61. 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
62. 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. firms in given industries, or given industry segments, are assumed to control similar strategically relevant
resources.
63. 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 in order to earn
above-average returns on investment.
64. Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly
attributable to
a. the power of the financial market stakeholders.
b. the resources the firm possesses.
c. the profitability of the industry in which the firm competes.
d. hypercompetition within the industry.
65. Firms use the five forces model to identify the of the industry as measured by its
a. size; number of competitors.
b. globalization; exports.
c. hypercompetition; technology diffusion.
d. attractiveness; profitability.
66. Although McDonald’s is competing in an unattractive industry, it has improved its performance by focusing on
product innovations and by enhancing existing facilities. This improved performance is best explained by
a. globalization.
b. the resource-based model.
c. the I/O model.
d. hypercompetition.
67. An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial
organization model of above-average returns and is using its concepts to make a decision. Both start-up companies
propose to manufacture health-focused foods with such characteristics as low salt, low sugar, high fiber, and no
artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which
consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and
commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial
organization?
a. Green Pastures Foods
b. RexRich Foods
c. Both firms are consistent with the I/O approach.
d. At the entrepreneurial stage, the model which companies follow is not important.
68. Research shows that approximately percent of a firm’s profitability is explained by the industry in which it
competes, whereas
a. 90; 10
b. 60; 40
c. 36; 20
d. 20; 36
percent is explained by the firm’s characteristics and actions.
69. 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 endowment of $400 million.
70. All of the following are assumptions of the resource-based model EXCEPT
a. each firm is a unique collection of resources and capabilities.
b. the industry’s structural characteristics have little impact on a firm’s performance over time.
c. capabilities are highly mobile across firms.
d. differences in resources and capabilities are the basis of competitive advantage.
71. 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
72. 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.
73. In the resource-based model, which of the following factors would be considered a key to organizational success?
a. unique market niche
b. weak competition
c. economies of scale
d. skilled employees
74. To have the potential to become sources of competitive advantage, resources and capabilities must be non-
substitutable, valuable, , and
a. unique; easy to imitate.
b. easy to imitate; difficult to implement.
c. rare; costly to imitate.
d. easy to implement; unique.
75. The resource-based model of the firm 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.
76. The resource-based view of the firm
a. emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone.
b. argues that the industry environment has a stronger influence on firms’ ability to implement strategies
successfully than does the competitor environment.
c. calls for firms to focus on their homogeneous capabilities to compete against their rivals.
d. suggests that vision and mission are closely linked to sustainable competitive advantage.
77. The goal of the organization’s
come.
a. vision
b. mission
c. culture
d. strategy
is to point the firm in the direction of where it would like to be in the years to
78. The Princeton Alliance Church states in its website that “PAC exists to help you live life to the fullest by knowing
God, developing community and bringing hope.“ This pronouncement is most precisely a statement of organizational
a. values.
b. mission.
c. vision.
d. culture.
79. 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.
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.
80. The final responsibility for forming the organization’s mission lies with the
a. CEO.
b. top-management team.
c. employees.
d. organization’s stakeholders.
81. Who typically develops a firm’s mission statement?
a. only the CEO
b. only top managers
c. the CEO and top managers
d. the CEO, COO, and CFO only
82. Organizational stakeholders include
a. unions.
b. host communities.
c. employees.
d. suppliers of capital.
83. 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
84. Capital market stakeholders include
a. industry competitors.
b. shareholders.
c. employees.
d. government regulators.
85. Dissatisfied capital market stakeholders may
a. sell their stock.
b. tighten loan covenants.
c. seek to increase their power.
d. All of these options are correct.
86. Greenleaf Property Management has been earning below-average returns for the last three years. Which of the
following statements are true?
a. Greenleaf will be able to satisfy its multiple stakeholders easily as long as the stakeholders are committed to
the strategic mission of the firm.
b. Greenleaf will be able to at least minimally satisfy the demands of each stakeholder.
c. Greenleaf will need to prioritize the demands of its stakeholders based on the political influence each wields.
d. Greenleaf will not be able to minimally satisfy all stakeholders.
87. 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 products and services in the industry.
c. obtaining reliable products at the lowest possible price.
d. increasing the profitability of the firm.
88. Generally speaking, product market stakeholders are satisfied when
a. a firm’s profit margin yields the lowest return to capital market stakeholders that is acceptable to them.
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.
89. Before liquidating, Circuit City took several actions to try to satisfy its stakeholders.
a. capital market
b. product market
c. organizational
d. governmental
90. 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
91. Although it closed stores, changed the top management team, and sought potential buyers, none of these actions
resulted in outcomes that allowed Circuit City to meet the expectations of its stakeholders.
a. product market
b. capital market
c. organizational
d. governmental
92. 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.
93. Product market stakeholders include
a. suppliers.
b. shareholders.
c. employees.
d. the firm’s chief executive officer.
94. 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 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.
95. A prominent national accounting firm runs television advertisements showing an accountant working alone late in
the office on a client’s project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The
message of the ad is that this firm’s accountants love their work. This ad seeks to convey a sense of the
organization’s to the viewers.
a. culture
b. mission
c. vision
d. personality
96. The global economy, globalization, rapid technological change, and the increasing importance of knowledge are
creating the need to
a. delegate strategic responsibilities to employees “closer to the action.”
b. split responsibilities between the CEO and the board of directors as a result of corporate scandals triggered
by unethical CEOs.
c. re-centralize the responsibility for strategy to the CEO.
d. expand the strategic responsibilities to all organizational stakeholders.
97. The strategic leader’s work is characterized by
a. ambiguous decision situations which make effective decisions difficult to determine.
b. a willingness to unify stakeholders through skillful manipulation.
c. an ability to identify the correct solutions to long-range problems.
d. concentration on the practical day-to–day aspects of the organization‘s operations.
98. The profit pool is the
a. pool of assets that is distributed to investors.
b. total profits earned in an industry along all points of the value chain.
c. profits that are accrued when a firm earns above-average returns.
d. total profits that can be divided among the competitors within an industry.
99. The steps for identifying the profit pools in an industry include all of the following EXCEPT
a. defining the boundaries of the pool.
b. estimating the overall size of the pool.
c. defining the competitors in the pool.
d. estimating the size of the value-chain activity in the pool.
100. Analysis of the industry‘s profit pool enables strategic managers to
a. predict future revenue streams for the organization.
b. predict growth in sales over the medium to long range.
c. determine whether an industry will be viable in the long term.
d. locate the most promising areas of an industry’s value chain.
101. If McDonald’s were to map the profit pool in the quick-service restaurant industry, it would do all of the following
EXCEPT
a. define the industry’s boundaries and size.
b. estimate the profit potential in each part of the value chain.
c. focus on unattractive industries ignored by competitors.
d. select the strategy to use where the largest profit pools are located.
102. A major assumption about the strategic management process is that it is
a. inspired.
b. team-based.
c. rational.
d. inclusive.
103. 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 firm’s actions to exploit its competitive advantage over rivals.
d. a firm’s resources, intent, and mission.
104. 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.