Crafting and Executing Strategy Concepts and Cases Arthur Thompson 22nd Edition- Test Bank

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Crafting and Executing Strategy Concepts and Cases Arthur Thompson 22nd Edition- Test Bank

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Chapter 2   Charting a Company’s Direction

 

1) The five basic tasks of the strategy-making, strategy-executing process DO NOT include

1. A) developing a strategic vision of where the company needs to head and what its future business makeup will be.
2. B) strategic management to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve.
3. C) crafting a strategy to achieve the objectives and get the company where it wants to go.
4. D) developing a profitable business model.
5. E) executing the chosen strategy efficiently and effectively.

 

Answer:  D

Explanation:  The process of crafting and executing a company’s strategy is an ongoing, continuous process consisting of five interrelated stages: developing a strategic vision that charts the company’s long-term direction; strategic management for measuring the company’s performance and tracking its progress in moving in the intended long-term direction; crafting a strategy for advancing the company along the path management has charted and achieving its performance objectives; executing the chosen strategy efficiently and effectively; and monitoring developments, evaluating performance, and initiating corrective adjustments in the company’s vision and mission statement, objectives, strategy, or approach to strategy execution in light of actual experience, changing conditions, new ideas, and new opportunities.

Difficulty: 1 Easy

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

2) A company’s strategic plan

1. A) maps out the company’s history.
2. B) links the company’s financial targets to control mechanisms.
3. C) outlines the competitive moves and approaches to be used in achieving the desired business results.
4. D) focuses on offering a more appealing product than rivals.
5. E) lists methods of making money in its chosen business.

 

Answer:  C

Explanation:  A strategic plan maps out where a company is headed, establishes strategic and financial targets, and outlines the competitive moves and approaches to be used in achieving the desired business results.

Difficulty: 1 Easy

Topic:  Strategy and the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

3) An integral part of the managerial process of crafting and executing strategy includes

1. A) developing a proven business model.
2. B) deciding how much of the company’s resources to employ in the pursuit of sustainable competitive advantage.
3. C) developing a strategic vision.
4. D) communicating the company’s values and code of conduct to all employees.
5. E) deciding on the company’s strategic intent.

 

Answer:  C

Explanation:  The process of crafting and executing a company’s strategy is an ongoing, continuous process consisting of five interrelated stages: developing a strategic vision that charts the company’s long-term direction; utilizing strategic management for measuring the company’s performance and tracking its progress in moving in the intended long-term direction; crafting a strategy for advancing the company along the path management has charted and achieving its performance objectives; executing the chosen strategy efficiently and effectively; and monitoring developments, evaluating performance, and initiating corrective adjustments in the company’s vision and mission statement, objectives, strategy, or approach to strategy execution in light of actual experience, changing conditions, new ideas, and new opportunities.

Difficulty: 1 Easy

Topic:  Strategy and the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

4) Integral parts of the managerial process of crafting and executing strategy include

1. A) developing a strategic vision, strategic management, and crafting a strategy.
2. B) developing a proven business model, deciding on the company’s strategic intent, and crafting a strategy.
3. C) strategic management, crafting a strategy, implementing and executing the chosen strategy, and deciding how much of the company’s resources to employ in the pursuit of sustainable competitive advantage.
4. D) coming up with a statement of the company’s mission and purpose, strategic management, choosing what business approaches to employ, selecting a business model, and monitoring developments.
5. E) deciding on the company’s strategic intent, setting financial objectives, crafting a strategy, and choosing what business approaches and operating practices to employ.

 

Answer:  A

Explanation:  The process of crafting and executing a company’s strategy is an ongoing, continuous process consisting of five interrelated stages: developing a strategic vision that charts the company’s long-term direction; utilizing strategic management for measuring the company’s performance and tracking its progress in moving in the intended long-term direction; crafting a strategy for advancing the company along the path management has charted and achieving its performance objectives; executing the chosen strategy efficiently and effectively; and monitoring developments, evaluating performance, and initiating corrective adjustments in the company’s vision and mission statement, objectives, strategy, or approach to strategy execution in light of actual experience, changing conditions, new ideas, and new opportunities.

Difficulty: 1 Easy

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

5) The strategy-making, strategy-executing process is shaped by

1. A) management’s strategic vision, strategic and financial objectives, and strategy.
2. B) the decisions made by the compensation and audit committees of the board of directors.
3. C) external factors such as the industry’s economic and competitive conditions and internal factors such as the company’s collection of resources and capabilities.
4. D) the challenges of developing a sound business model.
5. E) top executives and the board of directors; very few managers below this level are involved in the process.

 

Answer:  C

Explanation:  Management’s decisions that are made in the strategic management process are shaped by the prevailing economic conditions and competitive environment and the company’s own internal resources and competitive capabilities, as shown in Figure 2.1 and described in detail in Table 2.1.

Difficulty: 2 Medium

Topic:  Strategy and the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

6) When companies adopt the strategy-making and strategy-execution process, it requires they start by

1. A) developing a strategic vision, mission, and values.
2. B) developing a proven business model, deciding on the company’s top management team, and crafting a strategy.
3. C) strategic management, developing a business model, crafting a strategy, and deciding how much of the company’s resources to employ in the pursuit of sustainable competitive advantage.
4. D) coming up with a statement of the company’s mission and communicating it to all employees, strategic management, selecting a business model, and monitoring developments and initiating corrective adjustments to the business model when necessary.
5. E) deciding on the company’s board of directors, setting financial objectives, crafting a strategy, and choosing what business approaches and operating practices to employ.

 

Answer:  A

Explanation:  Figure 2.1 displays the five-stage process. The first step is developing a strategic vision, mission, and values.

Difficulty: 2 Medium

Topic:  Strategy and the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

7) A company’s strategic vision concerns

1. A) management’s storyline of how it intends to make a profit with the chosen strategy “who we are and what we do.”
2. B) what future actions the enterprise will likely undertake to outmaneuver rivals and achieve a sustainable competitive advantage.
3. C) “who we are and what we do.”
4. D) a company’s directional path and future product-customer-market-technology focus.
5. E) why the company does certain things in trying to please its customers.

 

Answer:  D

Explanation:  A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 1 Easy

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

8) The real purpose of the company’s strategic vision

1. A) lays out how management plans to implement and execute a profitable business model.
2. B) describes what business the company is presently in and why it has chosen certain operating practices to meet the needs of customers.
3. C) serves as management’s tool for giving the organization a sense of direction.
4. D) defines “who we are and what we do.”
5. E) spells out a company’s strategic intent, its strategic and financial objectives, and the business approaches and operating practices that will underpin its efforts to achieve sustainable competitive advantage.

 

Answer:  C

Explanation:  The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

9) A strategic vision constitutes management’s view and conclusions about the company’s

1. A) long-term direction and what product-market-customer mix seems optimal.
2. B) business model and the kind of value that it is trying to deliver to customers.
3. C) justification of why the business will be a moneymaker.
4. D) past and present scope of work.
5. E) long-term plan for outcompeting rivals and achieving a competitive advantage.

 

Answer:  A

Explanation:  Top management’s views and conclusions about the company’s long-term direction and what product-market-customer business mix seems optimal for the road ahead constitute a strategic vision for the company. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

10) The managerial task of developing a strategic vision for a company

1. A) concerns deciding what approach the company should take to implement and execute its business model.
2. B) entails coming up with a fairly specific answer to “who are we, what do we do, and why are we here?”
3. C) is chiefly concerned with addressing what a company needs to do to successfully outcompete rivals in the marketplace.
4. D) involves deciding upon what strategic course a company should pursue in preparing for the future and why this directional path makes good business sense.
5. E) entails coming up with a concrete plan for how the company intends to make money.

 

Answer:  D

Explanation:  The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

11) An unlikely, inaccurate feature of an organization’s strategic vision is

1. A) providing a panoramic view of “where we are going.”
2. B) outlining how the company intends to implement and execute its business model.
3. C) pointing an organization in a particular direction and charting a strategic path for it to follow.
4. D) helping mold an organization’s character and identity.
5. E) describing the company’s future product-market-customer focus.

 

Answer:  B

Explanation:  The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

12) Management’s strategic vision for an organization

1. A) charts a strategic course for the organization (“where we are going”) and provides a rationale for why this directional path makes good sense.
2. B) describes in fairly specific terms the organization’s strategic objectives, and strategy.
3. C) spells out how the company will become a big moneymaker and boost shareholder value.
4. D) addresses the critical issue of “why our business model needs to change and how we plan to change it.”
5. E) spells out the organization’s strategic intent and the actions and moves that will be undertaken to achieve it.

 

Answer:  A

Explanation:  The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity.

Difficulty: 1 Easy

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

13) Well-conceived visions are ________ and ________ to a particular organization and they avoid generic, feel-good statements that could apply to hundreds of organizations.

1. A) widespread; unique
2. B) recurring; customary
3. C) distinctive; specific
4. D) customary; familiar
5. E) universal; established

 

Answer:  C

Explanation:  Well-conceived visions are distinctive and specific to a particular organization; they avoid generic, feel-good statements.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

14) What a company’s top executives are saying about where the company is headed long-term with respect to its future product-market-customer-technology mix

1. A) indicates what kind of business model the company is going to have in the future.
2. B) constitutes the strategic vision for the company.
3. C) signals what the firm’s emergent strategy will be.
4. D) serves to define the company’s business plan.
5. E) indicates what kind of products and services the company plans to offer in the future.

 

Answer:  B

Explanation:  Top management’s views about the company’s direction and future product-customer-market-technology focus constitute a strategic vision for the company. A clearly articulated strategic vision communicates management’s aspirations to stakeholders about “where we are going” and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

15) One of the important benefits of a well-conceived and well-stated strategic vision is to

1. A) clearly delineate how the company’s business model will be implemented and executed.
2. B) clearly communicate management’s aspirations for the company to stakeholders and help steer the energies of company personnel in a common direction.
3. C) set forth the firm budgetary objectives in clear and fairly precise terms.
4. D) help create a balanced scorecard approach to objective setting and not stretch the company’s resources too thin across different products, technologies, and geographic markets.
5. E) indicate what kind of sustainable competitive advantage the company will try to create in the course of becoming the industry leader.

 

Answer:  B

Explanation:  The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

16) The defining characteristic of a well-conceived strategic vision is

1. A) what it says about the company’s future strategic course—”the direction we are headed and what our future product-market-customer focus will be.”
2. B) that it not stretch the company’s resources too thin across different products, technologies, and geographic markets.
3. C) clarity and specificity about “who we are, what we do, and why we are here.”
4. D) that it be flexible and operate in the mainstream.
5. E) that it be within the realm of what the company can reasonably expect to achieve within four years.

 

Answer:  A

Explanation:  Well-conceived visions are distinctive and specific to a particular organization; they avoid generic, feel-good statements. For a strategic vision to function as a valuable management tool, it must convey what top executives want the business to look like and provide managers at all organizational levels with a reference point in making strategic decisions and preparing the company for the future. It must say something definitive about how the company’s leaders intend to position the company beyond where it is today.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

17) When company managers are in the process of thinking strategically about what directional path should be taken by the company, they are not likely to ask which question?

1. A) Is the outlook for the company promising if it continues with its present product offerings?
2. B) Are changing market and competitive conditions acting to enhance or weaken the company’s prospects?
3. C) What business approaches and operating practices should we consider in trying to implement and execute our business model?
4. D) What strategic course offers attractive opportunity for growth and profitability?
5. E) What, if any, new customer groups and/or geographic markets should the company get in position to serve?

 

Answer:  C

Explanation:  The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

18) Company managers are unlikely to consider this question when choosing to pursue one strategic course or directional path versus another.

1. A) Are changing market and competitive conditions acting to enhance or weaken the company’s business outlook?
2. B) Is the company stretching its resources too thinly by trying to compete in too many markets or segments, some of which are unprofitable?
3. C) Will our present business generate sufficient growth and profitability in the years ahead to please shareholders?
4. D) What market opportunities should the company pursue and which ones should not be pursued?
5. E) Do we have a better business model than key rivals?

 

Answer:  E

Explanation:  A strategic vision delineates management’s aspirations for the business, providing a panoramic view of “where we are going” and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management’s aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

19) Characteristics of an effectively worded strategic vision statement are most likely to include

1. A) balanced, responsible, and rational.
2. B) challenging, competitive, and “set in concrete.”
3. C) graphic, directional, and focused.
4. D) realistic, customer-focused, and market-driven.
5. E) achievable, profitable, and ethical.

 

Answer:  C

Explanation:  An effectively worded vision statement should be graphic, painting a clear picture of where the company is headed and the market position(s) the company is striving to stake out; focused on providing managers with guidance in making decisions and allocating resources; and forward-looking and directional, describing the strategic course that will help the company prepare for the future.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

20) An effectively worded strategic vision statement is not likely to be

1. A) directional (is forward-looking, describes the strategic course that management has charted that will help the company prepare for the future).
2. B) easy to communicate (is explainable in 5-10 minutes, and can be reduced to a memorable slogan).
3. C) graphic (paints a picture of the kind of company management is trying to create and the market position(s) the company is striving to stake out).
4. D) consensus-driven (commits the company to a “mainstream” directional path that almost all stakeholders will enthusiastically support).
5. E) focused (provides guidance to managers in making decisions and allocating resources).

 

Answer:  D

Explanation:  An effectively worded vision statement should be graphic, painting a clear picture of where the company is headed and the market position(s) the company is striving to stake out; focused on providing managers with guidance in making decisions and allocating resources; forward-looking and directional, describing the strategic course that will help the company prepare for the future; and memorable—it should be reducible to a few choice lines.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

21) The wording of a company’s vision statement should commonly be

1. A) vague or incomplete—short on specifics.
2. B) flexible—adjustable according to changing circumstances.
3. C) bland or uninspiring—short on inspiration.
4. D) generic—could apply to almost any company (or at least several others in the same industry).
5. E) reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of customers).

 

Answer:  B

Explanation:  While wording a vision statement, do not be vague or incomplete—never skimp on specifics about where the company is headed or how the company intends to prepare for the future; do not state the vision in bland or uninspiring terms—the best vision statements have the power to motivate company personnel and inspire shareholder confidence about the company’s future; do not be generic—a vision statement that could apply to companies in any of several industries (or to any of several companies in the same industry) is not specific enough to provide any guidance; do not rely on superlatives—visions that claim the company’s strategic course is the “best” or “most successful” usually lack specifics about the path the company is taking to get there.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

22) Common shortcomings of company vision statements include

1. A) too specific and too flexible.
2. B) unrealistic, unconventional, and unbusinesslike.
3. C) too broad, vague or incomplete, bland/uninspiring, not distinctive, and too reliant on superlatives.
4. D) too graphic, too narrow, and too risky.
5. E) not customer-driven, out of step with emerging technological trends, and too ambitious.

 

Answer:  C

Explanation:  While wording a vision statement, do not be vague or incomplete—never skimp on specifics about where the company is headed or how the company intends to prepare for the future; do not state the vision in bland or uninspiring terms—the best vision statements have the power to motivate company personnel and inspire shareholder confidence about the company’s future; do not be generic—a vision statement that could apply to companies in any of several industries (or to any of several companies in the same industry) is not specific enough to provide any guidance; do not rely on superlatives—visions that claim the company’s strategic course is the “best” or “most successful” usually lack specifics about the path the company is taking to get there.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

23) Breaking down resistance to a new strategic vision typically requires that management, on an as needed basis,

1. A) institute a balance scorecard to measuring company performance, with the balance including a mixture of both old and new performance measures.
2. B) inform company personnel about forthcoming changes in the company’s strategy.
3. C) reiterate the company’s need for the new direction, while addressing employee concerns head-on, calming fears, lifting spirits, and providing them with updates and progress reports as events unfold.
4. D) explain all updates and merits of the company’s business model to align strategy with employee concerns.
5. E) raise wages and salaries to win the support of company personnel for the company’s new direction.

 

Answer:  C

Explanation:  It is particularly important for executives to provide a compelling rationale for a dramatically new strategic vision and company direction. When company personnel don’t understand or accept the need for redirecting organizational efforts, they are prone to resist change. Hence, explaining the basis for the new direction, addressing employee concerns head-on, calming fears, lifting spirits, and providing updates and progress reports as events unfold all become part of the task in mobilizing support for the vision and winning commitment to needed actions.

Difficulty: 2 Medium

Topic:  The Roles of Vision, Mission, and Values in the Strategic Management Process

Learning Objective:  02-01 Why it is critical for managers to have a clear strategic vision of where the company needs to head.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

Crafting and Executing Strategy, 22e (Thompson)

Chapter 4   Evaluating a Company’s Resources, Capabilities, and Competitiveness

 

1) In evaluating how well a company’s strategy is working, the best place to start is with a

1. A) SWOT analysis.
2. B) clear view of what that strategy entails.
3. C) value chain analysis.
4. D) competitive strength analysis.
5. E) financial ratio analysis.

 

Answer:  B

Explanation:  In evaluating how well a company’s strategy is working, the best place to start is with a clear view of what that strategy entails. The first thing to examine is the company’s competitive approach.

Difficulty: 1 Easy

Topic:  Strategy Analysis

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

2) When SunPower’s managers engage in the process of developing a list of questions to evaluate their company’s internal situation, which question does not address the task of evaluating SunPower’s resources and competitive position?

1. A) What strategic issues and problems merit front-burner managerial attention at SunPower?
2. B) How well is SunPower’s present strategy working?
3. C) Which are SunPower’s least and most profitable geographic market segments?
4. D) Is SunPower competitively stronger or weaker than key rivals?
5. E) How do SunPower’s value chain activities impact its cost structure and customer value proposition?

 

Answer:  C

Explanation:  Evaluating a company’s resources and competitive position does not involve the following question: What are the company’s most profitable geographic market segments?

Difficulty: 3 Hard

Topic:  Strategy Analysis

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

3) Choose the analytical tool that does not evaluate how well Apple Inc.’s strategy and competitive approach are currently working.

1. A) resource and capability analysis
2. B) benchmarking
3. C) value chain analysis
4. D) Porter’s three tests for evaluating diversification outside the core business
5. E) competitive strength assessment

 

Answer:  D

Explanation:  Porter’s three tests for evaluating diversification outside a company’s core business is a method of ascertaining whether or not a potential future diversification strategy for Apple Inc. could consistently deliver superior results, and as such is not considered to be an analytical tool to reveal that company’s current competitiveness.

Difficulty: 2 Medium

Topic:  Strategy Analysis

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

4) A superior indicator of how sound W.L. Gore’s strategy is and whether or not the strategy signals strong execution is

1. A) falling short of its stated financial objectives, that is, its financial performance is well below the industry average, and its market share gains reflect short-term preferences for capacity maximization.
2. B) remaining inattentive to possible improvements in its functional areas, creating stretch business goals, and providing a product-focused value proposition to customers.
3. C) foregoing initiatives designed to build market share and to promote corporate responsibility.
4. D) achieving its stated financial and strategic objectives via improvements in its internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity.
5. E) undertaking new initiatives to promote corporate social responsibility.

 

Answer:  D

Explanation:  The best indicator of how well a company’s strategy is working is whether the company is achieving its stated financial and strategic objectives, its financial performance is above the industry average, and it is gaining customers and increasing its market share.

Difficulty: 3 Hard

Topic:  Benchmarking

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

5) ________ is not a useful financial ratio indicating how well a company’s strategy is working.

1. A) Return on stockholders’ equity
2. B) The company’s gross profit margin
3. C) Quick (or acid test) ratio
4. D) Market share
5. E) A long-term debt to equity

 

Answer:  D

Explanation:  Market share is an indicator of competitive performance but is not a financial ratio.

Difficulty: 1 Easy

Topic:  Benchmarking

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

6) Key financial ratios that could help analysts measure Whole Foods’ profitability do not include

1. A) operating profit margin.
2. B) return on capital employed.
3. C) net return on assets.
4. D) inventory turnover.
5. E) return on stockholders’ equity.

 

Answer:  D

Explanation:  Inventory turnover is an indicator of Whole Foods’ asset utilization activity, but is not an indicator of its profitability.

Difficulty: 2 Medium

Topic:  Benchmarking

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

7) One important indicator of how well a company’s present strategy is working is whether

1. A) it has more core competencies than close rivals.
2. B) its strategy is built around at least two of the industry’s key success factors.
3. C) the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.
4. D) it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign).
5. E) it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).

 

Answer:  C

Explanation:  One important indicator of how well a company’s present strategy is working is whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

Difficulty: 2 Medium

Topic:  Benchmarking

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

8) Key functional strategies of a company include all of the following except

1. A) R&D, technology, and product design strategies.
2. B) production and information technology and supply chain management strategies.
3. C) human resource and finance strategies.
4. D) sales, marketing, and distribution strategies.
5. E) alliance and partnerships as well as merger and acquisition growth strategies.

 

Answer:  E

Explanation:  Key functional strategies do not include alliance and partnerships as well as merger and acquisition growth strategies (which form part of the business strategy of the company).

Difficulty: 1 Easy

Topic:  Types of Functional Strategies

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

9) A company’s resources and capabilities represent

1. A) the firm’s net working capital and related determinants for measuring operating performance and capabilities.
2. B) the firm’s competitive assets that determine its competitiveness and ability to succeed in the marketplace.
3. C) whether the firm has the industry’s most efficient value chain.
4. D) management’s sources and uses of funding for new strategic initiatives.
5. E) positive trends with relevant cultural factors related to buyers’ choices and product modifications.

 

Answer:  B

Explanation:  A company’s resources and capabilities represent its competitive assets and are determinants of its competitiveness and ability to succeed in the marketplace.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

10) If you were asked to use a powerful analytical tool to size up Amazon’s competitive assets and determine whether they can provide the foundation necessary for its competitive success in the marketplace, you would choose

1. A) VRIN tests.
2. B) SWOT analysis.
3. C) competitive strength matrix analysis.
4. D) financial and asset management analysis.
5. E) value chain analysis.

 

Answer:  A

Explanation:  VRIN tests can be a powerful tool for sizing up a company’s resources and capabilities. The competitive power of a resource or capability is measured by how many of four specific VRIN tests it can pass. These tests are referred to as the VRIN tests for sustainable competitive advantage—VRIN is a shorthand reminder standing for valuable, rare, inimitable, and nonsubstitutable. The first two tests determine whether a resource or capability can support a competitive advantage. The last two determine whether the competitive advantage can be sustained.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

11) The difference between a resource and a capability is a resource

1. A) is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.
2. B) is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function.
3. C) is a mechanism used for carrying out some responsibility, whereas a capability possesses the ability to monitor the resource.
4. D) represents the firm’s fixed assets, whereas a capability defines whether the firm is competent to perform some function with these assets.
5. E) represents the firm’s human assets, whereas a capability defines the skills and knowledge of these human resources.

 

Answer:  A

Explanation:  The difference between a resource and a capability is that a resource is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.

Difficulty: 1 Easy

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

12) Nestlé’s brand management capabilities for its 2000-plus food, beverage, and pet care brands are

1. A) known as productive inputs or competitive assets, while human assets and intellectual capital are, which are considered capabilities or competencies.
2. B) representative of physical resources only.
3. C) part of an inventory or collection of the firm’s strengths, weaknesses, opportunities, and threats.
4. D) categorized as tangible and/or intangible resources
5. E) intangible resources only, because they consist of patents, copyrights, and technological processes.

 

Answer:  A

Explanation:  A useful way to identify a company like Nestlé’s brand management resources, such as (1) the experience-based learning of the company’s brand managers, (2) the expertise of its marketing department, and (3) the company’s relationships with retailers in nearly 200 countries, is to categorize them as either tangible and intangible.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

13) A capability of the firm is not considered to be

1. A) the capacity of a firm to competently perform some internal activity.
2. B) referred to as a competence.
3. C) developed and enabled through the deployment of a company’s resources or some combination of its resources.
4. D) a competitively valuable resource.
5. E) related to the level of resources available.

 

Answer:  E

Explanation:  A resource is a competitive asset that is owned or controlled by a company; a capability is the capacity of a company to competently perform some internal activity. Capabilities are developed and enabled through the deployment of a company’s available resources.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

14) When strategic managers assess the competitive power of company resources, what matters is

1. A) whether it helps differentiate a company’s product offering from the product offerings of rival firms.
2. B) whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.
3. C) whether customers are aware of the resource and view it positively enough to boost the company’s brand name reputation.
4. D) whether the resource is something rivals are unable to perform, if it is an important differentiating product or service feature, how strongly it contributes to the company’s brand image, and if it is the foundation of a cost-based advantage.
5. E) whether the resource is technology based or based on superior marketing know-how.

 

Answer:  B

Explanation:  The competitive power of a company’s resources is predicated upon whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

15) Tangible resources do not include

1. A) physical resources.
2. B) financial resources.
3. C) human assets.
4. D) technological assets.
5. E) organizational resources.

 

Answer:  C

Explanation:  Tangible resources do not include human assets, because their knowledge and experience can be said to be intangible.

Difficulty: 1 Easy

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

16) Tangible resources include

1. A) human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel.
2. B) reputational assets, which can include the company’s reputation for quality, service, and reliability as well as its reputation for fair dealings with suppliers.
3. C) relationships such as alliances that provide access to technologies, specialized know-how, or geographic markets.
4. D) technological assets such as patents, copyrights, and innovation technologies.
5. E) company culture and incentive system, which includes the norms of behavior and business principles.

 

Answer:  D

Explanation:  Tangible resources include technological assets such as patents, copyrights, innovation technologies, production technology, and technological processes.

Difficulty: 1 Easy

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

17) Among W.L. Gore’s tangible resources are

1. A) human assets and intellectual capital.
2. B) creativity, production technologies, and patents.
3. C) brand, image, and reputation.
4. D) relationships.
5. E) company culture.

 

Answer:  B

Explanation:  Tangible resources include technological assets such as patents, copyrights, innovation technologies, production technology, and technological processes.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

18) Starbucks has hired you to make a systematic inventory of its competitive capabilities. To do so, you would conduct an assessment of Starbucks’

1. A) resources and functions.
2. B) competitive set via a strategy matrix.
3. C) sustainability initiatives and resource bundles.
4. D) cross-functional systems and collaborative resource methodology.
5. E) financial statements and managerial depth charts.

 

Answer:  A

Explanation:  Two approaches make the process of uncovering and identifying a firm’s capabilities more systematic. The first method takes the completed listing of a firm’s resources as its starting point. The second method of identifying a firm’s capabilities takes a functional approach.

Difficulty: 3 Hard

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

19) A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through

1. A) improved employee training programs, new marketing promotions, or technological enhancements to production processes.
2. B) the development of a new business strategy that draws upon existing resource strengths.
3. C) extensive strategic planning and resource identification sessions involving managers at all levels of the organization.
4. D) bundled resources that enable superior performance of cross-functional capabilities that can be leveraged to support its business model and strategy.
5. E) devising clever approaches to turning resource weaknesses into resource strengths.

 

Answer:  D

Explanation:  If management determines that the company does not possess a resource that independently passes all four VRIN tests with high marks, it may have a bundle of resources that can pass the tests.

Difficulty: 3 Hard

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

20) Organizational capabilities are virtually always

1. A) knowledge based, residing in people and in the company’s intellectual capital, or in organizational processes and systems, which embody tacit knowledge.
2. B) more complex than resources and are exercised only through key personnel.
3. C) require constant evaluation to ensure cooperative support from management.
4. D) easier and less challenging to categorize than resources because there are fewer to be concerned about.
5. E) reflective of the industry’s driving forces.

 

Answer:  A

Explanation:  Virtually all organizational capabilities are knowledge based, residing in people and in a company’s intellectual capital, or in organizational processes and systems, which embody tacit knowledge.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

21) ________ is/are (a) set(s) of linked and closely integrated competitive assets centered around one or more cross-functional capabilities.

1. A) Organizational assets
2. B) Resource bundles
3. C) Resource capabilities
4. D) A functional method compilation
5. E) An integrated asset advantage

 

Answer:  B

Explanation:  A resource bundle is a linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities.

Difficulty: 1 Easy

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

22) A sustainable competitive advantage is gained when a company

1. A) has durable competitive assets that are central to its strategy and superior to those of rival firms.
2. B) has sufficient resources to expedite its strategy.
3. C) realizes its inherent weaknesses are transformable to advantages.
4. D) can stand out relative to rivals because of resource utilization.
5. E) has resources in well-populated geographical locations.

 

Answer:  A

Explanation:  When a company has competitive assets that are central to its strategy and superior to those of rival firms, and durable despite the best efforts of competitors to overcome it, then the company is said to have a sustainable competitive advantage.

Difficulty: 2 Medium

Topic:  Competitive Advantage

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

23) The four tests of a resource’s competitive power are often referred to as the

1. A) SCIR test, which asks if a resource is sustainable, competitive, internalized, and reproducible.
2. B) competitive advantage sustainable method test.
3. C) reliability resources simulation.
4. D) VRIN test, which asks if a resource is valuable, rare, inimitable, and nonsubstitutable.
5. E) organizational capability metric analysis.

 

Answer:  D

Explanation:  The four tests of a resource’s competitive power are often referred to as the VRIN test, which asks if a resource is valuable, rare, inimitable, and nonsubstitutable.

Difficulty: 1 Easy

Topic:  Competitive Advantage

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

24) The spotlight in analyzing a company’s resources, internal circumstances, and competitiveness includes such questions/concerns as

1. A) whether the company is located all over the globe.
2. B) whether the company’s key success factors are more dominant than the key success factors of close rivals.
3. C) whether the company has the industry’s most efficient and effective value chain.
4. D) what the company’s resource strengths and weaknesses are in relation to the market opportunities and external threats.
5. E) what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.

 

Answer:  D

Explanation:  The spotlight in analyzing a company’s resources, internal circumstances, and competitiveness includes such questions/concerns as what are the company’s resource strengths and weaknesses in relation to the market opportunities and external threats.

Difficulty: 2 Medium

Topic:  SWOT Analysis

Learning Objective:  04-02 How to assess the company’s strengths and weaknesses in light of market opportunities and external threats.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

25) Choose the indicator that is not relevant in identifying a company’s present strategy

1. A) the key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing
2. B) management’s planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on)
3. C) the company’s mission, strategic objectives, and financial objectives
4. D) moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions
5. E) the strategic role of its collaborative partnerships and strategic alliances with others

 

Answer:  C

Explanation:  The company’s mission, strategic objectives, and financial objectives are not pertinent in identifying a company’s present strategy.

Difficulty: 2 Medium

Topic:  SWOT Analysis

Learning Objective:  04-02 How to assess the company’s strengths and weaknesses in light of market opportunities and external threats.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

26) The best quantitative evidence of whether a company’s present strategy is working well is

1. A) whether the company has more competitive assets than it does competitive liabilities.
2. B) whether the company is in the industry’s best strategic group.
3. C) the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.
4. D) whether the company has a shorter value chain than close rivals.
5. E) whether the company is in the Fortune 500.

 

Answer:  C

Explanation:  The best quantitative evidence of whether a company’s present strategy is working well is the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

Difficulty: 2 Medium

Topic:  Benchmarking

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

27) ________ cannot determine how effective a company’s current strategy is working.

1. A) Whether the company’s sales are growing faster, slower, or about the same pace as the industry as a whole, thus resulting in a rising, falling, or stable market share
2. B) Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product
3. C) The firm’s image and reputation with its customers
4. D) Whether its profit margins are rising or falling and how large its margins are relative to those of its rivals
5. E) Evidence of improvement in internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity

 

Answer:  B

Explanation:  It is not relevant whether a company has a larger number of competitive assets than competitive liabilities or whether it has a superior quality product in order to reliably conclude that a company’s current strategy is working well.

Difficulty: 3 Hard

Topic:  Benchmarking

Learning Objective:  04-01 How to evaluate how well a company’s strategy is working.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

28) A resource of a firm is considered to be

1. A) a market opportunity.
2. B) an environmental threat.
3. C) the capacity of a firm to competently perform some internal activity.
4. D) a competitive deficiency.
5. E) deployed to develop and enable a firm’s capabilities.

 

Answer:  E

Explanation:  A resource is a competitive asset that is owned or controlled by a company; a capability is the capacity of a company to competently perform some internal activity. Capabilities are developed and enabled through the deployment of a company’s available resources.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

29) How are a company’s organizational capabilities developed and enabled?

1. A) by strengthening the traditions that company executives are committed to maintaining
2. B) through deployment of a company’s resources or some combination of its resources
3. C) by talking openly about the problems of the present company and determining how new behaviors will improve performance
4. D) by shifting from decentralized to centralized decision-making
5. E) by urging company personnel to search outside the company for work practices and operating approaches that may be an improvement over what the company is presently doing

 

Answer:  B

Explanation:  Organizational capabilities are developed through the use of resources and draw on some combination of the firm’s resources as they are exercised.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

30) The best example of a company resource is

1. A) having higher earnings per share and a higher return on shareholders’ equity investment than key rivals.
2. B) being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders, or strategic alliances.
3. C) having proven technological expertise and an ability to churn out new and improved products on a regular basis.
4. D) having a larger number of competitive assets than competitive liabilities.
5. E) having more built-in key success factors than rivals.

 

Answer:  C

Explanation:  A resource is a productive input or competitive asset that is owned or controlled by the firm. Firms have many different types of resources at their disposal that vary not only in kind but in quality as well. Some are of a higher quality than others, and some are more competitively valuable, having greater potential to give a firm a competitive advantage over its rivals.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

31) A good example of a company’s resources does not include

1. A) more intellectual capital and better e-commerce capabilities than rivals
2. B) fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance
3. C) having higher earnings per share and a higher stock price than key rivals
4. D) a well-known brand name and enjoying the confidence of customers
5. E) a lower-cost value chain than rivals

 

Answer:  C

Explanation:  A resource is a productive input or competitive asset that is owned or controlled by the firm. Having higher earnings per share and a higher stock price than key rivals cannot be a good example of a company’s resources.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

32) If a company does not possess standalone resource strengths capable of contributing to competitive advantage,

1. A) all potential for competitive advantage is lost.
2. B) it is unlikely to survive in the marketplace and should exit the industry.
3. C) it may have a bundle of resources that can be leveraged to develop a distinctive competence.
4. D) it is virtually blocked from using offensive strategies and must rely on defensive strategies.
5. E) its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities.

 

Answer:  C

Explanation:  If a company does not possess standalone resource strengths capable of contributing to competitive advantage, it can benefit from a bundle of resources that can be leveraged to develop a distinctive competence. Resource bundles can sometimes pass the four tests of a resource’s competitive power even when the individual components of the resource bundle cannot.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

33) Resource and capability analysis is designed to

1. A) ascertain the internal marketplace of non-distinct divisions of the company.
2. B) ascertain which of a company’s resources and capabilities are competitively valuable.
3. C) stimulate demand for a product.
4. D) ascertain to what extent a competitor can sustain a competitive advantage.
5. E) stimulate economic growth for companies within the industry.

 

Answer:  B

Explanation:  Resource and capability analysis is designed to ascertain which of a company’s resources and capabilities are competitively valuable, so that they can provide the foundation necessary for competitive success in the marketplace.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

34) Resource and capability analysis is achieved by

1. A) probing the caliber of a firm’s competitive assets relative to those of rival firms.
2. B) attaining price stability.
3. C) analyzing only internal strengths and weaknesses through a matrix comparison model.
4. D) cost-benefit analysis of the company’s core product sales.
5. E) performing resource-specific activities within the organization to allocate available capital.

 

Answer:  A

Explanation:  Resource and capability analysis is achieved by probing the caliber of a firm’s competitive assets relative to those of rival firms.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

35) When a company has become proficient in modifying, upgrading, or deepening the company’s resources and capabilities in response to its changing environment and market opportunities, it is called the company’s

1. A) dynamic capability.
2. B) core competence.
3. C) distinct competence.
4. D) strategic assessment.
5. E) benchmarking exercise.

 

Answer:  B

Explanation:  A dynamic capability is the ability to modify, deepen, or reconfigure the company’s existing resources and capabilities in response to its changing environment or market opportunities.

Difficulty: 1 Easy

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

36) A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a

1. A) long-term derivative strategy.
2. B) cash flow feasibility analysis.
3. C) competitive advantage over other companies.
4. D) resource deployment strategic plan.
5. E) cost underestimation and benefit overestimation.

 

Answer:  C

Explanation:  When a company has competitive assets that are central to its strategy and superior to those of rival firms, it can create a competitive advantage.

Difficulty: 2 Medium

Topic:  Competitive Advantage

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

37) The competitive power of a company resource strength or competitive capability hinges on all of the following except

1. A) how hard it is for competitors to copy.
2. B) whether it is rare and something rivals lack.
3. C) whether it is really competitively valuable and has the potential to contribute to a competitive advantage.
4. D) whether it is nonsubstitutable.
5. E) whether it is readily available for rivals to adopt.

 

Answer:  E

Explanation:  The competitive power of a company resource strength or competitive capability hinges on whether it is rare and not whether it is available in plenty and common among firms.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

38) Which two factors inhibit the ability of rivals to imitate a firm’s most valuable resources and capabilities?

1. A) social ambiguity and causal uncertainty
2. B) social simplicity and causal complexity
3. C) collective complexity and causal ambiguity
4. D) social complexity and causal ambiguity
5. E) social simplicity and causal uncertainty

 

Answer:  D

Explanation:  Social complexity and causal ambiguity are two factors that inhibit the ability of rivals to imitate a firm’s most valuable resources and capabilities.

Difficulty: 2 Medium

Topic:  Resource-Based View

Learning Objective:  04-03 Why a company’s resources and capabilities are critical for gaining a competitive edge over rivals.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation