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Understanding Business Strategy Concepts Plus 3rd Edition by R. Duane Ireland - Test Bank
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,Chapter 1 - The Foundations of Strategic ManagementTRUE/FALSE
1. Only large companies that trade their stock on a major stock exchange need to use an effective
strategic management process.
ANS: F PTS: 1 REF: Page 6 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
2. A company’s mission defines the firm’s core intent and the business or businesses in which it intends
to operate.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Definition | Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
3. In order for a capability to be considered a distinctive competence, it must be performed BETTER than
the competition.
ANS: F PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
4. Capabilities result when firms integrate several different resources.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
5. Every company possesses both tangible and intangible resources.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 1
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
6. According to the Industrial Organization (I/O) model, when a firm lacks control over conditions in the
external environment, the company’s strategic options are limited.
ANS: T PTS: 1 REF: Page 9 | Page 11
OBJ: Learning Objective 2 KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic &
Systems Skills
7. Managers can use the Industrial Organization (I/O) model to identify strengths and weaknesses in the
external environment.
ANS: F PTS: 1 REF: Page 9 | Page 11
OBJ: Learning Objective 2 KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic &
Systems Skills
, 8. Changes in economic conditions are an environmental threat that could affect any company in any
industry.
ANS: T PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic &
Systems Skills
9. Innovation is a competitive advantage for Gillette.
ANS: T PTS: 1 REF: Page 5 OBJ: Learning Objective 3
KEY: Application
MSC: AACSB: Reflective Thinking | Management: Strategy | Dierdorff & Rubin: Managing Strategy
& Innovation
10. According to the Industrial Organization (I/O) model, effective management of a company’s
operations results in the creation of unique resources and capabilities.
ANS: F PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic &
Systems Skills
11. According to the Resource-Based View of the Firm (RBV) model, effective management of a
company’s operations results in the creation of unique resources and capabilities.
ANS: T PTS: 1 REF: Page 13 OBJ: Learning Objective 3
KEY: Comprehension
MSC: AACSB: Analytic | Management: Creation of Value | Dierdorff & Rubin: Managing Strategy &
Innovation
12. Managers can use the Industrial Organization (I/O) model to identify opportunities and threats in their
firm’s external environment.
ANS: T PTS: 1 REF: Page 12 OBJ: Learning Objective 2
KEY: Comprehension
MSC: AACSB: Analytic | Management: Environmental Influence | Dierdorff & Rubin: Strategic &
Systems Skills
13. An organization’s culture has no impact on or relationship to the firm’s strategic management process.
ANS: F PTS: 1 REF: Page 16-17 OBJ: Learning Objective 5
KEY: Comprehension
MSC: AACSB: Analytic | Management: Group Dynamics | Dierdorff & Rubin: Managing Human
Capital
14. Companies use centralization to make sure that the people who are closest to the action are the ones
who are making decisions and taking action.
ANS: F PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Managing Human Capital
, 15. In an organizational context, ethics reveal a value system that has been widely adopted by the firm’s
employees.
ANS: T PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Conceptual
MSC: AACSB: Ethics | Management: Ethical Responsibilities | Dierdorff & Rubin: Managing Human
Capital
16. The final responsibility for effective use of the strategic management process rests with the firm’s top
strategic leaders.
ANS: T PTS: 1 REF: Page 18 OBJ: Learning Objective 5
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
17. Effective communication is an essential aspect of successful strategy implementation.
ANS: T PTS: 1 REF: Page 20 OBJ: Learning Objective 5
KEY: Comprehension
MSC: AACSB: Communication | Management: Leadership Principles | Dierdorff & Rubin: Learning,
Motivation, & Leadership
18. In the fashion industry, Louis Vuitton’s competitive advantages in product design and manufacturing
are critical to the firm’s success.
ANS: T PTS: 1 REF: Page 14 OBJ: Learning Objective 2
KEY: Application
MSC: AACSB: Reflective Thinking | Management: Strategy | Dierdorff & Rubin: Knowledge of
Technology, Design, & Production
19. While inventory management and distribution are competitive advantages for Walmart’s discount
retailing business, they are of little value in their grocery business.
ANS: F PTS: 1 REF: Page 8-9 OBJ: Learning Objective 3
KEY: Application
MSC: AACSB: Reflective Thinking | Management: Strategy | Dierdorff & Rubin: Managing Logistics
& Technology
20. A business’ strategy is an action plan designed to help the organization move toward the achievement
of its vision.
ANS: T PTS: 1 REF: Page 4 OBJ: Learning Objective 1
KEY: Knowledge
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
21. A company’s strengths, weaknesses, opportunities and threats are all aspects of the internal
environment that can affect the firm’s choice and use of strategies.
ANS: F PTS: 1 REF: Page 5 OBJ: Learning Objective 3
KEY: Comprehension
MSC: AACSB: Analytic | Management: Strategy | Dierdorff & Rubin: Strategic & Systems Skills
22. Firms need stakeholders but stakeholders do not need firms.
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