Business Policies

Chapter 1 Review Questions

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1. What are strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process?

a. Strategic competitiveness- is achieved when a firm successfully formulates and implements a value-creating strategy.

b. Strategy- is a integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.

c. Competitive advantage- is when a firm implements a strategy that creates superior value for customers and competitors are unable to duplicate or find too costly to try to imitate.

d. Above-average returns- are returns in excess of what the investor expects to earn from other investments with similar amount of risk.

e. Strategic management process- is the full set of commitment, decisions, and actions required for a firm to achieve strategic competitiveness and earn above average returns.

2. What are the characteristics of the current competitive landscape? What two factors are the primary drivers of this landscape?

f. The current competitive landscape characteristics are that the markets are always changing and also noteworthy. Managers must adopt a new way of thinking to earn above-average returns.

g. The two factors that drive the current competitive landscape are the globalization of industries and significant technological changes.

3. According to the I/O model, what should a firm do to earn above- average returns?

h. The firm should identify five points to earn above-average returns?

i. Study the external environment.

ii. Locate the industry with the potential for above-average returns.

iii. Identify the strategy called for by the attractive industry.

iv. Develop or acquire assets and skills needed to implement the strategy.

v. Use the firms strengths to implement the strategy.

4. What does the...