Chapter 1

Question 1

It is achieved when a firm successfully formulates and implements a value-creating strategy

Answer 1

strategic competitiveness

Question 2

It is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage

Answer 2

strategy

Question 3

It happens when it implements a strategy that competitors are unable to duplicate or find too costly to try to imitate

Answer 3

competitive advantage

Question 4

True or false. An organization should not be confident that its strategy has resulted in one or more useful competitive advantages only if the competitors’ efforts to duplicate its strategy have ceased or failed.

Answer 4

False. An organization can be confident that its strategy has resulted in one or more useful competitive advantages only after competitors’ efforts to duplicate its strategy have ceased or failed.

Question 5

It is the returns in excess of what an investor expects to earn from other investments with a similar amount of risk

Answer 5

above-average returns

Question 6

It is an investor’s uncertainty about the economic gains or losses that will result from a particular investment

Answer 6

risk

Question 7

True or False. Performance is sometimes measured in terms of the amount and speed of growth rather than more traditional profitability measures

Answer 7

True

Question 8

It is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns

Answer 8

strategic management process

Question 9

True or False. The first step in the strategic management process is analyzing the firm’s internal and external environment to determine its resources, capabilities, and core competencies which will help it to develop its vision and mission and formulate its strategy. To implement this strategy, the firm takes actions toward achieving strategic competitiveness and above-average returns.

Answer 9

True

Question 10

It is one in which goods, services, people, skills, and ideas move freely across geographic borders

Answer 10

global economy

Question 11

It is the increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital, and knowledge across country borders

Answer 11

globalization

Question 12

3 categories of trends and conditions (TIIk)

Answer 12

1. technology diffusion and disruptive technologies
2. information age
3. increasing knowledge intensity

Question 13

It is a term used to describe how rapidly and consistently new,
information-intensive technologies replace older ones

Answer 13

perpetual innovation

Question 14

It is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment

Answer 14

strategic flexibility

Question 15

It is a model that assumes that each organization is a collection of unique resources and capabilities

Answer 15

resource-based model

Question 16

It is the inputs into a firm’s production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers

Answer 16

resources

Question 17

True or False. Individual resources alone may not yield a competitive advantage

Answer 17

True

Question 18

True or False. Resources have a lesser likelihood of being a source of competitive advantage when they are formed into a capability

Answer 18

False. Resources have a greater likelihood of being a source of competitive advantage when they are formed into a capability

Question 19

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

Answer 19

capability

Question 20

It is the resources and capabilities that serve as a source of competitive advantage for a firm over its rivals.

Answer 20

core competencies

Question 21

This model also assumes that firms acquire different resources and develop unique capabilities based on how they combine and use the resources; that resources and certainly capabilities are not highly mobile across firms; and that the differences in resources and capabilities are the basis of competitive advantage

Answer 21

Resource-based model

Question 22

4 criteria of resources and capabilities to become core competencies

Answer 22

Resources are:
1. Valuable
2. Rare
3. Costly to imitate
4. Nonsubstitutable

Question 23

To form a vision and mission, and subsequently to select one or more strategies and to determine how to implement them, firms use both:

Answer 23

I/O model or industrial organization model and resource-based model

Question 24

It is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve

Answer 24

Vision

Question 25

It is a statement that points the firm in the direction of where it would eventually like to be in the years to come

Answer 25

vision statement

Question 26

True or False. The mission is the foundation for the firm’s vision

Answer 26

False. The vision is the foundation for the firm’s mission

Question 27

It specifies the business in which the firm intends to compete and the customers it intends to serve

Answer 27

mission

Question 28

They are the individuals and groups who can affect, and are affected by, the strategic outcomes achieved and who have enforceable claims on a firm’s performance

Answer 28

stakeholders

Question 29

They are the people located in different parts of the firm using the strategic management process to help the firm reach its vision and mission.

Answer 29

strategic leaders

Question 30

True or False. Strategic leaders’ decisions and actions shape a firm’s culture

Answer 30

True

Question 31

It refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influences how the firm conducts business

Answer 31

organizational culture

Question 32

It entails the total profits earned in an industry at all points along the value chain.

Answer 32

profit pool

Question 33

It is a rational approach firms use to achieve strategic competitiveness and earn above-average returns.

Answer 33

strategic management process

Question 34

True or False. The fundamental nature of competition is different in the current competitive landscape

Answer 34

true

Question 35

The core assumption of this model is that the firm’s external environment has more of an influence on the choice of strategies than do the firm’s internal resources, capabilities, and core competencies. Thus, this model is used to understand the effects of industry’s characteristics can have on a firm when deciding what strategy or strategies to use to compete against rivals.

Answer 35

I/O model

Question 36

This model suggests that above-average returns are earned when the firm locates an attractive industry and successfully implements the strategy dictated by that industry’s characteristics

Answer 36

I/O model

Question 37

The core assumption of this model is that the firm’s unique resources, capabilities, and core competencies have more of an influence on selecting and using strategies than does the firm’s external environment.

Answer 37

resource-based model

Question 38

It is a model that suggests that the above-average returns are earned when the firm uses its valuable, rare, costly to imitate, and Nonsubstitutable resources and capabilities to compete against its rivals in one or more industries

Answer 38

resource-based model