,Chapter 1—Strategic Management and 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 PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Environmental Influence |
Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application
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.
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.
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.
, 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 PTS: 1 DIF: Hard OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing the task environment | Bloom: Application
7. The goal of strategic management is to develop a competitive advantage that is permanent.
ANS: F PTS: 1 DIF: Medium OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing strategy & innovation | Bloom: Comprehension
8. Risk in terms of financial returns reflects an investor’s uncertainty about economic gains or losses that
will result from a particular investment.
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.
, 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.
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 PTS: 1 DIF: Hard OBJ: Comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Management:
Creation of Value | Bloom: Comprehension
14. The two primary drivers of hypercompetition are the emergence of the global economy and
technology.
15. The rate of technology diffusion has been steadily increasing over the last two decades.
ANS: T PTS: 1 DIF: Easy OBJ: Knowledge
NOT: AACSB: Information Technology | Management: Information Technology | Dierdorff & Rubin:
Knowledge of technology, design, & production | Bloom: Knowledge
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 PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Information Technology | Management: Information Technology | Dierdorff & Rubin:
Knowledge of technology, design, & production | Bloom: Application
17. Examples of incremental innovations include iPods, PDAs, WiFi, and web browser software.
ANS: F PTS: 1 DIF: Medium OBJ: Application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff
& Rubin: Managing strategy & innovation | Bloom: Application
18. The rapid rate of technological diffusion has increased the competitive benefits of patents.
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