Capstone Exam 1 – Study Guide, Practice Questions & Exam Preparation
Firms achieve strategic competitiveness by - ANS ✔✔formulating and implementing a value-
creating strategy
The strategic management process is the:
a. full set of commitments, decisions, and actions firms take to achieve strategic
competitiveness and earn above-average returns.
b. analysis of the firm's external environment and internal organization to identify external
opportunities and threats.
c. utilization of the resource-based model of above-average returns to identify the internal
resources a company should leverage to achieve strategic competitiveness.
d. set of capabilities firms use to respond to various demands and opportunities existing in
today's dynamic and uncertain competitive environment. - ANS ✔✔full set of commitments,
decisions, and actions firms take to achieve strategic competitiveness and earn above-average
returns
Which of the following describes a company that has delivered above-average returns to its
investors?
a. A biotech firm that recently announced it has received FDA approval for its new orphan drug
to treat a rare heart condition and will be able to sell the treatment for $10,000 per year per
patient beginning in the fall
b. A tool manufacturer that announced it will increase its dividend payment—the highest
dividend amongst all of its industry competitors—for the upcoming quarter due to market share
gains in overseas markets
c. A retail company that announced it saw growth in same-store sales from last year to this year
and will open 250 new stores to capitalize on its growing popularity
d. An airline that reported weaker-than-projected earnings this year because of increased
maintenance costs for its aging fleet of planes - ANS ✔✔a tool manufacturer that announced it
will increase its dividend payment - the highest dividend amongst all of its industry competitors
- for the upcoming quarter due to market share gains in overseas markets
,Hypercompetition describes a competitive landscape in which:
a. there are thousands of companies competing within the same industry for the same group of
customers.
b. rivalry tends to occur among global competitors who innovate regularly and successfully.
c. the business is dominated by a single company, pushing all competitors to imitate its
strategies and develop similar resources.
d. the industry has a high cost of entry in capital investment, research and development (R&D),
or hiring of talented employees - ANS ✔✔rivalry tends to occur among global competitors who
innovate regularly and successfully
Michael is the CEO of a manufacturer with plants in three countries. He currently has a product
line that is manufactured only in the company's U.S. plant. That product has experienced a
steady increase in its export sales to Europe over the last three years. The international sales
director is recommending that the company expand manufacturing capabilities at the European
plant to include this product line. Michael and his management team must consider whether to
pursue this strategy. This is:
a. a decision driven by the industrial organization (I/O) model of above-average returns.
b. a conflict between two of the company's stakeholder groups.
c. the diffusion of technology and perpetual innovation to help the company achieve its goals.
d. a decision that would benefit from using the entire strategic management process - ANS
✔✔a decision that would benefit from using the entire strategic management process
Cell phones and digital music files are examples of:
a. hypercompetition.
b. disruptive technologies.
c. knowledge.
d. core competencies. - ANS ✔✔disruptive technologies
,Companies must be aware of technological advances within their industry and make strategic
management decisions that take into account perpetual innovation and disruptive technologies.
Which of the following is an example of a company that did not respond strategically to
technological changes?
a. After Google introduced the concept of pay-per-click advertising, a competing search engine,
Bing, introduced a similar advertising model.
b. Samsung, LG, and other cell phone manufacturers continued to innovate their products after
the introduction of the Apple iPhone to keep up with customer expectations of smartphones.
c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making
photography accessible to everyone. When innovators brought digital cameras to the
marketplace, Kodak focused on making it easy for people to print their photos using this
technology.
d. Amazon decided to enter into the o - ANS ✔✔Kodak revolutionized the automatic snapshot
camera more than 100 years ago, making photography accessible to everyone. When innovators
brought digital cameras to the marketplace, Kodak focused on making it easy for people to print
their photos using this technology.
The industrial organization (I/O) model of above-average returns:
a. puts emphasis on the external environment, which plays a role in determining a company's
ability to achieve above-average returns.
b. concentrates on the unique resources and capabilities of a firm to direct its strategic
management process.
c. is a new approach to strategic management that emphasizes technological advancement.
d. is critical to competing in the global economy and the information age because of its
emphasis on organizational development. - ANS ✔✔puts emphasis on the external
environment, which plays a role in determining a company's ability to achieve above-average
returns
An assumption of the industrial organization (I/O) model of above-average returns that supports
the need for a firm to find the most attractive industry in which to compete is that:
a. the external environment imposes pressures and constraints that determine the strategies
that would result in above-average returns.
, b. firms possess the same types of resources with value and those resources are mobile across
companies.
c. differences in resources and capabilities are the basis of competitive advantage.
d. organizational decision makers are rational individuals who are committed to acting in the
firm's best interests, as shown by their profit-maximizing behaviors. - ANS ✔✔firms possess the
same types of resources with value and those resources are mobile across companies
Which of the following is an example of the mobility of strategies and resources across firms in
the mobile network industry?
a. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness
compared to Verizon and AT&T.
b. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to
achieve a broad geographic network, serving both urban and rural areas.
c. A high-level engineer from AT&T is prevented from working for Verizon for five years by a
non-compete agreement.
d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed
network available to nearly all mobile phone customers. - ANS ✔✔the spread of 4g technology
between Verizon, AT&T, and Spring makes the high-speed network available to nearly all mobile
phone customers
A multidivisional corporation that manufactures large steel tanks is considering starting a new
business unit to serve the transportation industry. The company is utilizing the industrial
organization (I/O) model of above-average returns to develop its strategy. Which of the
following decisions is consistent with this model?
a. The company determines that it has an internal asset in a piece of software it developed for
scheduling manufacturing processes and decides to make the software the centerpiece of its
new business unit, selling it to transportation companies to manage their schedules.
b. The company identifies a large steel tank it is currently selling to customers in the brewing
industry and decides to begin selling it to customers in the transportation industry for
transporting liquids.
c. The company's research into a new railcar guideline that requires all tanker cars to be
replaced or retrofitted over the - ANS ✔✔the company's research into a new railcar guideline
Firms achieve strategic competitiveness by - ANS ✔✔formulating and implementing a value-
creating strategy
The strategic management process is the:
a. full set of commitments, decisions, and actions firms take to achieve strategic
competitiveness and earn above-average returns.
b. analysis of the firm's external environment and internal organization to identify external
opportunities and threats.
c. utilization of the resource-based model of above-average returns to identify the internal
resources a company should leverage to achieve strategic competitiveness.
d. set of capabilities firms use to respond to various demands and opportunities existing in
today's dynamic and uncertain competitive environment. - ANS ✔✔full set of commitments,
decisions, and actions firms take to achieve strategic competitiveness and earn above-average
returns
Which of the following describes a company that has delivered above-average returns to its
investors?
a. A biotech firm that recently announced it has received FDA approval for its new orphan drug
to treat a rare heart condition and will be able to sell the treatment for $10,000 per year per
patient beginning in the fall
b. A tool manufacturer that announced it will increase its dividend payment—the highest
dividend amongst all of its industry competitors—for the upcoming quarter due to market share
gains in overseas markets
c. A retail company that announced it saw growth in same-store sales from last year to this year
and will open 250 new stores to capitalize on its growing popularity
d. An airline that reported weaker-than-projected earnings this year because of increased
maintenance costs for its aging fleet of planes - ANS ✔✔a tool manufacturer that announced it
will increase its dividend payment - the highest dividend amongst all of its industry competitors
- for the upcoming quarter due to market share gains in overseas markets
,Hypercompetition describes a competitive landscape in which:
a. there are thousands of companies competing within the same industry for the same group of
customers.
b. rivalry tends to occur among global competitors who innovate regularly and successfully.
c. the business is dominated by a single company, pushing all competitors to imitate its
strategies and develop similar resources.
d. the industry has a high cost of entry in capital investment, research and development (R&D),
or hiring of talented employees - ANS ✔✔rivalry tends to occur among global competitors who
innovate regularly and successfully
Michael is the CEO of a manufacturer with plants in three countries. He currently has a product
line that is manufactured only in the company's U.S. plant. That product has experienced a
steady increase in its export sales to Europe over the last three years. The international sales
director is recommending that the company expand manufacturing capabilities at the European
plant to include this product line. Michael and his management team must consider whether to
pursue this strategy. This is:
a. a decision driven by the industrial organization (I/O) model of above-average returns.
b. a conflict between two of the company's stakeholder groups.
c. the diffusion of technology and perpetual innovation to help the company achieve its goals.
d. a decision that would benefit from using the entire strategic management process - ANS
✔✔a decision that would benefit from using the entire strategic management process
Cell phones and digital music files are examples of:
a. hypercompetition.
b. disruptive technologies.
c. knowledge.
d. core competencies. - ANS ✔✔disruptive technologies
,Companies must be aware of technological advances within their industry and make strategic
management decisions that take into account perpetual innovation and disruptive technologies.
Which of the following is an example of a company that did not respond strategically to
technological changes?
a. After Google introduced the concept of pay-per-click advertising, a competing search engine,
Bing, introduced a similar advertising model.
b. Samsung, LG, and other cell phone manufacturers continued to innovate their products after
the introduction of the Apple iPhone to keep up with customer expectations of smartphones.
c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making
photography accessible to everyone. When innovators brought digital cameras to the
marketplace, Kodak focused on making it easy for people to print their photos using this
technology.
d. Amazon decided to enter into the o - ANS ✔✔Kodak revolutionized the automatic snapshot
camera more than 100 years ago, making photography accessible to everyone. When innovators
brought digital cameras to the marketplace, Kodak focused on making it easy for people to print
their photos using this technology.
The industrial organization (I/O) model of above-average returns:
a. puts emphasis on the external environment, which plays a role in determining a company's
ability to achieve above-average returns.
b. concentrates on the unique resources and capabilities of a firm to direct its strategic
management process.
c. is a new approach to strategic management that emphasizes technological advancement.
d. is critical to competing in the global economy and the information age because of its
emphasis on organizational development. - ANS ✔✔puts emphasis on the external
environment, which plays a role in determining a company's ability to achieve above-average
returns
An assumption of the industrial organization (I/O) model of above-average returns that supports
the need for a firm to find the most attractive industry in which to compete is that:
a. the external environment imposes pressures and constraints that determine the strategies
that would result in above-average returns.
, b. firms possess the same types of resources with value and those resources are mobile across
companies.
c. differences in resources and capabilities are the basis of competitive advantage.
d. organizational decision makers are rational individuals who are committed to acting in the
firm's best interests, as shown by their profit-maximizing behaviors. - ANS ✔✔firms possess the
same types of resources with value and those resources are mobile across companies
Which of the following is an example of the mobility of strategies and resources across firms in
the mobile network industry?
a. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness
compared to Verizon and AT&T.
b. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to
achieve a broad geographic network, serving both urban and rural areas.
c. A high-level engineer from AT&T is prevented from working for Verizon for five years by a
non-compete agreement.
d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed
network available to nearly all mobile phone customers. - ANS ✔✔the spread of 4g technology
between Verizon, AT&T, and Spring makes the high-speed network available to nearly all mobile
phone customers
A multidivisional corporation that manufactures large steel tanks is considering starting a new
business unit to serve the transportation industry. The company is utilizing the industrial
organization (I/O) model of above-average returns to develop its strategy. Which of the
following decisions is consistent with this model?
a. The company determines that it has an internal asset in a piece of software it developed for
scheduling manufacturing processes and decides to make the software the centerpiece of its
new business unit, selling it to transportation companies to manage their schedules.
b. The company identifies a large steel tank it is currently selling to customers in the brewing
industry and decides to begin selling it to customers in the transportation industry for
transporting liquids.
c. The company's research into a new railcar guideline that requires all tanker cars to be
replaced or retrofitted over the - ANS ✔✔the company's research into a new railcar guideline
