often implore citizens to buy from local businesses. This is because
the organization’s role as a taxpayer is most important to ______ as stakeholders.
a.
major suppliers of capital
b.
shareholders
c.
host communities
d.
unions
85. A firm has achieved ______ when it successfully formulates and implements a value-creating strategy.
a.
strategic competitiveness
b.
a permanently sustainable competitive advantage
c.
substantial returns
d.
legal and ethical core values
86. Effective strategic leaders are chosen based on:
a.
their capabilities and accumulation of human capital over time.
b.
their single-minded focus on strategy formation.
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c.
their aptitude for strategy implementation.
d.
their focus on innovation.
87. The industrial organization (I/O) model argues that:
a.
the key factor in success is choosing the correct industry in which to compete.
b.
the firm’s internal resources and capabilities represent the foundation for development of a value-creating
strategy.
c.
the key to earning above-average returns is strategic flexibility.
d.
the internal structure of the organization must match the industry in which it competes for it to earn above-
average returns on investment.
88. Research shows that approximately ______ percent of a firm’s profitability is explained by the industry in which it
competes, whereas ______ percent is explained by the firm’s characteristics and actions.
a.
90; 10
b.
60; 40
c.
36; 20
d.
20; 36
89. :A business-level strategy describes
a.
the businesses in which the company intends to compete.
b.
all policies and procedures used in functional departments.
c.
the business unit’s actions to exploit its competitive advantage over rivals.
d.
a firm’s resources, intent, and mission.
90. All of the following are assumptions of the industrial organization (I/O) model EXCEPT:
a.
organizational decision makers are rational and committed to acting in the firm’s best interests.
b.
resources to implement strategies are firm-specific and attached to firms over the long-term.
c.
the external environment is assumed to impose pressures and constraints that determine the strategies that
result in above-average returns.
d.
every firm in an industry controls similar strategically relevant resources.
91. Above-average returns are;
a.
higher profits than the firm earned the previous year.
b.
higher profits than the industry averaged over the last 10 years.
c.
profits in excess of what an investor expects to earn from a historical pattern of performance of the firm.
d.
returns in excess of what an investor expects to earn from other investments with a similar level of risk.
92. ______ has become the second-largest economy in the world.
a.
The United States
b.
The European Union
c.
Japan
d.
China
93. A firm’s mission:
a.
is a statement of a firm’s business in which it intends to compete and the customers it intends to serve.
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b.
is an internally focused affirmation of the organization’s financial, social, and ethical goals.
c.
is mainly intended to emotionally inspire employees and other stakeholders.
d.
is developed by a firm before the firm develops its vision.
94. The culmination of the strategic management process is:
a.
performance.
b.
strategy implementation.
c.
strategy formulation.
d.
analysis.
95. ______ should establish a firm’s individuality and should be inspiring and relevant to all stakeholders.
a.
A strategy
b.
A vision
c.
A mission
d.
A goal
96. Product market stakeholders include the firm’s customers, and the principal concern of this stakeholder group is:
a.
maximizing the firm’s return on investment.
b.
receiving the highest-quality services in the industry at any price.
c.
obtaining reliable products at the lowest possible price.
d.
increasing the profitability of the firm.
97. According to Hitt, the final responsibility for forming the organization’s mission lies with the:
a.
CEO.
b.
top-management team.
c.
employees.
d.
organization’s stakeholders.
98. In smaller, new venture firms, returns are sometimes measured in terms of:
a.
return on assets.
b.
return on equity.
c.
return on sales.
d.
the amount and speed of growth.
99. Which of the following statements about organizational knowledge is correct?
a.
Knowledge is an intangible resource.
b.
The importance of knowledge is increasing.
c.
The value of knowledge as a proportion of shareholder value is increasing.
d.
All of these options are correct.
100. Before liquidating during a bankruptcy, a company will take several actions to try to satisfy its ______ stakeholders.
a.
capital market
b.
product market
c.
organizational
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d.
governmental
101. In order to cope with hypercompetition, firms need to develop ______ through continuous learning.
a.
competitive resilience
b.
strategic flexibility
c.
strategic power
d.
competitive dominance
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Answer Key
1. True
2. True
3. True
4. False
5. True
6. False
7. False
8. False
9. True
10. True
11. False
12. True
13. False
14. False
15. True
16. False
17. False
18. True
19. True
20. True
21. False
22. False
23. True
25. False
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26. True
27. False
28. False
29. True
30. False
31. False
32. False
33. True
34. True
35. False
36. True
37. False
38. False
39. False
40. True
41. b
42. c
43. d
44. d
45. c
46. b
47. c
48. c
49. a
51. d
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52. b
53. d
54. b
55. a
56. a
57. c
58. d
59. a
60. b
61. b
62. c
63. a
64. d
65. b
66. d
67. b
68. a
69. c
70. c
71. d
72. c
73. a
74. a
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77. c
78. c
79. d
80. b
81. d
82. b
83. c
84. c
85. a
86. a
87. a
88. d
89. c
90. b
91. d
92. d
93. a
94. a
95. c
96. c
97. a
98. d
99. d
100. a