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CHAPTER - 1
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Questions in this quiz (50)
1A firm's _____ is defined as its theory about how to gain competitive advantages.
- Aobjective
- Bmission
- Cvision
- Dstrategy
2A sequential set of analyses and choices that can increase the likelihood that a firm will choose a strategy that generates competitive advantages is the
- Aorganizational change process
- Bstrategic management process.
- Cmission statement process.
- Dgoal setting process
3A 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
- Amission
- Bstrategy
- Cobjective
- Dgoal
4The strategic management process begins when a firm
- Adetermines its objectives
- Bdefines its mission.
- Cmakes a strategic choice.
- Dimplements its strategy
5Firms whose mission is central to all they do are known as ________ firms.
- Amissionary
- Bemergent
- Cparity
- Dvisionary
6From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms
- Asubstantially lower
- Bsubstantially higher
- Cmarginally lower
- Dequivalent
7The mission statements of visionary firms
- Asuggest that profit maximizing, while an important corporate objective, is not their primary reason for existence
- Bsuggest that profit maximizing is neither an important corporate objective nor their primary reason for existence
- Csuggest that profit maximizing is their primary reason for existence.
- Dsuggest that value maximizing is their primary reason of existence.
8Which of the following statements regarding firm mission is accurate
- AWhile some firms have used their missions to develop strategies that create significant competitive advantages, firm missions can hurt a firm's performance as well
- BVirtually 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
- CIt 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
- DMissions tend to have very little impact on a firm's ability to create significant competitive advantages
9________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission
- AStrategies
- BMissions
- CCompetitive advantages
- DObjectives
10High quality objectives are those that are
- Atightly connected to elements of a firm's mission and are relatively easy to measure and track over time.
- Bdifficult to measure and track over time.
- Cnon-existent.
- Dnot quantitative.
11By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment.
- Ainternal analysis
- Bcompetitive analysis
- Cexternal analysis
- Dstrategic choice
12________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage.
- ACompetitive analysis
- BInternal analysis
- CStrategic choice
- DExternal analysis
13Actions firms take to gain competitive advantages in a single market or industry are known as
- Abusiness level strategies.
- Bcorporate level strategies.
- Cdiversification strategies.
- Dstrategy implementation.
14Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as
- Acorporate level strategies.
- Bdiversification strategies.
- Cbusiness level strategies.
- Dstrategic alliance strategies.
15________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.
- AStrategy formulation
- BStrategic choice
- CStrategy implementation
- DStrategic control
16When a firm is able to create more economic value than rival firms it is said to have a(n)
- Acomparative advantage
- Bcompetitive advantage
- Cresidual advantage.
- Deconomic advantage.
17The 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
- Avalue proposition.
- Bcost advantage.
- Ceconomic value.
- Dcompetitive advantage.
18If 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.
- Aperceived benefit
- Beconomic value
- Ccost advantage
- Dcompetitive advantage
19A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.
- Atemporary
- Bsustained
- Ctransient
- Dperpetual
20The center of Osterwalder and Pigneur's business model canvas is the
- Aparity point.
- Bvalue proposition.
- Ccompetitive advantage.
- Dstrategy box.
21Firms that generate less economic value than their rivals experience a competitive
- Aadvantage
- Bparity
- Cdisadvantage
- Dperceived benefit
22In 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 ________.
- Acompetitive advantages should not persist; when they can
- Bcompetitive advantages should persist; when they can
- Ccompetitive advantages should persist; why they should not
- Dcompetitive parity should not persist; why they should
23The two types of measures of competitive advantage include
- Aaccounting measures and strategic measures.
- Bstrategic measures and economic measures.
- Caccounting measures and economic measures.
- Dqualitative measures and quantitative measures.
24A firm's ________ is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements.
- Aeconomic performance
- Baccounting performance
- Cstrategic performance
- Dsustainable performance
25________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator.
- ALiquidity ratios
- BLeverage ratios
- CActivity ratios
- DProfitability ratios
26Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as
- Aleverage ratios.
- Bliquidity ratios.
- Cactivity ratios.
- Dprofitability ratios.
27Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.
- Aabove average economic performance
- Bbelow average accounting performance
- Cabove average accounting performance
- Dbelow average economic performance
28The ________ is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm.
- Acost of debt
- Bcost of advantage
- Ccost of parity
- Dcost of capital
29________ 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.
- AEconomic
- BAccounting
- CStrategic
- DSustainable
30The 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
- Aweighted cost of capital.
- Bweighted average cost of capital.
- Ccost of capital.
- Daverage cost of capital.
31A 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
- Anormal economic performance.
- Baverage accounting performance.
- Ctemporary advantage.
- Dabove normal economic performance.
32An important limitation of comparing a firm's performance to its cost of capital occurs when a firm is
- Aprivately held.
- Ban IPO.
- Can entrepreneurial venture.
- Dexperiencing below normal economic performance.
33A firm that earns its cost of capital is said to be earning
- Aabove normal economic performance.
- Bnormal economic performance.
- Cbelow normal economic performance.
- Dnormal accounting performance.
34The 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.
- Astakeholder
- Bresidual claimants
- Clegitimate claimants
- Dextraordinary claims
35Theories 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
- Aemergent strategies.
- Bobjective strategies.
- Cplanned strategies.
- Dad hoc strategies.
36The realized strategy of most firms tends to be
- Aalmost exclusively a reflection of their intended strategy.
- Balmost exclusively a reflection of their emergent strategy.
- Ca combination of both intended and emergent strategies.
- Dreflective of neither the firms' intended nor emergent strategy.
37Which of the following is a reason why it is important for students to study strategy and the strategic management process?
- AStudying strategy and the strategic management process can give students tools to evaluate the strategies of firms that may employ them.
- BIt 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.
- CWhile 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.
- DAll of the above
38Fed 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?
- Aintended
- Beconomic
- Cemergent
- Dvisionary
39Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?
- Aactivity ratios
- Bliquidity ratios
- Cleverageratios
- Dprofitability ratios
40One of the first scholars to examine the longevity of competitive advantage was
- ADennis Mueller.
- BGeoffrey Waring.
- CPeter Roberts.
- DRich Houston.
41Which ratio signals a greater risk of bankruptcy as it increases?
- Adebt to equity
- Bquick ratio
- Cdebt to assets
- Dcash flow per share
42Accounts receivable turnover is an example of which type of ratio?
- Aprofitability
- Bactivity
- Cliquidity
- Dleverage
43Thermacorp'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
- Aabove normal economic performance.
- Babove normal accounting performance.
- Cbelow normal economic performance.
- Dbelow normal accounting performance.
44Thermacorp's 17.3% ROE is an example of a(n) ________ ratio.
- Aliquidity
- Bprofitability
- Cactivity
- Dleverage
45If the average ROE in the heating and cooling industry is 10.1%, and Thermacorp's ROE is 17.3%, Thermacorp is said to have
- Abelow average accounting performance.
- Babove average economic performance.
- Cabove average accounting performance.
- Dbelow average economic performance.
46Green 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
- Adefining its mission.
- Bsetting objectives.
- Cmeasuring performance.
- Ddefining its business level strategy.
47Green 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?
- Aincreasing profitability
- Bgrowing market share annually
- Cimproving product quality every quarter
- Dgrowth in earnings per share averaging 15% or better annually for the next five years
48Green 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)
- Ainternal analysis.
- Bexternal analysis.
- CWACC analysis.
- Deconomic analysis.
49Green 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)
- Ainternal analysis.
- Bexternal analysis.
- CWACC analysis
- Deconomic analysis
50Green 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?
- Abusiness level strategy
- Bcost leadership strategy
- Cproduct differentiation strategy
- Dcorporate level strategy
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- Quiz on CHAPTER - 1, created by Strategy IO on 27/12/2016.
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- Strategy IO
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