Final answer:
It is true that firms must adapt to changing external trends to maintain a competitive advantage. Global competition and technology advancements necessitate innovation for firms to stay ahead. Companies can earn higher profits by being cost-efficient or by offering unique products.
Step-by-step explanation:
The statement that in order for a firm to achieve sustained competitive advantage, a firm must continually adapt to changes in external trends and events and effectively formulate, implement, and evaluate strategies that capitalize upon those factors is TRUE. The forces of globalization and advancements in communications and information technology have significantly increased the level of competition, as firms now compete not only locally but also globally.
This heightened competition has made it imperative for firms to be innovative, as doing so can lead firms to earn above-normal profits by producing products more efficiently or by developing unique products that consumers desire. Gregory Lee, CEO of Samsung, emphasized the importance of innovation by stating, "Relentless pursuit of new innovation is the key principle of our business and enables consumers to discover a world of possibilities with technology." Innovative firms understand the benefit of temporarily leading the market before competitors can catch up.