Chapter 1

Question 1

Above-Average Returns

Answer 1

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

Question 2

Average Returns

Answer 2

are returns equal to those an investor expects to earn from other investments with a similar amount of risk

Question 3

Capability

Answer 3

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

Question 4

Competitive Advantage

Answer 4

when it implements a strategy that creates superior value for customers and that competitors are unable to duplicate or find it too costly to try and imitate

Question 5

Global Economy

Answer 5

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

Question 6

Hypercompetition

Answer 6

describes competition that is excessive such that it creates inherent instability and necessitates constant disruptive change for firms in the competitive landscape

Question 7

Mission

Answer 7

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

Question 8

Organizational Culture

Answer 8

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

Question 9

Resources

Answer 9

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

Question 10

Risk

Answer 10

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

Question 11

Stakeholders

Answer 11

the individuals, groups, and organizations that can affect the firm’s vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm’s performance

Question 12

Strategic Competitiveness

Answer 12

achieved when a firm successfully formulates and implements a value creating strategy

Question 13

Strategic Flexibility

Answer 13

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

Question 14

Strategic Leaders

Answer 14

people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission

Question 15

Strategic Management Process

Answer 15

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

Question 16

Strategy

Answer 16

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

Question 17

Vision

Answer 17

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