Exam 1: Chapters 1-4

9. The Resource Based View: Two Assumptions

1. Resource Heterogeneity 2. Resource Immobility

Three Approach to Organizational Strategy

1. Strategic Planning 2. Scenario Planning 3. Strategy as planned emergence

Scenario Planning

A formal, top-down approach. Asks "what if" questions: Top management envisions different scenarios and then they derive strategic responses.

Strategic Planning

A formal, top-down approach. Formulation is separate from implementation. Information flows one-way. (Board of Directors, CEO, CFO, COO, Management, Supervisors, employees.)

7. Which of the following best represents a product-oriented vision statement? A. "To be the world's most loved, most efficient, and most profitable airline."- Southwest B. "Transportation as reliable as running water, everywhere for everyone."- Uber C. "To give people the power to build community and bring the world closer together."- Facebook D. "We believe in free expression and think every voice has the power to impact the world."- Twitter

A. "To be the world's most loved, most efficient, and most profitable airline."- Southwest

7. ________ is associated with collecting, storing, and distributing the product or service to buyers. A. Distribution B. Operations C. Marketing and sales D. Supply chain management

A. Distribution

2. Which of the following external factors is a part of a firm's task environment? A. Entry of new firms in the industry. B. Sustainable economic growth. C. Levels of employment D. Innovation in process technology

A. Entry of new firms in the industry

9. Uber and Lyft are engaged in a bitter war that involves undercutting each other's prices and poaching drivers in order to increase their market shares. This would be an example of: A. Intensity of Rivalry B. Bargaining Power of Buyers C. The Threat of Substitution D. The Threat of New Entrant

A. Intensity of Rivalry

10. Economies of scale help a firm to provide a response to their competitors by: A. Reducing the threat of new entrants. B. Reducing the threat of substitution. C. Reducing the bargaining power of suppliers. D. Reducing the bargaining powers of buyers.

A. Reducing the threat of new entrants.

7. External stakeholders include everyone, except: A. Stockholders B. Customers C. Unions D. Suppliers

A. Stockholders

3. Underperformance relative to other firms in the same industry or the industry average results in a(n) ________ for a firm. A. competitive advantage B. competitive disadvantage C. competitive parity D. sustainable competitive advantage

B. Competitive disadvantage

Customer-oriented vision statements:

Allow companies to adapt to changing environments. Focus on problem solving for the customer.

Top-Down Strategic Planning (F.A.I.)

Analysis: ->Vision, Mission, and Values. ->External Analysis. ->Internal Analysis. Formulation: ->Corporate Strategy. ->Business Strategy. ->Functional Strategy. Implementation: ->Structure, Culture, and Control. ->Corporate Governance and Business Ethics.

4. Resources

Any assets that a firm can draw on. Examples: Cash, buildings, machinery, or intellectual property

2. Which of the following is not a component of internal analysis leading to competitive advantage? A. Capabilities B. Analysis of supplier power C. Tangible and intangible resources D. Core competencies

B. Analysis of supplier power

3. In 2020, Starbucks announced that strawless, sippy cup-style lids will now be standard for iced beverages at stores across the U.S. and Canada, replacing plastic straws. The main objective of this move is to prevent an estimated one billion straws a year from ending up in landfills. Starbucks changed the strategy as a response to which of the following external environmental factors? A. Political B. Ecological C. Economic D. Legal

B. Ecological

3. The mission statement of a typewriter manufacturing company is- "A typewriter in every office." What is wrong with this mission statement? A. It is too specific. B. It does not indicate how the company will achieve its goal. C. It is not future-oriented. D. It is not visionary.

B. It does not indicate how the company will achieve its goal.

6. If yesterday the value of one U.S. Dollar was equal to 1.2 Canadian Dollars and today the value of one U.S. Dollar is equal to 1.4 Canadian Dollars, what happened to the value of the Canadian Dollar in relation to the U.S. Dollar A. It is appreciated. B. It is depreciated

B. It is depreciated.

5. Google states: "Google will redefine the search engine industry by organizing information and making it accessible and useful universally." This is an example of a A. Vision statement B. Mission statement C. Value

B. Mission Statement

9. Dunkin Donuts has an average service time of about 3 minutes and 37 seconds, which makes it America's fastest drive-thru. This achievement is accredited to the well-coordinated relationship between which of the following primary activities? A. Only supply chain management and operations B. Operations, distributions, and marketing and sales C. Only operations and distribution D. Only operations and marketing and sales

B. Operations, distributions, and marketing and sales

4. General environmental factors can have both positive and negative impacts on various industries. For example, greater concern for health might have a ________ impact on the fitness industry (together with health clubs and gyms) and a ________ impact on the packaged food industry. These are called ________ impacts. A. Negative; Positive; Economic B. Positive; Negative; Sociocultural C. Positive; Negative; Technological D. Negative; Positive; Ecological

B. Positive; Negative; Sociocultural

1. Which of the following is the main reason for the failure of JCPenney? A. The top management team failed to analyze that their biggest weakness is the layout of their stores. B. The top management team failed to analyze that their strength lies in serving their most loyal customers. C. The top management team failed to analyze the actions of the competitors. D. The top management team failed to change the merchandise sold in the stores.

B. The top management team failed to analyze that their strength lies in serving their most loyal customers.

2. Which of the following is true regarding vision statements? A. Vision statements are more specific than mission statements B. Vision statements are more general than mission statements C. Vision statements are short-term as compared to mission statements D. Employees play an important role in formulating a vision statement

B. Vision statements are more general than mission statements.

3. Which of the following is not an example of organizational capabilities? A. outstanding customer service B. brand image C. effective logistic system D. ability to hire, motivate, and retain human capital

B. brand image

10. John and Jackie are working in the advertising department of a company as a manager and lead, respectively. They have both been asked by the top managers to create two different advertisements for a new product that will be launched next month, one emphasizing the quality of the product and the other on the price. This strategic decision-making technique represents A. devil's advocacy B. dialectic inquiry

B. dialectic inquiry

8. Mercedes-Benz aggressively pushed for product placement in Hollywood movies. This is an example of which value chain primary or support activity? A. primary activity: supply chain management B. primary activity: marketing and sales C. support activity: research and development D. support activity: information systems

B. primary activity: marketing and sales

11. Barriers to Imitation

Better expectations of future resource value. Path Dependence: Past decisions limit current options. Casual Ambiguity: Cause and effect are vague. Social Complexity: Social and business systems interact. Intellectual Property (IP) Protection

Strategy As Planned Emergence

Bottom-up (strategic initiatives emerge) and tio-down (evaluated and coordinated by management). Begins with a strategic plan, but it is less formal.

6. Which of the following best represents a customer-oriented vision statement? A. "To be the fastest airline in the world." B. "We are in the computing business." C. "Education for all children in the nation." D. "To create great-tasting beverages."

C. "Education for all children in the nation."

4. Which of the following will most likely be considered as a core competency of Airbnb? A. Check and compare reviews to help guests make an informed selection B. Compare alternatives to help guests to book better accommodation with more amenities like free Wi-Fi, gym/fitness center, free parking, etc. C. A relatively cheaper and spacious accommodation for the guest D. A guarantee to the guests to get what they have paid for

C. A relatively cheaper and spacious accommodation for the guest

8. Internal stakeholders include everyone, except: A. Board members B. Employees C. Banks D. Stockholders

C. Banks

8. An automobile manufacturer acquires a rental car company. This is an example of A. Product Differentiation B. Economies of Scale C. Forward Integration D. Backward Integration

C. Forward Integration

6. Groupon connects subscribers with local merchants and offers online coupons. Which of the following is a reason that competitors are able to limit its growth? A. Its core capability is not easily imitated B. Not many firms possess the same capability C. Its core capability is easily imitated D. There are few equivalent capabilities

C. Its core capability is easily imitated

5. Which of the following is typically an economic responsibility of a firm? A. donating resources toward community development B. providing affordable health insurance to the employees and their dependents C. repayment of debt to the creditors D. helping a nation increase its import of goods and services

C. Repayment of debt to the creditors.

1. ABC Industries launched a new phone unsuccessfully in 2019 because their new model had fewer new features as compared to the phones launched by their competitors in the same year. Which step of the PESTEL framework was not given due diligence by the ABC Industries A. Monitoring B. Evaluating C. Scanning

C. Scanning

5. XYZ retailer, an upscale one-stop shop for all pet supply needs, suffered serious failures on opening the first store in New York. The management used a technique to help it identify possible future strategies. This technique involved gathering information related to income and affluence level of the residents of New York. What factor are they considering? A. Economic B. Legal C. Sociocultural D. Ecological

C. Sociocultural

9. A company decides to pay excessive bonuses to its high-performing employees. This decision might concern which of the following stakeholder groups most directly? A. Government B. Suppliers C. Stockholders D. Creditors

C. Stockholders

8. A technology company is operating in a highly volatile environment with new players entering into the market, changing customers' tastes and preferences, and the government formulating new laws regularly. Which of the following strategy plans might not be suitable for such a company? A. Scenario planning B. Strategy as planned emergence C. Strategic planning

C. Strategic planning

2. _______ is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. A. Analyze B. Performance C. Strategy D. Positioning

C. Strategy

7. Apple Inc. is expected to hit the market with their new electric vehicle in 2024 with the next level battery technology to extend range and efficiency. Big players in the EV industry like Tesla would face which of the following threat(s) if Apple Inc. is able to get the car on the road by 2024? A. The threat of new entrants B. The threat of substitution C. The threat of substitution and new entrant

C. The threat of substitution and new entrant.

4. Jeff Bezos, Founder and Ex-CEO of Amazon, named the company 'Amazon' after Amazon river, the largest river on the planet, as he wanted to make the company earth's largest bookstore. This example can be best stated as the strategic leaders' first step towards deciding A. the mission of the company B. organizational value C. the vision of the company

C. The vision of the company

1. ________ are considered the ethical standards and norms that govern the behavior of individuals within a firm. A. Vision Statements B. Mission Statements C. Values

C. Values

Vision

Captures an organization's aspiration. Spells out what the organizations wants to accomplish. Identifies the long-term objective. An effective vision: Is expressed as a statement. Should be forward-looking and inspiring.

13. Barriers to Imitation: Casual Ambiguity

Cause and effect are vague.

6. Supplier stakeholders are concerned with A. timely payment of wages. B. safe working conditions. C. increase in profits. D. an assurance of a continued relationship with the firm.

D. An assurance of a continued relationship with the firm.

10. If the top managers of a company decide to withhold taxes, which of the following stakeholder groups might be the most concerned? A. Suppliers B. Stockholders C. Creditors D. Government

D. Government

4. A company is operating in Los Angeles and has 36 employees. The hourly minimum wage in Los Angeles is $14.25 for employers with 26 or more employees and $13.25 for employers with 25 or fewer employees. This company is paying $12 per hour to the shop floor workers. This company is not satisfying which of the following responsibilities? A. economic responsibilities B. philanthropic responsibilities C. ethical responsibilities D. legal responsibilities

D. Legal Responsibilities

1. Which of the following is not an important component of the strategic management process? A. Formulation B. Analysis C. Implementation D. Measurement

D. Measurement

10. A travel agent is planning an itinerary that includes transportation, accommodations, and activities based on the budget, preferences, and travel date requirements of the guests. In terms of the value-chain analysis, this is an example of which of the following primary activity? A. primary activity: marketing and sales B. primary activity: distribution C. primary activity: supply chain management D. primary activity: operations

D. primary activity: operations

5. Which of the following is not an example of intangible resources? A. a culture of team building, trust, and effective communication B. a reputation for fast customer service C. patents for technological invention D. ramp for lifting heavy items

D. ramp for lifting heavy items

Power

The ability to influence others to do things. Formal authority (their position), informal authority (persuasion).

6. Activities

Distinct and fine-grained business process (order-taking, invoicing, etc.)

15. Reinvest, Hone, and Upgrade

Dynamic Capabilities: A firm's ability to adapt to resources over time. Resource Stocks: The firm's current level of intangible resources. New product development, engineering, expertise, innovation capability. Resource Flows: The firm's level of investments to maintain or build a resource.

Values

Ethical standards and norms. Govern the behavior of individuals. Provide stability to the strategy. Serve as guardrails to keep the company on track.

Product-oriented vision statements:

Focus on improving existing products and services. Force managers to take a more myopic view.

3. Resources, Capabilities, and Activities

Help organizations develop core competencies.

Mission Question

How do we accomplish our goals?

16. The Value Chain

Internal activities a firm engages in when transforming inputs into outputs. Through primary and support activities. Each activity adds incremental value and incremental costs. Primary Activities: Firm activities add value directly. Transform inputs into outputs. Focused on moving from raw materials, through production phases, to sales and marketing, and finally customer service. Support Activities: Firm activities that add value indirectly. Necessary to sustain primary activities.

9. A traditional top-down strategic planning process typically begins with A. strategic leaders adjusting a company's vision and mission based on environmental analysis. B. employees who have close contact with customers taking autonomous actions. C. functional managers formulating functional strategies for their respective departments. D. employees at the operational level identifying problems within an organization.

NOT A. strategic leaders adjusting a company's vision and mission based on environmental analysis.

5. Capabilties

Organizational managerial skills. Examples: Structure, routines, and culture.

12. Barriers to Imitation: Path Dependence

Past decisions limit current options.

14. Barriers to Imitation: Social Complexity

Social and business systems interact.

Strategic Leadership

Successful use of power and influence directing the activities of others when pursuing an organization's goals.

8. The Resource Based View: Resource

Tangible resources have physical attributes and are visible. Examples: Labor Capital Land Buildings Plant Equipment Supplies Intangible resources do not have physical attributes and are invisible. Examples: Culture Knowledge Brand Equity Reputation Intellectual Property (Patents, designs, copyrights, trademarks, trade secrets)

7. The Resource Based View

This model aids in identifying core competencies. Resources are key to superior firm performance.

1. Internal Analysis

Unique resources, capabilities, and competencies (required for sustainable competitive advantage). Firms identify what they can do.

2. Core Competencies

Unique strengths that are embedded deep within a firm. Allows the firm to differentiate from rivals. Results in creating higher value for the customer or Results in products and services offered at a lower cost. Expressed through structures, processes, routines.

Values Questions

What commitments do we make? What safeguards do we put in place? How do we act both legally and ethically as we pursue our vision and mission?

Vision Question

What do we want to accomplish ultimately?

Mission

What organizations do. ->The products and services it will provide. -> The markers in which it will compete. Defines how the vision is accomplished.

10. The VRIO Framework

What resource attributes underpin competitive advantage? To be the basis of a competitive advantage, a resource must be: Valuable Rare Costly to Imitate Organized to capture the value of the resource Jay Barney was a pioneer of this framework.