Q&A Hero

Q: ________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator. A) Liquidity ratios B) Leverage ratios C) Activity ratios D) Profitability ratios

Q: In many ways, the difference between traditional economics research and strategic management research is that the former attempts to explain why ________, while the latter attempts to explain ________ A) competitive advantages should not persist; when they can. B) competitive advantages should persist; when they can. C) competitive advantages should persist; why they should not. D) competitive parity should not persist; why they should.

Q: A firm's ________ is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements. A) economic performance B) accounting performance C) strategic performance D) sustainable performance

Q: Firms that generate less economic value than their rivals experience a competitive A) advantage. B) parity. C) disadvantage. D) preference.

Q: Firms that create the same economic value as their rivals experience competitive A) disadvantage. B) parity. C) superiority. D) advantage.

Q: A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage. A) temporary B) sustained C) transient D) perpetual

Q: If TechnoGeek and VarsityBlue compete in the same market for the same customer and TechnoGeek generates $900 of economic value each time it sells a product or service while VarsityBlue generates $400 of economic value each time it sells a product or service, TechnoGeek has a competitive advantage of A) $1,300. B) $3,600. C) $360,000. D) $500.

Q: The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic costs of these products or services is known as A) accounting value. B) comparative value. C) economic value. D) sustainable value.

Q: When a firm is able to create more economic value than rival firms it is said to have a(n) A) comparative advantage. B) competitive advantage. C) strategic choice. D) economic advantage.

Q: ________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy. A) Strategy formulation B) Organizational change C) Strategy implementation D) Strategic control

Q: Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as A) corporate level strategies. B) functional strategies. C) business level strategies. D) macro level strategies.

Q: Actions firms take to gain competitive advantages in a single market or industry are known as A) business level strategies. B) corporate level strategies. C) functional level strategies. D) sustainable strategies.

Q: ________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage. A) Competitive analysis B) Internal analysis C) Comparative analysis D) External analysis

Q: By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment. A) internal analysis B) competitive analysis C) external analysis D) economic analysis

Q: High quality objectives are those that are A) tightly connected to elements of a firm's mission. B) difficult to measure. C) difficult to track over time. D) not quantitative.

Q: ________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission. A) Visions B) Missions C) Competitive advantages D) Objectives

Q: Which of the following statements regarding firm mission is accurate? A) While some firms have used their missions to develop strategies that create significant competitive advantages, firm missions can hurt a firm's performance as well. B) Virtually all firms have used missions to develop strategies that create significant competitive advantages, while very few firms have used missions that can hurt their performance. C) It is very rare for firms to be able to use their missions to develop strategies that create significant competitive advantages, and most firm missions actually hurt their performance. D) Missions tend to have very little impact on a firm's ability to create significant competitive advantages.

Q: The mission statements of visionary firms A) suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence. B) suggest that profit maximizing is neither an important corporate objective nor their primary reason for existence. C) suggest that profit maximizing is their primary reason for existence. D) suggest that profit maximizing is an important corporate objective and is their primary reason of existence.

Q: From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms. A) substantially lower B) substantially higher C) marginally lower D) substantially equivalent

Q: Firms whose mission is central to all they do are known as ________ firms. A) missionary B) legendary C) parity D) visionary

Q: Missions are often written in the form of A) vision statements. B) mission statements. C) corporate objectives. D) organizational goals.

Q: A firm's ________ is its long-term purpose that defines both what it aspires to be in the long run and what it wants to avoid in the meantime. A) mission B) vision C) objective D) goal

Q: The sequential set of analyses and choices that can increase the likelihood that a firm will choose a strategy that generates competitive advantages is the A) organizational change process. B) strategic management process. C) mission statement process. D) goal setting process.

Q: A firm's ________ is defined as its theory about how to gain competitive advantages. A) objectives B) mission C) vision D) strategy

Q: All firms have almost entirely emergent strategies.

Q: Strategic choices are generally limited to very experienced senior managers in large corporations; in smaller and entrepreneurial firms, many employees end up being involved in the strategic management process.

Q: Firms with strategies that are unlikely to be a source of competitive advantage will rarely provide the same career opportunities as firms with strategies that do generate such advantages.

Q: Emergent strategies are only important when a firm fails to implement the strategic management process effectively.

Q: Johnson & Johnson's introduction of "Johnson's Toilet and Baby Powder" as a result of customers asking to purchase the talcum powder is an example of a planned strategy.

Q: Emergent 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.

Q: The correlation between economic and accounting measures of competitive advantage is generally low.

Q: The residual claimants' view of equity holders argues that the interests of equity holders and a firm's other stakeholders often collide.

Q: The cost of equity is equal to the interest a firm must pay its debt holders in order to induce those debt holders to lend money to the firm.

Q: Economic measures of competitive advantage compare a firm's level of return to its costs of capital instead of to the average level of return to the industry.

Q: The greatest disadvantage of accounting measures of competitive performance is that they are relatively difficult to compute.

Q: A firm that earns below average accounting performance, performance that is less than the industry average, generally experiences a competitive disadvantage.

Q: When a firm earns above average accounting performance, it is said to enjoy competitive parity.

Q: Liquidity ratios are ratios that focus on the firm's ability to meet its short-term financial obligations.

Q: Activity ratios are ratios with some measure of profit in the numerator and some measure of firm size or assets in the denominator.

Q: Applying accounting measures of competitive advantage for firms that are headquartered in different countries is not complicated by issues such as differences in accounting practices and exchange rates.

Q: A firm's accounting performance is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements.

Q: Firms that create the same economic value as their rivals experience competitive parity.

Q: A sustained competitive advantage is virtually permanent.

Q: The size of a firm's competitive advantage is the sum of the economic value a firm is able to create and the economic value rivals are able to create.

Q: In general, a firm has a competitive advantage when it is able to create more economic value than rival firms.

Q: Strategy implementation occurs when a firm adopts organizational policies and practices that are consistent with its strategy.

Q: Business level strategies are actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously.

Q: Corporate level strategies are actions firms take to gain competitive advantages in a single market or industry.

Q: By conducting an external analysis, a firm identifies the critical threats and opportunities in the industry's competitive environment.

Q: High quality objectives are tightly connected to the elements of a firm's mission but tend to be relatively difficulty to measure and track over time.

Q: Objectives are the specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission.

Q: Mission statements that are very inwardly focused and are defined only with reference to the personal values and priorities of its founders and top managers can hurt a firm's performance.

Q: Visionary firms earn substantially higher returns than average firms because they acknowledge that profit maximizing is their primary reason for existence.

Q: Firms whose mission statement is central to all they do are known as missionary firms.

Q: Mission statements often contain so many common elements that even if a firm's mission statement does not influence behavior throughout an organization, it is likely to have a significant impact on a firm's actions.

Q: A firm's mission defines both what it wants to be in the long run and what it wants to avoid in the meantime.

Q: The second step in the strategic management process is the definition of a firm's mission.

Q: The strategic management process is a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy that generates competitive advantages.

Q: It is usually possible to know for sure that a firm is choosing the right strategy.

Q: The greater the extent to which a firm's assumptions and hypotheses accurately describe how the competition in the industry is likely to evolve, and how that evolution can be exploited to earn a profit, the more likely it is that a firm will gain a competitive advantage from implementing its strategies.

Q: A "good strategy" does not necessarily have to create a competitive advantage.

Q: For the purposes of this book, a firm's strategy is defined as its theory about how to gain competitive advantages.

Q: There is complete consensus among strategic managers and academic researchers about what a "strategy" is.

Q: One of the central questions that all strategic managers must address, regardless of the industry they work in, is "What is our competition going to do next?"

Q: In China, one should eat heartily to demonstrate enjoyment of the food.

Q: Strategy-evaluation activities must be meaningful, that is, they should specifically relate to a firm's objectives.

Q: In the context of conflict management and resolution, ignoring the problem in the hopes that the conflict will resolve itself is classified as a defusion technique.

Q: Long-term objectives represent the results expected from pursuing certain strategies.

Q: Freund argues that key external factors must not be hierarchical.

Q: The understanding of Asian cultures is a strength U.S. firms have in competing with Pacific Rim firms.

Q: The most admired electronics company in 2011 was Tyco International.

Q: Well-run organizations are able to completely avoid conflict.

Q: To perform an external audit, a company first must gather competitive intelligence and information about social, cultural, demographic, environmental, economic, political, legal, governmental, and technological trends.

Q: In China, business relations revolve around guanxi, or personal relations.

Q: Each year, Fortune publishes strategy-evaluation research on both the United States and other countries.

Q: Avoidance, defusion, and confrontation are the classifications for the various types of conflict that can arise in organizations.

Q: Discuss the five steps involved in performing an IFE Matrix.

Q: As many managers and employees as possible should be involved in the process of performing an external audit.

Q: Since the 1980s, most countries including the U.S. have been steadily lowering their tax rates.

Q: The Balanced Scorecard approach deals with the question, "How satisfied are the firm's customers?"