TEST BANK
TEST BANK
, Chapter 1
Strategic Management and Strategic Competitiveness
KNOWLEDGE OBJECTIVES
1. Define strategic competitiveness, strategy, competitive advantage, above-average returns,
and the strategic management process.
2. Describe the competitive landscape and explain how globalization and technological
changes shape it.
3. Use the industrial organization (I/O) model to explain how firms can earn above-average
returns.
4. Use the resource-based model to explain how firms can earn above average-returns.
5. Describe vision and mission and discuss their value.
6. Define stakeholders and describe their ability to influence organizations.
7. Describe the work of strategic leaders.
8. Explain the strategic management process.
CHAPTER OUTLINE
Opening Case Once a “Giant,” Borders Became a “Weakling” on Its Knees
THE COMPETITIVE LANDSCAPE
The Global Economy
Strategic Focus Huawei Also Needs Guanxi in the United States
Technology and Technological Changes
Strategic Focus The Core of Apple: Technology and Innovation
THE I/O MODEL OF ABOVE-AVERAGE RETURNS
THE RESOURCE-BASED MODEL OF ABOVE-AVERAGE RETURNS
VISION AND MISSION
Vision
Mission
STAKEHOLDERS
Classifications of Stakeholders
STRATEGIC LEADERS
The Work of Effective Strategic Leaders
Predicting Outcomes of Strategic Decisions: Profit Pools
THE STRATEGIC MANAGEMENT PROCESS
SUMMARY
REVIEW QUESTIONS
EXPERIENTIAL EXERCISES
VIDEO CASE
NOTES
, LECTURE NOTES
Chapter Introduction: You may want to begin this lecture with a general comment that
Chapter 1 provides an overview of the strategic management process. This chapter
introduces a number of key terms and models that students will study in more detail in
Chapters 2 through 13. Stress the importance of students paying careful attention to the
concepts introduced in this chapter so that they are well-grounded in strategic
management concepts before proceeding further.
OPENING CASE
Once a “Giant,” Borders Became a Weakling on Its Knees
At one time Borders was the largest bookseller in the world. However, in February, 2011,
Borders declared bankruptcy. The opening case drives home the point that a company’s
past success guarantees it nothing when key conditions in its environment change.
Competition from big box retailers, evolving information technologies, changes in the
ways consumers acquire content, and the ongoing consumer quest for convenience have
all chipped away at Borders’ old sources of competitive advantage.
To initiate discussion, ask how the case lays the groundwork for the importance of strategy
as defined in the chapter—the coordinated set of commitments and actions designed to
achieve competitive advantage. Ask students how Borders should have responded to the
many environmental changes that it was experiencing. The case also provides a nice lead-
in to discuss anticipated environmental changes and how Borders might position itself for
future success—there is nowhere to go but up. Finally, the case provides the opportunity
to discuss strategic leadership or, in this case, the lack thereof. How could effective
leadership have kept Borders in the black?
Define strategic competitiveness, strategy, competitive advantage,
1
above-average returns, and the strategic management process.
Strategic competitiveness is achieved when a firm successfully formulates and implements a
value-creating strategy. By implementing a value-creating strategy that current and potential
competitors are not simultaneously implementing and that competitors are unable to
duplicate, or find too costly to imitate, a firm achieves a competitive advantage.
Strategy can be defined as an integrated and coordinated set of commitments and actions
designed to exploit core competencies and gain a competitive advantage.
So long as a firm can sustain (or maintain) a competitive advantage, investors will earn
above-average returns. Above-average returns represent returns that exceed returns that
investors expect to earn from other investments with similar levels of risk (investor
uncertainty about the economic gains or losses that will result from a particular investment).
In other words, above average-returns exceed investors’ expected levels of return for given
TEST BANK
, Chapter 1
Strategic Management and Strategic Competitiveness
KNOWLEDGE OBJECTIVES
1. Define strategic competitiveness, strategy, competitive advantage, above-average returns,
and the strategic management process.
2. Describe the competitive landscape and explain how globalization and technological
changes shape it.
3. Use the industrial organization (I/O) model to explain how firms can earn above-average
returns.
4. Use the resource-based model to explain how firms can earn above average-returns.
5. Describe vision and mission and discuss their value.
6. Define stakeholders and describe their ability to influence organizations.
7. Describe the work of strategic leaders.
8. Explain the strategic management process.
CHAPTER OUTLINE
Opening Case Once a “Giant,” Borders Became a “Weakling” on Its Knees
THE COMPETITIVE LANDSCAPE
The Global Economy
Strategic Focus Huawei Also Needs Guanxi in the United States
Technology and Technological Changes
Strategic Focus The Core of Apple: Technology and Innovation
THE I/O MODEL OF ABOVE-AVERAGE RETURNS
THE RESOURCE-BASED MODEL OF ABOVE-AVERAGE RETURNS
VISION AND MISSION
Vision
Mission
STAKEHOLDERS
Classifications of Stakeholders
STRATEGIC LEADERS
The Work of Effective Strategic Leaders
Predicting Outcomes of Strategic Decisions: Profit Pools
THE STRATEGIC MANAGEMENT PROCESS
SUMMARY
REVIEW QUESTIONS
EXPERIENTIAL EXERCISES
VIDEO CASE
NOTES
, LECTURE NOTES
Chapter Introduction: You may want to begin this lecture with a general comment that
Chapter 1 provides an overview of the strategic management process. This chapter
introduces a number of key terms and models that students will study in more detail in
Chapters 2 through 13. Stress the importance of students paying careful attention to the
concepts introduced in this chapter so that they are well-grounded in strategic
management concepts before proceeding further.
OPENING CASE
Once a “Giant,” Borders Became a Weakling on Its Knees
At one time Borders was the largest bookseller in the world. However, in February, 2011,
Borders declared bankruptcy. The opening case drives home the point that a company’s
past success guarantees it nothing when key conditions in its environment change.
Competition from big box retailers, evolving information technologies, changes in the
ways consumers acquire content, and the ongoing consumer quest for convenience have
all chipped away at Borders’ old sources of competitive advantage.
To initiate discussion, ask how the case lays the groundwork for the importance of strategy
as defined in the chapter—the coordinated set of commitments and actions designed to
achieve competitive advantage. Ask students how Borders should have responded to the
many environmental changes that it was experiencing. The case also provides a nice lead-
in to discuss anticipated environmental changes and how Borders might position itself for
future success—there is nowhere to go but up. Finally, the case provides the opportunity
to discuss strategic leadership or, in this case, the lack thereof. How could effective
leadership have kept Borders in the black?
Define strategic competitiveness, strategy, competitive advantage,
1
above-average returns, and the strategic management process.
Strategic competitiveness is achieved when a firm successfully formulates and implements a
value-creating strategy. By implementing a value-creating strategy that current and potential
competitors are not simultaneously implementing and that competitors are unable to
duplicate, or find too costly to imitate, a firm achieves a competitive advantage.
Strategy can be defined as an integrated and coordinated set of commitments and actions
designed to exploit core competencies and gain a competitive advantage.
So long as a firm can sustain (or maintain) a competitive advantage, investors will earn
above-average returns. Above-average returns represent returns that exceed returns that
investors expect to earn from other investments with similar levels of risk (investor
uncertainty about the economic gains or losses that will result from a particular investment).
In other words, above average-returns exceed investors’ expected levels of return for given
