Chapter 01
What is Strategy?
Multiple Choice Questions
1. Which of the following strategies does Twitter need to implement to increase its
competitive advantage?
A. charge no fee to individual
users
B. increase its user
base
C. deliver ads in real
time
D. allow core users to stay always
connected
2. _____ is best described as an integrative management field that combines analysis,
formulation, and implementation in the quest for competitive advantage.
A. Supply chain
management
B. Integrated technology
management
C. Strategic
management
D. Inventory
management
3. _____ is best described as a set of goal-directed actions a firm takes to gain and
sustain superior performance relative to competitors.
A. Behavior
modification
B. Strateg
y
C. Cred
o
D. Competency
management
1-1
,4. Which of the following stages of the strategic management process involves an
evaluation of a firm's external and internal environments?
A. strategy
analysis
B. strategy
implementation
C. strategy
formulation
D. strategy
control
5. In _____, a firm frames a guiding policy to address the competitive challenge.
A. strategy
control
B. strategy
implementation
C. strategy
formulation
D. strategy
analysis
6. Through _____, a firm puts its guiding policy into practice by employing a set of
coherent actions.
A. strategy
control
B. strategy
implementation
C. strategy
formulation
D. strategy
analysis
7. A firm that achieves superior performance relative to other firms in the same industry
or the industry average has a(n)
A. competitive
advantage.
B. balanced
scorecard.
C. power
position.
D. equity
leverage.
1-2
,8. Patterson Foods Inc. was the first company to start selling energy bars in its country
—a product that gained popularity among diverse groups. Soon, other companies
started to sell their own brands of energy bars, thereby giving Patterson Foods ample
competition. In response, Patterson Foods decided to limit its variety of energy bars
to only four. However, it ensured that these four varieties were low in calories and
low in cost. With this innovation, Patterson Foods Inc. consistently outperformed its
competitors for ten years. In this scenario, Patterson Foods Inc. maintained a _____
through its innovative strategy.
A. balanced
scorecard
B. fiduciary
responsibility
C. consistent power
position
D. sustainable competitive
advantage
9. Which of the following scenarios illustrates a firm that has a sustainable competitive
advantage?
A. Jamison Inc. generated revenue of $300,000 this financial year, which is close to
the industrial revenue average of $320,000.
B. CR Inc. almost doubled its sales to 9,000 units this year compared to its previous
year's sales of 5,000 units, though the industry average is 10,000 units.
C. Zhang Corp. was able to hold its market share of 68 percent in the social
networking industry for more than three years.
D. Peak Inc. was able to outperform its competitors with its new production system, in
terms of revenue, for a brief period of four months.
10. If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the
following will help determine if it has a competitive advantage over other
pharmaceutical companies?
A. comparing the return to the return on invested capital obtained by other firms
in the industry
B. assessing the value based on the shareholders' expectations of return on
their capital
C. evaluating the liquidity ratios for other pharmaceutical
companies
D. comparing the value to the history of the firm's return of investment over a
number of years
1-3
, 11. Underperformance relative to other firms in the same industry or the industry
average results in a(n) _____ for a firm.
A. sustainable competitive
advantage
B. increased power
distance
C. diseconomies of
scope
D. competitive
disadvantage
12. The Scoop, Ltd. is a magazine publishing company whose average return on invested
capital is approximately 5 percent. Because magazine publishing is a declining
industry, the industry average has been negative (–5 percent) for the last few years.
In this scenario, The Scoop Ltd. has a
A. competitive
advantage.
B. balanced
scorecard.
C. competitive
disadvantage.
D. power
position.
13. Rapida Inc. and Click Inc. are two companies that have been manufacturing
typewriters for almost 30 years. Due to the reduced demand for typewriters today,
both companies' average return on invested capital is approximately –5 percent. The
current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most
likely have
A. competitive advantage over other firms in their
industry.
B. competitive parity with each
other.
C. strategic alliance with each
other.
D. economies of scope instead of economies of
scale.
1-4
What is Strategy?
Multiple Choice Questions
1. Which of the following strategies does Twitter need to implement to increase its
competitive advantage?
A. charge no fee to individual
users
B. increase its user
base
C. deliver ads in real
time
D. allow core users to stay always
connected
2. _____ is best described as an integrative management field that combines analysis,
formulation, and implementation in the quest for competitive advantage.
A. Supply chain
management
B. Integrated technology
management
C. Strategic
management
D. Inventory
management
3. _____ is best described as a set of goal-directed actions a firm takes to gain and
sustain superior performance relative to competitors.
A. Behavior
modification
B. Strateg
y
C. Cred
o
D. Competency
management
1-1
,4. Which of the following stages of the strategic management process involves an
evaluation of a firm's external and internal environments?
A. strategy
analysis
B. strategy
implementation
C. strategy
formulation
D. strategy
control
5. In _____, a firm frames a guiding policy to address the competitive challenge.
A. strategy
control
B. strategy
implementation
C. strategy
formulation
D. strategy
analysis
6. Through _____, a firm puts its guiding policy into practice by employing a set of
coherent actions.
A. strategy
control
B. strategy
implementation
C. strategy
formulation
D. strategy
analysis
7. A firm that achieves superior performance relative to other firms in the same industry
or the industry average has a(n)
A. competitive
advantage.
B. balanced
scorecard.
C. power
position.
D. equity
leverage.
1-2
,8. Patterson Foods Inc. was the first company to start selling energy bars in its country
—a product that gained popularity among diverse groups. Soon, other companies
started to sell their own brands of energy bars, thereby giving Patterson Foods ample
competition. In response, Patterson Foods decided to limit its variety of energy bars
to only four. However, it ensured that these four varieties were low in calories and
low in cost. With this innovation, Patterson Foods Inc. consistently outperformed its
competitors for ten years. In this scenario, Patterson Foods Inc. maintained a _____
through its innovative strategy.
A. balanced
scorecard
B. fiduciary
responsibility
C. consistent power
position
D. sustainable competitive
advantage
9. Which of the following scenarios illustrates a firm that has a sustainable competitive
advantage?
A. Jamison Inc. generated revenue of $300,000 this financial year, which is close to
the industrial revenue average of $320,000.
B. CR Inc. almost doubled its sales to 9,000 units this year compared to its previous
year's sales of 5,000 units, though the industry average is 10,000 units.
C. Zhang Corp. was able to hold its market share of 68 percent in the social
networking industry for more than three years.
D. Peak Inc. was able to outperform its competitors with its new production system, in
terms of revenue, for a brief period of four months.
10. If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the
following will help determine if it has a competitive advantage over other
pharmaceutical companies?
A. comparing the return to the return on invested capital obtained by other firms
in the industry
B. assessing the value based on the shareholders' expectations of return on
their capital
C. evaluating the liquidity ratios for other pharmaceutical
companies
D. comparing the value to the history of the firm's return of investment over a
number of years
1-3
, 11. Underperformance relative to other firms in the same industry or the industry
average results in a(n) _____ for a firm.
A. sustainable competitive
advantage
B. increased power
distance
C. diseconomies of
scope
D. competitive
disadvantage
12. The Scoop, Ltd. is a magazine publishing company whose average return on invested
capital is approximately 5 percent. Because magazine publishing is a declining
industry, the industry average has been negative (–5 percent) for the last few years.
In this scenario, The Scoop Ltd. has a
A. competitive
advantage.
B. balanced
scorecard.
C. competitive
disadvantage.
D. power
position.
13. Rapida Inc. and Click Inc. are two companies that have been manufacturing
typewriters for almost 30 years. Due to the reduced demand for typewriters today,
both companies' average return on invested capital is approximately –5 percent. The
current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most
likely have
A. competitive advantage over other firms in their
industry.
B. competitive parity with each
other.
C. strategic alliance with each
other.
D. economies of scope instead of economies of
scale.
1-4
