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Chapter 01 Strategic Management: Creating Competitive Advantages Answer
Key
True / False Questions
1.
Hewlett-Packard's failure and success under the leadership first of Carly Fiorina and then of Mark Hurd
was said to be a direct result of the quality of leadership of each of these CEOs. According to the text,
this would be an example of the "romantic" perspective of leadership.
2.
Strategic management consists of the analyses, decisions, and actions an organization undertakes in
order to create and sustain competitive advantages.
3.
Strategic management is concerned with the analysis of strategic goals as stated in the vision, mission,
and strategic objectives of a firm.
4.
The three interrelated and principal activities of strategic management are: strategy analysis, strategy
formulation, and strategy implementation.
5.
Strategic management is not concerned with how to create competitive advantage in the marketplace.
6.
Management innovations such as total quality, just-in-time, benchmarking, business process
reengineering, and outsourcing are important, but not enough for building sustainable competitive
advantage.
7.
Making trade-off decisions between effectiveness and efficiency is central to the practice of strategic
management.
8.
Only shareholders in a publicly held company are stakeholders because they are the only group that has
a stake in the success of the organization.
9.
Strategic management is only concerned with short-term perspectives.
10.
Focusing on a single stakeholder is a good strategic principle for managers to follow.
11.
According to Peter Senge, a leading strategic management author, creative tension results from the need
to incorporate both short-term and long-term perspectives in strategic management.
12.
Shareholders expect only short-term value and therefore good managers should only focus on meeting
short-term performance targets.
13.
Focusing on the short term and efficiency is always a bad management principle.
14.
Ambidexterity refers to a manager's challenge to align resources, without having to take advantage of
existing product markets or to proactively explore new opportunities.
15.
According to a recent study involving 41 business units in 10 multinational companies, one
ambidextrous behavior exhibited by managers is that of being brokers who are always looking to build
internal networks.
16.
According to Henry Mintzberg, a management scholar, most firms realize their original intended
strategy.
17.
The final realized strategy of a firm is a combination of deliberate and emergent strategies.
18.
In the Mintzberg model, organizational decisions determined only by analysis are intended strategy.
19.
Strategy analysis is the study of the external environments of the firm.
20.
Both the internal and external environments of a firm must be analyzed as well as the goals of the firm
before managers can formulate and implement appropriate strategies.
21.
Strategy formulation involves decisions made by firms regarding investments, commitments, and other
aspects of operations that create and sustain competitive advantage.
22.
All successful firms compete and outperform their rivals by developing bases for competitive
advantage, which can be achieved only through cost leadership.
23.
Business-level strategy focuses on (1) what businesses to compete in and (2) the management of the
business portfolio to create synergy among its businesses.
24.
Corporate-level strategy addresses how firms compete and outperform their rivals as well as achieve
and sustain competitive advantages.
25.
International strategy involves decisions concerning appropriate entry strategy and attaining competitive
advantage in international markets.
26.
Entrepreneurial activity aimed at new value creation is not a major engine for economic growth.
27.
Strategy implementation involves actions that carry out the formulated strategy including proper
strategic controls, organizational designs, and leadership.
28.
Effective leadership can play a large role in fostering corporate entrepreneurship. Corporate
entrepreneurship can have a very positive impact on the bottom line of a firm.
29.
Firms must exercise either informational control or behavioral control in order to assure proper strategy
implementation.
30.
Leaders are responsible for creating a learning organization so that the entire organization can benefit
only from the individual talents.
31.
The three primary participants in corporate governance are: (1) the shareholders, (2) the management
(led by the chief executive officer), and (3) the employees.
32.
Decisions by boards of directors are always consistent with shareholder interests.
33.
Ensuring effective corporate governance requires an effective and engaged board of directors,
uninvolved shareholders, and proper managerial rewards and incentives.
34.
Auditors, banks, and analysts are external control mechanisms to ensure effective corporate
governance.
35.
Former Chrysler vice chairman Robert Lutz observed that companies exist to serve the shareholder and
create shareholder value. He insisted that the only person who owns the company is the person who paid
good money for it. This is an example of a symbiotic approach to stakeholder management.
36.
Stakeholders make various claims on a company. Their interests must be taken into account in the
strategic management process.
37.
Stockholders in a company are the only individuals with an interest in the financial performance of the
company.
38.
Stockholders, employees, and the community-at-large are among the stakeholders of a firm.
39.
Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders
within and outside an organization.
40.
Procter and Gamble developed a laundry detergent compaction technique that appeals to consumers,
retailers, shipping and wholesalers, and environmentalists. This is an example of stakeholder
symbiosis.
41.
Partnering with governments, communities, suppliers, customers, and rivals is a way to manage
conflicting stakeholder interests.
42.
The Higgs Index enables companies to compare environmental performance outcomes in order to
improve their environmental impact and is an example of how rivals work together to resolve complex
problems.
43.
As a stakeholder group, creditors are interested in taxes and compliance with regulations.
44.
As a stakeholder group, customers are interested in dividends and capital appreciation.
45.
As a stakeholder group, communities are interested in good citizenship behavior.
46.
Social responsibility is the idea that organizations are not only accountable to stockholders but also to
the community-at-large.
47.
What constitutes socially responsible behavior changes over time.
48.
Shell, NEC, and Procter and Gamble have been measuring their performance according to what has
been called a triple bottom line. This technique involves an assessment of financial, social, and
environmental performance.
49.
Demands for greater corporate responsibility are decreasing today.
50.
A key stakeholder group that appears to be particularly susceptible to corporate social responsibility
(CSR) initiatives is customers.
51.
There is a positive influence of CSR on the consumer evaluation of companies and their purchasing
decisions, according to recent studies.
52.
Environmental sustainability is a value embraced by the most competitive and successful multinational
companies.
53.
For many successful firms, environmental values are not central to the company culture and
management processes.
54.
Sustainability is being increasingly recognized as a source of cost efficiencies and revenue growth.
55.
The ROIs on sustainability projects are often very difficult to quantify because the data necessary to
calculate ROI accurately are often not available when it comes to sustainability projects.
56.
Many of the benefits from sustainability projects are intangible, making it difficult to calculate the ROI.
57.
The intangible benefits of sustainability projects, such as reducing risks, staying ahead of regulations,
pleasing communities, and enhancing employee morale, are substantial even when they are difficult to
quantify.
58.
Sustainability projects often require shorter-term payback windows than other projects.
59.
Sustainability initiatives rarely have difficulty making it through the conventional approval process
within corporations because managers are not concerned about their return on investment.
60.
The ROI on a sustainability project generally is easy to quantify.
61.
Strategic management requires managers at all levels of the organization to take a segregated view of
the organization.
62.
The strategic management process should be addressed only by top-level executives. Mid-level and
low-level employees are best equipped to implement the strategies of the organization.
63.
To develop and mobilize people and other assets, leaders are needed throughout the organization.
64.
In the strategic management process, only local line leaders and executive leaders are needed.
65.
Internal networks have great positional power and formal authority.
66.
Local line leaders have little profit-and-loss responsibility.
67.
Executive leaders champion and guide ideas.
68.
Local line leaders are key in setting the tone for the empowerment of employees.
69.
Richard Branson, the founder of the Virgin Group, is well known for creating an inclusive
organizational structure in which anybody in the organization can be involved in generating and
activating upon new business ideas.
70.
To inculcate a strategic management perspective, managers must often make a major effort to effect
transformational change.
71.
To effect transformational change in an organization, managers must communicate extensively and
provide incentives, training, and development.
