CHAPTER 1 STRATBUS

Question 1

When a firm successfully formulates and implements a value-creating strategy.

Answer 1

strategic competitiveness

Question 2

A __________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

When a firm implements a strategy that its competitors are unable to duplicate or find too costly to try to imitate.

Answer 3

Competitive Advantage

note: firms must understand that no competitive advantage is permanent!!

Question 4

Possessing a ________, and understanding how to use it effectively in marketplace competitions, is foundational to all firms’ efforts to achieve strategic competitiveness and outperform rivals in the process of doing so.

Answer 4

competitive advantage

Question 5

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

Answer 5

Risk

Question 6

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

Answer 6

Average Returns

Question 7

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

Answer 7

Above-average Returns

Question 8

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

firms have a_________ when they deliver the same value to customers as competitors deliver but at a lower cost, or when they deliver benefits for which customers are willing to pay that exceed the benefits competitors offer.

Answer 9

competitive advantage

Question 10

With the information gained from_____ and ____analyses, the firm develops
its vision and mission and formulates one or more strategies

Answer 10

external and internal

Question 11

This model suggests that the external environment is the primary determinant of a firm’s strategic actions

Answer 11

Industrial Organization or I/O

Question 12

According to this model, identifying and then operating effectively in an attractive (i.e., profitable) industry or segment of an industry are the keys to competitive success.

Answer 12

Industrial Organization or I/O Model

Question 13

This model suggests that a firm’s unique resources and capabilities are the critical link to strategic competitiveness.

Answer 13

resource-based model

Question 14

______is the process of converting something to digital form, is a new competitive dimension that is affecting competition in multiple industries throughout the world.

Answer 14

Digitalization

Question 15

How many are the digital customers globally who are under 25 years of age?

Answer 15

2.5 Billion/ 2 and half Billion

Question 16

_____________is a condition where competitors engage in intense rivalry, markets
change quickly and often, and entry barriers are low. In these environments, firms find it
difficult to maintain a competitive advantage

Answer 16

Hypercompetition

Question 17

It is a condition of rapidly escalating competition based on price-quality positioning, competition to create new know-how and establish first-mover advantage, and competition to protect or invade established product and/or geographic markets.

Answer 17

Hypercompetition

Question 18

What are the two primary drivers of hypercompetitive environments and the nature of today’s competitive landscape?

Answer 18

The emergence of a global economy and technology,

Question 19

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

> > Movement is relatively unfettered by artificial constraints.
Expansion into global arena complicates a firm’s competitive environment.
• Short-term: Where is the fastest growth likely to occur?
• Long-term: Where will sustainable growth occur?

Answer 19

global economy

Question 20

In 2018 what country was the world’s largest economy at a value of $20.4 trillion?

Answer 20

United States

Question 21

The_________ estimated that China and India’s economies would exceed the size of the U.S. economy by 2050 and that the economies of Germany, United Kingdom, and France would decline in size by this time as well.

Answer 21

World Economic Forum

Question 22

_________is the increasing economic interdependence among countries and their organizations as reflected in the flow of products, financial capital, and knowledge across
country borders

Answer 22

Globalization

Question 23

________ is a product of a large number of firms competing against one another in an increasing number of global economies.

Answer 23

Globalization

Question 24

______increases the range of opportunities for companies competing in the current competitive landscape

Answer 24

Globalization

Question 25

_______has led to higher performance standards with respect to multiple competitive dimensions, including quality, cost, productivity, product introduction time, and operational efficiency

Question 26

________ are a key source of competitive advantage

Answer 26

Employees

Question 27

________is the term describing the risks of competing outside a firm’s domestic markets

Answer 27

Liability of foreignness

Question 28

the emergence of emerging-market __________ in international markets forces large MNCs based in developed markets to enrich their own capabilities to compete effectively in global markets

Answer 28

multinational corporations (MNCs)

Question 29

________affects all aspects of how companies operate and as such, the strategies they choose to implement

Answer 29

technology

Question 30

The speed at which new technologies become available

Answer 30

Technology Diffusion

Question 31

Technologies that destroy the value of existing technology and create new markets

Answer 31

Disruptive Technologies

Question 32

The rapidity and consistency with which new, information-intensive technologies replace older ones

Answer 32

Perpetual Innovation

Question 33

_______are vital to firms’ efforts today to understand customers and their needs and to implement strategies in ways that satisfy those needs as well as the interests of all other stakeholders.

Answer 33

Data and information

Question 34

The ability to effectively and efficiently access and use information has become an important source of competitive advantage. Technology includes personal computers, cellular phones, artificial intelligence, virtual reality, massive databases, electronic networks, internet trade.

Answer 34

The Information Age

Question 35

___________ is the basis of technology and its application. This is also a critical organizational resource and an increasingly valuable source of competitive advantage.

Answer 35

Knowledge (information, intelligence, and expertise) Note: Individuals acquire knowledge through experience, observation, and inference

Question 36

___________ is a key intangible asset that when diffused quickly throughout a firm contributes to efforts to outperform rivals.

Answer 36

Knowledge

Question 37

__________ is a set of capabilities firms use to respond to various demands and opportunities existing in today’s dynamic and uncertain competitive environment. It also involves coping with uncertainty and its accompanying risks

Answer 37

Strategic flexibility

Question 38

This is a slack resources that allow the firm flexibility to respond to environmental changes

Answer 38

Organizational slack

Question 39

The logic of the________ is that a set of industry characteristics, including economies of scale, barriers to market entry, diversification, product differentiation, the degree of concentration of firms in the industry, and market frictions, determine the profitability potential of an industry or a segment of it as well as the actions firms should take to operate profitably.

Answer 39

I/O model

Question 40

Four underlying assumptions in Industrial Organization Model

Answer 40

1. the external environment imposes pressures and constraints that determine the strategies that would result in above-average returns 2. Most firms competing in an industry control similar strategically relevant resources and pursue similar strategies. 3. Resources used to implement strategies are highly mobile across firms. - meaning that any resource differences that might develop between firms will be short-lived. 4. Organizational decision makers are assumed to be rational and committed to acting in the firm’s best interests (profit maximizing).

Question 41

True or false A firm is able to increase its performance only when it competes in the industry with the highest profit potential and learns how to use its resources to implement the strategy required by the industry’s structural characteristics

Answer 41

True

Question 42

Firms use the__________to identify the attractiveness of an industry

Answer 42

five forces model

Question 43

firms can earn above-average returns by producing either standardized products at costs below those of competitors

Answer 43

Cost Leadership Strategy

Question 44

Producing differentiated products for which customers are willing to pay a price premium

Answer 44

Differentiation Strategy

Question 45

the_______ suggests that firms earn above-average returns by studying the external environment effectively as the foundation for identifying an attractive industry and implementing an appropriate strategy in it.

Answer 45

I/O model

Question 46

Under I/O model of Above-average returns 1st: The external environment Study the external environment, especially the industry environment:

Answer 46

``` • Economies of scale • Barriers to market entry • Diversification • Product differentiation • Degree of concentration of firms in the industry ```

Question 47

Under I/O model of Above-average returns 2nd: Attractive Industry Locate an attractive industry with a high potential for above-average returns.

Answer 47

Attractive industry: One whose structural characteristics suggest above-average returns.

Question 48

Under I/O model of Above-average returns 3rd: Strategy Formulation Identify the strategy called for by the attractive industry to earn above-average returns.

Answer 48

Strategy formulation: Selection of a strategy linked with above-average returns in a particular industry.

Question 49

Under I/O model of Above-average returns 4th: Assets and Skills Develop or acquire assets and skills needed to implement the strategy

Answer 49

Assets and skills required to implement a chosen strategy

Question 50

Under I/O model of Above-average returns 5th: Strategy Implementation Use the firm’s strengths (its developed or acquired assets and skills) to implement the strategy.

Answer 50

Selection of strategic actions linked with effective implementation of the chosen strategy

Question 51

Under I/O model of Above-average returns 6th: Superior Returns

Answer 51

Earning of above-average | returns

Question 52

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

Answer 52

Resources

Question 53

3 categories of resources

Answer 53

physical, human, and organizational capital.

Question 54

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

Answer 54

capability

Question 55

__________ are capabilities that serve as a source of competitive advantage for a firm over its rivals.

Answer 55

Core competencies

Question 56

Core competencies are often visible in the form of _____________

Answer 56

organizational functions

Question 57

Capacity of an integrated set of resources to integratively perform a task or activity

Answer 57

Capability

Question 58

Resources are______ when they allow a firm to take advantage of opportunities or neutralize threats in its external environment.

Answer 58

valuable

Question 59

Resources are ______when possessed by few, if any, current and potential competitors.

Answer 59

rare

Question 60

Resources are______ when other firms either cannot obtain them or are at a cost disadvantage in obtaining them compared with the firm that already possesses

Answer 60

costly to imitate

Question 61

Resources are ___________ when they have no structural equivalents

Answer 61

non-substitutable

Question 62

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

Answer 62

Vision

Question 63

vision statement articulates the ideal description of an organization and gives shape to its intended future.

Question 63

_________articulates the ideal description of an organization and gives shape to its intended future.

Answer 63

vision statement

Question 63

, a vision statement articulates the ideal description of an organization and gives shape to its intended future.

Question 64

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

Answer 64

mission

Question 65

True or false Vision is more concrete than the firm’s mission.

Answer 65

False!!! | Mission is more concrete than the firm’s vision.

Question 66

_______ are the fruits of the firm’s efforts to achieve its vision and mission.

Answer 66

Above-average returns

Question 67

True or false The probability of forming an effective mission decreases when employees have a strong sense of the ethical standards that guide their behaviors as they work to help the firm reach its vision

Answer 67

False | decreases- increases

Question 68

_________ are 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

Answer 68

Stakeholders

Question 69

This means that stakeholders possess different degrees of ability to influence an organization.

Answer 69

Unequal dependencies

Question 70

True or false The more critical and valued a stakeholder’s participation, the greater a firm’s dependency on it

Answer 70

True

Question 71

Individuals and groups who have invested capital in a firm in the expectation of earning a positive return on their investments.

Answer 71

Shareholders

Question 72

They prefer that investors receive a minimum return on their investments. They could have their interests maximized when the quality and reliability of a firm’s products are improved, but without high prices

Answer 72

Customers

Question 73

Who are the Capital Market Stakeholders?

Answer 73

• Shareholders • Major suppliers of capital (e.g., banks)

Question 74

Who are the Product Market Stakeholders?

Answer 74

* Primary customers * Suppliers * Host communities * Unions

Question 75

Who are the Organizational Stakeholders?

Answer 75

* Employees * Managers * Nonmanagers

Question 76

They seek loyal customers who are willing to pay the highest sustainable prices for the products they receive.

Answer 76

Suppliers

Question 77

This refers to multiple levels of power and influence

Answer 77

polycentric

Question 78

They are are generally satisfied when a firm’s profit margin reflects at least a balance between the returns to capital market stakeholders (i.e., the returns lenders and shareholders will accept and retain their interests in the firm) and the returns in which they share.

Answer 78

product market stakeholders

Question 79

They want companies willing to be long-term employers and providers of tax revenues while minimizing demands on public support services

Answer 79

Host communities

Question 80

_______ want secure jobs and desirable working conditions

Answer 80

Union officials

Question 81

_______ Expect a dynamic, stimulating and rewarding work environment and are satisfied by a company that is growing and actively developing their skills

Answer 81

Employees

Question 82

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

Answer 82

Strategic Leaders

Question 83

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

Answer 83

Organizational Culture

Question 84

The total profits earned in an industry at all points along the value chain

Answer 84

Profit Pool