Strategic competitiveness is achieved when a firm successfully formulates and implements a risk-averse strategy.

a. True

b. False

Profit in terms of financial returns reflects an investor's uncertainty about economic gains or losses that will result from a particular investment.

a. True

b. False

Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk.

a. True

b. False

Economies of scale and huge advertising budgets are more effective in the new competitive landscape than they have been in the past, but they must be reinforced by strategic flexibility.

 a. True

 b. False

The two primary drivers of hypercompetition are the emergence of the global economy and shrinking of the domestic economy.

 a. True

 b. False

One capability characteristic of a firm with strategic flexibility is the capacity to protect its market position from competition.

 a. True

 b. False

The resource-based model assumes that the uniqueness of a firm's resources and capabilities are its main source of above-average returns.

 a. True

 b. False

Research shows that a greater percentage of a firm's profitability is explained by the resource-based model rather than the I/O model.

 a. True

 b. False

The I/O model assumes that if firms have resources that are rare or costly to imitate, this is sufficient to form a basis for competitive advantage.

 a. True

 b. False

Organizational vision statements typically do not include statements about profitability and earning above-average returns.

 a. True

 b. False

Organizational vision and mission statements require abstract and superficial thinking to form them.

 a. True

 b. False

Organizational stakeholders include a firm's managers and employees.

 a. True

 b. False

The degree to which the firm is dependent on a stakeholder group gives that stakeholder more influence.

 a. True

 b. False

The needs and desires of organizational stakeholders are inherently similar.

 a. True

 b. False

Absolute power is the most critical criteria for prioritizing the demands of stakeholders.

 a. True

 b. False

Customers, suppliers, unions, and local governments are examples of product market stakeholders.

 a. True

 b. False

Although organizational cultures vary considerably, one can make an objective judgment that some organizational cultures are more or less functional than others.

 a. True

 b. False

A hard working, analytical individual who requires large amounts of concrete and precise data and a predictable environment in order to make a decision is well-suited to being a strategic leader.

 a. True

 b. False

A profit pool entails the total profits earned in an industry at all points along the value chain.

 a. True

 b. False

An organization's willingness to tolerate or encourage unethical behavior is unrelated to its core values.

 a. True

 b. False

A firm has achieved ________ when it successfully formulates and implements a value-creating strategy.

a. substantial returns

b. a permanently sustainable competitive advantage

c. strategic competitiveness

d. nirvana

A competitive advantage:

a. can be permanent if the firm has successfully implemented the strategic management process.

b. increases investors' risk.

c. can be identified only if it has been unsuccessfully challenged by competitors.

d. can be identified only if it has been successfully challenged by competitors.

The economic interdependence among countries as reflected in the free movement of goods, services, financial capital and knowledge across geographic borders is defined as:

a. globalization.

b. boundaryless retailing.

c. open systems reality.

d. hypercompetition.

Globalization has led to:

a. lower operational efficiency as firms must transport raw materials and finished goods farther.

b. decreasing loyalty of customers for products made domestically.

c. declining returns from investment in research and development.

d. lower product quality.

Even for companies capable of succeeding in global markets, it is critical that they:

a. remain committed to and strategically competitive in their domestic market.

b. introduce many lower prices immediately after entering a new market.

c. acquire a local company in each significant foreign market.

d. never forget that their home country provides the greatest potential for growth.

Knowledge is composed of all the following EXCEPT:

a. intelligence.

b. expertise.

c. information.

d. intuition.

Which of the following statements about organizational knowledge is correct?

a. Knowledge is a tangible resource.

b. The value of knowledge as a proportion of shareholder value is decreasing.

c. The importance of knowledge is increasing.

d. The application of knowledge has little impact on organizational competitiveness.

Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to:

a. the profitability of the industry the firm competes in.

b. the resources the firm possesses.

c. the power of the product market stakeholders.

d. hypercompetition within the global economy.

________ is a capacity for a set of resources to perform a task or an activity in an integrative manner.

a. A hyper-resource

b. A core competence

c. A capability

d. Organizational knowledge

When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n):

a. core competence.

b. strategic differentiator.

c. normal market niche.

d. sustainable market niche.

To have the potential to become sources of competitive advantage, resources and capabilities must be rare, costly to imitate:

a. unique, and expensive.

b. valuable, and difficult to implement.

c. non-substitutable, and valuable.

d. easy to implement, and unique.

The goal of the organization's ________ is to capture the hearts and minds of employees, challenge them, and evoke their emotions and dreams.

a. CEO

b. mission

c. values

d. vision

The final responsibility for forming the organization's mission lies with the:

a. CFO.

b. top-management team.

c. CEO.

d. organization's stockholders.

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. ability to withhold resources

b. need of each stakeholder

c. vulnerability of each stakeholder

d. power of each stakeholder

Product market stakeholders include:

a. customers.

b. creditors.

c. local governments.

d. VP of Marketing.

The strategic leader's work involves:

a. thinking seriously and deeply about the purpose of their organization.

b. a willingness to pressure vendors through skillful manipulation.

c. an ability to identify the correct solutions to market problems.

d. concentration on the practical day-to-day aspects of the organization's operations.

The profit pool is the:

a. pool of resources that contributes to competitive position.

b. total profits that can be divided up among all firms within an industry.

c. profits that are accrued over a strategic calendar.

d. total profits earned in an industry along all points of the value chain.

Analysis of the industry's profit pool enables strategic managers to:

a. predict future market opportunities for the organization.

b. locate the most promising areas of an industry's value chain.

c. determine whether a vision will be viable over the long term.

d. predict future market share over the medium to long range.

A major assumption about the strategic management process is that it is:

a. rational.

b. arbitrary.

c. focused.

d. random.

A business-level strategy describes:

a. which businesses to compete in and how resources will be allocated among businesses.

b. values and behaviors used in functional departments.

c. a firm's role in broader society.

d. the firm's actions to exploit its competitive advantage over rivals.