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Chapter 1—Strategic Management and Strategic Competitiveness

TRUE/FALSE

1.The Chapter 1 Opening Case shows that Borders was unsuccessful in competing in Internet book sales, but not against brick-and-mortar stores.

ANS:F

2.According to the Chapter 1 Opening Case, Barnes & Noble and Amazon were more competitive than Borders and adjusted more effectively to changes in the retail book market.

ANS:T

3.The Chapter 1 Opening Case illustrates that while Borders was able to achieve strategic competitiveness, it did not achieve above-average returns because of conditions beyond the control of of its top management.

ANS:F

4.According to the Chapter 1 Opening Case, Barnes & Noble and Amazon were more effective than Borders in using the strategic management process as the foundation for the commitments, decisions, and actions they took to pursue strategic competitiveness and above-average returns.

ANS:T

5.Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.

ANS:T

6.Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche, the firm’s owners can feel secure that Alligator has established a competitive advantage.

ANS:F

7.The goal of strategic management is to develop a competitive advantage that is permanent.

ANS:F

8.Risk in terms of financial returns reflects an investor’s uncertainty about economic gains or losses that will result from a particular investment.

ANS:T

9.Average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk.

ANS:F

10.Returns can only be measured in accounting terms such as return on assets, return on equity, or return on sales.

ANS:F

11.According to the Chapter 1 Strategic Focus, Huawei was successful in the US market primarily because of its ability to build Guanxi with the US government.

ANS:F

12.The Chapter 1 Strategic Focus shows that while Guanxi is an important element of doing business in China, it is unimportant in doing business in the United States as Huawei discovered when it entered US markets.

ANS:F

13.Economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past, but they must be reinforced by strategic flexibility.

ANS:F

14.The two primary drivers of hyper-competition are the emergence of the global economy and technology.

ANS:T

15.The rate of technology diffusion has been steadily increasing over the last two decades.

ANS:T

16.While patents may be an effective way of protecting proprietary technology in some industries such as pharmaceuticals, many firms competing in the electronics industry do not apply for patents.

ANS:T

17.Examples of incremental innovations include iPods, PDAs, WiFi, and web browser software.

ANS:F

18.The rapid rate of technological diffusion has increased the competitive benefits of patents.

ANS:F

19.Apple (Chapter 1 Strategic Focus) is a source of hypercompetition through its development and introduction of disruptive technologies such as the iPod.

ANS:T

20.Developed countries still have major advantages in access to information technology over emerging economies because of the significant cost of the infrastructure needed for computing power.

ANS:F

21.The rate of growth of Internet-based applications could be affected by the possibility of Internet service providers charging users for downloading those applications.

ANS:T

22.The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO feels that the employees of the company have the ability, training, and resources to engage in continuous learning....
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