MAN 4720 Exam 2 Study Guide
Which of the following foreign entry modes requires the highest level of investment in terms of capital and other resources and allows for a high level of control? - exporting - franchising - joint ventures- acquisitions
acquisitions
Which of the following is an example of related-constrained diversification? - a consumer electronics company launching its own line of designer apparel and accessories - an automobile company that manufactures petrol cars expanding into the diesel car industry - a grocery store leveraging its extra shelf space by stocking kitchen appliances - a company dealing in home appliances hiring another company to carry out its marketing strategies
an automobile company that manufactures petrol cars expanding into the diesel car industry
Janet is a marketing and sales employee at 4-Ever-Foods Inc. She has invented a new way to process and pack the company's food products that would avoid the usage of chemical preservatives. Which of the following terms best describes Janet? - a category captain - an intrapreneur - a venture capitalist - a franchised dealer
an intrapreneur
In a typical industry life cycle, an industry immediately moves to the ________ after the introduction stage. - maturity stage - growth stage - shakeout stage - decline stage
growth stage
The Bluth Company is a condominium-building company that is based in the country of Veritas. It sells high-priced homes to consumers in Veritas as well as to consumers in other countries. It has extremely high brand loyalty. The industry it operates in is characterized by low pressure for local responsiveness and low pressure for cost reductions. In this scenario, The Bluth Company most likely pursues a(n) _________ strategy. - international - localization - multi-domestic - transnational
international
"The process of joining two independent companies with their consent to form a combined entity on a permanent basis" is the definition of a - joint venture. - takeover. - merger. - cartel.
merger
A(n) ________ is used to describe the combining of two companies that are equal in size. - merger - joint venture - acquisition - co-opetition
merger
When a firm reconfigures components of an existing technology to enter into new markets, they are said to be employing - radical innovation - incremental innovation - architectural innovation - disruptive innovation
Architectural innovation.
Delish Corp is a chain of supermarkets that sells its fruits and vegetables at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Delish Corp adopted in this scenario? - Delish Corp is probably pursuing a differentiation strategy. - Delish Corp is probably pursuing a cost-leadership strategy. - Delish Corp is probably pursuing a market penetration strategy. - Delish Corp is probably pursuing a growth strategy.
Delish Corp is probably pursuing a differentiation strategy.
Which of the following is an advantage of using licensing or franchising as a foreign entry mode? - Licensing or franchising reduces a firm's exposure to loss of reputation. - Either one reduces a firm's exposure to loss of intellectual property. - Licensing or franchising allows for high levels of control. - Either one requires low capital investments.
Either one requires low capital investments.
_______ is best described as the process by which people undertake economic risk to innovate—to create new products, processes, and sometimes new organizations - crowdsourcing - headhunting - cannibalization - entrepreneurship
Entrepreneurship
Radical innovation occurs when an existing firm recombines its ________ with a new stream of knowledge for ________. - existing knowledge; new markets - new knowledge; existing markets - competitor's analysis; industry penetration - value chain; older markets
Existing knowledge; new markets
A(n) ________ occurs when a firm steadily improves an existing product thereby targeting an existing market while using existing technology .- radical innovation - incremental innovation - process innovation - architectural innovation
Incremental innovation
Which of the following statements accurately brings out the difference between economies of scale and learning effects? - While there are no diseconomies to scale, there are diseconomies to learning. - Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased. - Firms experience economies of scale when output increases, and they experience learning effects when output decreases. - Economies of scale reduce cost per unit, whereas learning effects increase cost per unit.
Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.
A large conglomerate is deciding on the range of new products and services it can offer to its customers to further expand its operations. This decision determines the firm's - level of diversification - vertical integration - geographic scope - horizontal integration
Level of diversification
________ are described as the benefits from locating value chain activities in prime geographies for a specific activity. - polycentric innovation strategies - communities of learning - location economies - liability of foreignness
Location economies
Redwood Corp. follows a business model in which the performance of the company is not only based on how much profits were generated, but also on how the community, in general, benefited from its operations. Thus, the company under its "Plant a Life" campaign promises to plant a tree with every customer purchase. Which of the following terms best describes the performance valuation model of Redwood Corp.? - crowdsourcing - social entrepreneurship - offshoring - corporate intrapreneurship
Social entrepreneurship
Fones Inc. and Speed Dial Corp. are two competitors in the mobile phone market. The cost incurred by each company to manufacture smartphones is $200 per unit. Although both the companies sell their smartphones at the same price, Speed Dial Corp. has a larger market share in the laptop industry. What does this imply? - Speed Dial Corp. has a cost advantage over Fones Inc. - Fones Inc. has a competitive advantage over Speed Dial Corp. - Speed Dial Corp. has been able to offer more perceived value than Fones Inc. - Fones Inc. has created a higher value gap than Speed Dial Corp.
Speed Dial Corp. has been able to offer more perceived value than Fones Inc.
Which of the following statements is true of the growth stage in the industry life cycle? - The objective of firms during this stage is to pursue a harvest strategy. - The prices begin to fall during this stage when compared to the introduction stage. - The type of buyers during this stage consists of the late majority. - The basis of competition tends to move away from process innovations toward product innovations.
The prices begin to fall during this stage when compared to the introduction stage.
According to the crossing-the-chasm framework, a firm's transition between the different parts of the industry life cycle is difficult because - the number and size of competitors change throughout the industry life cycle. - the firm tends to follow a predictable industry life cycle. - there are frequent changes in the supply and demand sides of the market throughout the industry life cycle. - there is a big gulf separating the early adopters from customer segments that make up the mass market.
There is a big gulf separating the early adopters from customer segments that make up the mass market.
Which of the following statements is typically true of early adopters? - They enter the market in the maturity stage of the industry life cycle. - They appreciate new technology that can add value to their personal and professional lives. - They make up the mass market together with the technology enthusiasts. - They enjoy using beta versions of products and providing free suggestions to companies.
They appreciate new technology that can add value to their personal and professional lives.
While the industry for tablet computers is in the growth stage, the laptop industry is in its shakeout stage. What does this imply? - The tablet industry is ahead of the laptop industry in the industry life cycle. - While the market demand for tablets will be high, the demand for laptops will be limited. - The number of competitors entering the laptop industry will be more than those entering the tablet computers industry. - While competition for the tablet industry is primarily based on price, it is not so for the laptop industry.
While the market demand for tablets will be high, the demand for laptops will be limited.
The rationale behind related diversification is to - limit learning-curve and experience-curve effects. - benefit from economies of scale and scope. - obtain only 10 percent of the revenues from the primary business activities. - avoid sharing resources and competencies across different business lines.
benefit from economies of scale and scope.
Supreme Coffee Roasters is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Cheap Beans, in contrast, is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Vale's Coffee Inc. has found a balance between these two strategic groups by using automated ordering to free up its employees to work as master baristas and bakers, thus focusing on creating excellent products. It charges a price slightly above that of Cheap Beans. In this scenario, Vale's Coffee is following a - liquidation strategy - product diversification strategy - market penetration strategy - blue ocean strategy
blue ocean strategy.
In a focused differentiation strategy, a firm seeks to - offer low-priced products and services with a narrow focus on a niche market. - create higher customer value than the competitors in different segments of a mass market. - deliver products or services with unique features to a specific, narrow part of the market. - focus on reducing the value gap to differentiate itself from the competitors.
deliver products or services with unique features to a specific, narrow part of the market.
According to Porter's diamond of national competitive advantage, factor conditions are best described as a country's - endowments in terms of natural, human, and other resources. - cultural and social environment that influence its economic health. - ethnographic conditions and trends that affect its growth and development. - level of political and economic integration with other countries.
endowments in terms of natural, human, and other resources.
Tyrell Corporation is an electronics company based in the country of Palmia. The company has manufacturing facilities in four other countries where labor costs are low. It also has its research centers in three other countries because these countries offer best-of-class capabilities. However, Tyrell Corporation does not offer much product differentiation, which means that price is the main competitive weapon. In this scenario, Aaron Inc. most likely implements a __________ strategy. - transnational - global-standarization - multidomestic - global matrix
global-standardization
"A process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs" is the definition of - traditionalism - privatization - globalization - nationalism
globalization.
There exist important trade-offs between value creation and low cost because value creation and cost tend to be - negatively correlated - positively correlated - independent of each other - inversely related
positively correlated
Amazon expanded its single-product business by leveraging spare capacity into cloud computing and by offering its Kindle line of tablet computers and Echo line of digital assistants. This is an example of - unrelated diversification - related-linked diversification - taper integration - backward vertical integration
related-linked diversification.
LMP Automotive Holdings Inc., a large multinational conglomerate, has hired an external consultant to process and audit its payroll. This allows the company to focus on manufacturing and marketing activities rather than developing and maintaining its own human resource management systems. Which of the following alternatives to vertical integration has LMP Automotive Holdings Inc. adopted? - crowdsourcing - forward integration - backward integration - strategic outsourcing
strategic outsourcing
Which of the following factors best helps capture administrative and political distances? - the wealth and per capita income of consumers - the linguistic and religious differences between two countries - the physical size and topography of a country - the absence or presence of weak legal and financial institutions
the absence or presence of weak legal and financial institutions
Which of the following strongly affects the cultural distance between two countries? - the difference in consumer income in the two countries - the languages spoken in each country - the status of financial institutions in each country - the transportation networks connecting the two countries
the languages spoken in each country
There are several decisions that strategic managers must make when developing corporate-level strategy. Which of the decisions below are not relevant when considering corporate-level strategy? - what range of products and services should be offered - where, globally, the company should compete- what stages of the industry value chain to participate in - which strategic position (differentiation or cost leadership) to engage in
which strategic position (differentiation or cost leadership) to engage in
Which of the following best illustrates a dominant-business firm? - Alpine Income Property Trust is a company whose multiple strategic business units contribute equally to the total corporate revenue. - 89bio Inc. is a luxury brand that derives 90 percent of its revenues from its apparel line and 10 percent of its revenues from its premium furniture business unit. - ECMOHO Ltd. is a company whose revenues solely come from selling automobiles. - Fanged Network Group is a firm that derives 50 percent of its revenues from its steel unit and another 50 percent from its automobile businesses.
89bio Inc. is a luxury brand that derives 90 percent of its revenues from its apparel line and 10 percent of its revenues from its premium furniture business unit.
Which of the following statements about patents is not true? - A patent over a product translates into a permanent monopoly position. - A patent can be enforced in court. - A patent is a form of intellectual property. - A patent can be obtained when an invention is useful, novel, and non-obvious.
A patent over a product translates into a permanent monopoly position.
Which of the following statements is true? - Platform businesses have a major weakness: they are not very successful at value creation. - A platform business exists to help make matches among users and facilitate the exchange of goods, services or social currency. - A platform business usually must rely on pipeline businesses to connect it with consumers. - Platform businesses are dependent on electronic media and thus are a new development in the business world.
A platform business exists to help make matches among users and facilitate the exchange of goods, services or social currency.
Which of the following examples would most likely limit a firm's growth? - A social entrepreneur wants to combine large profits with a socially responsible approach. - A social entrepreneur makes conservation of the environment the primary goal of his firm. - An entrepreneur sees retraining managers to eliminate principal-agent problems as a main goal of her firm. - An entrepreneur views joining a conglomerate as an important opportunity to reduce risks.
A social entrepreneur makes conservation of the environment the primary goal of his firm.
Which of the following best illustrates a strategic alliance? - ACME Inc., a large conglomerate, taking over a startup company against its will - the electronics subsidiary unit of Holsten Corp. deploying a few of its human resources to the automobile subsidiary of the company - All Pharma Inc. teaming up with a research company to invent and market breakthrough vaccines - EZ Clothes Inc. taking over one of its fabric suppliers in a less developed nation
All Pharma Inc. teaming up with a research company to invent and market breakthrough vaccines
What happens in the third phase of alliance management? - Alliance partners choose an appropriate governance mechanism. - The incumbent firm designs the alliance. - The firm initiating the alliance selects its partner. - Alliance partners make relation-specific investments.
Alliance partners make relation-specific investments.
________ is best described as the changes in an industry value chain that involve moving ownership of activities upstream to the originating (inputs) point of the value chain. - disruptive innovation - corporate divestiture - reverse engineering - backward vertical integration
Backward vertical integration
While SMART Tech Inc. incurs $350 to manufacture a laptop, its competitor, Better Electronics Inc., incurs $300. However, laptops of both the companies have been able to create the same value among customers. From the given scenario, it can be inferred that - SMART Tech has a competitive advantage over Better Electronics. - SMART Tech is a cost leader when compared to Better Electronics. - Better Electronics and SMART Tech share a differentiation parity. - Better Electronics can charge a higher price for its laptops.
Better Electronics and SMART Tech share a differentiation parity.
Which of the following innovations below is said to invades an existing market from the bottom up by leveraging novel technologies in order to penetrate existing markets? - disruptive innovation - architectural innovation - radical innovation - incremental innovation
Disruptive innovation
Japanese carmakers first introduced small fuel-efficient cars and then leveraged their low-cost and high-quality advantages into high-end luxury segments, dominated by brands such as Lexus, Infiniti, and Acura. This initiative best illustrates a(n) - disruptive innovation - incremental innovation - radical innovation - progressive innovation
Disruptive innovation.
Stuart bought his laptop and smartphone when these products had just entered their respective growth stages. More than the technological sophistication of these products, it was the idea that these products would allow him to multitask and work when traveling that drove him to make his purchase decision. Which of the following customer segments does Stuart best represent? - technology enthusiasts - early adopters - late majority - laggards
Early adopters
________ is how firms are able to source supplies at lower costs, to learn new competencies, and to further differentiate their products and services overseas. - domestic outsourcing - globalization - business-level strategy - an equity-based alliance
Globalization
Lillian, a real estate agent, is selling a moderately priced house in a subdivision. She knows from her uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a process that creates a very strong odor that permeates the surrounding neighborhood. A buyer, who is unaware of the type of factory under construction, makes an offer on one of the houses Lillian is selling, and within a short time, the deal goes through. What does this scenario best illustrate? - network effects - experience-curve effects - principal-agent problems - information asymmetries
Information asymmetries
________ is best described as the process of transformation of an idea into a new product or process, or the modification and recombination of existing ones. - invention - direct imitation - bootstrapping - lean manufacturing
Invention
Relaxicab Inc. is a 100-year-old, multinational enterprise (MNE). Which of the following activities would the company most likely have been involved in during the stage of Globalization 2.0? - Relaxicab would have restricted all its business activities to its home country. - It would have ventured into foreign markets essentially by exporting goods. - Relaxicab would have organized itself as a global collaboration network with the help of internet technologies. - It would have increased its local responsiveness to country-specific circumstances by duplicating business functions overseas.
It would have increased its local responsiveness to country-specific circumstances by duplicating business functions overseas.
Which of the following statements is true of local responsiveness? - It helps reinforce a cost-leadership strategy at the business level. - Local responsiveness generally entails higher costs. - It reduces the differentiation of products and services. - Local responsiveness forms the basis for the globalization hypothesis.
Local responsiveness generally entails higher costs.
If a pharmaceutical company develops a first-of-its-kind vaccine to prevent HIV/AIDS and thus creates a whole new market for the product (non-infected civilians), it would be a(n) _________ innovation. - radical - incremental - disruptive - architectural
Radical
Which of the following best illustrates horizontal integration? - CHOAM Autos Inc. sets up its own component-part manufacturing units to have strong control over production. - Soylent Corporation sets up its own retail stores to sell its skincare products directly to customers rather than selling them through large departmental stores. - Rich Industries Inc. acquires its competitor, Keenbean Electronics Inc., to gain access to its core competencies. - Sirius Cybernetics Corporation outsources its production to contract manufacturers in labor-intensive countries.
Rich Industries Inc. acquires its competitor, Keenbean Electronics Inc., to gain access to its core competencies.
Which of the following statements is true of the real-options perspective? - The approach obligates the incumbent firm to make continued investments when demanded by its partner. - The approach fails to provide the incumbent firm a hedge against uncertainty. - The approach involves making large investments at the end of a project, irrespective of whether the project is successful or not. - The approach allows the incumbent firm to obtain additional information at predetermined stages.
The approach allows the incumbent firm to obtain additional information at predetermined stages.
The executives of Anaplan Inc., a large conglomerate, are making decisions on the stages of the industry value chain the firm must participate in, the range of products and services it should offer, and the global markets it should compete in. What are the executives primarily determining? - the firm's economies of scale - the boundaries of the firm - the firm's chain of command - the absorptive capacity of the firm
The boundaries of the firm
Which of the following is a feature of Logitech as a global collaboration network? - It has been able to operate as a multinational company with self-contained operations in a few key countries. - Logitech has been able to keep its knowledge flow one-way, from its domestic headquarters to international outposts. - The company has been able to organize work continuously because its teams in different locations around the globe can work 24/7. - It has been unable to keep its costs low because of its centers of expertise that are spread across the globe.
The company has been able to organize work continuously because its teams in different locations around the globe can work 24/7.
How are the early majority and late majority different in their attitudes toward technology? - The early majority is very concerned with what new technology can do for them; the late majority is not. - The early majority is confident in their ability to master the new technology; the late majority is not. - The early majority is concerned that many new technologies will fade away; the late majority is not. - The early majority is strongly influenced by the endorsements of others; the late majority is not.
The early majority is confident in their ability to master the new technology; the late majority is not.
While the industry for 5G compatible devices is in the introduction stage, the industry for 3G compatible devices are in the maturity stage. What does this imply? - The market for 3G compatible devices has reached its maximum size, whereas the market for 5G compatible devices is still small in size. - The 5G compatible devices industry will focus on process innovation, whereas the 3G compatible devices industry will focus on product innovation. - The 3G compatible devices is likely to focus on achieving market acceptance, while the 5G compatible devices industry is likely to focus on the harvest strategy. - The 5G compatible devices industry will focus on pursuing an integration strategy, while the 3G compatible devices industry will focus on pursuing a differentiation strategy.
The market for 3G compatible devices has reached its maximum size, whereas the market for 5G compatible devices is still small in size.
Which of the following is a disadvantage faced by first movers in an industry? - They will have no access to intellectual properties such as critical patents .- They cannot benefit much from network effects. - They cannot benefit from learning and experience curve effects like the late entrants. - They will have to find distribution channels and complementary assets.
They will have to find distribution channels and complementary assets.
Which of the following is the best example of a platform business? - McDonald's restaurants - L.L. Bean clothing retailers - Coca Cola soft drink producer - Uber ride-hailing services
Uber ride-hailing services
In developed countries, the industry for thumb drives is in the maturity stage, and the industry for floppy disks is in the decline stage. What does this imply? - While the thumb drive industry has reached its maximum market size, the market size for floppy disks is small and contracting. - The industry structure for floppy disks is that of perfect competition, whereas the industry structure for thumb drives is monopolistically competitive. - The number of new entrants in the floppy disks industry will be more when compared to the industry for thumb drives. - While the buyers of floppy disks can be categorized under early majority, the customers of thumb drives can be categorized under late majority.
While the thumb drive industry has reached its maximum market size, the market size for floppy disks is small and contracting.
Which of the following best illustrates backward vertical integration? - an apparel company launching its line of premium wrist watches - a supplier of plastic bottles launching his or her own brand of sparkling water - a shoe brand outsourcing its production unit to manufacturers in less developed nations - a chocolate manufacturing company setting up its own cocoa plantations
a chocolate manufacturing company setting up its own cocoa plantations
The management at Fast Autos Inc. and All Start Automobiles Inc. realized that by combining the two entities, the stakeholders of both the companies would benefit. Their core competencies would act as complementary assets to each other. Consequently, All Start Automobiles joined with FastAutos to form a combined entity called Just All Start Inc. Which of the following does this scenario best illustrate? - a hostile takeover - a merger - a franchisee arrangement - a cartel
a merger
Swiss-based Nestlé, the largest food company in the world, is well known for customizing its product offerings to suit local preferences, tastes, and requirements. Which of the following strategies does the company pursue? - a "one product, multiple markets" strategy - a global-standardization strategy - a multidomestic strategy - a cost-reduction strategy
a multidomestic strategy
There are several benefits of horizontal integration. Which of the following below is not a benefit? - reducing competitive intensity - access to new marketing and sales divisions - lowering costs - increasing differentiation
access to new marketing and sales divisions
In order to rejuvenate its floundering product lineup, Disney - acquired Pixar. - merged with Lucasfilm. - outsourced its movies to Lucasfilm. - purchased Pixar's graphic display systems.
acquired Pixar.
Builder's Square, a do-it-yourself home improvement store recently purchased Tiny Tool Inc, a smaller incumbent. This would be best described as a(n) - acquisition - merger - equity alliance - strategic alliance
acquisition
The purchase or takeover of one company by another is a(n) - acquisition - merger - cartel venture - joint venture
acquisition
Trek Inc., a large conglomerate, took over a small startup company that had made some breakthrough innovations in the field of telecommunications. This purchase would help Trek to gain access to the startup company's superior technology and human capital. This transaction is an example of a(n) - acquisition - affiliate leadership - joint venture - cartel
acquisition
Highly diversified firms experience a diversification discount in the stock market because they - cannot leverage financial economies. - are unable to create additional value. - cannot influence costs. - are unable to overcome institutional weaknesses in emerging economies.
are unable to create additional value.
If costs are equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm - can charge a premium price for its products and services. - has achieved a competitive parity in its chosen industry. - has lost its competitive advantage to its competitor. - can adopt a cost-leadership strategy.
can charge a premium price for its products and services.
The local real estate companies in a city have joined together and arranged a "Property Fair." The sponsors will equally share the expenses of the event. Although many companies compete against each other, they have joined together because the medium will help the companies market themselves through a dedicated forum at an extremely low cost. This arrangement is best referred to as - co-opetition - merging - a cartel - bootstrapping
co-opetition
There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is- -adding unique features that turn standard commodities into differentiated products. - combining experience-based learning and process innovation to move onto a steeper learning curve. - creating personalized customer service in order to minimize price sensitivity among customers. - shifting to small-scale production processes in order to create highly customized products.
combining experience-based learning and process innovation to move onto a steeper learning curve.
Global strategy is a firm's quest to gain a(n) ________ when competing against foreign companies around the world. - strategic alliance - absolute advantage - competitive advantage - greenfield operation
competitive advantage
The strategic foundations of the globalization hypothesis are based primarily on - local responsiveness - cost reduction - product differentiation - superior customer service
cost reduction
Oberlo Autos competes against the global leaders in the automobile industry by developing and selling acceptable quality vehicles at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Oberlo Autos applying in this scenario? - differentiation strategy - product diversification strategy - cost-leadership strategy - liquidation strategy
cost-leadership strategy
Firms pursuing a cost-leadership strategy seek to - create higher value for customers and offer premium pricing - keep their cost structures at the same or similar levels as that of the competitors. - deliver products or services at a lower cost than competitors. - gain competitive advantage by reducing the value gap.
deliver products or services at a lower cost than competitors.
The viability of a differentiation strategy is severely undermined when the - difference between perceived value and costs is significant. - focus of competition shifts to value-creating features rather than price. - differential appeal is based more on intangible resources than tangible resources. - differentiated products become commoditized throughout the industry.
differentiated products become commoditized throughout the industry.
A strategic alliance has the potential to help a firm gain and sustain a competitive advantage when it joins resources and knowledge that are -common in the industry. - inexpensive to acquire. - less differentiated. - difficult to imitate.
difficult to imitate
ACME Inc. has retained you to review their low-cost strategy for their company. Based on several consultations with the client, you realize that their per-unit costs are actually increasing as their business grows and expands. You conclude that this firm is experiencing - diseconomies of scale - economies of scope - diseconomies of scope - economies of scale
diseconomies of scale
When Pluralsight Products planned to start its operations in Amerigo, an emerging nation, it realized that it would have to set up its own distribution channels. This would be a risky and expensive strategic move. The company had an option of hiring a small supply chain management company, Elastic Logistics, to reach its ultimate customers. However, this would require Elastic Logistics to make huge investments, which would be of no use to it if Pluralsight Products decided to exit the market. Thus, to gain Elastic Logistics' confidence, Gilded Products purchased 40 percent of the stock of Elastic Logistics. What does this scenario best illustrate? - equity alliance - franchising - licensing - venture capitalism
equity alliance
In the ________, firms change the underlying technology while holding cumulative output constant. - learning curve - experience curve - minimum efficient scale - maximum efficient scale
experience curve
Prestige Worldwide Inc. owns coffee plantations in Brazil. The company trades its coffee produce directly with coffee merchants in foreign markets who later resell and distribute it throughout their country. In this scenario, Prestige Worldwide's activities best illustrate - a greenfield operation - a strategic alliance - exporting - importing
exporting
Rekall Autos Inc., an automobile company based in the country of Springfield, made a capital investment of $400,000 to set up production units and distribution channels in the country of Uganda from where it plans to access the Uganda market. Such investments are best known as - corporate leveraged buyouts - foreign direct investments - corporate venture capital investments - foreign exchange
foreign direct investments.
Zscaler started as an original equipment manufacturing firm (OEM) for brand-name mobile device companies. Later, it started offering a lineup of innovative and high-performance smartphones by acquiring BuildIt, a San Francisco-based design firm. This strategic move of Zscaler is known as - crowdsourcing - corporate divestiture - forward vertical integration - radical innovation
forward vertical integration.
Firms enter strategic alliances to - increase fixed and variable costs for itself and competitors. - have a positive effect on economic value creation. - encourage competitors to enter an underserved market. - prevent allies from discovering new information.
have a positive effect on economic value creation.
The cost-leadership strategy helps a firm achieve competitive advantage when it does which one of the following? -helps a firm create as large a gap as possible between the differential value created and the cost required - permits a firm to perform similar activities than its rivals with greater costs or lower value creation - permits a firm to perform different activities than its rivals with greater value creation - permits a firm to perform similar activities differently than its rivals with resulting lower costs
helps a firm create as large a gap as possible between the differential value created and the cost required
An inverted U-shaped relationship between the type of diversification and overall firm performance indicates that - high and low levels of diversification are generally associated with lower overall performance. - moderate levels of diversification fail to achieve additional value creation. - firms that compete in single markets benefit the most from economies of scope. - levels of vertical integration and overall firm performance share an inverse relationship
high and low levels of diversification are generally associated with lower overall performance.
To secure a strong strategic position in fast-growing emerging markets, which of the following corporate strategies did Kraft Foods primarily pursue by acquiring Cadbury? - strategic outsourcing - horizontal integration - unrelated diversification - focused differentiation
horizontal integration
The process of merging with a competitor at the same stage of the value chain is best described as - backward integration - forward integration - horizontal integration - taper integration
horizontal integration.
When a firm wishes to consolidate the industry in which they compete by merging with their competitors, they are engaging in - vertical integration - horizontal integration - a hostile acquisition - value chain enlargement
horizontal integration.
The starting point of the build-borrow-or-buy framework is management's - evaluation of the firm's existing internal resources to check if they are relevant. - comparison of the internal transaction costs against the external transaction costs. - identification of a strategic resource gap that will impede future growth. - evaluation of the alliance partners' compatibility and commitment.
identification of a strategic resource gap that will impede future growth.
Firms often consolidate industries through horizontal mergers and acquisitions to -solve principal -agent problems - lower their stock prices - increase their market power - motivate managers
increase their market power.
In the third step of the innovation process, a(n) - invention is imitated by competitors. - new idea is presented in terms of abstract concepts. - new idea is expressed as findings derived from basic research. - invention is commercialized by entrepreneurs.
invention is commercialized by entrepreneurs.
A non-equity alliance is the most common type of strategic alliance because - it is easy to initiate and terminate. - it produces the strongest ties between alliance partners. - it is based on partial ownership. - it is the least flexible of all strategic alliances.
it is easy to initiate and terminate.
An experience curve attempts to capture both - network effects and diseconomies of scale. - time compression diseconomies and mass customizations. - learning effects and process improvements. - economies of scope and network effects.
learning effects and process improvements.
North Carolina National Bank (NCNB) used its unique core competency of identifying, appraising, and integrating acquisition targets to be rebranded as Bank of America, one of the largest banks in the United States. This is an example of a firm - leveraging existing core competencies to improve current market position. - building new core competencies to protect new market position. - redeploying and recombining existing core competencies to compete in markets of the future. - building new core competencies to create and compete in markets of the future.
leveraging existing core competencies to improve current market position.
The additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances, are best described as a(n) - economic embargo - social cost - opportunity cost - liability of foreignness
liability of foreignness.
"A form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary" is the definition of - self-actualization - managerial myopia - self-efficacy - managerial hubris
managerial hubris.
A disadvantage associated with obtaining goods and services externally includes - high administrative costs due to increased bureaucracy. - low-powered incentives for an individual to work as an entrepreneur for the firm. - nontrivial search costs to be borne by the firm. - creation of economies of scope for the firm.
nontrivial search costs to be borne by the firm.
A blue ocean strategy typically allows a firm to - provide unique product or service features at a premium price. - add product features that raise costs without raising the perceived value. - reduce the value gap created by their products. - offer a differentiated product or service at low cost.
offer a differentiated product or service at low cost.
The best explanation of why Gulf airlines are giving U.S. legacy carriers stiff competition is that the Gulf carriers - offer more special deals to business travelers than do the U.S. legacy carriers. - have taken advantage of U.S. trade laws that allow for unrestricted foreign competition. - offer better service for lower costs than do the U.S. legacy carriers. - have built luxury hubs throughout Europe and the United States.
offer better service for lower costs than do the U.S. legacy carriers.
All of the following are tools primarily used to achieve cost-leadership except - controlling the cost of inputs - leveraging economies of scale - offering products at a premium price - learning by doing
offering products at a premium price.
Dr. Shetty is able to drive down the cost of complex medical procedures from $100,000 to $2,000 not by doing one big thing, but rather by doing a thousand small things. This approach focuses on driving down the cost of health care through - value of input factors - cost of input factors - process innovation - product innovation
process innovation.
As differentiation and cost-leadership are distinct strategic positions that require important trade-offs, it is - easy to build an ambidextrous organization. - best for firms to avoid pursuing a generic business-level strategy. - quite difficult to translate a blue ocean strategy into reality.- easy to increase value and lower cost at the same time.
quite difficult to translate a blue ocean strategy into reality.
Companies from wealthy countries tend to trade with other rich countries rather than poor countries because they can - benefit from economic arbitrage. - increase the per capita income of consumers in the poor countries. - replicate their existing business model more easily. - take advantage of the price differences between the two markets.
replicate their existing business model more easily
A firm that follows the differentiation strategy is protected from the threat of new entrants primarily due to its - diseconomies of scale - reputation for quality - low pricing - low cost per unit
reputation for quality.
When a blue ocean strategy is successfully formulated and implemented, investments in differentiation and low costs are not - value drivers but cost drivers - cost drivers but value drivers - complements but substitutes - substitutes but complements
substitutes but complements.
Strategic managers who are interested in diversifying their firm should always remember that - successful diversification should be aligned with and strengthen a firm's business strategy. - forward vertical integration is more successful than backward vertical integration. - a single business diversification strategy generally works best. - it's always a good idea to limit the size and scope of firms in order to achieve a competitive advantage.
successful diversification should be aligned with and strengthen a firm's business strategy.
GiftBasket.com has successfully created a higher perceived value in the e-commerce industry, though it offers the same products at slightly higher prices than the competitors. This has been mainly attributed to the company's easy-to-navigate website, simple return procedures, fast delivery, and cash on delivery option. Thus, the value driver for GiftBasket.com is its - lower value gap - superior customer service - economies of scale - availability of complements
superior customer service.
According to the CAGE distance framework, cultural distance most affects industries or products - that a foreign government views as vital to national security. - that are related to national and/or religious identity. - for which demand varies by income. - with low value-to-weight ratio.
that are related to national and/or religious identity.
Which of the following is an example of internal transaction costs? - the costs pertaining to setting up a shop floor - the costs associated with searching for suitable manufacturer contracts - the costs associated with negotiating prices with a business consultancy - the costs linked to outsourcing payroll maintenance
the costs pertaining to setting up a shop floor
According to the CAGE distance framework, what does cultural distance represent? - the cultural disparity between an internationally expanding firm's home country and its targeted host country - the difference between a firm's organizational culture and its competitor's organizational culture - the cultural disparity between the employees of two companies in a joint venture - the geographical distance between two countries that have similar national cultures
the cultural disparity between an internationally expanding firm's home country and its targeted host country
Which of the following is an example of explicit knowledge? - the creative ability of a manager to recognize potential business opportunities - the findings of a research published in a scientific journal - the decision-making capability that is intrinsic to an employee - the entrepreneurial skills of a manager
the findings of a research published in a scientific journal
Which of the following is one of the reasons that firms make acquisitions? - to shift the industry structure from oligopoly to perfect competition - to move up a learning curve - to standardize their product and service offerings and reduce the levels of differentiation - to gain access to a new capability or competency
to gain access to a new capability or competency
Which of the following was one of the primary reasons why Adidas acquired Reebok? - to reduce the levels of differentiation - to gain competitive advantage - to gain the advantages of vertical integration - to overcome a competitive disadvantage
to overcome a competitive disadvantage
Which of the following best illustrates human-asset specificity? - investing in drilling equipment to drill through any commercial metal - training employees on how to operate a customized furnace - using standard casting machines in industrial manufacturing - instructing employees on how to operate a standard MRI scanner
training employees on how to operate a customized furnace
When examining the ________ framework, strategic managers are trying to decide on what activities to perform inside the firm and/or outside the firm (external market). - transaction cost economics - economic investment forecasting - elasticity - corporate-level strategy
transaction cost economics
The two primary competitive levers that managers can use in order to answer the question of how to compete are - accounting profitability and shareholder returns - profit and loss - core competencies and competitive advantage - value and cost
value and cost.
Multinational enterprises will often make foreign direct investments (FDI) which is a firm's investment in _________ abroad. - financial markets - the host country - lobbying foreign governments - value chain activities
value chain activities
Corporate-level strategy answers ________ a firm should compete. - where - when - how - who
where
