Chapter 1

Question 1

strategy

Answer 1

a firm’s theory about how to gain competitive advantages

Question 2

strategic mgmt process

Answer 2

set of analyses/choices that can increase the likelihood that a firm will choose a good strategy

Question 3

what does the CEO look at?

Answer 3

the mission

Question 4

strategic mgmt process objectives:

Answer 4

specific, measurable targets

should influence other elements in the process

Question 5

examples of what external analysis consists of:

Answer 5

interest rates
demographics
social trends
technology

Question 6

examples of what internal analysis consists of:

Answer 6

HR (knowledge)
manufacturing abilities
technology

Question 7

strategy implementation

Answer 7

when a firm adopts organizational policies and practices that are consistent with its strategy
how strategies are played out, deciding who does what

Question 8

strategy is only as good as its:

Answer 8

implementation

Question 9

competitive advantage

Answer 9

the ability to create more economic value than competitors

Question 10

2 types of competitive advantage difference:

Answer 10

preference for the firm’s output

cost advantage vis-a-vis competitors

Question 11

preference for the firm’s output

Answer 11

people choose the firm’s output over others and are willing to pay a premium

Question 12

cost advantage vis-a-vis competitors

Answer 12

lower costs of production/distribution

Question 13

imperfect competition means there’s:

Answer 13

winners and losers

Question 14

competitive advantage typically results in high/low profits:

Answer 14

high

Question 15

most competitive advantage is _________ but if not they use ________.

Answer 15

temporary, patents

Question 16

some competitive advantages are sustainable if:

Answer 16

competitors are unable to imitate the source of advantage or no one comes up with a better offering

Question 17

competitive parity

Answer 17

“perfect” competition

offering are average, there’s no preference, no competitive advantage over others, probably over 20 competitors

Question 18

competitive disadvantage

Answer 18

people have an aversion to firm’s offering

could have a cost disadvantage, outdated technology, or bad reputation

Question 19

superior economic performance is viewed as evidence of :

Answer 19

competitive advantage

Question 20

2 classes of measuring competitive advantage:

Answer 20

accounting measures

economic measures

Question 21

Accounting measures of competitive advantage

Answer 21

ROA, ROS, ROE, etc. that succeed industry averages

Question 22

Economic measures of competitive advantage

Answer 22

earning a return in excess of the cost of capital (cost of capital)

Question 23

economic returns on competitive advantage

Answer 23

above normal (exceeding expectations)

Question 24

economic returns on competitive parity

Answer 24

normal (meeting expectations)

Question 25

economic returns on competitive disadvantage

Answer 25

below normal (failing expectations)

Question 26

strategy is often the difference between:

Answer 26

success and failure

Question 27

the strategic mgmt process leads managers to ____ strategies

Answer 27

intended

Question 28

intended strategies

Answer 28

a strategy that a firm though it as going to pursue

Question 29

emergent strategies

Answer 29

theories of how to gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented

Question 30

mission

Answer 30

a firm’s long term purpose

Question 31

a firm’s mission is written in

Answer 31

mission statements

Question 32

visionary firms

Answer 32

firms whose mission is central to all they do have enjoyed long periods of high performance

Question 33

2 types of strategies:

Answer 33

business-level

corporate-level

Question 34

business level strategies:

Answer 34

actions that firms take to gain competitive advantages in a single market or industry

Question 35

corporate level strategies:

Answer 35

actions that firms take to gain competitive advantages by operating in multiple markets or industries simultaneously

Question 36

objectives when making a strategic choice:

Answer 36

support the firm’s mission
consistent with firm’s objectives
exploits opportunities with the firm’s strengths
neutralizes threats while avoiding the firm’s weaknesses

Question 37

economic value

Answer 37

difference between perceived benefits gained from a purchase and the full economic cost of the purchase

Question 38

2 sources of capital

Answer 38

debt & equity

Question 39

cost of capital

Answer 39

the level of performance a firm must attain if its to satisfy the economic objectives of its debt and equity holders

Question 40

if stock is privately held:

Answer 40

has stock that isn’t traded on public stock markets or a division of a larger company