1. Strategic competitiveness is achieved when a firm successfully formulates
and implements a value-creating strategy.
*a. True
b. False
2. Alligator Enterprises has earned above-average returns since its founding
five years ago. No other firm has challenged Alligator in its particular
market niche; therefore, the firm's owners can feel secure that Alligator has
established a competitive advantage.
a. True
*b. False
3. The goal of strategy implementation is to develop a permanent competitive
advantage.
a. True
*b. False
4. Risk in terms of financial returns reflects an investor's uncertainty about
economic gains or losses that will result from a particular investment.
*a. True
b. False
5. Average returns are those in excess of what an investor expects to earn
from other investments with a similar amount of risk.
a. True
*b. False
6. Above average returns are those in excess of what an investor expects to
earn from other investments with similar stock prices.
*a. True
b. False
7. Returns can only be measured in accounting terms such as return on assets,
return on equity, or return on sales.
a. True
*b. False
8. To implement a firm’s strategies, the firm takes actions to with the goal
of achieving strategic competitiveness and above average returns.
, *a. True
b. False
9. Economies of scale and huge advertising budgets are just as effective in
the new competitive landscape as they were in the past.
a. True
*b. False
10. The two primary drivers of hypercompetition are the emergence of the
global economy and technology.
*a. True
b. False
11. The rate of technology diffusion has been steadily increasing over the
last two decades.
*a. True
b. False
12. While patents may be an effective way of protecting proprietary
technology, many firms competing in the electronics industry do not apply for
patents to prevent competitors from utilizing the technological knowledge that
would be included in the patent application.
*a. True
b. False
13. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web
browser software.
a. True
*b. False
14. The rapid rate of technological diffusion has increased the competitive
benefits of patents.
a. True
*b. False
15. Developed countries still have major advantages in their access to
information technology when compared to emerging economies because of the
significant cost of the infrastructure needed for computing power.
a. True
*b. False
,16. The rate of growth of Internet-based applications could be affected by
strategies of Internet service providers charging users for downloading those
applications.
*a. True
b. False
17. The new CEO of Opacity Enterprises is determined to make the long-
established firm strategically flexible. The CEO feels that the employees of
the company have the ability, training, and resources to engage in continuous
learning. The CEO must encourage ambidextrous learning, absorbing new
knowledge and building incremental knowledge.
*a. True
b. False
18. The I/O (industrial organization) model assumes that the uniqueness of a
firm's resources and capabilities is the main source of above-average returns.
a. True
*b. False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and
resources currently in the firm to serve the needs of the natural gardening
community by providing rare and native plants to individuals and nurseries
around the United States. The perspective of the CEO of Twin Spires is
consistent with the assumptions of the industrial organization (I/O) model.
a. True
*b. False
20. The five forces model suggests that firms should target the industry with
the highest potential for above-average returns and then implement either a
cost-leadership strategy or a differentiation strategy.
*a. True
b. False
21. The uniqueness of a firm's resources and capabilities is the basis for a
firm's strategy and determines its ability to earn above-average returns under
the I/O view.
*a. True
b. False
, 22. Research shows that a greater percentage of a firm's profitability is
explained by the I/O rather than the resource-based model.
a. True
*b. False
23. The resource-based model assumes that firms must have resources that are
rare or costly to imitate to form a basis for competitive advantage.
a. True
*b. False
24. Resources are considered rare when they have no structural equivalent.
a. True
*b. False
25. The assumptions of the industrial organization model and the resource-
based model are contradictory. Therefore, organizational strategists must
choose one or the other model as the basis for developing a strategic plan.
a. True
*b. False
26. An effective vision statement must specify the industry in which a company
will operate.
a. True
*b. False
27. An effective vision stretches and challenges people and can result in
increased innovation. This is illustrated by Apple's CEO Steve Jobs, who was
known to think bigger and differently than most people ("putting a dent in the
universe").
*a. True
b. False
28. Organizational mission statements typically do not include statements
about profitability and earning above-average returns.
*a. True
b. False
29. A firm's mission tends to be enduring while its vision can change in light
of changing environmental conditions.
and implements a value-creating strategy.
*a. True
b. False
2. Alligator Enterprises has earned above-average returns since its founding
five years ago. No other firm has challenged Alligator in its particular
market niche; therefore, the firm's owners can feel secure that Alligator has
established a competitive advantage.
a. True
*b. False
3. The goal of strategy implementation is to develop a permanent competitive
advantage.
a. True
*b. False
4. Risk in terms of financial returns reflects an investor's uncertainty about
economic gains or losses that will result from a particular investment.
*a. True
b. False
5. Average returns are those in excess of what an investor expects to earn
from other investments with a similar amount of risk.
a. True
*b. False
6. Above average returns are those in excess of what an investor expects to
earn from other investments with similar stock prices.
*a. True
b. False
7. Returns can only be measured in accounting terms such as return on assets,
return on equity, or return on sales.
a. True
*b. False
8. To implement a firm’s strategies, the firm takes actions to with the goal
of achieving strategic competitiveness and above average returns.
, *a. True
b. False
9. Economies of scale and huge advertising budgets are just as effective in
the new competitive landscape as they were in the past.
a. True
*b. False
10. The two primary drivers of hypercompetition are the emergence of the
global economy and technology.
*a. True
b. False
11. The rate of technology diffusion has been steadily increasing over the
last two decades.
*a. True
b. False
12. While patents may be an effective way of protecting proprietary
technology, many firms competing in the electronics industry do not apply for
patents to prevent competitors from utilizing the technological knowledge that
would be included in the patent application.
*a. True
b. False
13. Examples of incremental innovations include iPods, PDAs, Wi-Fi, and web
browser software.
a. True
*b. False
14. The rapid rate of technological diffusion has increased the competitive
benefits of patents.
a. True
*b. False
15. Developed countries still have major advantages in their access to
information technology when compared to emerging economies because of the
significant cost of the infrastructure needed for computing power.
a. True
*b. False
,16. The rate of growth of Internet-based applications could be affected by
strategies of Internet service providers charging users for downloading those
applications.
*a. True
b. False
17. The new CEO of Opacity Enterprises is determined to make the long-
established firm strategically flexible. The CEO feels that the employees of
the company have the ability, training, and resources to engage in continuous
learning. The CEO must encourage ambidextrous learning, absorbing new
knowledge and building incremental knowledge.
*a. True
b. False
18. The I/O (industrial organization) model assumes that the uniqueness of a
firm's resources and capabilities is the main source of above-average returns.
a. True
*b. False
19. The CEO of Twin Spires, Inc., is committed to using the expertise and
resources currently in the firm to serve the needs of the natural gardening
community by providing rare and native plants to individuals and nurseries
around the United States. The perspective of the CEO of Twin Spires is
consistent with the assumptions of the industrial organization (I/O) model.
a. True
*b. False
20. The five forces model suggests that firms should target the industry with
the highest potential for above-average returns and then implement either a
cost-leadership strategy or a differentiation strategy.
*a. True
b. False
21. The uniqueness of a firm's resources and capabilities is the basis for a
firm's strategy and determines its ability to earn above-average returns under
the I/O view.
*a. True
b. False
, 22. Research shows that a greater percentage of a firm's profitability is
explained by the I/O rather than the resource-based model.
a. True
*b. False
23. The resource-based model assumes that firms must have resources that are
rare or costly to imitate to form a basis for competitive advantage.
a. True
*b. False
24. Resources are considered rare when they have no structural equivalent.
a. True
*b. False
25. The assumptions of the industrial organization model and the resource-
based model are contradictory. Therefore, organizational strategists must
choose one or the other model as the basis for developing a strategic plan.
a. True
*b. False
26. An effective vision statement must specify the industry in which a company
will operate.
a. True
*b. False
27. An effective vision stretches and challenges people and can result in
increased innovation. This is illustrated by Apple's CEO Steve Jobs, who was
known to think bigger and differently than most people ("putting a dent in the
universe").
*a. True
b. False
28. Organizational mission statements typically do not include statements
about profitability and earning above-average returns.
*a. True
b. False
29. A firm's mission tends to be enduring while its vision can change in light
of changing environmental conditions.
