I.IDENTIFICATION. Provide the correct answer in each question.

Industry 1. The _____________________ is the set of factors - threat of new entrants,

Environment Correct suppliers, buyers, product substitutes, and the intensity of rivalry among
Answer:
competitors - that directly influence a firm and its competitive decisions and
responses

Strategic 2. Involves coping with the uncertainty and risks of hypercompetitive environments
Flexibility is called _________________________.
Correct Answer:

Forecasting 3. This represents the process where analysts develop feasible projections of what
Correct Answer:
might happen

Competitor 4. ________________ represents the firm's understanding of its current competitors.

Analysis This understanding will complement information and insights derived from
Correct Answer:
investigating the general and industry environments.

External 5. The three components of a firm's _______________ are the general environment,
Environments industry environment and competitor environment.
Correct Answer:

Opportunities 6. __________________ represent conditions in the general environment that may

Correct Answer:
help a company achieve strategic competitiveness by presenting it with possibilities.

Scanning 7. This process entails the study of all segments in the general environment.
Correct Answer:

General 8. The __________________ is composed of elements in the broader society that

Environments can indirectly influence industry and the firms within the industry.
Correct Answer:

Strategic 9. This requires developing the capacity for continuous learning and applying the
flexibility new and updated skills sets and competencies to the firm's competitive advantage
Correct Answer:

Threat 10.________ are conditions that may hinder or constrain a company's efforts to
Correct Answer:
achieve strategic competitiveness.

Competitive 11. The _________________ can be described as one in which the fundamental
Landscape nature of completion is changing in a number of the world’s industries.
Correct Answer:

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 Globalization 12. _____________________ is the increasing economic interdependence among
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countries as reflected in the flow of goods and services, financial capital, and
knowledge across country boarders.

Strategic Action 13. ____________________ are guided by the firm’s vision and mission, and are
Correct Answer:
represented by strategies that are formulated or developed and subsequently
implemented or put into action

Strategic 14. ________ is achieved when a firm successfully formulates and implements a
Competitiveness value-creating strategy.
Correct Answer:

Perpetual 15. A term that is used to described rapid and consistent replacement of current
Innovation technologies by new information-intensive technologies is ______________.
Correct Answer:

Strategic 16. These individuals have a strong strategic orientation that relies on thorough
Leaders analysis when taking action.
Correct Answer:

Stakeholders 17. ________________ are individuals and groups who can affect and are affected
Correct Answer:
by the strategic outcomes achieved and who have enforceable claims on a frim’s
performance.

Mission 18. A firm’s ________ is an externally focused and application of its vision that
Correct Answer:
states the firms unique purpose and the scope of its operations in product and
market terms.

Vision 19. ____________________ is a picture of what firms wants to be, and in broad
Correct Answer:
terms, what I wants to ultimately achieve.

Capabilities 20. _____________ are the capacity for a set of resources to perform- in
Correct Answer:
combination- a task or activity.

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II. TRUE OR FALSE (60 POINTS). Write T if the statement is correct and write F if the statement is wrong.

TRUE _______ 1. Strategic competitiveness is achieved when a firm successfully formulates

Correct Answer:
and implements a value-creating strategy.

FALSE _______ 2. Aligator Enterprises has earned above-average returns since its founding
Correct Answer:
five years ago. No other firm has challenged Alligator in its particular market niche;
therefore, the firm's owners can feel secure that Alligator has established a competitive
advantage.

FALSE _______ 3. The goal of strategy implementation is to develop a permanent competitive

Correct Answer:
advantage.

TRUE _______ 4. Risk in terms of financial returns reflects an investor's uncertainty about the
Correct Answer:
economic gains or losses that will result from a particular Investment.

FALSE _______ 5. Average returns are returns in excess of what an investor expects to earn
Correct Answer:
from other investments with similar stock prices.

TRUE _______ 6. Above-average returns are returns in excess of what an investor expects to
Correct Answer:
earn from other investments with a similar amount of risk.

FALSE _______ 7. Returns can only be measured in accounting terms such as return on assets,
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return on equity, or return on sales.

TRUE _______ 8. To implement a firm's strategies, the firm takes actions to enact each
Correct Answer:
strategy with the intent of achieving strategic competitiveness and above-average
returns.

FALSE _______ 9. Economies of scale and huge advertising budgets are more effective in the
Correct Answer:
new competitive landscape as they were in the past.

TRUE _______ 10. The two primary drivers of hypercompetition are the emergence of the
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global economy and technology.

TRUE _______ 11. The rate of technology diffusion has been steadily increasing over the last
Correct Answer:
two decades.

TRUE _______ 12 While patents may be an effective way of protecting proprietary

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technology, many firms competing in the electronics industry often do not apply for
patents to prevent competitors from gaining access to the technological knowledge
included in the patent application

FALSE _______ 13. Examples of incremental innovations include IPods, iPads, Wi-Fi, and the
Correct Answer:
web browser.

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FALSE _______ 14. The rapid rate of technological diffusion has increased the competitive
Correct Answer:
benefits of patents.

FALSE _______ 15. Developed countries still have major advantages in their access to
Correct Answer:
information technology when compared to emerging economies because of the
significant cost of the infrastructure needed for computing power.

FALSE _______ 16. Since the 1980s, the basis for competition has shifted from intangible
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resources to hard assets.

TRUE _______ 17. The new CEO of Opacity Enterprises is determined to make the long-
Correct Answer:
established firm strategically flexible. The CEO should understand that the task is not
easy, largely because of inertia that can build up over time.

FALSE _______ 18. The industrial organization (I/O) model suggests that above-average
Correct Answer:
returns are determined primarily by the firm's unique internal resources rather than by
external capabilities. _______

FALSE 19. The CEO of Twin Spires, Inc., is committed to using the expertise and resources
Correct Answer:
currently in the firm to serve the needs of the natural gardening community by
providing rare and native plants to individuals and nurseries around the United States.
The perspective of the CEO of Twin Spires is consistent with the assumptions of the
industrial organization (I/O) model.

TRUE _______ 20. The five forces model suggests that firms should target the industry with
Correct Answer:
the highest potential for aboveaverage returns and then implement either a cost-
leadership strategy or a differentiation strategy

FALSE _______ 21. The uniqueness of a firm's resources and capabilities is the basis for a
Correct Answer:
firm's strategy and its ability to earn above-average return under the industrial
organization (I/O) model.

FALSE _______ 22. Research shows that a greater percentage of a firm's profitability is
Correct Answer:
explained by the I/O model rather than the resource-based model.

TRUE _______ 23 All of a firm's resources and capabilities have the potential to be the
Correct Answer:
foundation for a competitive advantage

FALSE _______24. Resources are considered rare when they have no structural equivalent.
Correct Answer:

FALSE _______ 25. The assumptions of the industrial organization model and the resource-
Correct Answer:
based model are contradictory. Therefore, organizational strategists must choose one
or the other model as the basis for developing a strategic plan

FALSE _______ 26. An effective vision statement must specify the industry in which a company
Correct Answer:
will operate.

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 TRUE _______ 27. An effective vision stretches and challenges people and can result in
Correct Answer:
increased innovation. This is illustrated by Apple's CEO Steve Jobs, who was known to
think bigger and differently than most people ("putting a dent in the universe").

TRUE _______28. The firm's mission is more concrete than its vision.
Correct Answer:

FALSE _______ 29. A firm's mission tends to be enduring while its vision can change in light
Correct Answer:
of changing environmental conditions.

FALSE _______30. Stakeholders are people located in different areas and levels of the firm
Correct Answer:
using the strategic management process to select strategic actions that help the firm
achieve its vision and fulfill its mission.

FALSE _______ 31. If a firm is dependent on a specific stakeholder group, that group has less
Correct Answer:
influence on the firm's strategic decision- making.

TRUE _______ 32. Power is the most critical criterion in prioritizing stakeholders.
Correct Answer:

TRUE _______ 33. Hourly workers on the production line of a chicken-processing plant are
Correct Answer:
considered organizational stakeholders.

FALSE _______ 34. Customers, suppliers, host communities, and unions are examples of
Correct Answer:
capital market stakeholders.

FALSE _______ 35. When a firm earns lower-than-average returns, the highest priority is given
Correct Answer:
to satisfying the needs of capital market stakeholders over the needs of the product
market and organizational shareholders.

TRUE _______ 36. Six years ago, Colette Smith founded a successful catering company that
Correct Answer:
specializes in providing a wide assortment of miniature cheesecakes for corporate and
social events. Although Ms. Smith is no longer active in the actual production of the
cheesecakes, she continues as president of the catering company. Ms. Smith could be
considered a strategic leader of this firm.

TRUE _______37. In contrast to shareholders, a firm's customers prefer that investors receive
Correct Answer:
a minimum return on their investments.

TRUE _______ 38. Strategic leaders must have a strong strategic orientation while
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simultaneously embracing change in the dynamic competitive landscape.

TRUE _______ 39. Strategy formulation and implementation must be simultaneously

Correct Answer:
integrated for a successfull strategic management process.

TRUE _______ 40. An organization's willingness to tolerate or encourage unethical behavior

Correct Answer:
is a reflection of its core values.
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FALSE _______ 41. The external environment facing business stays relatively constant over
Correct Answer:
time.

TRUE _______ 42. Demographic, economic, political/legal, sociocultural, technological, global,

Correct Answer:
and sustainable physical are the seven elements comprising the general environment.

FALSE _______ 43. Firms can directly control the elements of the seven segments of the
Correct Answer:
general environment.

TRUE _______ 44. The bankruptcy filings by General Motors and Chrysler Corporation during
Correct Answer:
the Great Recession illustrate that firms cannot directly control the general
environment's segments.

TRUE _______ 45. The industry environment directly influences a firm and its competitive
Correct Answer:
actions and responses.

FALSE _______ 46. Competitor analysis is focused on the factors and conditions influencing an
Correct Answer:
industry's profitability potential.

FALSE _______ 47. When firms analyze the external environment, they typically have complete
Correct Answer:
and unambiguous data.

FALSE _______ 48. Monitoring involves the development of a forecast of what might happen
Correct Answer:
at a future point in time.

FALSE _______ 49. Scanning involves detecting meaning through early signals of
Correct Answer:
environmental changes and trends.

FALSE _______ 50. When Google studies the Internet user privacy policies of various nations,
Correct Answer:
it is engaged in the forecasting component of the environmental analysis process.

TRUE _______ 51. The objective of assessing the external environment is to determine the
Correct Answer:
timing and importance of the effects of environmental changes and trends on the
strategic management of the firm.

FALSE _______ 52. Age structure, geographic distribution, income distribution, interest rates,
Correct Answer:
and process innovations are all elements of concern when studying the demographic
segment of the general environment.

FALSE _______ 53. In recent times, business leaders have become more confident in the
Correct Answer:
ability of economists to provide valid and reliable predictions about the world's
economic environment.

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 FALSE _______ 54. The legislation introduced in the U.S. Congress during the early tenure of
Correct Answer:
the Obama administration intended to reduce the amount of work U.S. companies
outsource and is an example of a potential change in the sociocultural segment of the
general environment.

TRUE _______ 55. The European sovereign-debt crisis and political upheavals in Egypt,
Correct Answer:
Tunisia, Libya, and Syria illustrate uncertainties in the political/legal segment of the
general environment that could affect the performance of business firms.

FALSE _______ 56. Developing a political strategy by the newly formed General Motors would
Correct Answer:
likely be ineffective as firms are generally unable to influence the political/legal
environment.

TRUE _______ 57. Although healthcare reform legislation was passed in the early part of the
Correct Answer:
Obama administration, it continues to be a contentious issue for employers, employees,
and politicians because of its increased expenses. These attitudes about health care
reform make up the sociocultural segment of the general environment.

TRUE _______ 58. Early adopters of new technology often achieve higher market shares and
Correct Answer:
higher returns than later adopters of the technology.

FALSE _______ 59. Contrary to popular belief, the global segment of the external environment
Correct Answer:
does not provide many opportunities for

FALSE _______ 60. Busines chuchu basta yung may ganto

Correct Answer:

III. Enumeration

1. What are the parts of External Environment Analysis? (S-F-A-M)

• Scanning
• Forecasting
• Assessing
• Monitoring
2. What are the five forces of Competitive Models? (2Ts, 2Bs, 1R)
• Threats of new entrants
• Threat of Substitute Products
• Bargaining power of supplier
• Bargaining Power of Buyers
• Rivalry among competing firms
3. Provide the General Environment: Segments (S-T-E-P-D-G) and Elements
• Sociocultural Segment
• Sustainable Physical Environment Segment
• Technological Segment
• Economic Segment
• Political/Legal Segment
• Demographic Segment (P-A-G-E-I)
- Population Size
- Age Structure
- Geographic Distribution
- Ethnic Mix
- Income Distribution
• Global Segment

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