Strategic Management in Action, 6/E solutions manual and test bank Mary Coulter

Strategic Management in Action, 6/E solutions manual and test bank Mary Coulter

Strategic Management in Action, 6e (Coulter)

Chapter 2 The Context of Managing Strategically

1) When an organization has numerous internal strengths, it is said to have a competitive advantage.

Answer: FALSE

Diff: 2 Page Ref: 28

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

2) In the industrial organization (I/O) view, the focus of strategic analysis is on the internal situation of the organization.

Answer: FALSE

Diff: 2 Page Ref: 29

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

3) The industrial organization (I/O) view proposes that an organization's competitive advantage is only temporary and can be gained only by peppering the competitive marketplace with rapid radical surprises.

Answer: FALSE

Diff: 3 Page Ref: 29

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

4) The resource-based view focuses on the structural forces within an industry, the firm's competitive environment, and how these influence competitive advantage.

Answer: FALSE

Diff: 2 Page Ref: 29

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

5) The resources-based view (RBV) takes the approach that a firm's resources are more important than industry structure in getting and keeping competitive advantage.

Answer: TRUE

Diff: 1 Page Ref: 29

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

6) The resource-based view (RBV) only focuses on the internal factors, with no regard for the organization's external factors.

Answer: FALSE

Diff: 3 Page Ref: 30

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

7) Physical assets encompass the actual and potential debt and equity used by the organization as well as any retained earnings or other financial holdings.

Answer: FALSE

Diff: 2 Page Ref: 30

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

8) According to the resource-based view, a firm's resources should add value, be rare, be exploited, and easy to duplicate or substitute.

Answer: FALSE

Diff: 3 Page Ref: 31

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

9) According to the guerrilla-based view, a firm's competitive advantage is temporary.

Answer: TRUE

Diff: 2 Page Ref: 33

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

10) Globalization is one of the driving forces in the twenty-first century business environment.

Answer: TRUE

Diff: 1 Page Ref: 37

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Multicultural and Diversity

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

11) Technology has significantly impacted how a creative idea is turned into a product or process that can be used or sold.

Answer: TRUE

Diff: 1 Page Ref: 35

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

12) The new business environment's driving forces include continual change, the reduced need for physical assets, vanishing distance and compressed time, and increased vulnerability.

Answer: TRUE

Diff: 2 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

13) Factors critical to success in the new business environment are the ability to embrace change, creativity and innovation capabilities, and being a world-class organization.

Answer: TRUE

Diff: 2 Page Ref: 39

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

14) Stakeholders are individuals or groups who have a stake in or are significantly influenced by an organization's decisions and actions and who, in turn, can influence the organization.

Answer: TRUE

Diff: 2 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

15) Corporate social responsibility (CSR) is the obligation of organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society.

Answer: TRUE

Diff: 2 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

16) Milton Friedman is an advocate of a contemporary view of social responsibility.

Answer: FALSE

Diff: 1 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

17) An example of a potential organizational stakeholder is a trade association.

Answer: TRUE

Diff: 3 Page Ref: 44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

18) Ethics involves the principles that define right and wrong decisions and behavior in a work setting.

Answer: TRUE

Diff: 2 Page Ref: 44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

19) An organizational vision is a broad comprehensive picture of what a leader wants an organization to become.

Answer: TRUE

Diff: 2 Page Ref: 41

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Analytical Skills

Objective: Discuss the functions of vision statements, mission statements, and long-term corporate objectives

20) Organization change is defined as a structured transition in what an organization does and how it does it.

Answer: TRUE

Diff: 3 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Explain how to manage resistance to change

21) Technology is using only equipment to perform tasks.

Answer: FALSE

Diff: 2 Page Ref: 35

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

22) Competitive advantage can best be described as

A) increased efficiency.

B) what sets an organization apart.

C) a strength of the organization.

D) intangible resources.

E) aggressive research and development.

Answer: B

Diff: 1 Page Ref: 28

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

23) Which of the following organization(s) need to have a competitive advantage to survive in the long-term?

A) Government agencies

B) Community arts organizations

C) Social service groups

D) For-profit companies

E) All of the answer choices are correct.

Answer: E

Diff: 2 Page Ref: 28

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

24) The competitive advantage perspective that focuses on structural forces within an industry, the competitive environment of firms, and how these influence competitive advantage is

A) the industrial-organizational view.

B) the resource-based view.

C) the guerilla view.

D) None of these answers is correct.

E) All of these answers are correct.

Answer: A

Diff: 2 Page Ref: 30

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

25) Which of the following factor(s) is(are) considered to make an organization's resources unique?

A) Durability

B) Imitability

C) Quality

D) Efficiency

E) Effectiveness

Answer: B

Diff: 2 Page Ref: 31

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

26) Experiences, characteristics, and knowledge are all aspects that represent

A) financial resources.

B) intangible resources.

C) human resources.

D) physical resources.

E) structural resources.

Answer: C

Diff: 2 Page Ref: 30

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

27) All of the following characteristic(s) reflect the uniqueness of a resource including

A) no other competing firms possess the resource.

B) the resource is hard to imitate.

C) the resource adds value.

D) the organization should be able to exploit the resource.

E) All of the answer choices are correct.

Answer: E

Diff: 2 Page Ref: 31

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

28) Imitability of a resource can occur through

A) duplication.

B) exploitation.

C) substitution.

D) duplication and substitution.

E) None of the answer choices is correct.

Answer: D

Diff: 3 Page Ref: 32

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

29) An organization's attempt at creating and sustaining a long-term competitive advantage can be disrupted through

A) technological advances.

B) market instability.

C) government legislation.

D) All of the answer choices are correct.

E) None of the above affect long-term competitive advantage.

Answer: D

Diff: 2 Page Ref: 33

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

30) According to the guerrilla view of competitive advantage, the state of an organization's competitive advantage is

A) temporary.

B) long term.

C) long term based on the role of strategic leadership.

D) able to provide stable cash flows.

E) None of the answer choices is correct.

Answer: A

Diff: 2 Page Ref: 33

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

31) American Airlines starting an airfare war by drastically reducing prices is an example of a change in the ________ environment.

A) internal

B) external

C) resource

D) modified environment

E) None of the answer choices is correct.

Answer: B

Diff: 3 Page Ref: 34

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

32) All of the following reflect important issues in the new business environment except

A) the information revolution.

B) technological advances and breakthroughs.

C) globalization.

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: D

Diff: 2 Page Ref: 34

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Use of Information Technology

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

33) The ability to access information with great speed reflects the impact of

A) the information revolution.

B) technological advances and breakthroughs.

C) globalization.

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: A

Diff: 2 Page Ref: 35

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Use of Information Technology

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

34) The use of equipment, materials, knowledge, and experience to perform tasks is defined as

A) the information revolution.

B) technology.

C) globalization.

D) resource allocation.

E) labor allocation.

Answer: B

Diff: 1 Page Ref: 35

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Use of Information Technology

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

35) ________ is the process of taking a creative idea and turning it into a product or process that can be used or sold.

A) Technology

B) Innovation

C) Invention

D) Discovery

E) All of the answer choices are correct.

Answer: B

Diff: 2 Page Ref: 36

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

36) The influence of globalization in managing strategically can be demonstrated in

A) the global marketplace.

B) global competition.

C) the organization itself.

D) global competitors and the global marketplace.

E) None of the answer choices is correct.

Answer: D

Diff: 2 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

37) Purchasing and sending electronic greeting cards through a web site could represent a(n) ________ for a traditional greeting card company like Hallmark.

A) organizational change

B) stable vision

C) physical change

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: A

Diff: 3 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

38) One of the effects of the driving forces in the new business environment is

A) vanishing distance.

B) the reduced need for physical assets.

C) compressed time.

D) continual turbulence.

E) All of the answer choices are correct.

Answer: E

Diff: 2 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

39) Capitalizing on information, people, ideas, and knowledge characterizes the implication of

A) vanishing distance.

B) reduced need for physical assets.

C) compressed time.

D) turbulent change.

E) All of the answer choices are correct.

Answer: B

Diff: 2 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

40) ________ is defined as a structured transition in what an organization does and how it does it.

A) Strategy

B) Strategic management

C) Organizational change

D) Globalization

E) Technology

Answer: C

Diff: 2 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

41) Instant interactivity reflects the environment of

A) reduced need for physical assets.

B) compressed time.

C) vanishing distance.

D) constant change.

E) All of the answer choices are correct.

Answer: B

Diff: 2 Page Ref: 39

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

42) Companies such as Google and Apple are finding that they can achieve a sustainable competitive advantage with

A) physical assets.

B) physical distance.

C) non-physical assets.

D) vanishing distance.

E) All of the answer choices are correct.

Answer: C

Diff: 3 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

43) The three components that form the three critical success factors include

A) the ability to embrace change, creativity and innovation capabilities, and being a world-class organization.

B) strategy formulation, strategy implementation, and strategy evaluation.

C) corporate, functional, and competitive strategies.

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: A

Diff: 2 Page Ref: 39

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

44) Which of the following is a characteristic of a world-class organization?

A) An authoritarian climate

B) A strong customer focus

C) A bureaucratic organization structure

D) A strong marketing department

E) A functional organizational structure

Answer: B

Diff: 2 Page Ref: 41

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

45) Change agents are

A) manipulators that facilitate change to improve an organization's revenue.

B) those who initiate and oversee the change efforts.

C) the leader who single-handedly is responsible for an organization's success through authoritarian leadership.

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: B

Diff: 1 Page Ref: 40

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

46) ________ and ________ are critical to strategic success in the new business environment.

A) Innovation; creativity

B) Formulation; innovation

C) Turbulence; stagnation

D) All of the answer choices are correct.

E) None of the answer choices is correct

Answer: A

Diff: 2 Page Ref: 40

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

47) The following are all components of an organizational vision except

A) a strong connection to the organization's core values and beliefs.

B) strategy based on the results of a focus group.

C) elaboration of a purpose for the organization.

D) summary of the organization's operations or what it does.

E) specification of broad goals.

Answer: B

Diff: 2 Page Ref: 41

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

48) An organization will have ________ mission(s), but ________ vision(s).

A) several; several

B) one; several

C) several; one

D) one; one

E) None of the answer choices is correct.

Answer: C

Diff: 3 Page Ref: 42

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

49) Which of the following is not an example of a stakeholder?

A) Political action groups

B) Trade associations

C) Customers

D) Government

E) All of the above are stakeholders.

Answer: E

Diff: 2 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

50) Corporate social responsibility (CSR) is the obligation of ________ to make decisions and act in ways that recognize the interrelatedness of business and society.

A) society

B) stakeholders

C) community

D) organizational decision makers

E) competitors

Answer: D

Diff: 3 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

51) The United States Congress could represent the ________ form of stakeholders.

A) political action groups

B) supplier

C) government

D) social action groups

E) shareholder

Answer: C

Diff: 2 Page Ref: 44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Analytical Skills

Objective: Discuss the role of ethics and social responsibility in strategic management

52) The traditional view of social responsibility states that

A) corporations should exist only to represent the stockholders.

B) corporations must represent all stakeholder groups.

C) corporations should operate on the basis of their suppliers' interests.

D) corporations function as a measure of consumer behavior.

E) corporations forecast their goals on the basis of pending legislation.

Answer: A

Diff: 1 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

53) Ethics is both a(n) ________ and ________ issue and should be part of the strategic management process.

A) inconsequential; organizational

B) personal; organizational

C) organizational; contemporary

D) None of the answer choices is correct.

E) All of the answer choices are correct.

Answer: B

Diff: 2 Page Ref: 44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

54) Ethics can be defined as

A) the obligation of organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society.

B) the intentional and ongoing actions of an organization to continuously transform itself by acquiring information and knowledge.

C) the rules and principles that define right and wrong decisions and behavior.

D) making decisions and implementing strategies that allow an organization to develop and maintain a competitive advantage.

E) the international linkage of economies and culture that fosters a business and competitive situation in which organizations have no national boundaries.

Answer: C

Diff: 1 Page Ref: 44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

55) An example of ethical behavior by an organization would be

A) a chemical company dumping toxic waste into a lake.

B) a cigarette manufacturer that fails to warn potential consumers about the hazards of tobacco.

C) a toy company that makes products that might be life threatening.

D) a company that develops a fund-raising campaign that would help its primary consumer group.

E) None of the answer choices is correct.

Answer: D

Diff: 2 Page Ref: 44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Ethical Reasoning, Analytical Skills

Objective: Discuss the role of ethics and social responsibility in strategic management

56) The ________ should elaborate a purpose for the organization.

A) vision

B) competitive strategy

C) mission

D) strategy

E) None of the answer choices is correct.

Answer: A

Diff: 1 Page Ref: 42

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Reflective Thinking

Objective: Discuss the functions of vision statements, mission statements, and long-term corporate objectives

57) A ________ statement is a statement of what specific organizational units do and what they hope to accomplish.

A) vision

B) strategy

C) technology

D) mission

E) corporate social responsibility

Answer: D

Diff: 2 Page Ref: 42

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Analytical Skills

Objective: Discuss the functions of vision statements, mission statements, and long-term corporate objectives

Shelley Gibson, the new CEO of Picture Perfect Painting, has been hired to help this company regain its number one market position. You have been asked to give Ms. Gibson advice to assist her in understanding the context in which the company is working.

58) Which of the following best describes the competitive advantage perspective that looks at the impact of external factors?

A) Resource-based view

B) Guerilla view

C) Industrial organization view

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: C

Diff: 2 Page Ref: 30

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

59) Ms. Gibson has decided the company's employees are their best organizational asset. This asset is an example of which type of resource?

A) Financial assets

B) Physical assets

C) Human resource assets

D) Intangible assets

E) Structural-cultural assets

Answer: C

Diff: 2 Page Ref: 30

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

60) Ms. Gibson has come up with the idea of offering free house painting if the job is not completed within the time agreed. Which of the following best describes the competitive advantage perspective that Ms. Gibson is proposing?

A) Resource-based view

B) Guerilla view

C) Industrial organization view

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: B

Diff: 2 Page Ref: 33

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

61) As the consultant, you propose to Ms. Gibson that she think about the way Picture Perfect Company operates. You are suggesting the company review which of the following?

A) Its digital technology

B) Its network capabilities

C) Its technology

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: C

Diff: 2 Page Ref: 35

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills; Use of Information Technology

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

62) As you are studying Picture Perfect Painting's context, it seems clear that the company will have to prepare itself for continual turbulence and change. Which of the following best describes the driving forces for change that could affect the company's future?

A) Reduced need for physical assets

B) Vanishing distance and compressed time

C) Increased vulnerability

D) All of the answer choices are correct.

E) None of the answer choices is correct.

Answer: D

Diff: 2 Page Ref: 38

Topic: Explain the Driving Forces, Implications, and Critical Success Factors of the Business Environment

AACSB: Analytical Skills

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

63) Compare and contrast the industrial organization (I/O) and resource-based views (RBV).

Answer: The I/O view develops a competitive advantage by positioning in the industry whereas the RBV view advocates that the organization possess unique organizational assets and capabilities. The focus of analysis with the I/O view is external and the RBV view's focus of analysis is internal. The major concern with the I/O and RBV views is competition and competencies, respectively. Determinants of profitability in the I/O view refer to the characteristics of the industry and the firm's position within the industry. With the RBV view, the determinants of profitability refer to the type, amount, and nature of the firm's resources.

Diff: 3 Page Ref: 29

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Reflective Thinking

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

64) What makes organizational resources unique?

Answer: The resource-based view of managing strategically emphasizes the uniqueness of resources as a means of developing and sustaining a competitive advantage. Organizational resources should add value to the organization. The resource should be rare and not subject to duplication or substitution. Additionally, the organization should be able to exploit the resource as a competitive advantage.

Diff: 2 Page Ref: 31

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Reflective Thinking

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

65) Explain the guerrilla view of managing strategically.

Answer: The guerrilla view emphasizes that competitive advantage should be a temporary notion for the organization. An organization's profitability will be hinged on its ability to change and radically surprise competitors with strategic actions. The focus of analysis in the guerrilla view is both external and internal. The strategic choice is surprising competitors and rapidly and repeatedly disrupting the current situations.

Diff: 2 Page Ref: 33

Topic: Describe the Different Perspectives on Competitive Advantage

AACSB: Reflective Thinking

Objective: Discuss strategies that companies use to acquire and maintain competitive advantages

66) Define stakeholders. Describe some potential organizational stakeholders. Why are stakeholders important?

Answer: Stakeholders are individuals or groups who have a stake in, or are significantly influenced by, an organization's decisions and actions and who, in turn, can influence the organization. Some stakeholders for an organization include customers, trade associations, suppliers, employees, and governments. Stakeholders could affect the viability of the organization and future profitability.

Diff: 3 Page Ref: 43-44

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Reflective Thinking, Ethical Reasoning

Objective: Discuss the role of ethics and social responsibility in strategic management

67) Describe the traditional view of corporations.

Answer: The traditional view of corporations was that they existed solely to serve the interests of one stakeholder group - the corporation's stockholders. The major proponent of this view was Milton Friedman, who argued that corporate social programs and actions must be paid for in some way, which adds to the costs of doing business.

Diff: 2 Page Ref: 43

Topic: Discuss Two Organizational Elements That Guide Strategic Decision Makers in Managing Strategically in Today's Context

AACSB: Reflective Thinking

Objective: Discuss the role of ethics and social responsibility in strategic management

 

 

CHAPTER 2 THE CONTEXT OF MANAGING STRATEGICALLY

LEARNING OUTCOMES

Use this Learning Outline as you read and study this chapter:

2.1 Describe the different perspectives on competitive advantage.

2.2 Explain the driving forces, implications, and critical success factors of the business environment.

2.3 Discuss two organizational elements that guide strategic decision makers in managing strategically

in today’s context.

TEXT OUTLINE

Strategic Management in Action Case #1: Out of Focus

Eastman Kodak, founded in 1884, has struggled to keep up with changing technologies. Though Kodak invented a digital camera in 1975, they were reluctant to introduce it into the market for fear of cannibalizing photographic film sales. Other companies soon began introducing digital cameras and once cell phone cameras were capable of providing quality pictures, it was too late for Kodak.

· Ask students why a company like Kodak, with a well-known brand and a long history, would be so slow to change. What could Kodak have done differently?

· It is clear that Kodak did not change and adapt as the technologies were advancing in the photographic industry. What can the firm do now to turn the company around?

· Have students work in pairs to brainstorm other current companies and their products that may become obsolete in the next 10 years.

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LEARNING OUTCOME 2.1 DESCRIBE THE DIFFERENT PERSPECTIVES ON
COMPETITIVE ADVANTAGE

A. Managing strategically means formulating and implementing strategies that allow an organization to develop and maintain competitive advantage.

B. Competitive advantage is what sets an organization apart or its competitive edge.

1. Having something that competitors don't

2. Doing something better than other organizations do

3. Doing something other organizations can't

C. Competitive advantage is a key ingredient for long-term success and survival of all organizations, including not-for-profits and governments.

1. Failure can be traced to:

a) Failure to recognize the impact of important external factors

b) Failure to capitalize on organizational resources and capabilities

D. Represent different perspectives on what it takes to capture competitive advantage—that is, how to manage strategically (refer to Table 2.1).

Strategic Management in Action: Hanesbrands Inc.

· As an in-class exercise (group or open discussion), discuss the I/O view of the pantyhose industry and where competitive advantages might come from in this industry.

1. Industrial Organization View (I/O)

The industrial organization (I/O) view suggests organizations look at the impact of important external factors. Focus is on:

a) The structural forces within an industry

b) The competitive environment (i.e., the firm's position within the industry)

c) How these influence competitive advantage

(1) Firm’s position in the industry and the underlying industry characteristics will, determine profitability.

· Negative forces in industry will result in lower than average profits

· Weak position in the market will result in lower than average profits

d) Competitive advantage

(1) Michael Porter is best known proponent

(2) Firm’s position within the industry and the underlying industry characteristics determine its potential profitability

Note: Students will not necessarily know what is meant by position. It might be a good time to use a strategic group map. Use dimensions to explain what is meant by competitive position, etc.

(3) The structure of an industry influences what is appropriate organizational conduct (i.e., its strategic decisions and actions influence the organization’s performance)

(4) Analyzing external forces and basing strategic decisions on that analysis

(5) Managers make sound strategic choices by understanding what makes an industry attractive, choosing an attractive industry in which to compete, and then choosing an appropriate competitive position within that industry

(6) Focus on strategic analysis is external

(7) Major concern is how the firm stacks up against its competitors

(8) Emphasis is clearly on understanding what is happening at the industry level

2. Resource-Based View

Resource-based view emphasizes firm’s resources are most important in getting and keeping a competitive advantage.

a) Organizations are different collections of assets and capabilities

b) Managing strategically is developing and exploiting an organization’s unique resources and capabilities

c) Organization is positioned to succeed if it has the best and most appropriate resources for its business

d) Competitive advantage will accrue to the organization that possesses unique assets or capabilities.

Strategic Managers in Action: Hulu

· What do you think Hulu’s owners should do now? In groups of two or three, have students assume the role of owner of Hulu. Ask them to brainstorm what they would do with the company.

· What is it about this situation context that’s so challenging? Students might cite the vast number of similar services appearing in the market. Competition could overtake Hulu’s status as one of the most-watched online video properties. They may also offer that content providers could charge higher fees or delay videos. Finally, some students may recognize that the owners (including NBC Universal, Walt Disney, and others) are in a position to ensure their productions are more accessible than that of competitors.

· What type of resource(s) does Hulu have? Would you call it unique. Explain. Students should go through the various types of resources (financial, physical, human, intangible, and structural/cultural assets) and determine what the company possesses. Have students examine Figure 2.2 and answer the questions as the uniqueness of the resources identified.

e) Resources include all financial, physical, human, intangible and structural/cultural assets used by an organization to develop, produce and deliver products or services to its customers.

(1) Financial assets encompass the financial holdings of an organization (cash reserves, investments, etc.), the actual and available debt and equity used by the organization and any retained earnings.

(2) Physical assets include equipment, office buildings, manufacturing or sales facilities, raw materials, or any other tangible materials an organization has.

(3) Human resources include the experiences, characteristics, knowledge, judgment, wisdom, skills, abilities and competencies of an organization's employees.

(4) Intangible assets include such things as brand names, patents, reputation, trademarks, copyrights, registered designs and databases.

(5) Structural/cultural assets include the history, culture, work systems, organizational policies, working relationships, level of employee trust and the formal structure being used.

f) Unique resources will provide a sustainable competitive advantage (Figure 2.2). Resources that have all four characteristics can be used to form sustainable competitive advantages. The four characteristics are:

(1) Value

(a) Resource can be used to exploit external circumstances that are likely to bring in organizational revenues

(b) Used to neutralize negative external situations that are likely to keep revenue from flowing in

(c) Resource is valuable in the context of what’s happening in the external environment

(2) Rarity

(a) No competing firm possesses the resource

(b) If more competitors acquire certain resources that have been a source of competitive advantage, then less likely source of competitive advantage for an organization

(c) Even commonly held resources may be valuable for firm’s survival in a competitive environment

(3) Difficult to Imitate (Duplicate) and Substitute

(a) Imitation (duplication) is when a competitor builds the same kind of resource as firm it’s imitating

(b) Substitution is when a firm substitutes an alternative resource for the specific resource currently being used to gain competitive advantage and achieves the same results

(c) To keep resources unique, want resources to be hard to imitate and substitute

(4) Ability to Exploit

(a) Organization must be able to exploit resources

(b) Formal structure, systems, policies, procedures and processes in place to use resources it has to develop a sustainable competitive advantage

(c) Managing strategically means continually building and maintaining organizational resources

Strategic Management in Action: W. L. Gore & Associates

· From the Gore company Web site, can other examples of resources be identified? Are any of the resources unique? Explain why or why not.

After visiting Gore’s Web site, you might pose this question to the class: “Consider that the patent protection for Gore-Tex has expired. What other resources does Gore have? What is your evidence that they have those resources?” (The students will probably focus on innovative product design, quality, great employees).

Then push the classroom discussion further with the following: “Does Gore’s structure and culture give it an advantage? How would that advantage work to benefit the company and its ability to make profits? (In other words, how does its culture lead to the effective use of the resources that the students identified earlier?) At this point, the students may struggle a bit. A key point is that the culture can facilitate innovation, better quality design, willingness to create clever new products and market them. It is not automatic…a company needs the resources and the culture and someone to make it all work together.

To explore another interesting area with your class, pose the question: “Is this culture unique to Gore? Could it be replicated easily?” If your students think it could be easily replicated you might want to push the students on the “ability to exploit” aspect of the resource-based view. How might Gore be able to use this culture to its advantage whereas other firms might fail using it?

3. Guerilla View

Guerilla view proposes that an organization’s competitive advantage is temporary and can be gained only by peppering the competitive marketplace with rapid radical surprises.

a) Environment is characterized by continual and often revolutionary changes.

b) Successful organizations must rapidly and repeatedly disrupt the current situation and radically surprise competitors with strategic actions designed to keep them off balance—act like a guerrilla unit. Successful organizations repeatedly create new competitive advantages based on how the context is changing.

4. Which View Is Best?

a) Managing strategically involves looking both externally and internally to come up with strategies that have a chance of creating a sustainable competitive advantage. Unique resources and capabilities can be “matched” to changing external circumstances.

b) As the external environment is continually changing, the source of sustainable competitive advantage is probably found in different places at different points in time

c) Continually analyze the external and internal organizational environments and take advantage of any positive changes (or buffer against negative changes) with the organization’s unique resources and capabilities.

Strategic Management in Action: FedEx

After visiting FedEx’s Web site, you might pose this question to the class: “What strategic options is FedEx pursuing, especially in light of the rising fuel costs and retail slump? Do FedEx’s actions reflect the guerilla view of competitive advantage?

The students will probably focus on developing new markets globally through acquiring Kinko’s, a copy company, and focusing on more profitable products (i.e., long-haul global and domestic cargo markets by buying new plans and acquiring a domestic trucking company.

You can then push the discussion further by asking: “Do FedEx’s structure, policies, procedures and processes give it an advantage? How would that advantage work to benefit the company and its ability to make profits? (In other words, how does its internal processes and structure lead to the effective use of the strategic options that the students identified earlier?)

Another interesting area to explore with your class is to pose the question: “Is this strategy unique to FedEx? Could it be replicated easily?” If your students think it could be easily replicated you might want to push them on the “ability to exploit” aspect of the resource-based view. How might FedEx be able to use this strategy to its advantage whereas other firms might fail using it?

Active Learning Hint

Pause lecture; allow the students 2-3 minutes to turn to the student next to them and compare notes. This gives students the opportunity to confirm the information, and review before moving to the next topic.

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