TEST BANK FOR STRATEGIC MANAGEMENT, 6TH EDITION BY
FRANK T. ROTHAERMEL
KA
Chapter 1
(ANSWERS AT THE END OF EVERY CHAPTER)
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Student name:
1) A good strategy allows a firm to achieve superior performance and sustainable competitive
advantage without regard to the external environment.
U
⊚ true
⊚ false
A
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
KA
8) Stakeholder impact analysis provides a decision tool that helps strategic leaders recognize the
needs of different stakeholders.
⊚ true
G
⊚ false
U
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
A
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.
KA
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.
G
D) False—Tony more than likely has a sustained competitive advantage since he’s been
in business longer.
U
12) Bill’s Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a
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
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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
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firm.
C) stakeholders can be both internal and external while stockholders own shares of a
firm and are classified as internal to the firm.
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D) stakeholders are external to the firm while stockholders are considered internal to the
firm.
A
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
