TEST BANK
Strategic Management 6th Edition
By Rothaermel Frank, All Chapter 1 - 12
,TABLE OF CONTENTS
PART ONE: ANALYSIS
CHAPTER 1: What Is Strategy?
CHAPTER 2: Strategic Leadership: Managing the Strategy Process
CHAPTER 3: External Analysis: Industry Structure, Competitive Forces, and
Strategic Groups
CHAPTER 4: Internal Analysis: Resources, Capabilities, and Core Competencies
CHAPTER 5: Shared Value and Competitive Advantage
PART TWO: FORMULATION
CHAPTER 6: Business Strategy: Differentiation, Cost Leadership, and Blue
Oceans
CHAPTER 7: Business Strategy: Innovation, Entrepreneurship, and Platforms
CHAPTER 8: Corporate Strategy: Vertical Integration and Diversification
CHAPTER 9: Corporate Strategy: Strategic Alliances, Mergers and Acquisitions
CHAPTER 10: Global Strategy: Competing Around the World
PART THREE: IMPLEMENTATION
CHAPTER 11: Organizational Design: Structure, Culture, and Control
CHAPTER 12: Corporate Governance, Business Ethics, and Business Models
,CHAPTER 1: What Is Strategy?
Answers are at the End of Each Chapter
Chapter 1
Student name:
1) A good strategy allows a firm to achieve superior performance and sustainable
competitive advantage without regard to the external environment.
⊚ true
⊚ false
2) The following statement by the chief executive of MegaFilms movie studio should
not be used as a strategy: “We will produce the greatest films of the 21st
century.”
⊚ true
⊚ false
3) The three tasks of the AFI strategy framework are to Assemble a prototype, Find a
buyer, and Incorporate feedback.
⊚ true
⊚ false
4) Questions asked during the strategy analysis stage of the AFI framework should
include “What effects do forces in the external environment have on the firm’s
potential to gain and sustain a competitive advantage?”
⊚ true
⊚ false
,5) Once a strategy has been formulated and implemented, it is important that the firm
sticks to it no matter what happens.
⊚ true
⊚ false
6) Because they are a crucial component of a firm’s success, customers are
considered internal stakeholders.
⊚ true
⊚ false
7) A firm is required by society and its shareholders to meet its ethical and
philanthropic responsibilities.
⊚ true
⊚ false
8) Stakeholder impact analysis provides a decision tool that helps strategic leaders
recognize the needs of different stakeholders.
⊚ true
⊚ false
9) Juan wants to open his own hot dog restaurant but doesn’t know anything about
business. He needs help determining who his competition is, how he should craft
his strategy to compete and how he’ll implement his strategy to achieve a
competitive advantage. He’s hired you to help him get started. As a result, you will
probably use which of the following?
A) AFI strategy framework
B) Red Queen effect
C) competitive benchmarking
D) Stakeholder Impact analysis
,10) Roberta is interested in the concept of strategy and decides to create her own.
As a result, Roberta says that her strategy is to focus on competitive
benchmarking to achieve competitive advantage. Which is the best evaluation of
Roberta’s statement?
A) Roberta’s strategy is clear, but she should provide more detail.
B) Roberta’s strategy reveals a clear strategic position and tradeoff, so
she should proceed.
C) Roberta should reevaluate her statement because it fails to mention more
than one strategy.
D) Roberta should reevaluate her statement because it fails to meet the
principles of what a strategy should be.
11) Tony’s Pizza Shop is able to net $10,000 a week; this makes the shop profitable.
Its number one competitor, Leo’s Pies, is also profitable, netting $12,000 a week.
Lil Anthony’s Pizza Palace nets $13,000 a week. Since Tony’s Pizza Shop is
profitable, we can conclude that it has a competitive advantage in its industry.
A) True—competitive advantage is achieved through profitability alone.
B) True—competitive advantage is achieved since Tony has a positive net
income.
C) False—competitive advantage is only achieved by generating above
average returns, relative to competition.
D) False—Tony more than likely has a sustained competitive advantage since
he’s been in business longer.
12) Bill’s Auto & Airplane Repair shop is able to generate a positive net income of
$10,000 a week, which is about the same as the income of a close competitor.
As a result, we can conclude that the two businesses also have a competitive
parity in the industry.
A) Correct—competitive advantage is achieved through profitability alone.
B) Correct—competitive advantage is achieved since Bill’s Auto & Airplane
Repair shop has a positive net income.
C) Correct—competitive parity is a performance of two or more firms at the same
level.
D) Incorrect—Bill’s Auto & Airplane Repair shop more than likely has a
sustained competitive advantage because the business is diversified.
,13) To better achieve a competitive advantage, firms must now adopt a holistic approach
towards satisfying multiple stakeholders opposed to focusing on the needs of their
shareholders. What term is used for this approach?
A) stakeholder strategy
B) internal shareholder strategy
C) value creation strategy
D) shareholder relationship strategy
14) All of the following are external stakeholders except which of the following?
A) customers
B) creditors
C) alliance partners
D) competitors
15) John is a bit confused about the difference between stakeholders and stockholders.
You meet with John and inform him that the main difference is that
A) stakeholders are both internal and external to the firm while
stockholders are considered external to the firm.
B) stakeholders are considered internal to the firm while stockholders are
external to the firm.
C) stakeholders can be both internal and external while stockholders own
shares of a firm and are classified as internal to the firm.
D) stakeholders are external to the firm while stockholders are considered
internal to the firm.
16) Which of the following three important stakeholder attributes should managers pay
special close attention to in order to better understand stakeholder impact
analysis?
A) competitive advantage, economic value, and time
B) power, legitimacy, and urgency
C) grace under pressure, financial control, and reward power
D) shareholder rights plan, board representation and CEO influence
,17) Most consumers and investors today want the firms they do business with to look
beyond just the profit motive. In fact, they want firms that behave legally and
ethically while also giving back to their communities via philanthropic activities. The
framework that attempts to reconcile these wants is known as
A) corporate social responsibility.
B) stakeholder impact analysis.
C) business model analysis.
D) value chain driven decision making.
18) Which of the following terms describes the guiding policy to address the
competitive challenge, and uses corporate- and business-level strategy?
A) analysis
B) formulation
C) implementation
D) competitive advantage
19) In strategic management, strategists engage in three pillars. These three
pillars include the of major goals and objectives.
A) implementation
B) presentation
C) objectification
D) unification
20) Which of the following tasks in the AFI strategy framework involves evaluating the
internal and external environments in which a firm operates?
A) analysis
B) formulation
C) implementation
D) competitive advantage
21) The goal of a good strategy is focused primarily on
A) creating superior value while containing costs.
B) making as much money as possible.
C) employing lean manufacturing and Six Sigma.
D) encouraging investors to buy more shares of the firm.
,22) For a corporate strategy, which question is often asked?
A) How do strategic leaders help shape a firm’s vision, mission, and values?
B) How should the firm compete: cost leadership, differentiation, or value
innovation?
C) How do we create shared value?
D) Where should the firm compete in terms of industry, markets, and geography?
23) A successful strategy details a set of goal-directed actions that managers make
to gain and sustain a competitive advantage; in order to create this strategy,
managers must focus on three pillars. Which of the following below is not one of
these pillars?
A) formulation
B) execution
C) implementation
D) analysis
24) The effect involves studying and copying the competition, which
results in unsuccessful efforts to gain a competitive advantage.
A) Mad Hatter
B) Black Swan
C) Red Queen
D) Wizard of Oz
25) Lawrence decided to copy the competition to gain a competitive advantage for his
company. After a year, he realized his company failed to gain such an advantage.
Lawrence most likely failed because of the effect.
A) Green Pawn
B) grandiose
C) globalization
D) Red Queen
26) Hewlett-Packard was not able to address the competitive challenges of cloud
and mobile computing. The company therefore destroyed shareholder value by
failing to create
A) a strong infrastructure.
B) value for society.
C) a need for printers.
D) foreign contacts.
, 27) Sean, a retired CEO, invests capital in a start-up company that creates budgeting
software. He mentors the entrepreneur and the employees of the company
because he wants the company to perform well and survive in the market. Thus,
Sean is the start-up company’s
A) headhunter.
B) category captain.
C) employee.
D) stakeholder.
28) Green and Good Inc., a multinational company, relies on its media partner
OmniSignal to regularly advertise its offers, sales, and new products.
OmniSignal is invested in this relationship because it generates most of its
revenue from advertising Green and Good’s products. In this scenario,
OmniSignal is Green and Good Inc.’s
A) stockholder.
B) workforce.
C) internal stakeholder.
D) external stakeholder.
29) Louise owns a large portion of Sturdy Appliance’s stock. However, she is not
employed by the company. In this scenario, Louise is the company’s
A) external stakeholder.
B) internal stakeholder.
C) creditor.
D) customer.
30) Contour Inc., a vendor, regularly supplies capacitors to All Purpose Electronics for
use in its products. Therefore, Contour Inc. is All Purpose Electronics’
A) internal stakeholder.
B) director.
C) shareholder.
D) external stakeholder.
