STRATEGIC MANAGEMENT 6TH EDITION

TEST BANK FOR

STRATEGIC MANAGEMENT 6TH EDITION

ROTHAERMEL FRANK

ISBN 978-1266191862

Chapter 1-12 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?

• AFI strategy framework
• Red Queen effect
• competitive benchmarking
• 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?

• Roberta’s strategy is clear, but she should provide more detail.
• Roberta’s strategy reveals a clear strategic position and tradeoff, so she should

proceed.

• Roberta should reevaluate her statement because it fails to mention more than one

strategy.

• 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.

• True—competitive advantage is achieved through profitability alone.
• True—competitive advantage is achieved since Tony has a positive net income.
• False—competitive advantage is only achieved by generating above average returns,

relative to competition.

• 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.

• Correct—competitive advantage is achieved through profitability alone.
• Correct—competitive advantage is achieved since Bill’s Auto & Airplane Repair shop

has a positive net income.

• Correct—competitive parity is a performance of two or more firms at the same level.
• Incorrect—Bill’s Auto & Airplane Repair shop more than likely has a sustained

competitive advantage because the business is diversified.