4490H Exam - Ch 6,7,8,9
Haoyu plans to restructure the portfolio of all his firm's strategic business units, similar to how an investor might change a portfolio of stocks. To do this, Haoyu will more than likely employ which corporate planning tool?
Boston Consulting Group (BCG) growth-share matrix
A video game company called Stratego Inc. forms an agreement with another video game company called Affronted Inc. Through this agreement, Stratego owns 25 percent of Affronted. However, Affronted does not own any part of Stratego. This type of agreement is called a(n)...
Equity Alliance
Imitation is the ________Blank step in the innovation process.
Fourth
Which type of strategic alliance enables the exchange of both tacit and explicit knowledge?
Joint Ventures
Sterling Cooper Footwear and NERV Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other's competencies. Sterling Cooper Footwear entered the strategic alliance to acquire the production system pioneered by NERV Shoes. Similarly, NERV Shoes agreed to the strategic alliance to study the design process of Sterling Cooper Footwear. However, Sterling Cooper Footwear was more successful and faster than NERV Shoes in accomplishing its alliance goal. What does this scenario best illustrate?
Learning Races
Decisions relating to the range of products and services a firm will offer determine the firm's...
Level of Diversification
The market reaching its maximum size is a feature of the ________ stage of the industry life cycle.
Maturity
The smartphone division of the large consumer electronics company Streethex has a significant market share in the always-growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the context of the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of Streethex will be categorized under ______________.
Star
___________________ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage.
Strategic Alliances
While Eye Windows incurs a cost of $12 for a pair of eyeglasses, Dura Frames, its competitor, manufactures a pair of glasses at $10. Both the companies are able to sell their glasses for a maximum of $30 per pair. Which of the following statements is true in this scenario? a) Eye Windows and Dura Frames have achieved differentiation parity. b) Eye Windows is a cost-leader when compared to Dura Frames. c) Eye Windows has created a greater economic value than Dura Frames. d) Dura Frames has a higher opportunity cost than Eye Windows.
a) Eye Windows and Dura Frames have achieved differentiation parity.
Thirty years ago, Raleigh Outdoors created a lightweight, easy-to-erect tent that became a runaway bestseller. Fifteen years later, the tent market reached the maturity stage and sales slowed down. However, by this time, Raleigh Outdoors had developed a strong brand name and continued to lead the market. In the context of the Boston Consulting Group (BCG) growth-share matrix, which of the following describes this scenario? a) Raleigh was a star that developed into a cash cow. b) Raleigh was a question mark that developed into a star. c) Raleigh was a dog that developed into a question mark. d) Raleigh was a cash cow that developed into a star.
a) Raleigh was a star that developed into a cash cow.
Which of the following is a feature of the growth stage of the industry life cycle? a) The consumer demand increases. b) The prices of goods begin to rise. c) The basis of competition moves away from process innovation. d) The number of competitors decreases.
a) The consumer demand increases.
Cumberland Computers will be buying processing chips needed for its laptops and tablets from external suppliers instead of manufacturing them in its own facilities. How will this decision affect the firm? a) The firm will have more flexibility in purchasing and comparing prices of goods and services. b) The firm's administrative costs will be low because of necessary bureaucracy. c) The firm will be protected against the principal-agent problem. d) The firm will have high-powered incentives, such as hourly wages and salaries.
a) The firm will have more flexibility in purchasing and comparing prices of goods and services.
Which of the following best illustrates site specificity? a) equipment necessary for mining bauxite and aluminum smelting b) bottling machinery to manufacture bottles with trademarked shapes c) investment made in human capital to master procedures of a specific organization d) investment made to train employees to operate computers
a) equipment necessary for mining bauxite and aluminum smelting
Which of the following reasons motivated Meta Platforms to acquire Instagram, a photo and video-sharing social media site, for $1 billion? a) the desire to preempt rivals b) the need to enter a new geographical market c) the need to reduce its level of horizontal integration d) the desire to pursue an unrelated diversification strategy
a) the desire to preempt rivals
Adaptive Biotechnologies Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which type of innovation does this scenario best illustrate?
architectural innovation
Which of the following questions should strategic leaders ask while formulating a business-level strategy? a) When should we introduce our product/service in the market? b) What customer needs, wishes, and desires will we satisfy? c) How do the employees, shareholders, and customers view us? d) Which corporate governance mechanisms should we use?
b) What customer needs, wishes, and desires will we satisfy?
Mars Tennis Equipment, Inc. wishes to pursue international markets such as Spain and France. In order to do this, it may wish to consider a possible... a) government partnership that may lead to lobbying b) joint venture with another firm already established in those markets c) hostile takeover with a firm operating in the United States d) marketing strategy that strengthens the international value chain.
b) joint venture with another firm already established in those markets
Nguyen Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Nguyen should pursue ___________________.
backward integration
Billy is the founder and CEO of Billy's Kicks, a soccer ball retailer. He decides to purchase a synthetic rubber manufacturing firm so he can create his own soccer balls and sell them nationally in his retail stores. Billy will engage in __________________.
backward vertical integration
In the multiplex industry, Home Again Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Movies-for-Less Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is Just Right Films Inc., which offers a customer experience comparable to that of Home Again Movies at a price almost as low as that of Movies-for-Less. What strategy is Just Right Films pursuing in this scenario?
blue ocean strategy
A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.
business-level strategy
Which of the following best explains why Disney showed superior post-merger integration capabilities? a) Disney pursued a combination of horizontal and vertical integration through its acquisitions. b) Disney did a thorough job in eliminating principal-agent problems in the firms it acquired. c) Disney managed its new subsidiaries more like alliances than attempting full integration. d) Disney used a corporate strategy based on a Build-Borrow-Buy framework for its acquisitions.
c) Disney managed its new subsidiaries more like alliances than attempting full integration.
Plexzap Sodas has been a market leader in the soft drink industry for several decades. However, its market research shows that consumer tastes have begun to shift to sugar-free flavored seltzer waters, a product that Plexzap is capable of producing with minimal changes to its facilities and production processes. Based on your knowledge of the core competence-market matrix, which diversification strategy should Plexzap pursue? a) Leverage existing core competencies to improve current market position. b) Build new core competencies to protect and extend current market position. c) Redeploy and recombine existing core competencies to compete in markets of the future. d) Build new core competencies to create and compete in markets of the future.
c) Redeploy and recombine existing core competencies to compete in markets of the future.
Which of the following statements is true of the early majority section of consumers? a) They come into the market during the introduction stage. b) They are unaware that many hyped new product introductions will fade away. c) They weigh the benefits and costs carefully when adopting a new product. d) They make up the smallest market segment.
c) They weigh the benefits and costs carefully when adopting a new product.
Tablette Corp. is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Tablette Corp. should ideally compare its strategic position with... a) a company that sells small kitchen appliances at affordable prices. b) a consumer electronics company that sells high-end devices. c) a consumer electronics company popular among price-conscious customers. d) an online company that sells customized electronics accessories.
c) a consumer electronics company popular among price-conscious customers.
Siobhan's firm focuses only on design, marketing, and retailing, and it outsources all its other value chain activities. This firm has... a) a high degree of vertical integration. b) fully integrated all aspects of its value chain. c) a low degree of vertical integration. d) achieved economies of scale.
c) a low degree of vertical integration.
Which of the following is a competitive benefit experienced by the first-mover firm in an industry? a) The first mover will be able to achieve a less steep learning curve. b) The first mover will be able to reduce the switching costs. c) The first mover will not have to patent its products or technology. d) The first mover will be able to reduce costs through economies of scale.
d) The first mover will be able to reduce costs through economies of scale.
Which of the following is an ineffective practice in alliance management? a) coordinating a firm's portfolio of alliances b) establishing knowledge-sharing routines between alliance partners c) developing relational capabilities to manage mergers and acquisitions d) focusing on developing an alliance management capability in isolation
d) focusing on developing an alliance management capability in isolation
Which of the following is primarily a value driver? a) cost of input factors b) economies of scope c) experience-curve effects d) product features
d) product features
The type of customers vital to a firm introducing a new innovation are the ________, who are willing to buy early into new technology or product concept.
early adopters
The broad question that business-level strategy answers is ________ the firm will compete.
how
Which driver simultaneously increases value while lowering cost?
innovation
What are the stages of the industry life cycle in the correct order?
introduction, growth, shakeout, maturity, and decline
A radical innovation leverages ________ markets, while incremental innovations are based on ________ markets.
new; existing
Customer service and ________ are two of the value drivers that managers can utilize when trying to improve a firm's differentiation strategic position.
product uniqueness
Since Coca-Cola focuses on selling only non-alcoholic beverages, a low degree of product diversification, we would conclude that it competes in a(n) ________ market versus its main competitor PepsiCo, which sells a wide variety of products.
single product
A company that engages in strategic outsourcing reduces its level of _______________.
vertical integration
A value curve indicates a lack of effectiveness in a firm's strategic profile when it ____________________.
zig zags
Feran is the founder of an innovative "impromptu catering" business that provides elegant, healthy party food and decorations on less than 24 hours' notice. The company has grown by over 150 percent in the past year. Feran credits some of the company's success to studying the strategies of prominent social entrepreneurs, such as Wikipedia's Jimmy Wales. What can Feran do to exemplify the social entrepreneurship model? a) Launch a social media platform for food lovers. b) Provide free weekly catered meals for the unhoused. c) Seek investments from venture capitalists. d) Buy out his closest competitors to ensure a competitive advantage.
b) Provide free weekly catered meals for the unhoused.
Which of the following scenarios best exemplifies a platform business? a) Ayesha purchases electronic parts from a variety of vendors and assembles them into inexpensive drones that she sells to consumers. b) Samantha operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy. c) Leo operates a consulting firm in which businesses hire him to assess deficiencies in their organizational culture. d) Tereza founded a bike-based transportation company that offers environmentally friendly rides to customers within a 25-mile radius.
b) Samantha operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy.
Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing ________________.
differentiation
Bright PAD introduced a tablet that could run completely on solar energy and was less expensive than competitors' tablets. On the downside, it required more frequent charging than the competition's tablets. However, the technology of the Bright PAD tablet improved rapidly, thereby improving its recharge frequency. This example describes ________ innovation.
disruptive
When examining the core competence-market matrix, the most challenging diversification strategy occurs when firms attempt to combine ____________ with ___________. If done successfully, the firm could have the potential for "mega-opportunities" that may lead to competitive advantage.
new core competencies; new markets
Incumbent firms prefer to focus on incremental innovations, which reinforce their established organizational structure and power distribution and avoid radical innovation that could disrupt their existing balance of power. This is known as ___________________.
organizational inertia
At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n)... a) 80 percent learning curve. b) 90 percent learning curve. c) 60 percent learning curve. d) 54 percent learning curve.
b) 90 percent learning curve.
How does horizontal integration within an industry affect the surviving firms? a) by increasing the threat the surviving firms will face from new entrants b) by strengthening the rivalry among existing firms c) by requiring the surviving firms to shift their focus from non-price to price competition d) by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
d) by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
Which of the following is an example of social entrepreneurship? The committee approved the new formula for an all-purpose cleaner because it... a) cleaned better than other cleaners and used easy-to-obtain ingredients. b) cleaned better than other cleaners and did not cost more to produce. c) cleaned as well as other cleaners and could be produced more efficiently. d) cleaned as well as other cleaners and used organic ingredients.
d) cleaned as well as other cleaners and used organic ingredients.
Singletechno Industries, a large U.S.-based conglomerate, competes in the hospitality, education, telecommunications, entertainment, airlines, and chemical industries. It currently operates in about 30 nations, and is planning to expand its portfolio by investing in rapidly developing countries. Which of the strategy is Singletechno Industries pursuing?
product-market diversification strategy
Which of the following statements about managing alliance-related tasks is true? a) Forming an alliance with another firm prohibits that firm from forming other alliances. b) Alliance management capability is based on three alliance-related tasks. c) A merger is one of the three options for alliance design and governance. d) In post-formation alliance management, none of the firms in an alliance is permitted to gain a competitive advantage.
b) Alliance management capability is based on three alliance-related tasks.
Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the best reason for this development? a) It failed to drive up the perceived customer value. b) It failed to refine its strategic position over time. c) It failed to move into a contested market space. d) It failed to offer enough strategic trade-offs.
b) It failed to refine its strategic position over time.
J-Texon Manufacturing is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which diversification strategy does this best illustrate?
Product Diversification
The demand for flip phones has drastically reduced, and there are only a few consumer electronics companies selling them at extremely low prices. Also, the current buyers of flip phones are mainly categorized under laggards. Which stages of the industry life cycle is the flip phone industry in currently?
Decline Stage
How is differentiation parity different from cost parity?
Differentiation parity deals with value not cost.
Lauren is the CEO of TimeEx Inc. and is competing in an industry that is shifting due to disruptive innovation. Which of the following strategies should she consider to most appropriately respond to this disruptive innovation? a) Lauren should guard against the disruptive innovation by protecting the low end of the market. b) Lauren should stop allocating her firm's resources toward continually trying to innovate. c) Lauren should exit the industry before her firm files for bankruptcy. d) Lauren should focus on procuring the "laggards" in her industry.
a) Lauren should guard against the disruptive innovation by protecting the low end of the market.
As the inventor of hypertension medication, BioNTech SE Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiry of BioNTech SE's patents, regular users did not want to switch because they were concerned about possible side effects. What benefit does this scenario best illustrate?
First-Mover Advantages
NoRu Inc. is a publicly traded firm that does not wish to be acquired by FRESHPoP Corporation, a much larger publicly traded firm, who is planning an acquisition of NoRu Inc. This is an example of a...
Hostile Takeover
Overall, was the Adidas acquisition of Reebok for $3.8 billion in 2006 a success? a) No. Adidas sold Reebok to a private equity firm for a mere $100 million in 2017. b) Yes. By acquiring Reebok, Adidas improved its market share and made sure that Nike could not acquire it. c) The acquisition was a success for Reebok but not for Adidas. d) The acquisition was a success for Adidas but not for Reebok.
a) No. Adidas sold Reebok to a private equity firm for a mere $100 million in 2017.
Using the Boston Consulting Group growth-share matrix, the managers of Fasehatice International determined that their business unit devoted to personal health monitoring devices was a "star." Based on this finding, which of the following strategies is likely to produce the best results? a) Increase investment in the personal health monitoring unit to encourage future growth. b) Seek to lower costs in the personal health monitoring unit to increase market share. c) Harvest as much cash flow as possible before shutting the business down. d) Immediately divest from the personal health monitoring industry.
a) Increase investment in the personal health monitoring unit to encourage future growth.
Why is following an unrelated diversification strategy especially advantageous in an emerging economy? a) It allows the conglomerate to overcome institutional weaknesses in emerging economies. b) It allows the conglomerate to form a monopoly in emerging economies. c) It allows the conglomerate to use well-defined legal systems in emerging economies. d) It allows the conglomerate to take advantage of strong capital markets in emerging economies.
a) It allows the conglomerate to overcome institutional weaknesses in emerging economies.
Which of the following best illustrates forward vertical integration? a) A firm that manufactures and sells car engines to major automobile companies launches its own line of cars. b) A chain of ice cream parlors launches a brand of toys and accessories for children. c) A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. d) A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery.
a) A firm that manufactures and sells car engines to major automobile companies launches its own line of cars.
Which of the following provides an example of a firm in a red ocean? a) Foley Office Supply offered printers at a low price but failed to differentiate its product as being exclusive. b) Blue Desk Company matched the price of its closest competitors and had lower profit margins as a result. c) Printers Inc. offered printers at a mid-range price but failed to differentiate its product as being of decent quality. d) Village Electronics offered printers at a higher price than competitors and, as a result, failed to make a profit.
a) Foley Office Supply offered printers at a low price but failed to differentiate its product as being exclusive.
Johnson is an executive vice president at Conecom Hardware. He researches a proposal by a larger company, Openlane Hardware, to combine the two companies. By analyzing past performance, conducting focus groups, and interviewing Openlane employees, Johnson concludes that Openlane has poor profit margins, sells shoddy merchandise, and treats customers poorly. What actions should Johnson and Conecom Hardware take? a) Turn down the acquisition offer, and prepare to resist a hostile takeover. b) Attempt a friendly merger, and use managerial hubris to improve results at Openlane. c) Welcome the acquisition, and use knowledge transfer to impart Conecom Hardware's management practices. d) Do nothing; the two companies cannot combine without Conecom Hardware's explicit consent.
a) Turn down the acquisition offer, and prepare to resist a hostile takeover.
The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator? a) high price, high comfort, high customer service, high concessions variety, low hours of operation b) low price, high comfort, high customer service, high concessions variety, low hours of operation c) high price, low comfort, low customer service, high concessions variety, low hours of operation d) low price, low comfort, low customer service, low concessions variety, low hours of operation
a) high price, high comfort, high customer service, high concessions variety, low hours of operation
BellRing Brands is a manufacturer of educational toys for children. Six months ago, the company's research and development division came up with an idea for a unique touchscreen device that can be used to introduce children to a number of foreign languages. Three months ago, the company produced a working prototype, and last month the company successfully launched its new device on the commercial market. What should the managers of BellRing Brands prepare for next? a) increased competition from imitators b) a prolonged period of uncontested success c) a sharp decline in demand for the product d) a difficult struggle to move from invention to innovation
a) increased competition from imitators
Openlane and Yearin Technologies have together invested and created a new organization, Globex Corporation, to focus on developing diagnostic devices. Through this new firm, both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments. However, the new organization operates independent of Openlane and Yearin Technologies. Which of the following alternatives to integration does this scenario best illustrate? a) joint venture b) franchisee c) licensing contract d) corporate acquisition
a) joint venture
When a firm combines experience-based learning and process innovation, the firm... a) jumps to a steeper learning curve. b) experiences an increase in per-unit cost. c) loses its competitive advantage. d) moves down the existing learning curve.
a) jumps to a steeper learning curve.
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because... a) the U.S. population was growing slowly and becoming more health conscious. b) its strategic position in the U.S. market was well protected through high entry barriers. c) this would help the company gain access to large cocoa plantations in China. d) Hershey's main strategic focus was on product and market diversification and not on the domestic market.
a) the U.S. population was growing slowly and becoming more health conscious.
A software firm is interested in acquiring an app development company that is small but highly profitable. The app developer also has a widely admired management structure and much lower attrition rates than are common in the industry. Which of these problems should the software firm anticipate? a) A rival software firm may imitate this approach by acquiring a similar app developer. b) The software firm may overpay for the app developer, poorly serving the software firm's shareholders. c) Because most acquisitions are profitable, there is little to worry about in this scenario. d) The software firm may underpay for the app developer, cheating the app developer's shareholders of profit.
b) The software firm may overpay for the app developer, poorly serving the software firm's shareholders.
Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters? a) While the customer segment in the introduction stage consists of early adopters, the customers entering the market in the growth stage are technology enthusiasts. b) Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns. c) While early adopters make up the smallest market segment, technology enthusiasts make up the mass market. d) Firms need to communicate products' potential applications in a more direct way when attracting technology enthusiasts rather than early adopters.
b) Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns.
Deluxe Yachts Inc., a large luxury yacht manufacturer, made an initial small investment in a startup company that was developing an ecologically friendly waste-water recycling system. This gave Deluxe Yachts controlling interests in the startup company. However, Deluxe Yachts had no obligations to make continued investments in the experiments of the startup company. It could invest small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Deluxe Yachts would have the right to buy out the startup company. This approach to strategic alliance is referred to as: a) a break-even analysis b) a real-options perspective c) credible commitment d) transaction cost economics
b) a real-options perspective
Antonia's is a chain of casual restaurants that promises affordable Italian meals using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage? a) lowering the quality of ingredients below what customers expect to control costs b) eliminating brick-and-mortar locations and offering delivery from a central kitchen c) raising prices without improving on the quality of its food or customer service d) marketing itself as an upscale eatery to compete with more refined restaurants
b) eliminating brick-and-mortar locations and offering delivery from a central kitchen
Fast-food chain Taco Trio operates through a business model in which individuals can buy the rights to set up Taco Trio restaurants and sell the company's food in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the individual restaurants have to offer a menu approved at Taco Trio headquarters, use the same interior color scheme and layout as the flagship restaurant, and maintain high-level customer service. Which of the following alternatives to integration does this best illustrate? a) crowdsourcing b) franchising c) credit rationing d) bootstrapping
b) franchising
When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it... a) loses its competitive advantage. b) gains market share from other firms. c) lowers the economic value created. d) results in diseconomies of scale.
b) gains market share from other firms.
There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale? a) increasing profits b) lowering costs c) reducing risk d) motivating managers
b) lowering costs
Donware Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleds by Gogozoom LLC This company produced bobsleds, but its sales had slowed. The managers of Donware convinced themselves that they were able to manage the business of Sleds by Gogozoom LLC more effectively even though they had no experience in the bobsled market. However, this move backfired, and the sale of Sleds by Gogozoom LLC's bobsleds plummeted. Which of the following terms is often used to describe this scenario? a) winner's curse b) managerial hubris c) winner's disadvantage d) interdepartmental apathy
b) managerial hubris
The core competency of Newex Motors is the fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that the growing demand for "green" vehicles has created a new market opportunity. Thus, it uses its existing technology to develop an engine that improves the fuel efficiency of recreational motorhomes. In this scenario, Newex Motors is... a) leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. b) redeploying and recombining existing core competencies to compete in future markets. c) building new core competencies to create and compete in future markets. d) building new core competencies to protect and extend current market position.
b) redeploying and recombining existing core competencies to compete in future markets.
Lupita is the CEO of JustFixIt Inc., a firm that merges technology with commercial hardware. She has been struggling with the decision to allocate her resources for the development of a new system or go to the market and search for an already established system. The board of directors for JustFixIt Inc. suggested that the firm enter a contractual agreement with a partner. This scenario best illustrates the concept of... a) buy-sell-or-trade framework b) the Build-Borrow-Buy framework c) the horizontal and vertical integration frameworks d) the strategic alliance framework
b) the Build-Borrow-Buy framework
One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that... a) they have both broad and narrow economies of scope. b) they maximize their scale efficiencies by stocking more inventory and handling it more efficiently. c) they are able to take advantage of market size and spread investment losses over many locations. d) they have been able to protect themselves from the threat of buyer power by increasing input prices.
b) they maximize their scale efficiencies by stocking more inventory and handling it more efficiently.
American Snacks Inc., a conglomerate, has a strategic alliance with Très Bien Limité, a French snack-maker. However, Très Bien managers are concerned that the different business units of American Snacks will set up partnerships with direct competitors of Très Bien in France. What can owners and managers at American Snacks do to respond to Très Bien's concern? a) Require business units at American Snacks and Très Bien to sign loyalty pledges. b) Encourage business units at American Snacks to act independently. c) Arrange for the alliance to be managed at the corporate level. d) Sever the relationship with Très Bien and find a more trusting corporate partner.
c) Arrange for the alliance to be managed at the corporate level.
Fatima is the owner of a remodeling company that caters to a very wealthy clientele. Her company has struggled to differentiate itself from the other high-end remodelers in the area, but because she has hired several expensive but highly qualified team members, Fatima is unable to shift to a cost-leadership strategy. Which strategy is most likely to achieve a competitive advantage? a) Offer similar remodeling services as competitors but raise prices to increase profits. b) Lower prices but continue employing high-paid expert designers and tradespeople. c) Narrow the scope of competition and focus on unique features such as using premium materials. d) Maintain prices but replace all the expert employees with less-skilled workers to control costs.
c) Narrow the scope of competition and focus on unique features such as using premium materials.
Northeast Insurance Group is one of the largest property and casualty insurance firms in the United States. It wants to acquire Sylvestri Mutual, a smaller rival. After the merger, Northeast Insurance Group will be one of the two largest property and casualty insurance firms in the U.S. market. What should Northeast Insurance Group include in its acquisition plans? a) Northeast Insurance Group should refocus its attention from the national to the international market. b) In addition to acquiring Sylvestri Mutual, Northeast Insurance Group should determine the best way to drive independent "mom and pop" tax preparers out of business. c) Northeast Insurance Group will need to explain to the Federal Trade Commission (FTC) how the acquisition will not result in an increase in prices for consumers. d) Northeast Insurance Group should enter a price-based competition with its other major competitor to force it out of b
c) Northeast Insurance Group will need to explain to the Federal Trade Commission (FTC) how the acquisition will not result in an increase in prices for consumers.
Summit Technology Inc. manufactures soundbars for $100 per unit, and the maximum price customers are willing to pay is $475 per unit. Sound Gold Inc. is a competitor of Summit Technology that produces soundbars for $150 per unit, and customers are willing to pay a maximum price of $500 per unit. What does this imply? a) Summit Technology and Sound Gold share differentiation parity. b) Sound Gold has a competitive advantage over Summit Technology in terms of perceived value. c) Summit Technology creates a greater economic value than Sound Gold. d) Sound Gold is a cost leader when compared to Summit Technology.
c) Summit Technology creates a greater economic value than Sound Gold.
A microchip company wants a computer company to produce more powerful tablets and therefore use more of its chips. That same computer company wants the microchip maker to create chips with faster processing power. Which approach could these companies take so that both can serve stockholders well? a) Both companies should reduce prices to force out competitors and make entering the market less appealing to potential rivals b) Whichever company is larger should acquire the smaller one and impose its management system on the acquired company c) The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power d) For data security reasons, both companies should remain separate and refrain from sharing information
c) The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power
Shapiro-Rennart is a large conglomerate. In the context of the Boston Consulting Group (BCG) growth-share matrix, the company's healthy-living strategic business unit (SBU) has been categorized as a "cash cow," and its tobacco SBU has been categorized as a "dog." Which of the following can be inferred from this scenario? a) While the tobacco SBU operates in a low-growth market, the healthy-living SBU operates in a high-growth market. b) The management of the company should use the cash inflow from the healthy-living SBU and invest it in the tobacco SBU. c) While the market share of the company in the healthy-living industry will be high, the market share in the tobacco industry will be low. d) The tobacco SBU should follow a backward integration strategy, and the healthy-living SBU should pursue a forward integration strategy.
c) While the market share of the company in the healthy-living industry will be high, the market share in the tobacco industry will be low.
Which of the following describes organizational inertia? a) when the market leader captures almost all of the market share b) a network of suppliers, buyers, and complementors c) a firm's resistance to changes in the status quo d) an innovation that leverages new technologies to attack existing markets from the bottom up
c) a firm's resistance to changes in the status quo
Which of the following best describes a strategic alliance? a) conceptual model that aids strategic leaders in deciding whether to pursue internal development, enter a contractual arrangement or strategic alliance, or acquire new resources, capabilities, and competencies b) an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time c) a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services d) cooperation by competitors to achieve a strategic objective
c) a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services
When the market for standalone Global Positioning System (GPS) devices declined with the arrival of GPS-enabled mobile phones, InMode Ltd., a manufacturer of GPS devices, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has InMode Ltd. adopted in this scenario? a) harvest strategy b) maintain strategy c) consolidation strategy d) differentiation strategy
c) consolidation strategy
It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they... a) are driven by technology concerns rather than the practicality of a new product. b) influence the purchase decisions of early adopters. c) enter into the market in large numbers, creating a herding effect. d) have the highest purchasing power when compared to the other customer segments.
c) enter into the market in large numbers, creating a herding effect.
To be successful and to survive the shakeout stage of the industry life cycle, a firm should... a) charge higher prices than its competitors. b) focus on product innovation rather than process innovation. c) gain economies of scale. d) shift from price to nonprice competition.
c) gain economies of scale
Golden Soles has been successful at differentiating itself from competitors by claiming a premium price for its athletic footwear based on superior design and high-quality materials. In this scenario, which of the following is the key value driver? a) economies of scale b) low-cost input factors c) product features d) premium prices
c) product features
One of the risks of pursuing a blue ocean strategy is that a firm can find itself... a) losing sight of its mission and vision. b) competing with only a differentiation strategy. c) stuck in the middle without a clear strategic position. d) ineffective when competing on an international scale.
c) stuck in the middle without a clear strategic position.
In a non-equity alliance, which of the following types of information would firms most likely share? a) a manager's knowledge related to solving nonroutine problems b) a top-level manager's experience related to making strategic decisions c) the documented information about the material composition of a product d) the employees' entrepreneurial skills
c) the documented information about the material composition of a product
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because... a) the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive. b) the surviving firms will need to be protected against the increasing bargaining power of the suppliers. c) the horizontal integration activity has the potential to reduce competitive intensity in an industry. d) the surviving firms will need protection against the relaxed entry barriers.
c) the horizontal integration activity has the potential to reduce competitive intensity in an industry.
When does a firm fall into the large competitive chasm between early adopters and early majority? a) when it cannot attract technological enthusiasts to try the beta versions of its products b) when it creates strong network effects during the growth stage c) when it fails to successfully launch a mass-market version of its product d) when the early majority create herding effects for its products
c) when it fails to successfully launch a mass-market version of its product
Which of the following accurately describes a common difference between a merger and an acquisition? a) A merger tends to include mostly small firms; an acquisition can often involve large firms. b) A merger involves the combination of three or more firms; an acquisition involved the combination of two firms. c) A merger involves firms of different size; an acquisition involved firms of the same size. d) A merger tends to be friendly; an acquisition can be friendly or hostile.
d) A merger tends to be friendly; an acquisition can be friendly or hostile.
Due to its large sales volume and low-cost structure, Bunny's Lo-Cost enjoys a cost-leadership position. Which of the following scenarios might threaten Bunny's competitive advantage? a) Existing competitors in the same industry lower their prices to match those of Bunny's. b) Industry suppliers raise their prices. c) Competitors engage in an all-out price war. d) A new competitor is perceived to provide similar value while offering better service than Bunny's.
d) A new competitor is perceived to provide similar value while offering better service than Bunny's.
Which of the following business models in the landscaping industry is likely to scale most efficiently? a) a company that offers three different bundles of services at a low, medium, and high price point depending on the level of care required by the customer b) a company that deploys a team of both skilled and unskilled landscapers to each customer's location regardless of their needs c) a company that charges the same hourly rate for landscaping services no matter what the situation requires d) a company that allows users of its website to schedule appointments with landscapers who specialize in the exact service required
d) a company that allows users of its website to schedule appointments with landscapers who specialize in the exact service required
Funholding is a large multinational company active in the petroleum, capital market, chemicals, steel, beverages, hospitality, airlines, automobiles, and consumer electronics industries. The company has multiple brands and a large product portfolio under its banner. Which of the following terms would best describe this company? a) flagship brand b) single-business firm c) dominant-business firm d) conglomerate
d) conglomerate
A differentiation strategy works best when a... a) firm has tangible resources, its focus of competition shifts to price, and equivalent substitutes are readily available. b) firm's focus of competition shifts to price, and when increasing differentiation of product features do not create additional value. c) firm's differentiated products are commoditized, and costs of providing uniqueness do not rise above the customer's willingness to pay. d) firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.
d) firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.