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Chapter 01
Strategic Management: Creating Competitive Advantages
True / False Questions
1. | Hewlett-Packards failure and success under the leadership first of Carly Fiorina and then of Mark Hurd was said to be a direct result of the quality of leadership of each of these CEOs. According to the text, this would be an example of the romantic perspective of leadership.
True False |
2. | Strategic management consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
True False |
3. | Strategic management is concerned with the analysis of strategic goals as stated in the vision, mission, and strategic objectives of a firm.
True False |
4. | The three interrelated and principal activities of strategic management are: strategy analysis, strategy formulation, and strategy implementation.
True False |
5. | Strategic management is not concerned with how to create competitive advantage in the marketplace.
True False |
6. | Management innovations such as total quality, just-in-time, benchmarking, business process reengineering, and outsourcing are important, but not enough for building sustainable competitive advantage.
True False |
7. | Making trade-off decisions between effectiveness and efficiency is central to the practice of strategic management.
True False |
8. | Only shareholders in a publicly held company are stakeholders because they are the only group that has a stake in the success of the organization.
True False |
9. | Strategic management is only concerned with short-term perspectives.
True False |
10. | Focusing on a single stakeholder is a good strategic principle for managers to follow.
True False |
11. | According to Peter Senge, a leading strategic management author, creative tension results from the need to incorporate both short-term and long-term perspectives in strategic management.
True False |
12. | Shareholders expect only short-term value and therefore good managers should only focus on meeting short-term performance targets.
True False |
13. | Focusing on the short term and efficiency is always a bad management principle.
True False |
14. | Ambidexterity refers to a managers challenge to align resources, without having to take advantage of existing product markets or to proactively explore new opportunities.
True False |
15. | According to a recent study involving 41 business units in 10 multinational companies, one ambidextrous behavior exhibited by managers is that of being brokers who are always looking to build internal networks.
True False |
16. | According to Henry Mintzberg, a management scholar, most firms realize their original intended strategy.
True False |
17. | The final realized strategy of a firm is a combination of deliberate and emergent strategies.
True False |
18. | In the Mintzberg model, organizational decisions determined only by analysis are intended strategy.
True False |
19. | Strategy analysis is the study of the external environments of the firm.
True False |
20. | Both the internal and external environments of a firm must be analyzed as well as the goals of the firm before managers can formulate and implement appropriate strategies.
True False |
21. | Strategy formulation involves decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage.
True False |
22. | All successful firms compete and outperform their rivals by developing bases for competitive advantage, which can be achieved only through cost leadership.
True False |
23. | Business-level strategy focuses on (1) what businesses to compete in and (2) the management of the business portfolio to create synergy among its businesses.
True False |
24. | Corporate-level strategy addresses how firms compete and outperform their rivals as well as achieve and sustain competitive advantages.
True False |
25. | International strategy involves decisions concerning appropriate entry strategy and attaining competitive advantage in international markets.
True False |
26. | Entrepreneurial activity aimed at new value creation is not a major engine for economic growth.
True False |
27. | Strategy implementation involves actions that carry out the formulated strategy including proper strategic controls, organizational designs, and leadership.
True False |
28. | Effective leadership can play a large role in fostering corporate entrepreneurship. Corporate entrepreneurship can have a very positive impact on the bottom line of a firm.
True False |
29. | Firms must exercise either informational control or behavioral control in order to assure proper strategy implementation.
True False |
30. | Leaders are responsible for creating a learning organization so that the entire organization can benefit only from the individual talents.
True False |
31. | The three primary participants in corporate governance are: (1) the shareholders, (2) the management (led by the chief executive officer), and (3) the employees.
True False |
32. | Decisions by boards of directors are always consistent with shareholder interests.
True False |
33. | Ensuring effective corporate governance requires an effective and engaged board of directors, uninvolved shareholders, and proper managerial rewards and incentives.
True False |
34. | Auditors, banks, and analysts are external control mechanisms to ensure effective corporate governance.
True False |
35. | Former Chrysler vice chairman Robert Lutz observed that companies exist to serve the shareholder and create shareholder value. He insisted that the only person who owns the company is the person who paid good money for it. This is an example of a symbiotic approach to stakeholder management.
True False |
36. | Stakeholders make various claims on a company. Their interests must be taken into account in the strategic management process.
True False |
37. | Stockholders in a company are the only individuals with an interest in the financial performance of the company.
True False |
38. | Stockholders, employees, and the community-at-large are among the stakeholders of a firm.
True False |
39. | Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders within and outside an organization.
True False |
40. | Procter and Gamble developed a laundry detergent compaction technique that appeals to consumers, retailers, shipping and wholesalers, and environmentalists. This is an example of stakeholder symbiosis.
True False |
41. | Partnering with governments, communities, suppliers, customers, and rivals is a way to manage conflicting stakeholder interests.
True False |
42. | The Higgs Index enables companies to compare environmental performance outcomes in order to improve their environmental impact and is an example of how rivals work together to resolve complex problems.
True False |
43. | As a stakeholder group, creditors are interested in taxes and compliance with regulations.
True False |
44. | As a stakeholder group, customers are interested in dividends and capital appreciation.
True False |
45. | As a stakeholder group, communities are interested in good citizenship behavior.
True False |
46. | Social responsibility is the idea that organizations are not only accountable to stockholders but also to the community-at-large.
True False |
47. | What constitutes socially responsible behavior changes over time.
True False |
48. | Shell, NEC, and Procter and Gamble have been measuring their performance according to what has been called a triple bottom line. This technique involves an assessment of financial, social, and environmental performance.
True False |
49. | Demands for greater corporate responsibility are decreasing today.
True False |
50. | A key stakeholder group that appears to be particularly susceptible to corporate social responsibility (CSR) initiatives is customers.
True False |
51. | There is a positive influence of CSR on the consumer evaluation of companies and their purchasing decisions, according to recent studies.
True False |
52. | Environmental sustainability is a value embraced by the most competitive and successful multinational companies.
True False |
53. | For many successful firms, environmental values are not central to the company culture and management processes.
True False |
54. | Sustainability is being increasingly recognized as a source of cost efficiencies and revenue growth.
True False |
55. | The ROIs on sustainability projects are often very difficult to quantify because the data necessary to calculate ROI accurately are often not available when it comes to sustainability projects.
True False |
56. | Many of the benefits from sustainability projects are intangible, making it difficult to calculate the ROI.
True False |
57. | The intangible benefits of sustainability projects, such as reducing risks, staying ahead of regulations, pleasing communities, and enhancing employee morale, are substantial even when they are difficult to quantify.
True False |
58. | Sustainability projects often require shorter-term payback windows than other projects.
True False |
59. | Sustainability initiatives rarely have difficulty making it through the conventional approval process within corporations because managers are not concerned about their return on investment.
True False |
60. | The ROI on a sustainability project generally is easy to quantify.
True False |
61. | Strategic management requires managers at all levels of the organization to take a segregated view of the organization.
True False |
62. | The strategic management process should be addressed only by top-level executives. Mid-level and low-level employees are best equipped to implement the strategies of the organization.
True False |
63. | To develop and mobilize people and other assets, leaders are needed throughout the organization.
True False |
64. | In the strategic management process, only local line leaders and executive leaders are needed.
True False |
65. | Internal networks have great positional power and formal authority.
True False |
66. | Local line leaders have little profit-and-loss responsibility.
True False |
67. | Executive leaders champion and guide ideas.
True False |
68. | Local line leaders are key in setting the tone for the empowerment of employees.
True False |
69. | Richard Branson, the founder of the Virgin Group, is well known for creating an inclusive organizational structure in which anybody in the organization can be involved in generating and activating upon new business ideas.
True False |
70. | To inculcate a strategic management perspective, managers must often make a major effort to effect transformational change.
True False |
71. | To effect transformational change in an organization, managers must communicate extensively and provide incentives, training, and development.
True False |
72. | Nancy Snyder, corporate vice president of Whirlpool, shifted the reputation of the firm to that of an innovator by investing financially in capital spending.
True False |
73. | Successful executives do not reward honesty and input and do not show their interest in learning what others are thinking.
True False |
74. | According to the CEO of IDEO, Tim Brown, spotting and promoting at any level in the firm is important.
True False |
75. | There are few benefits to having broad investment throughout the organization in the strategic management process.
True False |
76. | Showing interest in learning what others are thinking is a leadership weakness.
True False |
77. | The vision of an organization is the top level of its hierarchy of organizational goals. The vision statement should be massively inspiring, overarching, and long term.
True False |
78. | Strategic objectives are more specific than vision statements.
True False |
79. | According to the text, a mission statement is an overarching statement that is massively inspiring, long term, and only discusses the purpose of the company.
True False |
80. | A mission statement encompasses both the purpose of the organization as well as its basis of competition, and the basis of its competitive advantage.
True False |
81. | Strategic objectives should be measurable, specific, appropriate, and realistic, but not constrained by time deadlines.
True False |
82. | Much research has supported the notion that individuals work much harder when they are asked to do their best rather than when they are striving toward a specific goal.
True False |
83. | Objectives in organizations should be clear, stated, and known by employees throughout the organization.
True False |
84. | Strategic management should only include short-term objectives. Long-term objectives are covered in the vision statement of the organization.
True False |
85. | Organizational goals and objectives should be vague in order to allow for changes in strategy.
True False |
86. | An idealistic vision can arouse employee enthusiasm and therefore is a good vision.
True False |
87. | One of the reasons a vision fails is that too much focus can lead to missed opportunities.
True False |
88. | Visions need to be anchored in reality in order to be successful.
True False |
89. | Effective mission statements incorporate the concept of stakeholder management, suggesting that organizations must respond to a single constituency.
True False |
90. | A good mission statement, by addressing each principal theme, must communicate why an organization is special and different.
True False |
91. | When formulating strategic objectives, managers need to remember that too many objectives can result in a lack of focus and diminished results.
True False |
Multiple Choice Questions
92. | The text addresses two perspectives of leadership as well as their implications. These two perspectives are
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93. | A CEO made a lot of mistakes in assessing the market and the competitive conditions and improperly redesigning the organization into numerous business units. Such errors led to significant performance declines. According to the text, this example illustrates the __________ perspective of leadership.
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94. | According to the external control view of leadership, which of the following factors would not be considered an external factor that might positively or negatively affect a firms success?
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95. | Melvin Alexander, executive director of Principled Solutions Enterprise, a management consulting firm specializing in health care, suggests that environmental changes oblige firms to make strategic changes in order to survive. Which of the following is one of the strategic changes he foresees will occur in the next three to five years?
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96. | According to the text, the strategic management process entails three ongoing processes. They are
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97. | Management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because
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98. | The organizational versus the individual rationality perspective suggests that objectives that are
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99. | The four key attributes of strategic management include the idea that strategy must
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100. | The four key attributes of strategic management include all of the following except
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101. | Effectiveness is often defined as
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102. | In choosing to focus on stakeholders, which of the following will not lead to success for a manager?
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103. | In strategic management, both the short-term and long-term perspectives need to be considered because
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104. | Strategic management involves the recognition of trade-offs between effectiveness and
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105. | All of the following are ambidextrous behaviors except
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106. | Ambidextrous behaviors in individuals illustrate how a dual capacity for _______ can be woven into the fabric of an organization at the individual level.
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107. | According to Henry Mintzberg, the final realized strategy of a firm is
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108. | __________ may be considered the advance work that must be done in order to effectively formulate and implement strategies.
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109. | Strategy analysis is the starting point of the strategic management process and consists of the
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110. | Strategy formulation at the business level addresses best how to compete in a given business:
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111. | Corporate level strategy focuses on what businesses to compete in and
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112. | Corporate-level strategy looks at how to manage the ______ of its businesses to create synergies.
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113. | Entering foreign markets requires firms to ascertain foremost how they will attain
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114. | New value creation is a major engine for economic growth and is the main focus of _______________ strategy.
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115. | Two types of strategic control that firms must exercise for good strategy implementation are
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116. | Effective organizational design means that firms must have ________ that are consistent with their strategy.
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117. | Learning organizations permit the entire organization to benefit from ____________ talents.
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118. | Effective leaders set a direction and develop an organization so that it is committed to excellence and ___________ behavior.
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119. | Strategies should be formulated that enhance foremost the ____________ capacity of a firm.
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120. | The three participants in corporate governance are the shareholders,
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121. | While working to prioritize and fulfill their responsibilities, members of the board of directors of an organization should
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122. | Members of boards of directors are
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123. | An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that
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124. | Stakeholders are
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125. | Procter and Gamble has perfected a technique for compacting cleaning powder into a liquid concentration. Consumers, retailers, shipping and wholesalers, and environmentalists all have benefited from the resulting change in consumer shopping habits and the revolution in industry supply-chain economics. According to the text, this is an example of
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126. | There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum thinking means that
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127. | Managers should do more than focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that
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128. | Employee stakeholders are concerned with
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129. | Stockholders as a stakeholder group are interested primarily by
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130. | The Sustainable Apparel Coalition accounts for more than one-third of the global
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131. | Wall Street executives have received excessive bonus pay in the past. This concerns which of the following stakeholder groups most directly?
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132. | Supplier stakeholders are concerned with
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133. | Community stakeholders are concerned primarily with
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134. | Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility, which is the
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135. | According to the text, the triple bottom line approach to corporate accounting includes which three components?
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136. | Demands for greater corporate responsibility have accelerated today. They focus on issues such as
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137. | A key stakeholder group that is particularly susceptible to corporate social responsibility (CSR) initiatives is
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138. | According to the Corporate Citizenship poll conducted by Cone Communications, most Americans say they would be likely to switch brands to one associated with a good cause, if there are similarities between
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139. | According to a CEO survey by Accenture, __________________ are not mutually exclusive corporate goals.
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140. | The Clorox Green Works line of plant-based cleaning materials captured 42 percent of the natural cleaning products market in its first year. This is an example of the benefit of
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141. | Northrup Grumman saved $2 million in energy costs at a single facility by installing reflective roofs and fluorescent lighting, replacing old equipment, and making minor temperature and humidity-level adjustments. This is an example of the benefit of
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142. | The Fairmont Royal York in Toronto invested $25,000 in an energy conservation program to replace leaky steam traps and fix leaks, which resulted in an annual savings of over $200,000. This is an example of a sustainability effort to
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143. | The ROI on sustainability efforts can be difficult to quantify because
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144. | Sustainability programs often find their success beyond company boundaries, thus ______ systems and _____ metrics cannot capture all of the relevant numbers.
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145. | Traditional financial models are built around relatively easy-to-measure, monetized results; whereas, the benefits of sustainability projects involve
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146. | The case for sustainability projects needs to be made on the basis of a more holistic and comprehensive understanding of all the _____________ benefits.
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