sustained competitive advantage. There is no universally accepted, absolute number of
years/months/days that supports a firm’s claim of sustainable competitive advantage. Instead, the
manager must examine the industry to determine the appropriate time period necessary to make
such a claim. For instance, the steel industry is not subject to the same volatility as the tech industry,
thus, sustainable competitive advantage for firms in the steel industry may be ten years or more.
Conversely, firms that compete in the tech industry may have a much shorter window before they
can claim a sustainable competitive advantage.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-03 Assess the
relationship between stakeholder
strategy and sustainable competitive
advantage.
Who are a firm’s stakeholders?
Stakeholders are organizations, groups, and individuals who can affect or be affected by a firm’s
actions. Stakeholders have a vested claim or interest in the performance and continued survival of
the firm. Stakeholders can be grouped by whether they are internal or external to a firm. All
stakeholders make specific contributions to a firm, which in turn provides different types of benefits
to different stakeholders.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-03 Assess the
relationship between stakeholder
strategy and sustainable competitive
advantage.
103.
Award: 1.00 point
104.
Award: 1.00 point
A firm is embedded in a multifaceted exchange relationship with a number of diverse internal and
external stakeholders. Elaborate on this statement and provide multiple examples of the exchange
relationship between a firm and its stakeholders, including what each party contributes.
All stakeholders make specific contributions to a firm, which in turn provides different types of
benefits to different stakeholders. Employees contribute their time and talents to the firm, receiving
wages and salaries in exchange. Shareholders contribute capital in the hope that the stock will rise
and the firm will pay dividends. Communities provide real estate, infrastructure, and public safety. In
return, they expect that companies will pay taxes, provide employment, and not pollute the
environment. The firm, therefore, is embedded in a multifaceted exchange relationship with a
number of diverse internal and external stakeholders. If any of the stakeholders withholds
participation in the firm’s exchange relationships, it can have severe negative performance
implications.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-03 Assess the
relationship between stakeholder
strategy and sustainable competitive
advantage.
What is meant by corporate social responsibility (CSR)?
To identify a firm’s responsibilities toward its stakeholders, scholars have advanced the notion of
corporate social responsibility (CSR). This framework helps firms recognize and address the
economic, legal, ethical, and philanthropic expectations that society has of the business enterprise
at a given point in time. CSR goes beyond the notion of encouraging businesses to “just be nice.”
Instead, managers need to realize that society grants shareholders the right and privilege to create
a publicly traded stock company, and therefore the firm owes something to society. Moreover, CSR
provides managers with a conceptual model that more completely describes a society’s
expectations and can guide strategic decision making more effectively.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-04 Conduct a
stakeholder impact analysis.
105.
Award: 1.00 point
Discuss the pyramid of corporate social responsibility (CSR).
The pyramid summarizes the four components of corporate social responsibility. Economic
responsibilities are the foundational building block, followed by legal, ethical, and philanthropic
responsibilities. Society and shareholders require economic and legal responsibilities. Ethical and
philanthropic responsibilities result from a society’s expectations toward business. The pyramid of
CSR symbolizes the need for firms to carefully balance their social responsibilities. Doing so ensures
not only effective strategy implementation but also long-term viability.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-04 Conduct a
stakeholder impact analysis.