Busi 690 Final Study Questions

Industry structures are not stable over time. The U.S. banking industry has seen major consolidation in recent years. We would expect the result of this dynamic change to be what?

Generally higher industry profits

Gillette invented a "razor-blade" model of business whereby the razor is provided at a low cost and the replacement razor blades are sold relatively expensively. Which of the following is another example of this business model?

HP laser printers

Macroeconomic factors such as the unemployment rate and economic contraction:

Have a direct bearing on a firm's stock price.

When an organization briefly describes what its business is about and why it does it, they have articulated a:

Mission Statement

Given current trends, several industries promise significant potential for value creation and thus career opportunities, which of the following is not one of them described by the text?

Petroleum

Many of the early U.S. railroad companies defined themselves as being in the railroad business instead of being in the transportation needs business. These companies used:

Product oriented missions

The never-ending cycle of analysis, formulation, implementation and feedback is called what?

The strategic management process.

Macro-environmental PESTEL analysis considers effects of forces directly on:

An entire industry

In considering retailers JC Penney and Neiman Marcus, these firms have different business strategies. They both accomplish this by providing value to their customers while controlling costs. This is known as:

Differential strategic positioning.

An upscale jeweler ordered several thousand ounces of gold a few years ago when gold was priced at $650 an ounce. As of 2011 gold was averaging about $1,700 an ounce. This jeweler will be able to protect his competitive advantage, at least temporarily, due to which condition?

Better expectations of future resource value

The objective of Porter's five forces model is to:

Assess the potential for profits within an industry

The idea of firm's creating significant business opportunities for some 4 billion people on the planet who live in poverty is called:

Bottom of the pyramid

Applying a real options perspective to strategic decision making allows for:

Breaking investment decisions into smaller, staged phases while obtaining new information about the project viability as it continues.

The basic way that the balanced scorecard provides competitive insight to managers is through the use of:

Concise reports that track and measure chosen metrics.

Visionary companies differ from their competition in that:

Employees in visionary organizations find meaning in their work and are motivated.

All of the following are aspects of sociocultural factors influencing industry attractiveness EXCEPT:

Environmental protection laws

Globalization has led to increased entry barriers.

False

Creating resources that meet the VRIO criteria are strategically important to a firm because:

Firms that possess these types of resources may be able to experience a sustained competitive advantage.

As discussed in Chapter 5, the chemical manufacturer FMC Corporation overcame short-term thinking and underperforming business units by adopting a balanced scorecard approach. All of the following are true about FMC's successful implementation of a balanced scorecard EXCEPT:

Managers were able to formulate new strategies.

One way that a firm can create a sustainable competitive advantage is by:

Managing value chain activities better than its rivals.

A ____________ is created when the government believes the product or service would not be supplied by the market under free market conditions.

Natural Monopoly

Agriculture is generally considered a perfect competition industry with largely commodity products. However there is an aspect of the industry that can be classified as monopolistic competition with differentiated products and price premiums. Which part of the industry is it?

Organic milk

Google's initial competitive advantage over AltaVista and Yahoo was what?

PageRank Algorithm

The fact that the U.S. still uses a system of measurement from the 1820's instead of the metric system and is at a disadvantage in certain cross-border transactions and negotiations demonstrates that:

Path dependence can affect the ability to remain competitive.

Suppose that a firm wanted to find profitability information about its rivals. The most likely source of this information would be:

Publicly available information including 10-K reports.

When a successful firm exhibits resource immobility:

Resource differences between the firm and a rival are hard to replicate.

Core competencies are built through the interplay of several firm attributes. These attributes include a firm's:

Resources, capabilities and activities.

In Strategy Highlight 2.3, what type strategy is the store manager of Starbucks using to develop new drinks for the stores?

She is using an emergent strategy process.

Strategic intent is considered to be forward-looking and future-oriented. It is most useful in situations where _______________.

Small firms are wanting to compete against bigger, more established firms

Individuals or groups that can affect or are affected by the actions of a firm are called:

Stakeholders

Which SWOT factors below are generated from internal resources, capabilities and competencies?

Strengths and weaknesses

If a manager is listing out resources which can be used to drive competitive advantage, which item below would NOT be on the list?

The economy

The term "strategy" has grown in usage in a variety of fields today. Which of the following is the best use of the term for this course?

The firm's efforts to gain and sustain competitive advantage.

According to Michael Porter, when it comes to a firm's value chain activities and the essence of strategy a firm should ask itself:

Which activities should be done and more importantly what should not be done?

A firm's stock market valuation is based on historical accounting data and ___________.

market expectations for the future

When a firm attempts to improve its economic, social and ecological performance it is taking a(n) ___________ approach to assessing competitive advantage.

triple-bottom-line

From an accounting profitability perspective, competitive advantage is achieved by the firm that does which of the following?

Delivers the most positive profitability metrics.

____________ is created when a customer is willing to pay more for a good or service than it costs the firm to produce it.

Economic value

In 2010 Exxon Mobil posted 19.3 billion in profits and was ranked as the top performer by the Fortune 500 list. However, Liberty Media, which is a smaller organization than Exxon, posted the highest return on revenue (ROR) for the year at 62.1 percent. Using the accounting profitability framework, Exxon outperformed Liberty in ________ terms and Liberty outperformed Exxon in _________ terms.

absolute; relative

Strategic group mapping tells us that:

competitive pressures in an industry favor some strategic groups while threatening others

A ____________ is a product or service that can help raise demand in an industry by indirectly enhancing performance or decreasing prices.

complement

The 2001 collapse of Enron, resulting in one of the biggest bankruptcies in U.S. history, demonstrates that:

All of the above

Intangible assets add great value to a firm because:

A firm's culture, knowledge and intellectual property take time to develop and are generally difficult to imitate

Understanding the Resource Allocation Process (RAP) will have large effects on shaping a firm's realized strategy. Which of the following is an example of such an allocation of resources?

Intel's rule to "maximize margin-per-wafer-start"

What is wrong with the following statement? "Intended strategies tend to be generated from a bottom up approach."

Intended strategies are generated from a top down approach.

Threadless is an online apparel store. Its business model is quite different from most other apparel stores. Threadless leverages Web 2.0 capabilities by using crowdsourcing. How this does benefit Threadless in their T-shirt design process?

It both lowers the cost and ensures popularity of the selected designs.

Exit barriers are obstacles that determine how easily a firm can leave the industry. When exit barriers are high, what happens to industry attractiveness?

It decreases

If a firm has 25% return on invested capital (ROIC) what do you need to know to determine if it has a competitive advantage?

It must be compared to the ROIC of the competitors and/or industry.

Intel is provided as an example of a firm that has continuously changed its mission statement, including most recently moving to a customer-focused mission. This is an indication of what?

The mission was changed after Intel had already changed its business focus.

Under the economic value creation framework, producer surplus is important in the quest for competitive advantage because:

This is the profit that a firm captures when producing and selling a good or service.