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CHAPTER - 1

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Quiz on CHAPTER - 1, created by Strategy IO on 27/12/2016.
Strategy IO
Quiz by Strategy IO, updated more than 1 year ago
Strategy IO
Created by Strategy IO almost 8 years ago
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Question 1

Question
A firm's _____ is defined as its theory about how to gain competitive advantages.
Answer
  • objective
  • mission
  • vision
  • strategy

Question 2

Question
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
Answer
  • organizational change process
  • strategic management process.
  • mission statement process.
  • goal setting process

Question 3

Question
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
Answer
  • mission
  • strategy
  • objective
  • goal

Question 4

Question
The strategic management process begins when a firm
Answer
  • determines its objectives
  • defines its mission.
  • makes a strategic choice.
  • implements its strategy

Question 5

Question
Firms whose mission is central to all they do are known as ________ firms.
Answer
  • missionary
  • emergent
  • parity
  • visionary

Question 6

Question
From 1926 to 1995, visionary firms earned ________ returns compared to firms that were not visionary firms
Answer
  • substantially lower
  • substantially higher
  • marginally lower
  • equivalent

Question 7

Question
The mission statements of visionary firms
Answer
  • 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.

Question 8

Question
Which of the following statements regarding firm mission is accurate
Answer
  • 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

Question 9

Question
________ are specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission
Answer
  • Strategies
  • Missions
  • Competitive advantages
  • Objectives

Question 10

Question
High quality objectives are those that are
Answer
  • 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.

Question 11

Question
By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment.
Answer
  • internal analysis
  • competitive analysis
  • external analysis
  • strategic choice

Question 12

Question
________ helps a firm understand which of its resources and capabilities are likely to be sources of competitive advantage.
Answer
  • Competitive analysis
  • Internal analysis
  • Strategic choice
  • External analysis

Question 13

Question
Actions firms take to gain competitive advantages in a single market or industry are known as
Answer
  • business level strategies.
  • corporate level strategies.
  • diversification strategies.
  • strategy implementation.

Question 14

Question
Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as
Answer
  • corporate level strategies.
  • diversification strategies.
  • business level strategies.
  • strategic alliance strategies.

Question 15

Question
________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.
Answer
  • Strategy formulation
  • Strategic choice
  • Strategy implementation
  • Strategic control

Question 16

Question
When a firm is able to create more economic value than rival firms it is said to have a(n)
Answer
  • comparative advantage
  • competitive advantage
  • residual advantage.
  • economic advantage.

Question 17

Question
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
Answer
  • value proposition.
  • cost advantage.
  • economic value.
  • competitive advantage.

Question 18

Question
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.
Answer
  • perceived benefit
  • economic value
  • cost advantage
  • competitive advantage

Question 19

Question
A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.
Answer
  • temporary
  • sustained
  • transient
  • perpetual

Question 20

Question
The center of Osterwalder and Pigneur's business model canvas is the
Answer
  • parity point.
  • value proposition.
  • competitive advantage.
  • strategy box.

Question 21

Question
Firms that generate less economic value than their rivals experience a competitive
Answer
  • advantage
  • parity
  • disadvantage
  • perceived benefit

Question 22

Question
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 ________.
Answer
  • 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

Question 23

Question
The two types of measures of competitive advantage include
Answer
  • accounting measures and strategic measures.
  • strategic measures and economic measures.
  • accounting measures and economic measures.
  • qualitative measures and quantitative measures.

Question 24

Question
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.
Answer
  • economic performance
  • accounting performance
  • strategic performance
  • sustainable performance

Question 25

Question
________ are ratios with some measure of profit in the numerator and some measure of firms' size or assets in the denominator.
Answer
  • Liquidity ratios
  • Leverage ratios
  • Activity ratios
  • Profitability ratios

Question 26

Question
Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as
Answer
  • leverage ratios.
  • liquidity ratios.
  • activity ratios.
  • profitability ratios.

Question 27

Question
Using ratio analysis, a firm earns ________ when its performance is greater than the industry average.
Answer
  • above average economic performance
  • below average accounting performance
  • above average accounting performance
  • below average economic performance

Question 28

Question
The ________ is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm.
Answer
  • cost of debt
  • cost of advantage
  • cost of parity
  • cost of capital

Question 29

Question
________ 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.
Answer
  • Economic
  • Accounting
  • Strategic
  • Sustainable

Question 30

Question
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
Answer
  • weighted cost of capital.
  • weighted average cost of capital.
  • cost of capital.
  • average cost of capital.

Question 31

Question
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
Answer
  • normal economic performance.
  • average accounting performance.
  • temporary advantage.
  • above normal economic performance.

Question 32

Question
An important limitation of comparing a firm's performance to its cost of capital occurs when a firm is
Answer
  • privately held.
  • an IPO.
  • an entrepreneurial venture.
  • experiencing below normal economic performance.

Question 33

Question
A firm that earns its cost of capital is said to be earning
Answer
  • above normal economic performance.
  • normal economic performance.
  • below normal economic performance.
  • normal accounting performance.

Question 34

Question
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.
Answer
  • stakeholder
  • residual claimants
  • legitimate claimants
  • extraordinary claims

Question 35

Question
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
Answer
  • emergent strategies.
  • objective strategies.
  • planned strategies.
  • ad hoc strategies.

Question 36

Question
The realized strategy of most firms tends to be
Answer
  • 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.

Question 37

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

Question 38

Question
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?
Answer
  • intended
  • economic
  • emergent
  • visionary

Question 39

Question
Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?
Answer
  • activity ratios
  • liquidity ratios
  • leverageratios
  • profitability ratios

Question 40

Question
One of the first scholars to examine the longevity of competitive advantage was
Answer
  • Dennis Mueller.
  • Geoffrey Waring.
  • Peter Roberts.
  • Rich Houston.

Question 41

Question
Which ratio signals a greater risk of bankruptcy as it increases?
Answer
  • debt to equity
  • quick ratio
  • debt to assets
  • cash flow per share

Question 42

Question
Accounts receivable turnover is an example of which type of ratio?
Answer
  • profitability
  • activity
  • liquidity
  • leverage

Question 43

Question
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
Answer
  • above normal economic performance.
  • above normal accounting performance.
  • below normal economic performance.
  • below normal accounting performance.

Question 44

Question
Thermacorp's 17.3% ROE is an example of a(n) ________ ratio.
Answer
  • liquidity
  • profitability
  • activity
  • leverage

Question 45

Question
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
Answer
  • below average accounting performance.
  • above average economic performance.
  • above average accounting performance.
  • below average economic performance.

Question 46

Question
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
Answer
  • defining its mission.
  • setting objectives.
  • measuring performance.
  • defining its business level strategy.

Question 47

Question
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?
Answer
  • 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

Question 48

Question
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)
Answer
  • internal analysis.
  • external analysis.
  • WACC analysis.
  • economic analysis.

Question 49

Question
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)
Answer
  • internal analysis.
  • external analysis.
  • WACC analysis
  • economic analysis

Question 50

Question
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?
Answer
  • business level strategy
  • cost leadership strategy
  • product differentiation strategy
  • corporate level strategy
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