BCOR 460 Exam 3

Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of political rather than economic considerations? A. A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing. B. Airbus and Boeing are likely to exit the aircraft manufacturing industry when industry profit potential falls to zero. C. The traditional U.S. airlines Delta, United, and American Airlines have large fixed costs to maintain their network of routes that affords global coverage, frequently in conjunction with foreign partner airlines. D. Given their strategic commitments, neither Delta nor United is likely to merge with other airlines.

A. A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.? A. Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost. B. Ez Solutions Inc. will have to expand its operations to meet the increasing consumer demand. C. Ez Solutions Inc. will experience less competition from rival companies. D. Ez Solutions Inc. will find it easier to raise prices to increase profits.

A. Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost

_________ are industry-specific factors that separate one strategic group from another. A. Mobility barriers B. Competitive differences C. Complementary products/services D. Barriers to entry

A. Mobility barriers

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is A. a temporary competitive advantage. B. a state of perfect competition. C. strategic equivalence. D. direct imitation.

A. a temporary competitive advantage

In the context of the VRIO framework, a resource is said to be valuable if it A. allows a firm to take advantage of an external opportunity. B. helps a firm increase its costs but lower its prices. C. results in a perfectly competitive industry structure. D. leads to competitive parity within an industry.

A. allows a firm to take advantage of an external opportunity

What term is used to describe cooperation by competitors who want to achieve a strategic objective? A. co-opetition B. strategic competition C. complementary assets D. strategic commitment

A. co-opetition

________ tends to be more fierce when exit barriers in the industry are high, resulting in some firms being locked into the industry. A. Competitive rivalry B. Strategic complements C. Co-opetition D. Strategic Commitments

A. competitive rivalry

Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem. A. complement B. value chain C. mobility barrier D. technological factor

A. complement

For a firm to sustain its competitive advantage, any fit between its internal strengths and the external environment must be A. dynamic. B. static. C. valuable. D. permanent.

A. dynamic

MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to A. forward integrate. B. crowdsource. C. outsource. D. backward integrate.

A. forward integrate

According to the resource-based view, a firm's competitive advantage often stems from its ___________ opposed to its ___________. A. intangible resources; tangible resources B. tangible resources; intangible resources C. current assets; long-term assets D. long-term assets; current assets

A. intangible resources; tangible resources

Patents, designs, copyrights, trademarks, and trade secrets are five forms of A. intellectual property. B. social complexity. C. causal ambiguity. D. path dependence.

A. intellectual property

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is best described as a(n) A. interest rate. B. service tax. C. royalty fee. D. surcharge.

A. interest rate

A consolidated industry turns into a fragmented industry when A. restrictive government policies are introduced in the industry. B. firms reduce competition within the industry through mergers and acquisitions. C. technological advances lead to industry convergence. D. network effects enjoyed by incumbent firms within the industry become stronger.

A. restrictive government policies are introduced in the industry

Which of the following SWOT factors are internal to the firm? A. strengths and weaknesses B. weaknesses and opportunities C. opportunities and threats D. threats and strengths

A. strengths and weaknesses

While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing, so it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to A. time compression diseconomies. B. better expectations of future resource value. C. economies of scale. D. resource mobility.

A. time compression diseconomies

Which of the following is not one of the VRIO characteristics of competitive advantage? A. variable B. rare C. costly to imitate D. organized to capture value

A. variable

Which of the following is a feature of a fragmented industry? A. It tends to generate high profitability. B. It consists of many small firms. C. It allows firms to set prices. D. One large firm dominates the industry.

B. It consists of many small firms

Which of the following statements is true of an oligopoly? A. Price-competition is the preferred mode of competition. B. It is often analyzed using game theory. C. Competing firms are most often independent of one another. D. It is characterized by low entry barriers.

B. It is often analyzed using game theory

When the Alta Velocidad Española (AVE) was completed, it impacted Spain's local airline industry. Which of the following statements about the five forces does this reflect? A. Substitutes were not readily available because customers cannot use other means of transport. B. Substitutes made it difficult for generating a profit potential in Spain's airline industry. C. The combination of the competitive forces leads to collusion among existing airlines. D. Entry barriers in Spain's airline industry are relatively high because of the high costs involved.

B. Substitutes made it difficult for generating a profit potential in Spain's airline industry

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities? A. While a firm's resources are always tangible, its capabilities are by their very nature intangible. B. While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies C. Unlike resources, capabilities do not find their expression in the firm's structure, routines, and culture. D. Unlike capabilities, the resources of the firm cannot be imitated by its competitors.

B. While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies

Strategic-group mapping establishes that A. competitive pressures within an industry are similar among all strategic groups. B. competitive rivalry is strongest between firms that are within the same strategic group. C. product features and prices are irrelevant to a strategic group. D. rivals inside a strategic group serve different customers.

B. competitive rivalry is strongest between firms that are within the same strategic group

In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by A. maximizing an external strength to exploit an internal opportunity. B. eliminating an internal weakness to mitigate an external threat. C. leveraging an external opportunity to overcome an internal threat. D. using an internal strength to exploit an external opportunity.

B. eliminating an internal weakness to mitigate an external threat

A fragmented industry turns into a consolidated industry when A. there are no restrictive government policies introduced in the industry. B. firms reduce competition within the industry through mergers and acquisitions. C. the barriers to enter the industry are reduced. D. the products/services are seen as commodities.

B. firms reduce competition within the industry through mergers and acquisitions

The relative bargaining power of suppliers is most likely low when A. the suppliers provide products that are differentiated. B. incumbent firms face low switching costs when changing suppliers. C. there are no readily available substitutes for the products and services they offer. D. the suppliers' industry is more concentrated than the industry it sells to.

B. incumbent firms face low switching costs when changing suppliers

In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n) A. perfectly competitive structure. B. monopolistically competitive structure. C. monogopoly. D. oligopoly.

B. monopolistically competitive structure

The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment? A. the company's headquarters B. the company's brand equity C. the company's cash reserves D. the company's plant and equipment

B. the company's brand equity

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage? A. The resource is easy to replicate. B. The resource is costly to imitate. C. The resource neutralizes external opportunities. D. The resource decreases the perceived value of its products.

B. the resource is costly to imitate

FL Systems Inc. and Oryxo Systems Inc. are two competing firms. FL Systems Inc. has $300,000 in tangible assets and $200,000 in intangible assets. Oryxo Systems Inc. has $150,000 in tangible assets and $347,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies? A. Oryxo Systems Inc. has less valuable resources than FL Systems Inc. B. Oryxo Systems Inc. has less invisible assets than FL Systems Inc. C. FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage. D. FL Systems Inc. will find it easier than Oryxo Systems Inc. to sustain competitive advantage.

C. FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage

How do complements affect a primary product or service? A. They reduce the value of the primary product. B. They act as the strategic equivalent of the primary product. C. They increase the demand for the primary product. D. They lower the utility of the primary product.

C. They increase the demand for the primary product

In a perfectly competitive industry structure A. resource immobility is high. B. resource heterogeneity is high. C. any competitive advantage that one firm has will be short-lived. D. competitors cannot quickly acquire resources used by the current market leader.

C. any competitive advantage that one firm has will be short-lived

In the dynamic capabilities perspective, for an asset or a capability to be included in a firm's resource stock, it should be A. readily available for purchase using cash. B. commonly shared by other firms in the same industry. C. built through investments over time. D. capable of reducing the barriers to entry in an industry.

C. built through investments over time

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm? A. increasing productivity of the employees B. decreasing employee attrition within the firm C. decreasing government interference in the target market D. increasing inflation rates in the target market

C. decreasing government interference in the target market

ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) A. plant. B. focus group. C. industry. D. occupational group.

C. industry

A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. According to the dynamic capabilities perspective, the $20,000 would most likely be referred to as the firm's A. capital gain. B. frozen asset. C. resource flow. D. marginal utility.

C. resource flow

Using the _______, managers can see how competitive advantage flows from a firm's distinct set of activities. A. resource-based view B. VRIO framework C. value chain analysis D. SWOT analysis

C. value chain analysis

The _______ describes the internal activities a firm engages in when transforming inputs into outputs. A. resource-based view B. PESTEL analysis C. value chain view D. SWOT analysis

C. value chain view

Which of the following explains how dynamic capabilities are different from the resource-based view? A. Dynamic capabilities deal with resource heterogeneity. B. Dynamic capabilities deal with intangible resources. C. Dynamic capabilities deal with tangible resources. D. Dynamic capabilities deal with applying resources over time.

D. Dynamic capabilities deal with applying resources over time

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained? A. Suppliers in the automotive industry had low bargaining power. B. Other American automakers of plug-in hybrid sports cars, like Fisker Automotive, filed for bankruptcy. C. Complementary products and services like battery charging and service stations were pervasive. D. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

D. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry

When asked to explore the strengths and weaknesses of a firm, which of the following would be the best framework to employ? A. Value Chain analysis B. PESTEL analysis C. Five Forces analysis D. None of these answers are correct.

D. None of these answers are correct

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? A. They cannot employ technology efficiently. B. They can spread fixed costs over lesser units. C. They benefit from a less specialized division of labor. D. They can demand better terms from their suppliers.

D. They can demand better terms from their suppliers

Which of the following firms most likely has the lowest bargaining power as a buyer? A. an automobile company that can backwardly integrate to produce its own component parts B. a fast food chain that has multiple suppliers for processed meat C. a government agency that buys large quantities of cement from a private supplier D. a cell phone company that requires highly customized software for its phones

D. a cell phone company that requires highly customized software for its phones

A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers. A. resource flows B. capital gains C. capabilities D. activities

D. activities

Generally speaking, which of these situations is likely to lead to greater profits? A. an industry that is about to undergo deregulation B. a situation that encourages operating at excess capacity C. a fragmented industry rather than a consolidated one D. an industry with fewer but larger competitors

D. an industry with fewer but larger competitors

Which of these is a way to reconfigure a value chain? A. thinking about new combinations of resources and capabilities that a firm already possesses, such as repurposing a movie theater as a location for off-site corporate meetings B. creating a partnership through strategic alliances, such as a bakery partnering with a restaurant C. preparing to leave an industry rather than supply unreliable or substandard products to customers D. entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups

D. entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups

Owners of coffee plantations in the country of Cantonica grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Cantonica best illustrates a(n) ________ structure. A. monopolistically competitive B. oligopolistic C. monopolistic D. perfectly competitive

D. perfectly competitive

Restrictions imposed by the government, such as export quotas on certain products, are a part of the ________ environment of the PESTEL framework. A. economic B. sociocultural C. ecological D. political

D. political

According to the value chain analysis, which of the following is a support activity? A. production and operations B. supply chain management C. marketing and sales D. research and development

D. research and development

Which of the following is an example of a firm's capabilities? A. routine activities performed in the firm, like physical delivery of products B. specific tasks involved in the invoicing of customers C. assets such as plant and machinery owned by the firm D. skills involved in training and managing a workforce

D. skills involved in training and managing a workforce

Even though Easy Speak Inc. and KM Com Inc. operate in the same industry—telecommunications—each firm has a different and loyal customer base. While Easy Speak Inc. attracts young students and professionals through its efficient network coverage and pricing, KM Com Inc. attracts elderly customers solely due to its excellent customer service. Thus, both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? A. resource imitation B. resource mobility C. resource substitution D. resource heterogeneity

Resource heterogeneity