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Chapter 01 What is Strategy? Answer Key
Multiple Choice Questions
1.
Which of the following strategies does Twitter need to implement to increase its
competitive advantage?
2.
_____ is best described as an integrative management field that combines analysis,
formulation, and implementation in the quest for competitive advantage.
3.
_____ is best described as a set of goal-directed actions a firm takes to gain and sustain
superior performance relative to competitors.
4.
Which of the following stages of the strategic management process involves an evaluation
of a firm's external and internal environments?
5.
In _____, a firm frames a guiding policy to address the competitive challenge.
6.
Through _____, a firm puts its guiding policy into practice by employing a set of coherent
actions.
7.
A firm that achieves superior performance relative to other firms in the same industry or
the industry average has a(n)
8.
Patterson Foods Inc. was the first company to start selling energy bars in its country—a
product that gained popularity among diverse groups. Soon, other companies started to
sell their own brands of energy bars, thereby giving Patterson Foods ample competition. In
response, Patterson Foods decided to limit its variety of energy bars to only four. However,
it ensured that these four varieties were low in calories and low in cost. With this
innovation, Patterson Foods Inc. consistently outperformed its competitors for ten years.
In this scenario, Patterson Foods Inc. maintained a _____ through its innovative strategy.
9.
Which of the following scenarios illustrates a firm that has a sustainable competitive
advantage?
10.
If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the
following will help determine if it has a competitive advantage over other pharmaceutical
companies?
11.
Underperformance relative to other firms in the same industry or the industry average
results in a(n) _____ for a firm.
12.
The Scoop, Ltd. is a magazine publishing company whose average return on invested
capital is approximately 5 percent. Because magazine publishing is a declining industry,
the industry average has been negative (–5 percent) for the last few years. In this
scenario, The Scoop Ltd. has a
13.
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
14.
The average cost of production for a bottle of vitamin water in the industry is $4 while its
average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and
sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll
Inc. in this scenario?
15.
A firm is said to gain a competitive advantage when it can
16.
FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online.
Through services like cash on delivery, easy return, and online tracking, the company has
created more customer value than its competitors (brick-and-mortar businesses) at the
same price. Also, the company's costs are substantially low due to minimal investment in
operation and administration. In this scenario, FindFor Inc. has most likely been able to
provide superior value and cost control through
17.
A firm
always
has a competitive disadvantage when its return on invested capital is
18.
Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie
theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a
cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the
following statements is most likely true of this scenario?
19.
For a firm that operates in an industry where competition is high, which of the following
practices will result in inferior performance?
20.
If a company wants to gain a competitive advantage in a highly competitive industry, it
should ideally
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21.
Jake's Taxi Service is a new entrant to the taxi industry. It has achieved success by staking
out a unique position in the industry. How did Jake's Taxi Service mostly likely achieve this
position?
22.
Pink Couture Inc. and Pink Blush Inc. are two companies in the apparel industry. While
Pink Couture Inc. focuses on providing unique product features and superior customer
service, Pink Blush Inc. focuses on low prices and minimal customer service. Both
companies have been able to gain a competitive advantage. This is most likely because
the companies have
23.
Which of the following is an implication of all firms in an industry pursuing a low-cost
position through application of competitive benchmarking?
24.
Which of the following statements should ideally reflect a firm's strategy for competitive
advantage?
25.
Which of the following factors most effectively contributed to the success of Threadless in
comparison to other companies with T-shirt designs, including American Eagle, Old Navy,
and Urban Outfitters?
26.
Which of the following statements about strategy is
not
true?
27.
Industry effects describe the underlying _____ structure of the industry.
28.
Which of the following statements accurately describes firm effects?
29.
Which of the following forces tends to be more important in determining a firm's
performance?
30.
A company wants to determine how industry effects have affected its profitability. Which
of the following elements should the company focus on?
