BAD -5902
Moral Hazard
A company scientist working on personal research, The profits of successful risk taking stay with the private firm while the risks are shared with other parties.
The group of customers referred to as the ________ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage.
Early Majority
Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.
False
As a rule of thumb, the stronger the five forces, the higher the industry's profit potential, which causes the industry to become less attractive for competitors.
False
High demand for online video streaming options is one of Netflix's core competencies.
False
Product-oriented vision statements are better suited than customer-oriented vision statements for helping companies to adapt to changes in the external environment.
False
The autocratic strategic management process exhibited by the former head of Apple, Steve Jobs, is best described as an emergent strategy.
False
Innovation that targets new markets with existing technologies is known as disruptive innovation.
False - Architectural Innovation
The best way for a firm to keep its proprietary technologies, recipes, or formulas secret is to obtain a patent.
False - Trade Secrets are best
A strategy of related-constrained or related-linked diversification is less likely to enhance corporate performance than either a single or dominant level of diversification or an unrelated level of diversification.
False -more likely to enhance
Which of the following real-world examples best exemplifies a shared value creation framework?
GE's Ecomagination strategy that focuses on providing cleaner and efficient sources of energy while generating billions in revenues
Adverse Selection
Resume overstatements for Team Openings
The board of directors is charged with protecting the rights of
Shareholders
Which of the following best exemplifies information asymmetry at Rainholm Industries Inc., a publicly traded software development firm?
The board of directors at Rainholm Industries makes significant structural changes to the organization and waits several weeks before issuing a press release about it.
Which one of the following statements below can best be linked to the Nobel laureate Milton Friedman?
The social responsibility of a business is to increase its profits.
Horizontal integration through M&A can help firms strengthen their competitive position by increasing the differentiation of their product and service offerings.
True
Suppose that a small company that makes a standardized product is experiencing an increase in sales even though it has a small geographic footprint. Currently, the founder makes all of the strategic decisions but is beginning to feel overwhelmed. She has decided to pursue a cost-leadership strategy going forward. In order for the firm to achieve its goals, which of the following business-level structures should the firm adopt?
a centralized functional structure
Agency theory presents some important managerial considerations. Broadly speaking, governance mechanisms need to assure alignment of incentives between principals and agents. The text provides an example of financial institutions in the situation of profits remaining within the firm while losses are paid by the public as a description of
a moral hazard problem
In an economic context, strategy for producers is primarily about
capturing the economic value created as much as possible.
Jennifer was just named the CEO of a pen company called National Pens Inc. She immediately changed the name to "Jenn's Pens." When asked why she made this change by the board of directors, who showed research that there was no correlation between success and CEP names, she responded by saying, "my previous company had the name of their CEO in the title, and they were very successful." This fallacy on Jenifer's part reveals her
confirmation bias.
Ontomedia Inc. is a large multinational conglomerate. As a single business unit, the company's stock price is estimated to be $200. However, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300. What is Ontomedia experiencing in this scenario?
diversification discount
Rangreen Watches, a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of developing nations. Which of the following types of diversification strategies is the firm pursuing?
geographic diversification strategy
Licensing
is a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property such as patents.
An M-form
is structured with distinct strategic business units that operate independently, using their own unique structure. These SBUs can maintain flexibility, as evidenced by Zappos.
Zoom was identified as a unicorn in the case. A unicorn is a
private company worth $1 billion or more
The shared value creation framework recognizes
that externalities such as accidents create internal costs.
If stockholders were upset that Eric Yuan allowed security problems to surface because he was focused on other things, the situation could be considered an example of
the principal-agent problem.
closed innovation
utilizing closed innovation (keeping all the innovation within the company).
Trader Joe's differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Trader Joe's focuses on
increasing the perceived value created for customers, which allows it to charge a premium price.
With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as?
industry convergence
The risk of employee opportunism, on behalf of agents, is exacerbated by the concept of
information asymmetry.
The board of directors had an important role in Luckin Coffee, but it claimed to be unaware of any problems. If true, this is an example of
information asymmetry. where the company officers know more than the board.
An artifact
is a physical sign of the company's culture, such as store layout, uniforms, hours, etc.
functional structure
is an organizational structure that groups employees into distinct functional areas based on domain expertise.
As a rule of thumb, if a firm's ROIC is greater than its cost of capital
it generates value; if it is less than the cost of capital, the firm destroys value.
What type of entry into the Japanese market did KFC use?
joint venture
A reason for a country's development of advanced and specialized factors of human capital is often its
lack of natural resources.
When KFC struggled to open its restaurants in Japan, it was experiencing one of the disadvantages of going global. KFC was encountering the
liability of foreignness.
After initially selling original Carhartt clothing, Edwin and Faeh were given the rights to create their own line. This type of globalization arrangement is known as
licensing.
Donald owns shares of Meat and Bone Steakhouse, a food and beverages company. The company's financial situation takes a turn for the worse and ends up in severe debt. Despite owning shares of Meat and Bone Steakhouse, Donald is not responsible for bringing more money into the company to get it out of its debt. Which characteristic of public stock companies does this scenario best exemplify?
limited liability for investors
As the competitive forces increase in an industry, profit decreases due to
lower bargaining power for the competing firm.
Many financial service firms, IT firms, and health care companies are among the most active when it comes to________, which occurs when value chain activities are taken care of outside the home country of the firm.
offshore outsourcing
Codehow Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Codehow?
serial acquisitions
ince Coca-Cola focuses on selling only soft drinks, a low degree of product diversification, we would conclude that they compete in a(n) ________ market versus their main competitor PepsiCo, that sells a wide variety of products.
single product
Susan is the founder of the restaurant chain Right and Fresh. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and all packaging is manufactured from recycled material. Also, her company sources ingredients from farms within 100 miles from her locations. Susan's belief is that her restaurants should be able to support the community at large. Which of the following terms best describes Susan?
social entrepreneur
All of the following are signs of Chick-fil-A's organizational values except its
store logo.
Before Zoom went public, it enjoyed the following advantages of
strong financial reporting and auditing requirements.
Bioplex requires its members to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate?
subscription-based
A functional structure that is centralized and hierarchical is
the best type of structure when a firm is pursuing a cost-leadership strategy and makes a standardized product.
Which of the following external forces is a part of a firm's task environment?
the composition of the strategic group to which the firm belongs
Which of the following is an example of an internal transaction cost?
the cost of maintaining a production unit
The type of structure that best supports a firm with low organizational complexity is
the simple structure.
There are several major limitations of employing the balance scorecard framework; which of the following below is not one of those limitations?
the type of marketing and HR functions used to employ the framework
Which of the following is true of acquisitions?
they can be friendly or hostile.
As firms grow, there is increasing complexity and the structure
typically moves from simple to functional to multidivisional to manage the needed changes.
One of the major differences between inside directors and outside directors of a company is that outside directors are more likely to
watch out for the interests of the shareholders of the company.
When does a firm fall into the large competitive chasm between early adopters and early majority?
when it fails to successfully launch a mass-market version of its product
Which of the following features about a buyer indicates that the buyer has high bargaining power?
when the buyer operates in an industry where products are undifferentiated
Porter's National Diamond framework is helpful in understanding
why high-performing firms in some industries are country-specific.
Which of the following best illustrates forward vertical integration?
A firm that manufactures and sells car engines to major automobile companies launches its own line of cars.
Which of the following descriptions best exemplifies adverse selection?
A manager cannot ascertain the contributions of individual team members in team production.
Concerning strategy and organizational structure, which of the following is false?
A multidivisional firm loses the ability to be flexible.
Which of the following is one of the implications of information asymmetry between principals and agents?
Agents can pass on the information to select principals who can trade stocks based on this information.
Susan owns a firm that is considered fully integrated. Which of the following statements below would best describe a firm that is fully integrated?
All of Susan's business activities are conducted within the boundaries of the firm.
Chick-fil-A's policy of closing all of its restaurants on Sundays, Thanksgiving, and Christmas is
An artifact
Competitive Intensity in a Focal Industry
Auto Industry in Germany
Demand Conditions
Cell Phone Needs in Finland
Which of the following summarizes the difference between corporate strategy and business strategy?
Corporate strategy deals with where to compete; business strategy deals with how to compete.
Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week; this is the industry average. We can conclude that since he has a positive net income, he also has a competitive parity in the industry.
Correct—competitive parity is achieved by generating average returns, relative to competition in each industry.
Which of the following best explains why Disney showed superior post-merger integration capabilities?
Disney managed its new subsidiaries more like alliances rather than attempting full integration.
In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should
Divest the strategic Business unit
On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?
Each stage of the industry life cycle is dominated by a different customer group.
Which of the following statements is true of explicit knowledge?
Explicit knowledge is shared in nonequity alliance firms.
A firm's resource-allocation process (RAP) has very little effect on its realized strategy.
False
Intellectual property (IP) protections such as trademarks or patents are proven methods of establishing permanent barriers to imitation.
False
Which of the following is not an advantage when it comes to "first-mover advantages"?
First movers must educate potential customers about the product.
Which of the following terms describes the guiding policy to address the competitive challenge, and uses corporate- and business-level strategy?
Formulation
Treequote Industries has produced a new piece of technology that will monitor the soil moisture in a user's garden and send a notification to an app on the user's phone when it is time to water their plants. The goal of this inexpensive technology is to entice users to purchase Treequote's more expensive automated watering system, so that they can trigger the watering process from the app on their phones. Which business model is most likely to help Treequote Industries accomplish its goals?
Freemium
Why is following an unrelated diversification strategy especially advantageous in an emerging economy?
It allows the conglomerate to overcome institutional weaknesses in emerging economies.
As discussed in the case, W. L. Gore eventually adopted a cooperative multidivisional organizational structure. Which of the following is not a reason why this type of structure is advantageous for firms like W. L. Gore?
It best supports a firm with low organizational complexity.
Which of the following scenarios would justify a firm using an organizational structure that supports centralized decision making?
It competes on costs and economies of scale.
Suppose that several senior managers recently left Target Corporation and went to work at rival Walmart. What part of the ""stocks and flows"" of resources does this represent for Target Corporation?
Leakage
Which of the following is an accurate statement about learning effects?
Learning effects occur over time as output accumulates.
The clothing lines created by Edwin and Faeh were tailored to appeal to European tastes. What approach does this represent according to the integrative-responsiveness framework?
Multidomestic
Agency Theory
Nexus of legal contracts
Kroger's partnership with Ocado is an example of what type of innovation?
Open innovation
path dependence
Path dependence is a situation in which the options one faces in the current situation are limited by decisions made in the past.
Southwest Airlines (SWA) and Alaska Airlines both compete as point-to-point airlines, but they draw upon different resource bundles. This example best illustrates which of the following assumptions regarding the resource-based view?
Resource Heterogeneity
As discussed in the case and the text, W. L. Gore and Zappos adopted new organizational structures during periods of growth. In general, most firms follow a predictable pattern of structural change. Which of the following best exemplifies this pattern?
Simple to functional to Multidivisional Stractures
dialectic inquiry
Technique that can help to improve strategic decision making; key element is that two teams each generate a detailed but alternate plan of action (thesis and anti-thesis). The goal, if feasible, is to achieve a synthesis between the two plans.
A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this?
The company's organizational structure and systems will be designed to support bottom-up strategic initiatives.
Hooli Computers has decided to procure processing chips required for its laptops from external suppliers instead of manufacturing them in their own facilities. How will this decision affect the firm?
The firm will have more flexibility in purchasing and comparing prices of goods and services.
Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?
The framework does not explain everything about changes in industries.
Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?
There is more strategic variety in the growth stage when compared to the introduction stage.
If you examine various barriers to entry facing firms that might wish to enter the airline industry, this would be most helpful in assessing which of the five forces in that industry?
Threat of new entrants
Related and Supporting Industries
Traditional Supplier Network for Toyota
Because competitors in oligopolistic industries are so interdependent, it is especially important for managers in those firms to monitor and respond to changes their competitors make.
True
When the value that a customer attaches to a good or service exceeds the price paid for the good or service, this is a consumer surplus.
True
Corporate governance methods are ultimately responsible for ensuring the honesty and integrity of the firm. This can be especially problematic for high-rising "unicorn" firms that sometimes grow more quickly than their governance structures can mature. Which one of the following is the best evidence that Uber may be facing a problem of corporate governance?
Uber has shown open disregard for laws and partnerships with Carnegie Mellon University.
Kroger's plan to fight hunger and waste is an example of the organization's
Values
Wayne Enterprises Inc. is a publicly traded company that specializes in manufacturing consumer electronics. Which of the following best exemplifies the implementation of a shared value creation framework at Wayne Enterprises Inc.?
Wayne Enterprises uses recycled materials to create its commercially successful products.
Funholding Inc. is a large multinational company owned by two partners, is active in the petroleum, capital market, chemicals, steel, beverages, hospitality, airlines, education, 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 conglomerate
Tom Terry is the CEO of BuildIt.com but wants a physical retail presence. In order to accomplish this, Tom formed a joint venture with a major real estate tycoon who has a significant foothold in the commercial property sector. This venture will require exchanging more than just codified information; as such, Tom should expect to share
both tacit and explicit knowledge.
Jennifer 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 enter a contractual agreement with a partner. This scenario best illustrates the concept of
build-borrow-or-buy framework.
When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because
building downstream complementary assets can be expensive and time-consuming.
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?
consolidation strategy
All Foods is the parent company of several chain restaurants offering a variety of cuisines. The top management at All Foods has decided to enter the frozen foods industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate?
corporate strategy
When applying the CAGE framework to KFC's early days in Japan, the factor with the most impact on its success seems to be
cultural
Causal ambiguity
describes a situation in which the cause and effect of a phenomenon are not readily apparent.
Companies generally decide to expand globally to increase their
economic value creation.
Sam, owner of Sam's Hand Sanitizer Inc., is in the middle of the strategy formulation stage. He has already allocated a substantial amount of money that covered his employees' salaries from the prior year (sunk costs) but has failed to see any positive outcomes. Given the money he has already spent, he feels as if he needs to recover those costs and pushes forward even though the outcome seems dim. This best illustrates the concept of
escalating commitment.
When Carhartt allowed Edwin and Faeh to sell their apparel in Europe, they were expanding globally through
exporting.
The loss of customer trust because of security problems are ________ that created ________.
externalities; internal costs
If directors were aware of or should have been aware of Jian Liu's activities, they would have been in violation of their
fiduciary responsibilities.
Jill is the CEO of Note's Etc, a stationary manufacturer. She decides to open up a retail store to sell her products directly to consumers instead of just selling to retailers. In order to do this, Jill will need to engage in ________, which is a corporate level, strategy.
forward vertical integration
Based on the company description in the case, Kroger could be said to follow dominant-business diversification. According to the textbook, what type of organization most closely matches the dominant-business strategy?
functional structure
Although Dynatrace Holdings still sells its DVD players, a product in its decline stage, the investments made by the company on improving or marketing the product are very low. The company has allocated the least amount of human and financial capital to this department. Which of the following strategies has Dynatrace Holdings adopted in this scenario?
harvest strategy
The principal-agent problem surfaces when the agent, hired by the principal(s) to run the business
has different goals than the principal and fails to act in the principal's interests.
Open Innovation
has permeable boundaries that allow for innovation to flow out from the company to others or into the company from others.
How does a conglomerate benefit from following an unrelated diversification strategy?
The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies.
________ is the benefit that is missed or given up when an investor, individual or business chooses one alternative over another.
Opportunity cost
Benny's Closet Inc. is an apparel company that caters to highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Benny's Closet applying?
Cost-Leadership
Carhartt has some noncore apparel made in China. This type of globalization is called
Offshoring
economies of scope
Economy of scope describes the savings that come from producing two (or more) outputs at less cost than producing each output individually, even though using the same resources and technology.
Information Asymmetry
Galleon Group's Founder, agents usually know more than the principal and it causes an increased risk of employee opportunism.
While the personal computer industry is flooded and growing with laptops and tablets, Javier recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Javier best represent?
Laggards
________, which captures the cultural fit between different firms, is one key element needed when selecting an alliance partner.
Partner Compatibility
Principal-Agent Problem
Stockholders' relationships with managers
Which of the following is true of public stock companies?
There exists an implicit contract based on trust between society and the public stock company.
Which component of a company's culture is the most important aspect?
Values
Factor Conditions
Vast Oil and Gas Reserves in Venezuela
About 20 years ago, Xx-zobam, Inc., produced a sturdy, lightweight backpack in a market that was rapidly growing. Sturdy Light became a leader in this market. Eventually, the backpack market reached the maturity stage and slowed down. However, by this time, Xx-zobam had developed a strong brand name and continued to steadily lead the market. Which of the following describes this scenario?
Xx-zobam was a star that developed into a cash cow.
Canon was able to redesign the copying machine so that it didn't need professional service—reliability was built directly into the machine, and the user could replace parts, such as the cartridge. What Xerox had not envisioned was the possibility that the components of the copying machine could be put together in an altogether different way that was more user-friendly. This example describes
architectural innovation.
The scandal at Luckin Coffee is being portrayed by the company as perpetrated by ________, whereas some analysts suspect it is more likely by a ________.
bad apples; bad barrel
What was the strongest influence that shaped Chick-fil-A's organizational culture?
beliefs of its founder
The managers at Acme Corporation decided that their firm needed to diversify because of overall falling sales and lower performance in one sector. How does diversifying compensate for the declining performance in this sector?
by having higher performance in another sector
When Bernard Kroger began to innovate in his grocery stores, what type of innovation did he use?
closed innovation
Maria and Tom both serve as SBU managers of their divisions. They have both been asked by the CEO to generate two different courses of action for a new product launch. This strategic decision-making technique can be described as
dialectic inquiry.
Pete E' Gee sell's Big Dog Choppers, a special type of motorcycle. His business generates roughly 80 percent of his revenues from selling these motorcycles and about 20 percent on motorcycle repair and service. Pete E' Gee would be classified as a ________ firm.
dominate business
According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were
easy to imitate.
The amount of polyethanal that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment and is considered a legal offense. Consequently, PrismPaints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures polyethanal-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is Prism Paints Corp. primarily compromising in this scenario?
economic responsibilities toward its shareholders
Marriott is able to create greater economic value than its competitors due to their ability to take advantage of ________, which describe the savings that come from producing two (or more) outputs at less cost than producing one output individually, while utilizing the same amount of resources and technology.
economies of scope
multidomestic strategy
emphasis on local, niche interests in designs indicates the company is following a strategy type that responds to high pressure for local responsiveness and low pressure for cost reductions.
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
enter into the market in large numbers, creating a herding effect.
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
When Monopar Therapeutics released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. However, any attempts by competitors to copy the chemical composition would result in infringement of Monopar Therapeutics' intellectual property rights. Thus, the drug is protected by a
patent.
Chips & Motherboards Inc., a leading hard drive manufacturer, recently filed for bankruptcy. While most of Chips & Motherboards Inc.'s competitors were shifting away from physical data storage devices toward online cloud storage services, Chips & Motherboards Inc. invested most of its retained earnings in the effort to improve its hard drives. Once the hard-drive market drastically declined, Chips & Motherboards Inc. was unable to capitalize on the new technology. Which of the following does this scenario best illustrate?
path dependence
Blackzim Wireless is a cellular service provider that charges its customers $1 for three hours of talk time. So, if a customer's talk time for a month is 60 hours, the company charges him or her $20 at the end of the month. Which of the following business models does this best illustrate?
pay-as-you-go
Piper Inc. is a large cosmetics company that made an initial small investment in a start-up company, Oscorp, which was developing an organic face lotion. This gave Piper controlling interests in the start-up company. However, Oscorp soon began to have financial difficulties because of principal-agent problems. As a result, Piper did not invest in the next stage of development and pulled out of the company. This approach to strategic alliance is referred to as a
real-options perspective.
Fresher Corp. produces electric bathroom fragrance diffusers and sells the electric outer device at a market rate price. However, they lock their clients into a two-year agreement to purchase the perfume refills solely from them on a monthly basis. Which of the following business models does this best illustrate?
subscription-based
SonronMedia sells books by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells a book, he or she gets a predetermined percentage commission. This type of business model is called
An Agency
When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be
Availability of Complements
Konmatfix Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU). The desktop SBU has been experiencing drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent. This has been attributed to the low growth in the desktop market after the arrival of tablet computers and laptops. In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under
Dogs
Generally speaking, a firm will create value if its return on invested capital (ROIC) is less than the cost of capital.
False
The distribution department at Wheat, Barley and Whey Corp. has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its bags of wheat. Which of the following strategies does this scenario best illustrate?
Functional strategy
Good Ole Cinemas Inc. and HD Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Good Ole Cinemas Inc. pursues a cost-leadership strategy, HD Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario?
HD and Good Ole Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.
Suger & Sweet Sodas has seen its market share erode in recent years, as consumers increasingly turn toward healthier beverage choices such as unsweetened sparkling water. Hoping to rekindle interest in sugary sodas, Suger & Sweet decides to produce a limited run of "throwback" cans using labeling first introduced in the 1980s. What is wrong with this strategy?
It fails to face the competitive challenge.
Which of the following best illustrates a merger between the two companies Scotfind Inc. and Inity Inc.?
Scotfind Inc. and Inity Inc. join together to form a single new company called ScotfindInity Inc.
Which of the following scenarios best illustrates horizontal integration?
Siliss Inc. joins with Cancity Inc., one of its direct competitors.
Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters?
Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns.
Which of the following best illustrates physical-asset specificity?
a machine solely designed to give a candy its trademarked shape
Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company's product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of
causal ambiguity.
Vehement Capital Partners wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, Vehement Capital Partners invested $100 million in the project. This investment made by Vehement Capital Partners will result in a
credible commitment.
A firm's resource-allocation process (RAP)
determines the way it allocates its resources and can be critical in shaping its realized strategy. Emergent strategies can result from a firm's resource-allocation process (RAP).
Intel's Celeron chip and Atom chip are initiatives to
guard the company against disruptive innovation by protecting the low end of the market.
The effectiveness of the balanced scorecard
is contingent upon the skills of the managers using it, the metrics chosen, and asking the four key questions.
Firms that can employ and establish _________________, are more likely to protect their competitive advantage from being copied and/or eroding away.
isolating mechanisms
When ASI Inc. declared a dividend of $20,000,000, its market value increased from $8 billion to $8.5 billion. However, it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million. Thus, this $200 million is referred to as ASI Inc.'s
opportunity cost.
Bob is exploring multiple suppliers in order to find the best price. However, instead of calling all eight potential suppliers, he only reaches out to the first three and bases his selection on those instead of contacting all suppliers. Bob's action best describes the concept of
satisficing.
Accounting, human resources, and research and development are examples of
support activities that add value indirectly.
Mark owns Drones 'R' Us, Inc. and is looking for an alternative to vertical integration. He decides to manufacture some of his own parts while keeping a few key suppliers in his industry value chain as well. This is known as
taper integration.
The Konex Hotel Group purchased Green-Plus Hotels for an estimated value of $120 billion. All the hotels previously owned by Green-Plus Hotels are now managed by the Konex Hotel Group and are known as Konex hotels. What does this scenario best illustrate?
Acquisition
Assume a firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by
Casual ambiguity
Managers at SunTrustUs Properties are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates?
Consumer demand will increase.
After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to
identify stakeholders' interests and claims.
n recent years a growing number of U.S. consumers have become more health-conscious about what they eat. According to the PESTEL Framework this trend could best be classified as a ________ trend.
Sociocultural
We Ensure Inc., an insurance firm, replaced its existing project management software with new software from another supplier. Since the new software has different features and abilities, We Ensure has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents We Ensure's
Switching Cost
Which of the following best qualifies as a firm's internal stakeholder?
a manager taking care of the firm's operations in a foreign market
Delos Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Delos Autos controlling interests in the start-up company. However, Delos Autos had no obligations to make continued investments in the experiments of the start-up 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, Delos Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as
a real-options perspective
Under its co-founder and longtime CEO, Steve Jobs, Apple was one of the few successful tech companies using
a top-down strategic planning process.
Core competencies are unique strengths possessed by a firm which
allow it to differentiate its products and services from its rivals. Consumer demand is external to the firm. An example of Netflix's core competencies is its use of proprietary algorithms to determine its customer's needs.
As a research scholar, Linda had built a helicam as part of her project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, she started a new venture where she could customize these helicams to fit the specific needs of the buyers and sell them. Linda can be best described as a(n)
entrepreneur.
Online retailer eBuy had been drastically losing market share to its competitors. The management hired a reputed consulting firm to advise the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its poor customer service, including slow response times to customer inquiries and unclear return policies. These ineffective policies and procedures led to many disgruntled customers and a steady migration to more customer-friendly retailers. eBuy can best solve its problem by working on its
support activities.
Which of the following is not captured when examining a competitive industry structure?
the ability to engage in forward vertical integration - The ability to engage in horizontal integration would capture elements in a competitive structure