CHAPTER - 1

Question 1 of 50

1

A firm's _____ is defined as its theory about how to gain competitive advantages.

Select one of the following:

objective
mission
vision
strategy

Explanation

Question 2 of 50

1

A sequential set of analyses and choices that can increase the likelihood that a firm will choose a strategy that generates competitive advantages is the

Select one of the following:

organizational change process
strategic management process.
mission statement process.
goal setting process

Explanation

Question 3 of 50

1

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

Select one of the following:

mission
strategy
objective
goal

Explanation

Question 4 of 50

1

The strategic management process begins when a firm

Select one of the following:

determines its objectives
defines its mission.
makes a strategic choice.
implements its strategy

Explanation

Question 5 of 50

1

Firms whose mission is central to all they do are known as ________ firms.

Select one of the following:

missionary
emergent
parity
visionary

Explanation

Question 6 of 50

1

From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms

Select one of the following:

substantially lower
substantially higher
marginally lower
equivalent

Explanation

Question 7 of 50

1

The mission statements of visionary firms

Select one of the following:

suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence
suggest that profit maximizing is neither an important corporate objective nor their primary reason for existence
suggest that profit maximizing is their primary reason for existence.
suggest that value maximizing is their primary reason of existence.

Explanation

Question 8 of 50

1

Which of the following statements regarding firm mission is accurate

Select one of the following:

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
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
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
Missions tend to have very little impact on a firm's ability to create significant competitive advantages

Explanation

Question 9 of 50

1

________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission

Select one of the following:

Strategies
Missions
Competitive advantages
Objectives

Explanation

Question 10 of 50

1

High quality objectives are those that are

Select one of the following:

tightly connected to elements of a firm's mission and are relatively easy to measure and track over time.
difficult to measure and track over time.
non-existent.
not quantitative.

Explanation

Question 11 of 50

1

By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment.

Select one of the following:

internal analysis
competitive analysis
external analysis
strategic choice

Explanation

Question 12 of 50

1

________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage.

Select one of the following:

Competitive analysis
Internal analysis
Strategic choice
External analysis

Explanation

Question 13 of 50

1

Actions firms take to gain competitive advantages in a single market or industry are known as

Select one of the following:

business level strategies.
corporate level strategies.
diversification strategies.
strategy implementation.

Explanation

Question 14 of 50

1

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

Select one of the following:

corporate level strategies.
diversification strategies.
business level strategies.
strategic alliance strategies.

Explanation

Question 15 of 50

1

________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.

Select one of the following:

Strategy formulation
Strategic choice
Strategy implementation
Strategic control

Explanation

Question 16 of 50

1

When a firm is able to create more economic value than rival firms it is said to have a(n)

Select one of the following:

comparative advantage
competitive advantage
residual advantage.
economic advantage.

Explanation

Question 17 of 50

1

The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic cost of these products or services is the

Select one of the following:

value proposition.
cost advantage.
economic value.
competitive advantage.

Explanation

Question 18 of 50

1

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(n) ________ of $500.

Select one of the following:

perceived benefit
economic value
cost advantage
competitive advantage

Explanation

Question 19 of 50

1

A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.

Select one of the following:

temporary
sustained
transient
perpetual

Explanation

Question 20 of 50

1

The center of Osterwalder and Pigneur's business model canvas is the

Select one of the following:

parity point.
value proposition.
competitive advantage.
strategy box.

Explanation

Question 21 of 50

1

Firms that generate less economic value than their rivals experience a competitive

Select one of the following:

advantage
parity
disadvantage
perceived benefit

Explanation

Question 22 of 50

1

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 .

Select one of the following:

competitive advantages should not persist; when they can
competitive advantages should persist; when they can
competitive advantages should persist; why they should not
competitive parity should not persist; why they should

Explanation

Question 23 of 50

1

The two types of measures of competitive advantage include

Select one of the following:

accounting measures and strategic measures.
strategic measures and economic measures.
accounting measures and economic measures.
qualitative measures and quantitative measures.

Explanation

Question 24 of 50

1

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.

Select one of the following:

economic performance
accounting performance
strategic performance
sustainable performance

Explanation

Question 25 of 50

1

________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator.

Select one of the following:

Liquidity ratios
Leverage ratios
Activity ratios
Profitability ratios

Explanation

Question 26 of 50

1

Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as

Select one of the following:

leverage ratios.
liquidity ratios.
activity ratios.
profitability ratios.

Explanation

Question 27 of 50

1

Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.

Select one of the following:

above average economic performance
below average accounting performance
above average accounting performance
below average economic performance

Explanation

Question 28 of 50

1

The ________ is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm.

Select one of the following:

cost of debt
cost of advantage
cost of parity
cost of capital

Explanation

Question 29 of 50

1

________ measures of competitive advantage compare a firm's level of return to its cost of capital instead of to the average level of return in the industry.

Select one of the following:

Economic
Accounting
Strategic
Sustainable

Explanation

Question 30 of 50

1

The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital; or equity times the cost of equity is the

Select one of the following:

weighted cost of capital.
weighted average cost of capital.
cost of capital.
average cost of capital.

Explanation

Question 31 of 50

1

A firm that is able to attract additional capital because debt holders and equity holders will scramble to make additional funds available for it is likely earning

Select one of the following:

normal economic performance.
average accounting performance.
temporary advantage.
above normal economic performance.

Explanation

Question 32 of 50

1

An important limitation of comparing a firm's performance to its cost of capital occurs when a firm is

Select one of the following:

privately held.
an IPO.
an entrepreneurial venture.
experiencing below normal economic performance.

Explanation

Question 33 of 50

1

A firm that earns its cost of capital is said to be earning

Select one of the following:

above normal economic performance.
normal economic performance.
below normal economic performance.
normal accounting performance.

Explanation

Question 34 of 50

1

The view that equity holders only receive payment on their investment in a firm after all legitimate claims by a firm's other stakeholders are satisfied is known as the ________ view of equity holders.

Select one of the following:

stakeholder
residual claimants
legitimate claimants
extraordinary claims

Explanation

Question 35 of 50

1

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 are known as

Select one of the following:

emergent strategies.
objective strategies.
planned strategies.
ad hoc strategies.

Explanation

Question 36 of 50

1

The realized strategy of most firms tends to be

Select one of the following:

almost exclusively a reflection of their intended strategy.
almost exclusively a reflection of their emergent strategy.
a combination of both intended and emergent strategies.
reflective of neither the firms' intended nor emergent strategy.

Explanation

Question 37 of 50

1

Which of the following is a reason why it is important for students to study strategy and the strategic management process?

Select one of the following:

Studying strategy and the strategic management process can give students tools to evaluate the strategies of firms that may employ them.
It can be very important to a new hire's career success to understand the strategies of the firm that hired them and their place in implementing these strategies.
While strategic choices are generally limited to very experienced senior managers in large organizations, in smaller and entrepreneurial firms many employees end up being involved in the strategic management process.
All of the above

Explanation

Question 38 of 50

1

Fed Ex entered their market with a well-defined mission and objectives, making strategic choices and implementing those strategies. This is an example of which type of strategy?

Select one of the following:

intended
economic
emergent
visionary

Explanation

Question 39 of 50

1

Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?

Select one of the following:

activity ratios
liquidity ratios
leverageratios
profitability ratios

Explanation

Question 40 of 50

1

One of the first scholars to examine the longevity of competitive advantage was

Select one of the following:

Dennis Mueller.
Geoffrey Waring.
Peter Roberts.
Rich Houston.

Explanation

Question 41 of 50

1

Which ratio signals a greater risk of bankruptcy as it increases?

Select one of the following:

debt to equity
quick ratio
debt to assets
cash flow per share

Explanation

Question 42 of 50

1

Accounts receivable turnover is an example of which type of ratio?

Select one of the following:

profitability
activity
liquidity
leverage

Explanation

Question 43 of 50

1

Thermacorp's weighted average cost of capital is 13.5. If the average WACC in the heating and cooling industry is 19, Thermacorp can be said to be earning

Select one of the following:

above normal economic performance.
above normal accounting performance.
below normal economic performance.
below normal accounting performance.

Explanation

Question 44 of 50

1

Thermacorp's 17.3% ROE is an example of a(n) ________ ratio.

Select one of the following:

liquidity
profitability
activity
leverage

Explanation

Question 45 of 50

1

If the average ROE in the heating and cooling industry is 10.1%, and Thermacorp's ROE is 17.3%, Thermacorp is said to have

Select one of the following:

below average accounting performance.
above average economic performance.
above average accounting performance.
below average economic performance.

Explanation

Question 46 of 50

1

Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project. It wants to ensure that it performs the process correctly and so intends to start the process with the first step of the strategic planning process, which is

Select one of the following:

defining its mission.
setting objectives.
measuring performance.
defining its business level strategy.

Explanation

Question 47 of 50

1

Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, the strategic planning team had decided that financial performance is one of the company's top priorities. Which of the following is the best example of an objective the company might use to help it achieve its goal of superior financial performance?

Select one of the following:

increasing profitability
growing market share annually
improving product quality every quarter
growth in earnings per share averaging 15% or better annually for the next five years

Explanation

Question 48 of 50

1

Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a(n)

Select one of the following:

internal analysis.
external analysis.
WACC analysis.
economic analysis.

Explanation

Question 49 of 50

1

Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog undertook an analysis to help it understand which of its resources and capabilities are likely to be sources of competitive advantage and which are less likely to sources of such advantages it would be performing a(n)

Select one of the following:

internal analysis.
external analysis.
WACC analysis
economic analysis

Explanation

Question 50 of 50

1

Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog were considering expanding beyond the cosmetics industry into pharmaceuticals in order to gain competitive advantages by operating in multiple markets and industries, this would be an example of which type of strategy?

Select one of the following:

business level strategy
cost leadership strategy
product differentiation strategy
corporate level strategy

	Created by Strategy IO over 7 years ago

Quiz on CHAPTER - 1, created by Strategy IO on 27/12/2016.

CHAPTER - 1

Question 1 of 50

A firm's _____ is defined as its theory about how to gain competitive advantages.

Select one of the following:

Explanation

Question 2 of 50

A sequential set of analyses and choices that can increase the likelihood that a firm will choose a strategy that generates competitive advantages is the

Select one of the following:

Explanation

Question 3 of 50

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

Select one of the following:

Explanation

Question 4 of 50

The strategic management process begins when a firm

Select one of the following:

Explanation

Question 5 of 50

Firms whose mission is central to all they do are known as ________ firms.

Select one of the following:

Explanation

Question 6 of 50

From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms

Select one of the following:

Explanation

Question 7 of 50

The mission statements of visionary firms

Select one of the following:

Explanation

Question 8 of 50

Which of the following statements regarding firm mission is accurate

Select one of the following:

Explanation

Question 9 of 50

________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission

Select one of the following:

Explanation

Question 10 of 50

High quality objectives are those that are

Select one of the following:

Explanation

Question 11 of 50

By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment.

Select one of the following:

Explanation

Question 12 of 50

________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage.

Select one of the following:

Explanation

Question 13 of 50

Actions firms take to gain competitive advantages in a single market or industry are known as

Select one of the following:

Explanation

Question 14 of 50

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

Select one of the following:

Explanation

Question 15 of 50

________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.

Select one of the following:

Explanation

Question 16 of 50

When a firm is able to create more economic value than rival firms it is said to have a(n)

Select one of the following:

Explanation

Question 17 of 50

The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic cost of these products or services is the

Select one of the following:

Explanation

Question 18 of 50

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(n) ________ of $500.

Select one of the following:

Explanation

Question 19 of 50

A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.

Select one of the following:

Explanation

Question 20 of 50

The center of Osterwalder and Pigneur's business model canvas is the

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 .