Chapter 2

Strategy and Technology: Concepts and Frameworks for Achieving Success

Section 2.1

True/False Questions

1. A firm’s financial performance that consistently outperforms its industry’s peers is known as

operational effectiveness.

False; Easy

2. According to Michael Porter, the reason many firms suffer margin-eroding competition is because

they have defined themselves according to strategic positioning rather than operational effectiveness.

False; Moderate

3. When technology can be matched quickly, it is rarely a source of competitive advantage.

True; Easy

4. According to the resource-based view of competitive advantage, if a firm is to maintain sustainable

competitive advantage, it must control a set of exploitable resources that are valuable and can be

substituted easily.

False; Moderate

5. Fast growing Groupon was able to dissuade rivals from entering its market because the firm’s

technology was so difficult to replicate.

False; Easy

6. Cisco’s acquisition of Pur Digital, makers of the Flip video camera line, was largely considered a flop

because comparable technology soon became a feature in other popular consumer electronics

products.

True; Easy

Multiple Choice Questions

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7. A firm’s financial performance that consistently outperforms its industry’s peers is known as _____.

a. comparative advantage

b. absolute advantage

c. sustainable competitive advantage

d. first mover advantage

e. operational efficiency advantage

c; Easy

8. Which of the following statements about technology is true?

a. Technology alone is enough to provide sustainable competitive advantage to a firm.

b. Technology plays a marginal role in creating strategic differences.

c. Technological improvements are not important in strengthening a firm’s strategic advantages.

d. Technological improvements can often be copied by rivals, leading to a profit-eroding arms race.

e. Technology cannot be used by late entrants to gain a share of the industry.

d; Moderate

9. Technology that that super-imposes content, such as images and animation on top of real world

images is called:

a. Alternative imaging

b. Strategic design

c. Illustration editing

d. Augmented reality

e. Product placement

d; Hard

10. Operational effectiveness refers to:

a. the implementation of technology in a business context.

b. performing the same tasks better than rivals perform them.

c. the number of times inventory is sold or used during the course of a year.

d. performing different tasks or the same tasks in different ways.

e. matching the benefits of a successful position while maintaining an existing position.

b; Easy

11. The _____ problem exists when rivals watch a pioneer’s efforts, learn from their successes and

missteps, and then enter the market quickly with a comparable or superior product at a lower cost.

a. late entrant

b. early starter

c. first mover

d. intellectual property

e. fast follower

e; Easy

12. _____ refers to performing different tasks than rivals or the same tasks in a different way.

a. Straddling

b. Operational effectiveness

c. Strategic positioning

d. Vertical integration

e. Scale advantage

c; Easy

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