Chapter 1

Question 1

A Good Strategy Is Based on Three Elements

Answer 1

• diagnosis (of the competitive challenge)
• guiding policy (to address the competitive
  challenge)
• a set of coherent actions (to implement the firm’s guiding policy)

Question 2

Competitive Advantage

Answer 2

Superior performance relative to other competitors in the same industry or the industry average

Question 3

Sustainable Competitive Advantage

Answer 3

A firm that is able to outperform its competitors or the industry average over a prolonged period

Question 4

Competitive Disadvantage

Answer 4

a firm that underperforms

Question 5

Competitive Parity

Answer 5

two or more firms that perform at the same level

Question 6

How to determine if ROIC is superior

Answer 6

It depends on the industry

Question 7

How to Gain a Competitive Advantage

Answer 7

• Superior value creation
• Offer similar products/services at a lower price
• Higher quality than the market

Question 8

Strategic Positioning

Answer 8

A unique position within an industry that allows the firm to provide value to customers while controlling costs

Question 9

Economic Contribution Equation

Answer 9

Value creation - costs = economic contribution

Question 10

Strategic Positioning Trade-Offs

Answer 10

• How to allocate resources?
• Which activities to pursue?

Question 11

Unique Strategic Position

Answer 11

A successful combination of strategic activities

Question 12

Competitive advantage has to come from

Answer 12

• Performing different activities
• Performing the same activities differently than rivals

Question 13

What Strategy Is Not

Answer 13

• Grandiose statements
• Failure to face a competitive challenge
• Operational effectiveness

Question 14

Good Strategy

Answer 14

Providing products or services to consumers at a price point that they can afford while having a profit

Question 15

Value Creation

Answer 15

Lays the foundation for a successful economy

Question 16

Examples of Value Creation

Answer 16

• Education
• Infrastructure
• Public safety
• Healthcare
• Clean water and air

Question 17

Stakeholders

Answer 17

Organizations, groups, and individuals can affect or be affected by a firm’s actions. Also, they have an interest in the performance or survival of the firm.

Question 18

Stakeholder Impact Analysis

Answer 18

Helps to recognize, prioritize, and address stakeholder needs

Question 19

Legitimate claims

Answer 19

Perceived to be legally valid or otherwise appropriate

Question 20

Urgent claims

Answer 20

Require a company’s immediate attention and response

Question 21

AFI Framework

Answer 21

Explains and predicts differences in firm performance. Helps leaders formulate and implement a strategy that can result in superior performance.

Question 22

AFI

Answer 22

• Analysis (A)
• Formulation (F)
• Implementation (I)

Question 23

Stakeholder Impact Analysis List

Answer 23

1. Who are stakeholders?
2. What are stakeholder interests?
3. What opportunities & threats do our stakeholders present?
4. What legal, economic, and philanthropic responsibilities do we have to our stakeholders?
5. How should we effectively address stakeholder concerns?

Question 24

Pyramid of Corporate Social Responsibility

Answer 24

1. Philanthropic Responsibilities (top)
2. Ethical Responsibilities
3. Legal Responsibilities
4. Economic Responsibilities (bottom)