Management Final

Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates?

Consumer demand will increase

Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented?

Customer-oriented visions tend to be more flexible when adapting to changing environments.

Which of the following scenarios best illustrates bundling?

Fresh Seeds Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually

Which of the following is a disadvantage of the balanced-scorecard approach?

It provides limited guidance about which metrics to choose

which of the following describes an airline that is most likely stuck in the middle

Just Right Airline

The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & development expense/Revenue, and

Selling, general, & administrative expense/Revenue

________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set it's own price

Wholesale

In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity?

an increase in its customers' disposable income

A ________ is best described as any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures

strategic initiative

which of the conditions prevail when an industry is at the end of its life cycle?

the level of process innovation reaches its maximum as firms attempt to lower costs

The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment?

the punch presses that produce parts

A defining characteristic of the subscription-based business model is that the

user pays for access to a product or service whether he or she uses it during the payment term or not

A defining characteristic of the pay-as-you-go business model is that the

users pay for only the services they consume

____ is best described as a firms ownership of its production of needed inputs or of the channels by which it distributes its outputs

vertical integration

Gold Leaf computers sources the components for its laptops from various suppliers on the market

vertically integrate

Incline electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones and TV's

forward vertical integration

Cloudlink is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this best illustrate?

freemium

Strategies developed at the departmental level, such as the accounting, human resources, production, and marketing departments, within a strategic business unit are referred to as ________ strategies

functional

As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to

how to implement business strategy.

Hammer and Nails, Local Motion, DIY Palace, and Handy Paradise are all hardware stores that compete against each other through everyday low pricing and discounts on bulk purchases. All four stores cater to the needs of highly price-sensitive customers. Thus, together these stores form a

strategic group

While the domestic airline industry is in the maturity stage of the industry life cycle, the pet clothing industry is in its growth stage. Which of the following can be inferred from the given data?

while the domestic airline industry is mostly free from excess capacity, the internet enabled appliance industry will have new entrants

what is the main reason that most mergers and acquisitions negatively effect shareholder value?

promised synergies never take place

A firm is said to gain a competitive advantage when it can

provide products similar to its competitors, but at lower prices

strategic objective of a first mover during the intro stage of the industry life cycle is to

pursue harvest strategy

which of the following best illustrates a merger between the two companies HQ Inc., and AV Inc.?

HQ Inc. and AV Inc. join together to form a single new company called HQAV Inc.

Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then

Invoro will have a resource that is valuable but no longer rare

________ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy

Isolating mechanisms

Which of the following is an advantage of the balanced-scorecard?

It allows managers to translate a firm's vision into measureable operational goals

Which of the following statements is true of the balanced-scorecard?

It attempts to provide a holistic perspective on firm performance

GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information?

It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage

How is a firm's task environment different from its general environment?

Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment

________ describes a process in which the options one faces in a current situation are limited by decisions made in the past

Path dependence

____ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Strategic management

In which of the following situations is the power of suppliers high in an industry?

Suppliers' industry is more concentrated than the industry it sells to

A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this?

The company's organizational structure and systems will be designed to support bottom-up strategic initiatives

product features, customer service, complements

Value Drivers

assume the market for print book publishing has entered the maturity stage. which would be most likely to exist during the stage?

a few large publishers

The tenet behind the triple-bottom-line is that

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

coastal pharma and brainwave technologies have together invested and created a new organization, InnerView

a joint venture

Golden Harvest is a restaurant located inside a five-star hotel. It caters mainly to customers who are concerned about quality dining rather than the prices. In this scenario, which of the following will be a part of Golden Harvest's strategic group?

a premium rooftop restaurant in the same city

Braintree Inc. a manufacturer of smartphones, has entered 15 year partnership

a strategic alliance

Mediflow, a medium sized medical technology company

acquire a company that has a successful medical technology sales force in Europe so that mediflow can gain access to new distribution channels

how did horizontal integration in the US airline industry provide benefits to the surviving carriers?

by lowering the competitive intensity in the industry overall

To be effective, firms need to

back up their visions with strategic commitments that are costly and difficult to reverse.

_____ primarily details the goal directed actions manager take in their quest for competitive advantage

business level strategy

In an industry, the threat of entry is high when

capital requirements are low.

RHC pharmaceuticals Inc., Lawrence Pharma Inc., and Quincy Pharma

co-opetition

In the five forces model developed by Michael Porter, ________ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes

competition

What part of the AFI strategy framework does the question "How does the firm make money?" relate to?

competitive advantage, firm performance, and business models

which of the following is a feature of the shakeout phase of the industry life cycle?

competitive industry within the industry increases

Economic value creation is best expressed as

consumer surplus plus firm profit

Merton's Toothpaste has been the leader of dental care products for about 40 years. However, this company relied too long on its competency of reducing cavities without refining or upgrading other aspects of its product. As a result, other personal hygiene companies that began to offer toothpastes with natural whitening agents gained a competitive advantage over Merton's. This case is an example of

core rigidity

Bargain Styles Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Bargain Styles applying?

cost leadership

Strategic commitments are actions that are

costly, long-term oriented, and difficult to reverse

Health Tech wanted its research partner, an R&D company to develop a cancer vaccine

credible commitment

in a focused cost leadership strategy

delivers low cost products and services to a specific narrow part of the market

Leading guitar string producer Wound Up Inc. has enjoyed a competitive advantage based on its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated strings. One of Wound Up's competitors, however, has recently developed a similar coating using less expensive ingredients, which allows it to charge a lower price than Wound Up for similar-quality strings. Wound Up's competitive advantage is in danger due to

direct imitation and substitution

ElectraSync Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU). The desktop SBU has been experiencing drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent. This has been attributed to the low growth in the desktop market after the arrival of tablet computers and laptops. In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under

dogs

In the pyramid of corporate social responsibility, ________ responsibilities are the foundational building block

economic

To support the rise of emergent strategies, an organization should

empower lower-level employees to take up autonomous actions

how is an equity alliance different from a joint venture?

equity alliance involves taking ownership in a partner; joint venture involves two or more entities owning a firm

Organizational core values are the ________ that govern the behavior of individuals within a firm or organization

ethical standards and norms

pace of innovation has slowed in 21st century

false

Which of the following is a macroeconomic factor that can affect a firm's strategy?

levels of employment

according to five forces model, which of the following is viewed as a major risk to a business pursuing a cost leadership strategy

innovation that allows competitors to emerge with more economical replacements

After carefully assessing the market potential for solar-powered mobile devices, the top-level executives of Futuretronics Inc. decided that the company would be launching a line of solar-powered tablets within the next two years. This would mean that the tablet division would need to immediately begin research and development efforts. Which of the following strategies in the planned emergence model does this best illustrate?

intended strategy

What must a cost-leadership strategy accomplish to be successful?

it must reduce firms cost below that of its competitors while offering adequate value

Green Jeans, Inc. had a mission to become the leading producer of environmentally friendly blue jeans, an emerging and in-demand category in the apparel industry. Its strategy involved leveraging a network of organic cotton farmers and suppliers of environmentally responsible synthetic materials to create a product that is durable, attractive, affordable, and 100% recyclable. However, because it did not upgrade its outdated production facilities, Green Jeans could not assemble its products at a low-enough cost to offer the jeans at a price that was attractive to customers. Green Jeans' strategy failed because

it was not backed up with strategic commitments

which of the following scenarios best illustrates horizontal integration?

king autos inc. joins with dimitra motors inc., one of its direct competitors

Economies of scale are cost advantages that accrue for firms with

larger output

to initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address 4 key questions

lowering cost and increasing perceived customer benefits

Icarus Airways decision to acquire Midas fuels inc.

managerial hubris

According to the value chain analysis, which of the following is a primary activity?

marketing and sales

The ratio of SG&A/Revenue is an indicator of a firm's focus on

marketing and sales to promote its products and services

fleet foot shoes has been successful at differentiating itself from competitors by claiming premium price for athletic footwear based on superior design and high quality materials

product features

A firm's resistance to changes in the status quo is referred to as

organizational inertia

when ReGen pharmaceuticals released a new drug to treat insomnia

patent

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate?

principal agent problem

WellMade manufacturing is a large conglomerate that operates only in its home country

product diversification

Noodles 2 Go and Sal's Trattoria are two restaurants serving Italian cuisine. While Noodles 2 Go focuses on providing quick, affordable pasta dishes for the lunch crowd, Sal's Trattoria focuses on serving home-style dishes in an upscale, romantic setting. Both companies have been able to gain a competitive advantage. This is most likely because the companies have

pursued distinct strategic positions

Polygon sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Polygon implementing?

razor-razor-blade

WJ Group Inc., a large multinational conglomerate, had begun to experience declining revenues over the years. The top management at the headquarters of the company decided that it was important for the company to avoid deviating from its core competencies. Thus, a few of the company's key businesses like energy, telecommunications, and automobiles were centralized, giving the top management more control over them. Also, relatively newer businesses like beverages and food processing were divested. In this scenario, WJ Group is involved in

restructuring

The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of the dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well prepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing ________ as the approach to the development of strategy

scenario planning

Medequip Inc. is a large firm involved in the highly competitive market of high tech medical equipment

serial acquisitions

As the legal owners, ________ have the most legitimate claim on a company's profits

shareholders

________ are the legal owners of public companies

shareholders

Edna Gomez is the founder of the restaurant chain Good and Green

social entrepreneur

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that

some of the firms proprietary know how may be appropriated by the foreign partner

both bison autos and sparrow inc. incur a $9k to manufacture a vehicle

sparrow inc. can charge a premium price on its automobiles

the key objective for firms during the growth phase is to

stake out a strong strategic position not easily imitated by rivals

starfish sodas has successfully achieved a competitive advantage in soft drink industry

starfish customers start to consider soda a commodity

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period.

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources....

strategic alliances

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

the balanced-scorecard model

which of the following is a feature of the growth stage of the industry life cycle?

the consumer demand increases

When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger?

the threat of substitutes

which of the following is an advantage of equity alliances when compared to non-equity alliances?

they produce stronger ties between partners

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance

trying to be everything to everybody by combining different competitive strategies

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

understand the profit potential of industries

Molly Hue Apparels Inc. (MHA) had been outsourcing its production to less-developed countries in order to reduce its cost of production. With the emergence of its competitor, Hova Inc., MHA lost its competitive advantage. Hova had its production units in its home country that allowed the company to bring out the latest trends to the market earlier than MHA. Also, MHA frequently suffered due to political instability and lack of intellectual property laws in the outsourced countries. Thus, parts of MHA's strategies became obsolete and it had to relocate its production. What are such obsolete strategies referred to as in the planned emergence model?

unrealized strategy