CH1-3

Which of the following industry structures consists of a large number of small or medium-sized companies, none of which is in a position to determine industry price?

A. Fragmented industry

An industry can be defmed as a group of:

A. companies offering products or services that are close substitutes for each other.

In growth industries:

C threat from potential competitors is typically highest.

Mobility barriers:

C. inhibit the movement of companies between strategic groups in an industry.

10. The more commodity-like an industry's product is, the lower the intensity of any price war that may develop.

FALSE

4. The bottled water industry created new competitors for Coca-Cola, but did not change the basic industry boundaries.

FALSE

8. When a company has differentiated products, they have less pricing options.

FALSE

A group of fmns all make tools for baking-pots, pans, measuring cups, and utensils. This group should be referred to as a market segment.

FALSE

Changes in the characteristics of a population, such as age or race, are irrelevant to the analysis of an industry's macroenvironment.

FALSE

Internal analysis is concerned with identifying a company's opportunities and threats.

FALSE

Lucy is an entrepreneur who is interested in opening her own bakery. She is concerned with obtaining money for equipment for the bakery such as ovens, pots and pans, and display cabinets. Lucy is trying to obtain intangible resources for her business.

FALSE

Patents typically provide the greatest barrier to imitation.

FALSE

Starbucks and an independent local cafe are different in terms of their business techniques. They both sell coffee, and therefore belong to the same strategic group.

FALSE

Strong brand loyalty and high customer switching costs are low barriers to entering an industry.

FALSE

Substitute products are not a threat if a company is the market leader.

FALSE

Successful innovation cannot transform the nature of industry competition.

FALSE

Suppliers are most powerful when the products that they sell have many substitutes.

FALSE

Tangible resources include experiential knowledge and technological know-how.

FALSE

The ability of established competitors to imitate the competitive advantage of a rival is not limited by factors such as existing strategic commitments and low absorptive capacity.

FALSE

The building blocks of competitive advantage are turnover, quantity, and profitability.

FALSE

The price a company charges for a good or service is typically more than the utility placed on that good or service by the customer.

FALSE

The punctuated equilibrium view can be described as a freezing, but not unfreezing, process in an industry's life cycle.

FALSE

To determine its opportunities and threats, a finn should focus on internal processes and capabilities.

FALSE

Unfortunately, quality-as-excellence and quality-as-reliability are concepts that apply to goods but not services.

FALSE

When buyers are in a weak bargaining position, companies in the industry must lower their prices to increase profits.

FALSE

Emergent strategies arise from within the company as a result of prior planning.

False

One of the factors that distinguishes organizations in the nonprofit sector from profit-making businesses is the lack of a need for strategic management.

False

Research finds that leaders who exhibit a high degree of emotional intelligence tend to be significantly less effective than those who do not.

False

Rules of thumb, or heuristics, always help to avoid severe and systematic errors in the decision-making process.

False

The concepts vision and mission can be used interchangeably.

False

The final component of the strategic management process is crafting the organization's mission statement, which provides the framework or context within which strategies are formulated.

False

The mission of a company lays out some desired future state and articulates what the company would like to achieve.

False

To increase shareholder value, managers must try to venture into new markets whether the results are profitable or not.

False

. Together with an analysis of the company's external environment, internal analysis gives managers the information they need to choose the business model and strategies that will enable their company to attain a sustained competitive advantage.

TRUE

16. A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers.

TRUE

7. At the heart of any company's business model is the combination of congruent strategies aimed at creating distinctive competencies that differentiate its products and result in a lower cost structure.

TRUE

A company's closest competitors are those in its strategic group, not those in other strategic groups in the industry.

TRUE

A company's profitability depends on the value customers place on the company's products

TRUE

A technological change, such as the rise of the Internet, can represent either an opportunity or a threat.

TRUE

Absorptive capacity refers to the ability of an enterprise to identify, value, assimilate, and use new knowledge.

TRUE

At Adam's bicycle repair shop, the primary value chain activity of production occurs each time a customer's bicycle is repaired.

TRUE

Benchmarking is a practice in which a company's performance is compared against that of competitors and the historic performance of the company itself.

TRUE

Cost reductions gained through mass-producing a standardized output is a source of scale economies.

TRUE

Deregulation of the mortgage industry is an example of how political and legal forces can impact an industry.

TRUE

Distinctive competencies are finn-specific strengths that allow a company to differentiate its products and achieve substantially lower costs than its rivals.

TRUE

Employee productivity is a common measure of efficiency.

TRUE

Goverrnnent deregulation of telephone service lowered the barriers to entry and lowered industry profit rates.

TRUE

Growing demand tends to reduce rivalry because all companies can sell more without taking market share away from other companies.

TRUE

High-teclrnology industries are dependent on complementary products for their mutual success.

TRUE

IBMs investment in mainframe computers, that proved disadvantageous when the market shifted to smaller personal computers, is an example of a prior strategic commitment. a. True

TRUE

If a company's profitability is higher than the industry average, it has a competitive advantage.

TRUE

Imitating a company's capabilities tends to be more difficult than imitating its tangible and intangible resources.

TRUE

In Porter's framework, the stronger the five forces, the ability of established companies to raise prices and earn greater profits becomes more limited.

TRUE

In the fashion industry, the time required to take a new product from design inception to placement in a retail store is known as customer response time.

TRUE

Intense rivalry lowers prices and raises costs.

TRUE

Interest rates have an impact on the sale of autos, appliances, and capital equipment, and thus represent a macroeconomic force.

TRUE

Market segments are distinct groups of customers within a market that can be differentiated from each other on the basis of their individual attributes and specific demands.

TRUE

Nene works in a factory where she picks crab meat from crabs. She is paid per day based upon the number of pounds of crab meat that she picks. Nene's daily number of pounds of crab meat can be referred to as her productivity.

TRUE

One of the defrning characteristics of the mature stage of the industry life cycle is that growth is low or zero.

TRUE

Opportunities arise when a company can take advantage of conditions in its environment to formulate and implement strategies that allow it to become more profitable

TRUE

Rapid growth in demand enables companies to expand their revenues and profits without taking market share away from competitors.

TRUE

Texas Instruments achieved early success through engineering excellence. But thereafter, they became so obsessed with engineering that they lost sight of market realities. This is an example of the Icarus Paradox.

TRUE

The greater the exit barriers, the harder it is for companies to reduce capacity, and the greater the threat of severe price competition.

TRUE

The importance of reliability in building competitive advantage has increased dramatically over the past decade.

TRUE

The more a resource is fmu-specific and difficult to imitate, the more likely a company holding that resource is said to have a distinctive competency.

TRUE

The more utility a company creates for its customers, the more flexibility it has in determining prices.

TRUE

The most successful fmns are those that constantly learn and upgrade their distinctive competencies.

TRUE

The primary activities of the value chain include the design, creation, and delivery of the product, the product's marketing, and its support and after-sales service.

TRUE

The risk of entry by potential competitors is a function of the height of the barriers to entry.

TRUE

Threats arise when conditions in the external envirornnent endanger the integrity and profitability of the company's business.

TRUE

When the value of the dollar is low compared to the value of other currencies, products made in the United States are relatively inexpensive and products made overseas are relatively expensive.

TRUE

A business model is managers' conception of how the set of strategies their company pursues should mesh together into a congruent whole, thus enabling the company to gain a competitive advantage and achieve superior profitability and profit growth.

True

A firm obtains competitive advantage when its strategy results in superior performance compared to its competitors.

True

A strategy can be defined as a set of related actions that managers take to increase their company's performance.

True

Emergent strategies are the unplanned responses to unforeseen circumstances.

True

General managers bear responsibility for the overall performance of the company or for one of its major self-contained subunits or divisions

True

In practice, the strategies of most organizations are probably a combination of the intended and emergent strategies.

True

Mintzberg maintains that emergent strategies are often successful and may be more appropriate than intended strategies.

True

ROIC is a measure of how efficiently and effectively managers use the capital at their disposal to produce profitability.

True

SWOT analysis is implemented to fine-tune strategies.

True

Strategic leadership is concerned with how to most effectively manage a company's strategy-making process to create competitive advantage.

True

The CEO is a company's principal general manager

True

The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis.

True

The feedback loop in the model of the strategic management process indicates that the process is ongoing; it never ends.

True

The great virtue of scenario planning is that managers must think outside the box to anticipate what they might do in different situations.

True

The planning model suggests that a company's strategies are the result of a plan from a highly structured process orchestrated by top management.

True

The profit growth of a company can be measured by the increase in net profit over time.

True

The values of a company state how managers and employees should conduct themselves.

True

Well-constructed goals provide a means by which the performance of managers can be evaluated.

True

Which of the following dimensions is encompassed by a company's business model? a. Configuring resources b. Avoiding focus on acquiring new customers c. Reducing emphasis on product quality d. Maintaining high costs e. Restricting growth

a. Configuring resources

consists of the electronic systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries.

a. Information systems

Which of the following statements is true about the feedback loop in the context of strategy implementation? a. It provides managers the input for the next round of strategy formulation and implementation. b. It emerges within an organization without prior planning, and in response to unforeseen circumstances. c. It cannot reveal whether or not a business model is working. d. It carries information from the corporate level to the functional level management.. e. It indicates that the strategy implementation process has ended.

a. It provides managers the input for the next round of strategy formulation and implementation.

Which of the following best defines shareholder value? a. It refers to the returns that shareholders earn from purchasing shares in a company. b. It refers to the capital invested in a company by the shareholders. c. It refers to the efforts taken by a company to sell its shares to prospective shareholders. d. It refers to the efforts taken by a company to buy back its shares from its shareholders. e. It refers to the non-monetary benefits that a company provides to its shareholders.

a. It refers to the returns that shareholders earn from purchasing shares in a company.

Which of the following cognitive biases refers to the fact that decision makers who have strong pre-existing beliefs about the relationship between two variables tend to make decisions on the basis of these beliefs, even when presented with evidence that their beliefs are wrong? a. Prior hypothesis bias b. Reasoning by analogy c. Illusion of control d. Escalating commitment e. Representativeness

a. Prior hypothesis bias

. Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs?

a. Research and development

Which primary activity in the value chain is concerned with the design of products and production processes?

a. Research and development

Which of the following statements is true about nonprofit organizations? a. They compete with each other for resources. b. Their ultimate aim is to maximize shareholder value in order to attract risk capital. c. Their mangers needn't develop careful strategies, since making profit is not the organization's goal. d. They do not have to worry about exceeding budgets. e. They seldom set any performance goals like profit-making organizations do.

a. They compete with each other for resources.

Which of the following statements is true about potential competitors in an industry?

a. They threaten the profitability of established companies

Edward Wrapp's ideas about the astuteness of power suggest that successful strategic managers: a. act as members of a coalition or its democratic leaders rather than as dictators. b. usually have little control over resources that are important to the organization. c. maintain tight control over as many decisions as possible by demanding complete obedience. d. publicly commit themselves to bold strategic agendas whether or not they are rational. e. recognize the futility of pursuing intended strategies.

a. act as members of a coalition or its democratic leaders rather than as dictators.

The concept of quality applies to:

a. all products produced by a finn.

Factors that make it difficult for a competitor to copy a company's distinctive competencies are known as:

a. barriers to imitation.

Mike, the CEO of a retail chain, wanted to keep costs low. To set an example for others, he drove his own car and furnished his office with plain, metal desks. In this case, Mike was displaying: a. commitment. b. ego. c. astute use of power. d. devil's advocacy. e. autocratic leadership.

a. commitment.

The first component of the strategic management process is: a. crafting the organization's mission statement. b. corning up with a damage control plan. c. analyzing the macroenvironment. d. determining the firm's employee turnover rate. e. deciding on a fit between the organization's strengths and weaknesses and the environment's opportunities and threats.

a. crafting the organization's mission statement.

Market segments are groups of:

a. customers within a market that can be different from each other on the basis of their distinct attributes and specific demands.

Research and development activities are concerned with:

a. design of products.

A component of strategy implementation is: a. designing the best organization structure, culture, and control systems to put a strategy into action. b. providing the number and kind of periodic reports that must be submitted by functional-level managers. c. defining the goals and objectives of the organizations. d. answering the question, "What is our business?" e. eliminating the feedback loop.

a. designing the best organization structure, culture, and control systems to put a strategy into action.

The scenario approach to strategic planning involves: a. devising plans for coping with a number of different possible future states of the world. b. designing the best organization structure and the best culture and control systems to put a chosen strategy into action. c. functional managers setting key corporate objectives. d. anticipating the reoccurrence of problems that were previously encountered and designing solutions accordingly. e. designing plans for problems that the company believes will most certainly face in the near future.

a. devising plans for coping with a number of different possible future states of the world.

40. Kodak possesses the leading imaging technology. This technology has allowed the company to differentiate its products from those offered by rivals. Imaging technology is Kodak's:

a. distinctive competence.

Competitive advantage is based on:

a. distinctive competencies.

As an industry enters the decline stage:

a. growth becomes negative.

The argument states that companies find it hard to change their strategies and structures to adapt to changing competitive conditions.

a. inertia.

Ted is an accountant at ABC Company. He calculates the difference between total revenues and total costs before tax. Ted calculates the:

a. net profit.

Dale's methods of fitting horseshoes save time and money for his employer at the local ranch. However, when Dale suggests that everyone use his method, his boss, Cedric, says, "No. That's not the way we've always done it around here." Cedric's resistance to change illustrates:

a. organizational inertia.

Good strategic leaders: a. possess a willingness to delegate and empower subordinates. b. control all facets of decision making. c. make decisions without consulting others. d. ensure uniformity of purpose through the authoritarian exercise of power. e. are usually inconsistent in their approach.

a. possess a willingness to delegate and empower subordinates.

One of the principal factors that helps increase shareholder value is: a. profitability. b. risk factors. c. low brand awareness. d. government regulations. e. high production costs.

a. profitability

A company's competitive advantage will not endure for long when that competitive advantage can be:

a. quickly or easily duplicated by other companies.

One of the most widely used measures of financial performance is:

a. return on invested capital.

The ratio of net profit to invested capital is known as:

a. return on invested capital.

Philip Morris capitalized on the growing health consciousness trend when it acquired Miller Brewing Company, and then redefmed competition in the beer industry with its introduction oflow-calorie beer (Miller Lite). This health trend represents a force.

a. social

The Internet is an example of a:

a. technological force.

Porter's Five Forces model did not recognize one force, which is:

a. the power of complement providers.

Suppliers in an industry are most powerful when:

a. there are few substitutes for the products that they sell.

Scenario-based planning is a technique for coping with the problem of: a. uncertainty. b. planning equilibrium. c. bottom-up planning. d. strategic fit. e. cognitive bias.

a. uncertainty.

Anna bakes cookies for about $10 per batch, she charges customers $15 to a batch, and customers perceive that the cookies are worth $25 per batch. Anna's profit margin is:

a.$5.

Which of the following factors does not determine the durability of a company's competitive advantage?

b. Apathy in an industry

Roza Munoz oversees the overall operations of Maxwell Coffee House which is one of the divisions of Kraft Foods Company. Roza is also responsible for the overall performance of the business division. Which of the following is not likely to be one of Roza's responsibilities? a. Turning corporate-level strategy into action b. Defining Kraft Food's mission statement c. Deciding how to compete in the coffee industry d. Supervising functional-level managers e. Developing a business-level strategy

b. Defining Kraft Food's mission statement

Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks. In which value chain activity does Mike work?

b. Human resources

Which of the following is true of the impact of high product quality on competitive advantage?

b. It lowers unit costs of the products.

Which of the following statements is true about rivalry in the context of established companies?

b. It squeezes profits out of an industry.

Rebecca, a manager, was very annoyed after noticing several negligent errors in a critical report. However, while talking to the subordinate who created the report, Rebecca was calm and composed; she did not act impulsively and lose her temper. Which of the following aspects of emotional intelligence is illustrated in this scenario? a. Self-awareness b. Self-regulation c. Motivation d. Empathy e. Social skills

b. Self-regulation

Which of the following statements is true about functional-level managers? a. They oversee the operation of an entire company or division. b. Their sphere of responsibility is generally confined to one organizational activity. c. Their activities and roles have no importance in realizing the strategic goals of an organization. d. They provide a link between the people who oversee the strategic development of a firm and those who own it. e. They occupy the apex of decision making within an organization.

b. Their sphere of responsibility is generally confined to one organizational activity.

Which of the following statements is true about emergent strategies? a. They are essentially the strategies that arise from the feedback loops. b. They are also influenced by the kind of culture that the organization's structure and control systems foster. c. They are the strategies that require the least amount of evaluation and strategic thinking from the managers. d. They cannot be combined with intended strategies of an organization. e. They are the product of formal top-down planning mechanisms.

b. They are also influenced by the kind of culture that the organization's structure and control systems foster.

Which of the following is not a characteristic of well-constructed goals? a. They are provide a means by which the performance of managers can be evaluated. b. They are lengthy and wordy. c. They specify a time period. d. They are challenging but realistic. e. They address critical issues.

b. They are lengthy and wordy.

Which of the following is true of growth industries?

b. They tend to be characterized by weak rivalry.

When Rollie's car wash began to lose business to rivals, Rollie read publications for car wash owners to learn the best practices in the industry. Then she implemented the best practices. Rollie is using to improve her car wash.

b. benchmarking

Resources:

b. can be both tangible and intangible.

A sector refers to a group of:

b. closely related industries.

Innovation refers to the act of:

b. creating new products and processes.

The extent of rivalry among established companies is lowest when:

b. demand is growing rapidly.

Due to advances in medicine, Americans are currently living longer now than in the past. As a result, the sale of products that meet the needs of older individuals, such as devices that assist in walking and movement, have increased. In the context of an industry's macroenvironment, age is considered a:

b. demographic force.

Beta Corp., a gaming software company, had recently launched a new game. The target audience identified by the company was the age group of 12-18 years. The advertising and marketing strategies were designed exclusively to target this age group. However, it was noticed that individuals who belong to the age bracket 18-25 years were the ones who would actually buy the game. The managers at Beta Corp. decided to redesign their marketing strategies to position the game as something that people of all age would enjoy. The company's decision to modify its product positioning demonstrates: a. downsizing strategy. b. emergent strategy. c. deliberate strategy. d. concurrency control strategy. e. unrealized strategy.

b. emergent strategy.

Common exit barriers include:

b. emotional attachments to an industry.

Feelings of personal responsibility for a project are most likely to lead to: a. prior hypothesis biases. b. escalating commitment. c. reasoning by analogy. d. representativeness. e. ivory tower planning.

b. escalating commitment.

Philip oversees the processes of the research and development department of his company. He is responsible for all the activities and tasks undertaken by the department. In the context of strategic management, Philip is most likely to be a a. corporate-level general manager b. functional manager c. managing director d. CEO e. business development manager

b. functional manager

The threat from potential competitors is greatest in the stage of the industry life cycle.

b. growth

The level of industry demand:

b. is one of the determinants of the intensity of rivalry in the industry.

The competitive structure of an industry refers to the:

b. number and size distribution of companies in the industry.

Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as

b. product

An industry's buyers have high bargaining power when:

b. switching costs are low.

Efficiency is:

b. the quantity of inputs required to produce an output.

An impact that the changing industry boundaries have had is that:

b. there is an increase in the number of competitors for companies.

More people seem to fear a snake bite than a dog bite, and yet statistically one is more likely to be bitten by a dog than by a snake. This is because people tend to estimate the probability of an outcome based on how easy the outcome is to imagine. This represents which of the following cognitive biases? a. Escalating commitment b. Hypothesis bias c. Availability error d. Representativeness e. Illusion of control

c. Availability error

Which of the following best describes product innovation?

c. Creating products that have superior attributes than existing products.

70. Which of the following is NOT one of the factors in the economic forces of the macroenvirornnent?

c. Cultural changes

Ralph is a well-liked manager at Aries Inc. He eloquently communicates the goals of the organization and has even been successful in making the organization's vision part of its culture. Which of the following characteristics of good strategic leaders can be observed in Ralph? a. Authoritarian leadership b. Devil's advocacy c. Eloquence d. Inconsistency e. Empathy

c. Eloquence

Which of the following is not a characteristic of emotional intelligence? a. Self-awareness b. Self-regulation c. Escalating commitment d. Empathy e. Social skills

c. Escalating commitment

Which of the following statements is true about government regulations in the context of entry barriers of an industry?

c. Falling entry barriers due to goverrnnent deregulation results in higher competition and lower industry profit rates.

Which of the following statements is true about strategic leadership? a. It is the primary responsibility of the functional managers of an organization. b. It does not take into account the task of maximizing shareholder value. c. It is involved with taking decisions regarding how to create a competitive advantage. d. It is a concept that does not apply to multidivisional companies that have several business units. e. It is essentially about supervising workers at a manufacturing unit of an organization.

c. It is involved with taking decisions regarding how to create a competitive advantage.

Which of the following is not a cognitive bias? a. Escalating commitment b. Reasoning by analogy c. Ivory tower thinking d. Representativeness e. Illusion of control

c. Ivory tower thinking

Due to a recent relaxation in the pollution control laws by the government, Alpha Motors has reduced the production of its electric-powered cars. The company is responding to a change in which of the following macroenvironmental forces?

c. Political and legal

Between 2005 and 2011, Blue Drinks, a multinational beverage corporation, increased its return on investment from $5 million to $25 million. The company was able to do this by expanding its product line to include a wider variety of flavors. The $20 million increase in its return on investment between 2005 and 2011 can be referred to as which of the following? a. Shareholder value b. Dividend payment c. Profit growth d. Profitability turnover e. Risk capital

c. Profit growth

Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?

c. Service and support

Which of the following statements is true about the complementors?

c. They have the power to impact the sales of the industry to which they supply complement products.

An important first step in the process of formulating a company's mission is to answer the question: a. What is our budget for advertising? b. What are the government regulations that are most likely to impact our business? c. What is our business? d. How do we persuade shareholders to provide risk capital? e. How many employees should we hire?

c. What is our business?

Industry dynamism refers to:

c. a rapidly changing industry envirornnent.

The term value chain refers to the idea that a company is:

c. a series of activities that transform inputs into products that customers value.

Economies of scale can arise from:

c. an advantage gained by spreading fixed production costs over a large production volume.

A company's competitive advantage is more durable when:

c. barriers to imitation are high and the industry is stable.

Systematic errors in the decision-making process are caused by: a. inadequate information. b. information overload. c. cognitive biases of decision makers. d. poor data collection procedures. e. the devil's advocacy method.

c. cognitive biases of decision makers.

A consolidated industry structure:

c. consists of few companies that are in a position to determine industry price.

Jeffrey Ffeffer believes that a manager's power comes from his or her: a. ability to prioritize the well-being of the company over personal well-being. b. ability to be unemphatic toward the feelings and emotions of the subordinates. c. control over the important organizational resources. d. ability to cut overhead costs. e. personal rapport with the senior management.

c. control over the important organizational resources.

68. In the late 1800s, when the automobile was first manufactured, the automobile industry would have been considered a(n):

c. embryonic industry.

Members of a strategic group:

c. follow a business model that is similar to that pursued by other companies in the group.

Daryl works for Delta Corp. He is involved in all the important decision-making processes of the company and is also responsible for the overall performance of the company. In the context of strategic management, Daryl is most likely to be a . a. line manager b. functional manager c. general manager d. production supervisor e. project manager

c. general manager

In the context of strategic management of a company, have profit-and-loss responsibility for a product, a business, or the company as a whole. a. line managers b. functional managers c. general managers d. government regulators e. marketing managers

c. general managers

In the typical scenario planning exercise: a. managers entirely depend on employee feedback. b. managers try to come up with alternative plans when a business model has failed. c. managers formulate plans upon 'what-if situations about the future. d. managers do a 'postmortem' to understand what went wrong with a strategy. e. the corporate-level management sets targets for functional-level managers.

c. managers formulate plans upon 'what-if situations about the future.

Capabilities refer to a company's:

c. skills at using resources effectively.

Competitive advantage typically leads to:

c. superior profitability.

Julian was asked to examine the demographic forces facing his employer, a clothing manufacturer. Which of the following factors is Julian most likely to examine?

d. Age of the population

Which of the following is the organization's principal general manager? a. Line manager b. Marketing division head c. CFO d. CEO e. Sales manager

d. CEO

Which of the following cognitive biases occurs when decision makers allocate even more resources to a project if they receive feedback that the project is failing? a. Prior hypothesis bias b. Reasoning by analogy c. Illusion of control d. Escalating commitment e. Representativeness

d. Escalating commitment

Which of the following is NOT a barrier to entry?

d. High customer bargaining power

Which of the following statements is true about competitive advantage? a. It is unaffected by the strategies taken by the company. b. It is considered to be sustained when it lasts for three months. c. It exists only when the company's profitability is greater than the ten highest grossing firms in the world. d. It exists only when the company's profitability is greater than the average profitability and profit growth of its rivals. e. It is seldom affected by the business model of the company.

d. It exists only when the company's profitability is greater than the average

Which of the following support activities in the value chain refers to the transmission of physical materials from procurement through production and into distribution?

d. Logistics

Ford Motors developed the Explorer sports utility vehicle, the number I selling sports utility vehicle in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies?

d. Marketing and sales

Which of the following is currently an embryonic industry?

d. Nanotechnology

Ray, a toymaker, knits a stuffed unicorn for Belle. Which function of the value chain is illustrated in this scenario?

d. Production

______ refers to the investment that shareholders make in a company that cannot be recovered if the company fails and goes bankrupt. a. Profitability b. Shareholder value c. Debt d. Risk capital e. Dividend payments

d. Risk capital

A company, at its inception, states that its goal is "to provide the best customer service possible." Which of the following best describes this objective? a. The company's emergent strategy b. The company's corporate structure c. The company's HR strategy d. The company's mission statement e. The company's damage control plan

d. The company's mission statement

Which of the following determines the cost of goods sold?

d. The income statement

When shopping for clothing such as shirts and jeans, Tyrone only buys products from Eastern Clothing Company even if there are several other companies that offer similar products at lower prices. Tyrone's preference for Eastern Clothing Company demonstrates:

d. brand loyalty.

A company's mission: a. describes the marketing strategies the company intends to use to sell its products. b. outlines the manner in which employees and managers should conduct themselves. c. defines the manner in which strategies will be developed and attained. d. describes what the company does. e. describes the benefits offered to the shareholders.

d. describes what the company does.

Brand loyalty can be created by:

d. emphasizing high product quality

As an industry enters the shakeout stage:

d. excess productive capacity emerges.

Devil's advocacy: a. involves generating a plan and a counter-plan that reflects plausible conflicting courses of action. b. is an example of ivory tower planning. c. hides the possible perils of a recommended course of action. d. involves generating a plan, and a critical analysis of that plan. e. involves downplaying the problems that could result from implementing a particular plan.

d. involves generating a plan, and a critical analysis of that plan.

If economies of scale are an industry's primary entry barrier, a new entrant's major concern is:

d. its inability to produce in sufficient volume to match the cost advantages of established producers.

A baking company has different product ranges like whole-wheat pizzas for the diet-conscious and rich cookies for children and youngsters. The company is catering to different groups of customers known as:

d. market segments.

Demand reaches total saturation in the stage of the industry life cycle.

d. maturity

Benchmarking can be defmed as the practice of:

d. measuring a company against the products, practices, and services of some of its most efficient global competitors.

Holly owns a landscape company and is thinking about expanding her services to include outdoor water features (waterfalls, streams, ponds). If, before making this decision, she looks at the experience of similar fmns that have added outdoor water features, she is employing: a. cognitive bias. b. illusion of control. c. devil's advocacy. d. outside view. e. dialectic inquiry.

d. outside view.

Within a diversified company, the responsibilities of corporate-level strategic managers include: a. supervising production at the manufacturing units of the company. b. compiling sales reports, company costs, employee productivity and calculating the employee turnover rate. c. responding to employee complaints on a daily basis. d. providing leadership for the entire organization and allocating resources among its different business areas. e. maintaining records of transactions with suppliers.

d. providing leadership for the entire organization and allocating resources among its different business areas.

Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs. In which value chain activity do cost accountants work?

e. Company infrastructure

Karen, a manager at Libra Inc, had noticed that her subordinates were experiencing a lot of stress. After conducting a meeting with her subordinates, Karen realized that they were extremely overworked and daunted by close deadlines. Determined to reduce their stress, she introduced a new process that eliminated time-consuming activities and gave them more flexibility with regard to work timings. The action taken by Karen demonstrates which of the following aspects of emotional intelligence? a. Availability error b. Self-awareness c. Self-regulation d. Motivation e. Empathy

e. Empathy

Which of the following is not a way that companies can avoid failure?

e. Following rigid business processes

Which of the following statements is true about SWOT analysis? a. It does not encompass the analysis of an organization's external environment. b. It essentially results in the generation of one single strategy that deals with one particular internal function of an organization. c. It does not encompass functional-level strategies directed at improving the effectiveness of operations within a company. d. It essentially produces strategies that are incongruent with each other. e. It is a methodology for choosing between competing business models.

e. It is a methodology for choosing between competing business models.

Which of the following is an important attribute for a product from a quality-as-reliability perspective?

e. Performance

Many beverage manufacturers are noticing that the sales for packaged water and fruit-based beverages is increasing compared to carbonated drinks as customers are increasingly becoming health conscious. This change in customer preferences can be attributed to which of the following factors of the macroenvironment?

e. Social forces

arise when a customer invests time, energy, and money shifting from the products offered by one established company to the products offered by a new entrant.

e. Switching costs

Which of the following is NOT a determinant of the extent of rivalry among established companies?

e. The power of buyers

Which of the following is not true regarding a company's distinctive competencies?

e. They are shared by many firms in an industry.

According to Ghernawat, a strategic commitment is:

e. a company's dedication to developing a particular set of resources and capabilities.

A group of firms manufactures writing implements such as pens, pencils, and markers. This group should be referred to as a(n):

e. industry.

One of the basic building blocks of competitive advantage is:

e. innovation.

The intellectual property of an organization is a(n):

e. intangible resource.

As a barrier to new entry, absolute cost advantages can be based on:

e. superior production operations and processes due to accumulated experience, patents, or trade secrets.

Strategy formulation refers to the: a. task of executing corporate- and business-level plans. b. process by which strategies are put into action. c. task of designing organizational structures and control systems. d. task of implementing emergent strategies. e. task of analyzing an organization's external and internal environment and then selecting an appropriate strategy.

e. task of analyzing an organization's external and internal environment and then selecting an appropriate strategy.

Entry barriers in embryonic industries tend to be based on:

e. technological knowhow

The bargaining power of an industry's suppliers is greater when:

e. the industry is not an important customer to the suppliers.

The simplest measure of efficiency is:

e. the quantity of inputs that it takes to produce a given output.

Customer response time is:

e. the time taken for a good to be delivered or a service to be performed.

Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is:

$75