Q&A Hero

Q: (p. 6) In a multi-business firm, ______ -level executives determine the businesses in which the firm should be involved. A. Business B. Functional C. Corporate D. Operative

Q: To a firm seeking competitive advantage, an environmental threat is any individual, group, or organization outside a firm that seeks to reduce the level of that firm's performance.

Q: (p. 6) The top of the decision-making hierarchy comprises all of these EXCEPT A. Board of directors B. Front-line managers C. The CEO D. Administrative officers

Q: (p. 6) To a large extent, attitudes at the corporate level reflect the concerns of A. Stockholders and society at large B. Top managers C. The CEO D. The federal government

Q: (p. 6) Typically how many strategic decision levels are in the corporate decision-making hierarchy? A. 5 or more B. 4 C. 3 D. 2

Q: Monopolistically competitive industries consist of only a single firm.

Q: (p. 6) Which level of strategy is at the top of the decision-making hierarchy? A. Functional B. Business C. Corporate D. Operational

Q: (p. 6) Which level of strategy is at the bottom of the decision-making hierarchy? A. Corporate B. Business C. Functional D. Strategic

Q: Within the five forces framework, when all five threats are very high competition in the industry begins to approach a monopoly.

Q: (p. 6) Which level of strategy is in the middle of the decision-making hierarchy? A. Corporate B. Functional C. Business D. Strategic

Q: The five forces framework is based on the S-C-P model and identifies the five most common threats facing firms from their local competitive environment and the conditions under which these threats are more or less likely to be present.

Q: (p. 6) Which level of strategy uses a portfolio approach? A. Business B. Operational C. Corporate D. Functional

Q: According to the S-C-P model, attributes of the industry structure within which a firm operates define the range of options and constraints facing a firm.

Q: (p. 6) General Electric is a multi-business company. It typically would have ____ levels of strategy. A. 5 or more B. 4 C. 3 D. 2

Q: The S-C-P model assumes that any competitive advantages a firm has in an industry must benefit society.

Q: In a perfectly competitive industry, a large number of firms have products and services that are similar to each other and it is not very costly for firms to enter into or exit these markets.

Q: (p. 5) In a turbulent and competitive free enterprise environment, a firm will succeed only if it takes a(n) ____ stance towards change. A. Reactive B. Anti-regulatory or anti-government C. Proactive D. Vision and not mission

Q: (p. 5) All businesses exist in a(n) _____ system. A. open B. closed C. insular D. protected

Q: In the structure-conduct-performance model, the term "performance" refers solely to the performance of individual firms.

Q: (p. 5) Strategic decisions are based on what managers _____, rather than on what they _____. A. Forecast; know B. React to; anticipate C. Know; forecast D. Compromise with; analyze

Q: In the structure-conduct-performance model, the term "structure" refers to industry structure, measured by such factors as the number of competitors in an industry.

Q: (p. 5) Strategic issues are ____ oriented. A. future B. present C. past D. timelessly

Q: A severe recession that lasts for several years is known as a depression.

Q: Culture is the values, beliefs and norms that guide a behavior in a society, and culture is largely the same across the world.

Q: (p. 5) Which of the following applies to strategic issues? A. Consider only the firm's internal environment B. Are future oriented C. Concern allocation of insignificant amounts of company resources D. Do not have long-term impact on the firm's prosperity

Q: The aging of the "baby boomer" generation in American society is an example of a demographic trend.

Q: (p. 4-5) Some business decisions are strategic and therefore deserve strategic management attention. Which of the following is one of the six strategic issue dimensions? A. Requires front-line employee decisions B. Is not likely to have a significant impact on long-term prosperity of the firm C. Necessitates considering factors in the firm's external environment D. Is spontaneous

Q: In general, technological change creates opportunities, but not threats.

Q: (p. 5) Strategic issues require large amounts of the companys A. strengths B. opportunities C. suppliers D. resources

Q: (p. 5) Strategic decisions ostensibly commit the firm for A. 1-2 years B. The short term C. 3-4 years D. A long time, typically five years

Q: A firm's general environment consists of broad trends in the context within which the firm operates that can have an impact on the firm's strategic choices.

Q: What is the residual claimants view of equity holders?

Q: (p. 4) Strategic issues require which level of management decisions? A. Operative B. Top C. Front-line D. Middle

Q: Why is it important to understand a firm's strategy, even if you are not a senior manager in a firm?

Q: (p. 4) A(n) strategy reflects a company's awareness of how, when and where is should ____, against whom it should _____ and for what purpose it should _____. A. cooperate B. ally C. compete D. plan

Q: Describe the difference between emergent and intended strategies. Why might firms employ an emergent strategy?

Q: (p. 4) A(n) _____ reflects a company's awareness of how, when and where is should compete, against whom it should compete and for what purpose it should compete. A. Vision B. Organizational structure C. Strategy D. Long-term objective

Q: (p. 4) A _____is a company's game plan. A. Strategy B. Pricing policy C. Value statement D. Long-term objective

Q: Identify two approaches to estimating a firm's competitive advantages and discuss the strengths and weaknesses of each.

Q: Discuss the nature of a sustainable competitive advantage. In your answer, identify when a firm has a competitive advantage, define the term "economic value" and distinguish between a temporary competitive advantage and a sustainable competitive advantage.

Q: (p. 4) A strategy is a company's A. Game plan B. Pricing policy C. Value statement D. Long-term objective

Q: Define strategy implementation and discuss three specific organizational policies and practices that are particularly important in implementing a strategy.

Q: (p.4) Large-scale, future-oriented plans, for interacting with the competitive environment to achieve company objectives refers to its A. Strategy B. Goals C. Competitive analysis D. Dynamic policies

Q: Differentiate between business level and corporate level strategies and give examples of each.

Q: (p. 4) Strategic management involves the _____, directing, _____ and controlling of a company's strategy-related decisions and actions. A. Financing; marketing B. Planning; financing C. Marketing; planning D. Planning; organizing

Q: What are objectives, what role do they play in the strategic management process and what differentiates high quality objectives from low quality objectives?

Q: (p. 3) Strategic management compromises nine critical tasks. Which of the following is NOT one of the tasks? A. Development of annual objectives compatible with grand strategies B. Assessment of the company's external environment C. Selection of a particular set of long-term objectives and grand strategies D. Evaluate the success of the strategic process

Q: Define the term "mission" and discuss how a firm's mission can both positively and negatively impact a firm's performance.

Q: (p. 3) The set of decisions and actions resulting in the formulation and implementation of plans designed to achieve a company's objectives is defined as: A. Strategic policy B. Business policy C. Strategic management D. Tactics

Q: Define the term "strategy," discuss the set of assumptions and hypotheses that a strategy is based on and discuss what makes a good strategy.

Q: (p. 3) The _______ comprises economic and social conditions, political priorities and technological developments, all of which must be anticipated, monitored, assessed and incorporated into the executive's decision making. A. Remote external environment B. Task environment C. Operating environment D. Internal environment

Q: Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog were considering expanding beyond the cosmetics industry into pharmaceuticals in order to gain competitive advantages by operating in multiple markets and industries, this would be an example of which type of strategy? A) Business level strategy B) Functional level strategy C) Marketing strategy D) Corporate level strategy

Q: (p. 3) The immediate external environment includes: A. Competitors B. S. B. U. s C. Divisions D. Management

Q: Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog undertook an analysis to help it understand which of its resources and capabilities are likely to be sources of competitive advantage and which are less likely to sources of such advantages it would be performing a(n) A) internal analysis. B) external analysis. C) WACC analysis. D) economic analysis.

Q: (p. 3) Which of the following is NOT a part of a firm's immediate external environment? A. Technological development B. Competitors C. Suppliers D. Government agencies

Q: Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a(n) A) internal analysis. B) external analysis. C) WACC analysis. D) economic analysis.

Q: Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, the strategic planning team had decided that financial performance is one of the company's top priorities. Which of the following is the best example of an objective the company might use to help it achieve its goal of superior financial performance? A) Increasing profitability. B) Growing market share annually. C) Improving product quality every quarter. D) Growth in earnings per share averaging 15% or better annually for the next five years

Q: (p. 3) Which of the following is an element of a firm's remote external environment? A. Competition B. Suppliers C. Government agencies D. Economic and social conditions

Q: Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project. It wants to ensure that it performs the process correctly and so intends to start the process with the first step of the strategic planning process, which is A) crafting a mission statement. B) setting objectives. C) measuring performance. D) defining its business level strategy.

Q: If the average ROE in the heating and cooling industry is 10.1%, and Thermacorp's ROE is 17.3%, Thermacorp is said to have A) below average accounting performance. B) above average economic performance. C) above average accounting performance. D) below average economic performance.

Q: Thermacorp's 17.3% ROE is an example of a(n) ________ ratio. A) liquidity B) profitability C) activity D) leverage

Q: Thermacorp's weighted average cost of capital is 11.35. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning A) above normal economic performance. B) above normal accounting performance. C) below normal economic performance. D) below normal accounting performance.

Q: Thermacorp's cost of equity is 13.6. If the after tax cost of debt is 4.6, what is the weighted average cost of capital? A) 15.85 B) 11.35 C) 11.2 D) 13.2

Q: Thermacorp is in the heating and cooling industry and has total assets of $20 million, with stockholders' equity of $15 million, an ROE of 17.3%, and a firm Beta of 1.6. If the risk free rate of return is 4 and the market rate of return is 10, what is the cost of equity? A) 19.6 B) 7.75 C) 13.6 D) 25.28

Q: One of the first scholars to examine the longevity of competitive advantage was A) Dennis Mueller. B) Geoffrey Waring. C) Peter Roberts. D) Rich Houston.

Q: Which type of ratios focus on the ability of a firm to meet its short-term financial obligations? A) Activity ratios B) Liquidity ratios C) Leverage ratios D) Profitability ratios

Q: ________ strategies are theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented. A) Intended B) Realized C) Emergent D) Visionary

Q: Which of the following is a reason why it is important for students to study strategy and the strategic management process? A) Studying strategy and the strategic management process can give students tools to evaluate the strategies of firms that may employ them. B) It can be very important to a new hire's career success to understand the strategies of the firm that hired them and their place in implementing these strategies. C) While strategic choices are generally limited to very experienced senior managers in large organizations, in smaller and entrepreneurial firms many employees end up being involved in the strategic management process. D) All of the above.

Q: The realized strategy of most firms tends to be A) almost exclusively a reflection of their intended strategy. B) almost exclusively a reflection of their emergent strategy. C) a combination of both intended and emergent strategies. D) reflective of neither the firms' intended nor emergent strategy.

Q: Theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented are known as A) emergent strategies. B) objective strategies. C) planned strategies. D) ad hoc strategies.

Q: The view that equity holders only receive payment on their investment in a firm after all legitimate claims by a firm's other stakeholders are satisfied is known as the ________ view of equity holders. A) stakeholder B) residual claimants C) legitimate claimants D) extraordinary claims

Q: A firm that earns its cost of capital is said to be earning A) above normal economic performance. B) normal economic performance. C) below normal economic performance. D) normal accounting performance.

Q: If a firm has total assets of $10 million, stockholder's equity of $6 million, a cost of equity of 10, and an after tax cost of debt of 5%, what is the firm's weighted average cost of capital? A) 8 B) 18 C) 7 D) 1

Q: If the risk free rate of return is 4%, the market rate of return is 9%, and a firm's beta is 2.0, what is the firm's cost of equity? A) 30 B) 6 C) 18 D) 14

Q: The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital that is equity times the cost of equity is the A) weighted cost of capital. B) weighted average cost of capital. C) unweighted average cost of capital. D) average cost of capital.

Q: ________ measures of competitive advantage compare a firm's level of return to its cost of capital instead of to the average level of return in the industry. A) Economic B) Accounting C) Strategic D) Sustainable

Q: The ________ is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm. A) cost of debt B) cost of advantage C) cost of parity D) cost of capital

Q: Using ratio analysis, a firm earns ________ when its performance is greater than the industry average. A) above average economic performance B) below average accounting performance C) above average accounting performance D) below average economic performance

Q: Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as A) leverage ratios. B) liquidity ratios. C) activity ratios. D) profitability ratios.

Q: The two types of measures of competitive advantage include A) accounting measures and strategic measures. B) strategic measures and economic measures. C) accounting measures and economic measures. D) qualitative measures and quantitative measures.