External Environment: Quiz :Designing the Organization (Strategic Leadership and Management Specialization) Answers 2025

Question 1

The economy, changes in demographics, political elections, and legal issues tend to be factors of the task environment.

❌ True
✅ False

Explanation:
These factors belong to the general (macro) environment, not the task environment. The task environment includes customers, suppliers, competitors, and regulators.

Question 2

Uncertainty in an organization’s external environment is influenced by its complexity and stability.

✅ True
❌ False

Explanation:
Environmental uncertainty increases with greater complexity (more elements) and lower stability (frequent change).

Question 3

In response to increasing complexity in the external environment, firms tend to create more specialized departments.

✅ True
❌ False

Explanation:
Greater environmental complexity leads firms to differentiate by creating specialized units to handle diverse demands.

Question 4

Resource dependence theory suggests that organizations must control all of the resources in their value chain.

❌ True
✅ False

Explanation:
Resource dependence theory argues that firms should manage dependencies, not control all resources outright.

Question 5

Broad strategies organizations use to deal with resource dependence (check all that apply):

✅ Attempt to control the environment directly
✅ Create linkages with other organizations
❌ Use of horizontal linkage mechanisms

Explanation:
Firms manage dependence by controlling resources (e.g., acquisitions) or forming linkages (alliances, joint ventures). Horizontal linkage mechanisms mainly address coordination, not dependence.

Question 6

Competencies are known as “things a firm is good at.”

✅ True
❌ False

Explanation:
Competencies represent organizational strengths and capabilities developed over time.

Question 7

Managers with a long-term focus are more likely to fall into a competency trap.

❌ True
✅ False

Explanation:
Competency traps often result from over-reliance on existing strengths, not from a thoughtful long-term perspective.

Question 8

Sustaining innovations are improvements to existing products and services and are essentially driven by shareholders.

❌ True
✅ False

Explanation:
Sustaining innovations are driven by existing customers and market demands, not shareholders.

Question 9

This situation is known as the ____ dilemma.

❌ incumbent’s
❌ entrant’s
❌ manager’s
✅ innovator’s

Explanation:
The innovator’s dilemma describes the challenge incumbents face when deciding whether to pursue disruptive innovations.

Question 10

One way a firm can avoid being disrupted is by acquiring potentially disruptive firms.

✅ True
❌ False

Explanation:
Acquisitions can help incumbents internalize disruptive technologies and reduce competitive threats.

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