Quiz 1:

1. Strategic objectives should be measurable, specific, appropriate, and realistic, but not constrained by
time deadlines.
a. False
2. An organization’s mission statement and vision statement set the overall direction of the organization.
Strategic objectives
a. Operationalize the mission statement
3. To illustrate interrelationships among different segments of the general environment: The persistence of
large US trade deficits (__________) has led to greater demand for protectionist measures, such as trade
barriers and quotas (___________). These measures lead to higher prices for US consumers and fuel
inflation (___________).
a. Macroeconomic, political/legal, economic
4. The same environmental trend can often have very different effects on firms within the same industry.
a. True
5. Some excellent examples of mission statements are: “To be the happiest place on earth” (Disneyland)
and “Restoring patients to full life” (Medtronic).
a. False
6. Environmental forecasting involves developing plausible projections about the ______ of environmental
change.
a. Direction
b. Scope
c. Speed
7. Strategic management recognizes the trade-offs between effectiveness and efficiency
a. True
8. According to the text, the strategic management process entails three ongoing processes:
a. Analyses, decisions, and actions
9. Technological innovations can create entirely new industries and alter the boundaries of industries.
a. True
10. Interest-rate increases have a ________ impact on the residential home construction industry and a
________ effect on industries that produce consumer necessities such as prescription drugs or basic
grocery items.
a. Negative; negligible
11. The aging of the population, changes in ethnic composition, and effects of the baby boom are
a. Demographic changes
 12. The three primary participants in corporate governance are: 1) the shareholders; 2) management (lead by
CEO); and 3) employees.
a. False
13. According to the text, the “triple bottom line” approach to corporate accounting includes 3 components:
a. Financial, environmental, and social
14. All of the following are important elements of the political/legal segment of the general environment
except
a. The increased use of internet technology
15. A mission statement encompasses both the purpose of the company as well as the basis of competition
and competitive advantage.
16. Which of the following would be considered part of a firm’s general environment?
a. Higher unemployment rates
17. A major sociocultural trend in the US is the increased educational attainment by women
a. True
18. The hierarchy of organizational goals is in this order (least specific to most specific):
a. Vision statements, mission statements, strategic objectives.
19. Stockholders, employees, and the community-at-large are among a firm’s stakeholders.
a. True
20. Although changes in the general environment may often adversely or favorably impact a firm, they
seldom alter an entire industry.
a. False

Quiz 2
1. Industries characterized by high economies of scale typically attract fewer new entrants.
a. True
2. Strategic groups consist of
a. A group of firms within an industry that follow similar strategies
3. The bargaining power of suppliers is enhanced under the following market
a. Dominance by a few suppliers
4. Porter’s Five Forces model helps to determine both the nature of competition in an industry and the
industry’s profit potential
a. True
5. In some industries, high switching costs can act as an important barrier to entry
a. True
6. Rivalry is most intense when there are high exit barriers and high industry growth
 a. False
7. Which of the following firms would likely pose the least competitive threat?
a. A competitor to your product where a high switching cost exists.
8. The power of a buyer group is increased if the buyer group has less concentration than the supplier
group
a. False
9. Buyer power tends to be higher if suppliers provide undifferentiated or standard products
a. True
10. Incumbent firms may enjoy increased bargaining power because the internet
a. Diminished the power of many distribution channel intermediaries
11. The most intense rivalry results from numerous equally balanced competitors, slow industry growth,
high fixed or storage costs
12. The power of suppliers will be enhanced if they are able to maintain a credible threat of forward
integration
a. True
13. A large fabricator of building components purchased a steel company to provide raw materials for its
production process. This is an example of
a. Backward integration
14. Complementary products are products that typically have a negative impact on the value of a firm’s own
products or services.
a. False
15. Supplier power tends to be highest in industries where products are vital to buyers, where switching
from one supplier to another is very costly, and where there are many suppliers
a. False
16. In the value net analysis, complementors are
a. Firms that produce products or services that have a positive impact on the value of firm’s
products or services
17. In general, the threat of substitutes is heightened because the internet
a. Introduces new ways to accomplish the same task
18. Buyer power will be greater when
a. It is concentrated or purchases large volumes relative to seller sales
19. Product differentiation by incumbents act as an entry barrier because
a. New entrants will have to spend heavily to overcome existing customer loyalties
20. The more attractive the price/performance ratio of substitute products, the more tightly it constraints an
industry’s ability to charge high prices
Quiz 3
1. Which of the following is not an advantage of Just-in-Time inventory systems?
a. Reduced dependence on suppliers
2. A firm’s intangible resources refer to its capacity to deploy tangible resources over time and leverage
those resources effectively
a. False
3. Gillette combines several technologies (e.g. metallurgy, physiology, physics) to attain unparalleled
success in the wet shaving industry. This is an example of their
a. Organizational capabilities
4. A variety of firm’s resources include interpersonal relations among managers in the firm, its culture, and
its reputation with its suppliers and customers. Such competitive advantages are based upon
a. Social complexity
5. Which of the following lists consists of support activities?
a. HR management, tech development, procurement, and firm infrastructure
6. Examples of tangible resources (in the resource-based view of the firm) include:
a. Financial resources, physical resources, and tech resources
7. ____________ are typically embedded in unique routines and practices that have evolved and
accumulated over time – such as trust and effective work teams
a. Intangible resources
8. Primary activities contribute to the physical creation of a product or service, its sale and transfer to the
buyer, and its service after the sale.
a. True
9. The power of suppliers will be enhanced if they are able to maintain a credible threat of forward
integration.
a. True
10. For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have
four attributes. Which of the following is not one of these attributes?
a. Easy for competitors to substitute
11. In value chain analysis, the activities of an organization are divided into two major categories of value
activities: primary and support. Which of the following is a primary activity?
a. Repairing the product for the consumer
12. Value chain analysis can only be applied to manufacturing operations
a. False
13. Rivalry will be most intense when there is a lack of differentiation or switching costs
 14. Rivalry is most intense when there are high exit barriers and high industry growth
a. False
15. In most industries, new entrants will be a bigger threat because the internet lowers entry barriers
a. True
16. A firm should not drain its resources on
a. Superfluous strengths or the zone of irrelevance
17. Capabilities that exhibit causal ambiguity are difficult to imitate
a. True
18. The more attractive the price/performance ratio of substitute products, the more tightly it constraints an
industry’s ability to charge high prices
a. True
19. The balanced scorecard developed by Kaplan and Norton helps to integrate
a. Financial analysis and stakeholder perspectives
20. Value chain analysis assumes that a firm’s basic economic purpose is to create value and it is a useful
framework for analyzing a firm’s strengths and weaknesses
a. True

Quiz 4
1. All of the following are potential pitfalls of a differentiation strategy except
a. All rivals share a common input or raw material
2. With a focus strategy, creating a niche by differentiating one’s product or service often allows small
firms to compete successfully with market leaders
a. True
3. In the _______ stage of the industry life cycle, the emphasis on product design is very high, the intensity
of competition is low, and the market growth rate is low
a. Introduction
4. Firms that compete on overall cost leadership are vulnerable if all rivals share a common input or raw
material that contributes a significant amount to total costs
a. True
5. Which of the following is a risk of cost leadership?
a. Cost cutting may lead to the loss of desirable features
6. A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies
is that they are relatively easy for competitors to imitate
a. False
7. High product differentiation is generally accompanied by
 a. Decreased emphasis on competition based on price
8. Research has consistently shown that firms that achieve both cost leadership and differentiation
advantages tend to perform
a. Higher than firms that achieve a cost or a differentiation advantage
9. Michael Porter’s three generic strategies can be depicted on two dimensions: competitive advantage and
product life cycle
a. False
10. A potential pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs
a. True
11. A manufacturing business pursuing cost leadership will likely
a. Rely on experience effects to raise efficiency
12. Primary value chain activities that involve the effective layout of receiving dock operations (inbound
logistics) and support value chain activities that include expertise in process engineering (tech
development) characterize what generic strategy?
a. Overall cost leadership
13. An important potential pitfall of an integrated overall cost leadership and differentiation strategy is that
firms may fail to implement either one and become “stuck in the middle”
a. True
14. A firm can achieve differentiation through all of the following means excepts
a. Offering lower prices to frequent customers
15. Concentrating solely on one form of competitive advantage generally leads to the highest possible level
of profitability
a. False
16. The text discusses three approaches to combining overall cost leadership and differentiation competitive
advantages. These are the following except
a. Deriving benefits from highly focused and high tech markets
17. Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the
ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
a. Overall cost leadership
18. To generate above average returns, a firm following an overall cost leadership position should not be
concerned with attaining parity or proximity on the basis of differentiation relative to its peers
a. False
19. One potential pitfall of a differentiation strategy is that a brand’s identification in the marketplace may
become diluted through excessive product line extensions
a. True
 20. A successful differentiation strategy increases rivalry since buyers become more price sensitive
a. False

Quiz 5
1. The risks of vertical integration include all of the following except
a. Costs and expenses associated with increased overhead and capital expenditures
b. Lack of control over valuable assets
c. Problems associated with unbalanced capacities along the value chain
d. Additional administrative costs associated with managing a more complex set of activities
2. Through joint ventures, firms can directly acquire the assets and competencies of other firms
a. False
b. True
3. When management uses common production facilities or purchasing procedures to distribute different
but related products, they are
a. Building on core competencies
b. Using portfolio analysis
c. Sharing activities
d. Achieving process gains
4. A firm should consider vertical integration when
a. The competitive situation is highly volatile
b. Customer needs are evolving
c. The firm’s suppliers willingly cooperate with the firm
d. The firm’s suppliers of raw materials are often unable to maintain quality standards
5. A newly acquired business must always have products that are similar to the existing businesses’
products to benefit from the corporation’s core competence
a. True
b. False
6. An advantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product
markets
a. True
b. False
7. A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated
diversification
a. True
b. False
8. McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor
through its super warehouses. This is an example of
a. Achieving economies of scope through related diversification
b. Achieving market power through related diversification
c. Attaining the benefits of restructuring through unrelated diversification
d. Attaining the benefits of parenting through unrelated diversification
9. Among the disadvantages of acquisitions are the expensive premiums that are frequently paid to acquire
a business
a. True
b. False
10. Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller’s market share.
This justification for diversification is best described as
a. Utilizing common infrastructures
b. Using portfolio analysis
c. Capitalizing on core competencies
d. Reducing corporate risk
11. For a core competence to be a viable basis for the corporation strengthening a new business unit, there
are three requirements. Which one of the following is not one of these requirements?
a. The new business must be similar to existing businesses to benefit from a core competence
b. The collection of competencies should be unique, so that they cannot be easily imitated
c. The competence must help the business gain strength relative to its competition
d. The new business must have an established large market share
12. An advantage of internal development is that firms do not have to combine activities across the value
chains of many companies and merge company cultures
a. True
b. False
13. Sharing activities across business units can provide two primary benefits: cost savings and revenue
enhancements
a. True
b. False
14. A firm that incorporates more processes toward the original source of raw materials is an example of
forward integration
a. True
b. False
 15. The corporate office of Cooper Industries adds value to its acquired businesses by performing such
activities as auditing their manufacturing operations, improving their accounting activities, and
centralizing union negotiations. This is an example of
a. Achieving economies of scope through related diversification
b. Achieving market power through related diversification
c. Attaining the benefits of horizontal integration
d. Attaining the benefits of parenting through unrelated diversification
16. Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing
much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of
a. Leveraging core competencies
b. Sharing activities
c. Vertical integration
d. Pooled negotiating power
17. Corporate level strategy addresses two related issues:
a. What businesses to compete in; how these businesses can achieve synergy
b. How to compete in a given business; the application of technology
c. How integrate primary activities; increase shareholder wealth
d. How to improve a firm’s infrastructure; how to maintain ethical behavior
18. Similar businesses working together or the affiliation of a business with a strong parent can strengthen a
firm’s bargaining position relative to suppliers and customers
a. True
b. False
19. Sharing core competencies is one of the primary potential advantages of diversification. In order for
diversification to be most successful, it is important that
a. The methods of production are the same
b. The target market is the same, even if the products are very different
c. The products use similar distribution channels
d. The similarity required for sharing core competencies must be in the value chain, not in the
product
20. When firms diversify into unrelated businesses, the primary potential benefits are horizontal
relationships, i.e., businesses sharing tangible and intangible resources
a. True
b. False
Quiz 6
1. A limitation of a multi-domestic strategy is that it may lead to over-adaptation as conditions change.
 a. True
2. Michael porter’s framework all of the following factors affect a nation’s competitiveness except
a. Policies that protect the nation’s domestic competitors
3. Demanding domestic consumers tend to push firms to move ahead of companies in other countries
where consumers are less demanding and more complacent
a. True
4. High pressure for local adaptation combined with low pressure for lower costs would suggest what type
of international strategy?
a. Multi-domestic
5. Two opposing pressures that managers face when they compete in foreign markets are cost reduction
and adaptation to local markets
a. True
6. Microsoft decided to establish a corporate research laboratory in Cambridge, England
a. To access the outstanding technical and professional talent available there so that they can attain
world-class excellence in selected value-creating activities
7. _____ occurs when a firm decides to utilize other firms to perform value-creating activities that were
previously performed in-house
a. Outsourcing
8. Optimizing the location of every activity in the value chain can yield all of the following strategic
advantages except
a. Extending the life cycle of the product or service
9. Multinational firms following a transnational strategy strive to optimize the trade-offs associated with
efficiency, local adaptation, and learning
a. True
10. Differences in foreign markets such as culture, language, and customs can represent significant
management risks when firms enter foreign markets
a. True
11. International expansion can extend the life cycle of a product that is in its maturity stage in a firm’s
home country
a. True
12. The factor endowments of a country are inherited and cannot be created
a. False
13. Typically, joint ventures involve less control and risk than franchising
a. False
 14. The sale of Boeing’s commercial aircraft and Microsoft’s operating systems in many countries enable
these companies to benefit from
a. Economies of scale
15. Within a worldwide market, the most effective strategies are neither purely multi-domestic nor purely
global
a. True
16. Low pressure for local adaptation combined with low pressure for lower costs would suggest what type
of strategy?
a. International
17. Appreciation of the US dollar will have the following impact on McDonald’s:
a. Lower profits, because foreign profits will be redued when measured in dollars
18. Many US multinational companies set up maquiladora operations south of the US-Mexico border
primarily
a. To take advantage of the low cost of labor
19. An advantage of international expansion is that competition within foreign countries is generally very
similar to that of the US.
a. False
20. According to Michael Porter, firms that have experienced intense domestic competition are
a. More likely to design strategies and structures that allow them to successfully compete abroad

Quiz 7
1. Informational control is primarily concerned with whether or not the organization is “doing the right
things.”
a. True
b. False
2. At ABC Corporation, work is divided into units that specialize in production, marketing, research and
development, and other management tasks. This is an example of a
a. Simple structure
b. Functional structure
c. Divisional structure
d. Matrix structure
3. Central to agency theory is the relationship between two primary players, the principals (stockholders)
and agents (management)
a. True
b. False
4. In the BCG Matrix, a business that has a low market share in an industry characterized by high market
growth is termed a
a. Star
b. Question mark
c. Cow
d. Dog
5. Portfolio management matrices are applied to what level of strategy?
a. Departmental level
b. Business level
c. Corporate level
d. International level
6. _________ is when a firm’s corporate office helps subsidiaries make wise choices in their own
acquisitions, divestures, and new ventures
a. Parenting
b. Restructuring
c. Leveraging core competencies
d. Increasing market power
7. Portfolio management matrices generally consist of two axes that reflect industry or market growth and
the market share of a business
a. True
b. False
8. A company offering local telecommunications service combines resources with an international
company that manufactures digital switching equipment to research a new type of telecommunications
technology. This is an example of
a. Joint diversification
b. Strategic alliance
c. Divestment
d. Global integration
9. The “traditional” approach to strategic control is interactive, while the “contemporary” approach to
strategic control is sequential.
a. True
b. False
10. _________ is when a firm tries to find and acquire either poorly performing firms with unrealized
potential or firms in industries on the threshold of significant, positive change.
a. Parenting
 b. Restructuring
c. Leveraging core competencies
d. Sharing activities
11. _______ entail the creation of a third party legal entity; whereas _____ do not.
a. Joint ventures; strategic alliances
b. Licensing agreements; joint ventures
c. Strategic alliances; joint ventures
d. Franchising agreements; strategic alliances
12. The matrix structure attempts to combine the advantages of the functional and product-oriented structure.
a. True
b. False
13. The form of entry strategy into international operations that offers the lowest level of control would be
exporting.
a. True
b. False
14. ________ are most appropriate where a firm already has the appropriate knowledge and capabilities that
it can leverage rather easily through multiple locations in many countries
a. Join ventures
b. Strategic alliances
c. Wholly owned subsidiaries
d. Licensing agreements
15. According to the text, boundaryless organizational structures are most effective when they replace rather
than complement traditional organizational structures
a. True
b. False
16. The strategic business unit and holding company structure are variants of the functional form of
structure
a. True
b. False
17. All of the following are examples of how organizational culture exerts behavioral control except
a. Culture helps maintain control by creating behavioral norms
b. Culture sets explicit boundaries
c. Culture encourages individual identification with the organization and its objectives
d. Culture generates unwritten standards of acceptable behavior
18. As firms grow, owner managers often need to hire functional specialists to handle the increased
information-processing burden
a. True
b. False
19. An organization’s reward system is typically a weak method of motivating employees
a. True
b. False
20. When using a BCG matrix, a business that currently holds a large market share in a rapidly growing
market and that has minimal or negative cash flow would be known as a
a. Cow
b. Dog
c. Problem child
d. star