WPC 480 (FINAL) EXAM QUESTIONS
AND ANSWERS
Ackbar, iiInc. iihas iihad iihigh iigrowth iiin iiprofits iifor iiseveral iiyears, iiand iieach iiyear iiit iihas
iihad iithe iihighest iiprofits iiever. iiWhat iican iiyou iiassess iiabout iiAckbar's iistrategic
iicompetitive iiadvantage? ii- iiAnswers ii-Can iiassess iinothing iiabout iicompetitive
iiadvantage.
Firms iithat iioutperform iiall iitheir iicompetitors iimust iihave iia iihigh iiquality iistrategy. ii-
iiAnswers ii-False
It iiis iinot iirare iithat iia iiCEO iiof iia iilarge, iipublic iiorganizations iiwill iibe iigiven iia iiraise
iiand/or iibonus iieven iithough iithe iiprofitability iiof iithe iifirm iihas iibeen iinegative iifor
iiseveral iiyears. iiWhat iiis iithe iibest iiexplanation iifor iithis? ii- iiAnswers ii-The iifirm iihas
iibeen iigrowing iirapidly iiin iinumber iiof iilocations iiand iifactories.
Why iiare iitheories iiof iihow iito iiachieve iia iicompetitive iiadvantage iinot iiabout iisufficient
iicauses, iibut iionly iinecessary iicauses? ii- iiAnswers ii-The iicauses iiof iifirm iiperformance
iiare iinot iigeneralizable iito iiall iicontexts.
Firms iiare iimade iimore iicapable iiof iiachieving iia iicompetitive iiadvantage iiby iihaving
iistrong iicompetitors iiso iithey iimust iiadapt iiand iibecome iistronger iiin iithe iimarket. ii-
iiAnswers ii-False
Accounting iiValue ii- iiAnswers ii-Based iion iihistorical iidata
Shareholder iiValue ii- iiAnswers ii-Based iion iipredictions iion iithe iifuture
Economic iiValue ii- iiAnswers ii-Based iion iipredictions iiof iithe iifuture
Balanced iiScorecard ii- iiAnswers ii-Based iimostly iion iiperceptions iithat iican iichange
iiquickly
Research iiinto iithe iicauses iiof iihigh iiperformance iiin iifirms iiought iito iiinclude iistudying
iifirms iithat iihave iivery iilow iiperformance. ii- iiAnswers ii-True
It iiis iidifficult iito iilearn iimuch iiabout iihow iito iisucceed iiat iistrategy iiwhen iiasking iipeople
iito iiexplain iitheir iisuccesses iiafter iithey iihave iibecome iisuccessful. ii- iiAnswers ii-True
, In iithe iilong iirun,the iimajor iiways iiof iievaluating iifirm iiperformance iiwill iitend iito iibe
iicorrelated iiwith iieach iiother. iiSo iithis iisuggests iithat iifor iia iistrategic iianalyst, iiit iidoesn't
iimatter iimuch iiwhat iidata iion iifirm iiperformance iiis iichosen. ii- iiAnswers ii-False
The iihigher iiproportion iiof iiassets iithat iiare iitangible, iithe iimore iiuseful iiaccounting iiprofit
iiis iias iia iimeasure iiof iifirm iiperformance iifor iia iistrategic iianalyst. ii- iiAnswers ii-True
PESTEL ii- iiAnswers ii-Political
Economic
Sociocultural
Technological
Ecological
Legal
Political ii- iiAnswers ii-Non-market iistrategies
Economic ii- iiAnswers ii-Macro-economic iiconditions iiof iia iicountry iior iiregion
Sociocultural ii- iiAnswers ii-Cultures, iinorms, iiand iivalue
Technological ii- iiAnswers ii-Application iiof iinew iiknowledge
Ecological ii- iiAnswers ii-Natural iienvironment
Legal ii- iiAnswers ii-Governing iilaws, iimandates, iiregulations
What iiis iithe iiprimary iivalue iito iia iistrategic iianalyst iiof iidoing iia iiPESTEL iianalysis? ii-
iiAnswers ii-Identifies iiexternal iiconditions iithat iican iihave iian iieffect iion iicompetitiveness.
What iiis iithe iimost iiimportant iiinformation iia iistrategic iianalyst iican iiobtain iiby iidoing iian
iiindustry iistructure iianalysis? ii- iiAnswers ii-Who iigets iithe iiprofits iiproduced iiby iiindustry
iimembers.
The iipatent iion iia iinew iitechnology iihas iijust iiexpired. iiIf iiall iimembers iiof iian iiindustry
iiadopt iithe iinewly iiavailable iitechnology, iiit iiwill iiallow iithem iito iireduce iiproduction iicosts
iiby ii50% iiby iiusing iimore iicommon iiinput iimaterials iiand iifewer iiworkers iito iirun iithe
iiproduction iiline. iiWhich iiof iithe iifollowing iiforces iiis iiLEAST iilikely iito iibe iiaffected iiif iiall
iithe iiindustry iimember's iiadopt iithe iinew iiproduction iitechnology? ii- iiAnswers ii-Rivalry
iiamong iicompetitors
High iiexit iibarriers iiare iilikely iito iilower iithe iiprofitability iiof iian iiindustry iion iiaverage. ii-
iiAnswers ii-True
Network iieffects ii(also iiknown iias iinetwork iiexternalities) iiare iiwhen iia iiproduct iibecomes
iimore iivaluable iiwhen iimore iipeople iipurchase iiand/or iiuse iithat iiproduct. iiFor iiexample,
iithe iimore iipeople iithat iiuse iia iiparticular iisocial iimedia iiplatform, iithe iimore iivaluable
AND ANSWERS
Ackbar, iiInc. iihas iihad iihigh iigrowth iiin iiprofits iifor iiseveral iiyears, iiand iieach iiyear iiit iihas
iihad iithe iihighest iiprofits iiever. iiWhat iican iiyou iiassess iiabout iiAckbar's iistrategic
iicompetitive iiadvantage? ii- iiAnswers ii-Can iiassess iinothing iiabout iicompetitive
iiadvantage.
Firms iithat iioutperform iiall iitheir iicompetitors iimust iihave iia iihigh iiquality iistrategy. ii-
iiAnswers ii-False
It iiis iinot iirare iithat iia iiCEO iiof iia iilarge, iipublic iiorganizations iiwill iibe iigiven iia iiraise
iiand/or iibonus iieven iithough iithe iiprofitability iiof iithe iifirm iihas iibeen iinegative iifor
iiseveral iiyears. iiWhat iiis iithe iibest iiexplanation iifor iithis? ii- iiAnswers ii-The iifirm iihas
iibeen iigrowing iirapidly iiin iinumber iiof iilocations iiand iifactories.
Why iiare iitheories iiof iihow iito iiachieve iia iicompetitive iiadvantage iinot iiabout iisufficient
iicauses, iibut iionly iinecessary iicauses? ii- iiAnswers ii-The iicauses iiof iifirm iiperformance
iiare iinot iigeneralizable iito iiall iicontexts.
Firms iiare iimade iimore iicapable iiof iiachieving iia iicompetitive iiadvantage iiby iihaving
iistrong iicompetitors iiso iithey iimust iiadapt iiand iibecome iistronger iiin iithe iimarket. ii-
iiAnswers ii-False
Accounting iiValue ii- iiAnswers ii-Based iion iihistorical iidata
Shareholder iiValue ii- iiAnswers ii-Based iion iipredictions iion iithe iifuture
Economic iiValue ii- iiAnswers ii-Based iion iipredictions iiof iithe iifuture
Balanced iiScorecard ii- iiAnswers ii-Based iimostly iion iiperceptions iithat iican iichange
iiquickly
Research iiinto iithe iicauses iiof iihigh iiperformance iiin iifirms iiought iito iiinclude iistudying
iifirms iithat iihave iivery iilow iiperformance. ii- iiAnswers ii-True
It iiis iidifficult iito iilearn iimuch iiabout iihow iito iisucceed iiat iistrategy iiwhen iiasking iipeople
iito iiexplain iitheir iisuccesses iiafter iithey iihave iibecome iisuccessful. ii- iiAnswers ii-True
, In iithe iilong iirun,the iimajor iiways iiof iievaluating iifirm iiperformance iiwill iitend iito iibe
iicorrelated iiwith iieach iiother. iiSo iithis iisuggests iithat iifor iia iistrategic iianalyst, iiit iidoesn't
iimatter iimuch iiwhat iidata iion iifirm iiperformance iiis iichosen. ii- iiAnswers ii-False
The iihigher iiproportion iiof iiassets iithat iiare iitangible, iithe iimore iiuseful iiaccounting iiprofit
iiis iias iia iimeasure iiof iifirm iiperformance iifor iia iistrategic iianalyst. ii- iiAnswers ii-True
PESTEL ii- iiAnswers ii-Political
Economic
Sociocultural
Technological
Ecological
Legal
Political ii- iiAnswers ii-Non-market iistrategies
Economic ii- iiAnswers ii-Macro-economic iiconditions iiof iia iicountry iior iiregion
Sociocultural ii- iiAnswers ii-Cultures, iinorms, iiand iivalue
Technological ii- iiAnswers ii-Application iiof iinew iiknowledge
Ecological ii- iiAnswers ii-Natural iienvironment
Legal ii- iiAnswers ii-Governing iilaws, iimandates, iiregulations
What iiis iithe iiprimary iivalue iito iia iistrategic iianalyst iiof iidoing iia iiPESTEL iianalysis? ii-
iiAnswers ii-Identifies iiexternal iiconditions iithat iican iihave iian iieffect iion iicompetitiveness.
What iiis iithe iimost iiimportant iiinformation iia iistrategic iianalyst iican iiobtain iiby iidoing iian
iiindustry iistructure iianalysis? ii- iiAnswers ii-Who iigets iithe iiprofits iiproduced iiby iiindustry
iimembers.
The iipatent iion iia iinew iitechnology iihas iijust iiexpired. iiIf iiall iimembers iiof iian iiindustry
iiadopt iithe iinewly iiavailable iitechnology, iiit iiwill iiallow iithem iito iireduce iiproduction iicosts
iiby ii50% iiby iiusing iimore iicommon iiinput iimaterials iiand iifewer iiworkers iito iirun iithe
iiproduction iiline. iiWhich iiof iithe iifollowing iiforces iiis iiLEAST iilikely iito iibe iiaffected iiif iiall
iithe iiindustry iimember's iiadopt iithe iinew iiproduction iitechnology? ii- iiAnswers ii-Rivalry
iiamong iicompetitors
High iiexit iibarriers iiare iilikely iito iilower iithe iiprofitability iiof iian iiindustry iion iiaverage. ii-
iiAnswers ii-True
Network iieffects ii(also iiknown iias iinetwork iiexternalities) iiare iiwhen iia iiproduct iibecomes
iimore iivaluable iiwhen iimore iipeople iipurchase iiand/or iiuse iithat iiproduct. iiFor iiexample,
iithe iimore iipeople iithat iiuse iia iiparticular iisocial iimedia iiplatform, iithe iimore iivaluable
