MGMT 408 Exam 1
Which of the following is NOT included as in Porter's Five Forces Framework?
Threat of government action
The production cost benchmarks reported on p. 6 of each issue of the Footwear Industry Report
always merit close examination because they enable company managers to check whether certain aspects of the production operations at their company's production facilities are competitive with the production outcomes at other production facilities in the same region
A generic strategy aimed at emphasizing the uniqueness or superiority of products and services is_?
differentiation strategy
Which of the following is true concerning mail-in rebates?
There are 13 rebate options ranging from $3/pair to $15/pair b. Customer response to rebates is a function of the size of the rebate and the amount that your offer is above/below industry average c. the customer acceptance rate of rebate offers range from 15% to 90% d. All of the above are true concerning mail-in rebates d.
Porter's "Five Forces" framework includes: Bargaining Power of Customers, Bargaining Power of Suppliers, Threat from New Entrants, Threat from substitutes, and Rivalry of Existing Competitors. As discussed in class, which force might be included as a sixth force?
Threat from complementors
Strategy formulation, strategy implementation, and ____ are the steps (or phases) in the strategic management process.
strategy evaluation
Which of the following is/are not among the factors that affect worker productivity?
the S/Q ratings of the footwear being produced and whether the percentage use of superior materials exceeds 60%
The "triple bottom line" is an approach to assessing performance that emphasizes concern for:
people, planet, and profit
"Given the business (es) we are in, how should we compete?" is the question asked at the ____ level.
competitive (business) strategy
If Microsoft bought a chain of food retailers such as Piggly-Wiggly, it would be an example of a __.
conglomerate diversification
Which generic strategy is usually associated with the discount retailers such as Wal-Mart?
cost leadership strategy
Sony's and Apple's ability to innovate to "reinvent" existing ways of doing things is known as ___.
creative destruction
Dell Computer's initial decision to start selling LCD wide-screen TVs is an example of _______.
related diversification
Which of the following is not a distribution channel available in the game?
retail sales at the company's stores in outlet malls
A skill or activity in which a firm excels compared to rival firms is known as a (an):
Distinctive competence
Market Capitalization
Shares outstanding x price per share
A "3 firm concentration ratio of 80%" would mean:
The industry is highly concentrated
Sony's launches of PlayStation 2, then PS3, then PS4, is an example of which concentration (intensive) strategy?
product development
Which of the following is true concerning mail-in rebates?
the higher the rebate offer, the higher the redemption rate
The main question asked at corporate-level strategy is:
what business(es) are we in/should we be in?
If you offer free shipping in the internet market, the shipping and handling fees that you will have to "absorb" is how much per pair of shoes?
$12.50 per pair
Income Tax Expense
(EBIT - Interest Expense) x Tax Rate
If a company spends $14.4 million to install refurbished footwear-making equipment with capacity to produce 1 million pairs of athletic footwear at its North American production facility, then its annual depreciation costs at that facility will rise by
10% or $1,440,000
Buyer demand for branded athletic footwear is projected to grow
9-11% annually in Latin America and the Asia-Pacific during the Year 11-Year 15 period
Rumelt's criteria for strategy evaluation are: feasibility, consistency, consonance, and __________
Advantage
The company currently has production facilities to make athletic footwear in
Asia-Pacific and North America
Which of the following are components of the total compensation package for production workers at your company's production facilities?
Base wages, incentive payments per non-defective pair produced, fringe benefits and any overtime pay
What labels go with the designated areas in Kotler's model?
Core Product, Actual Product, Augmented Product
GE is know as a diversified conglomerate, operating in a number of different industries, including Power, Aviation, Healthcare, Transportation, etc. In 2016 GE sold its Appliances division to Haier. From GE's perspective, this is an example of a _______ strategy, and it is also an example of a ______ strategy decision.
Divestment; Corporate-level
Net Profit (also called Net Income; Earnings)
Earnings Before Tax (EBT) - income tax expense
Dividends paid per share
Earnings Per Share x Dividend payout ratio
Which one of the following helps increase the S/Q rating of branded pairs produced at a particular production location?
Increasing expenditures for enhanced styling/features
What are the four categories of grand strategies identified in class?
Integration (Forward Vertical, Backward Vertical, Horizontal) Intensive (Market development, product development, market penetration) Diversification (concentric and conglomerate) Defensive (retrenchment, divestment, liquidation)
A health drink company is known for launching drinks with flavors which are different from what are offered in the market. It regularly indulges in experimentation to come up with new and exotic flavored drinks. It is also able to charge prices that are higher than what other health drink companies charge. What advantage would the company enjoy because of the strategy it follows?
It has an ability to obtain premium prices from customers.
What are the names given to the quadrants in the positioning map shown below?
Maverick competitors, Clone competitors, Off-radar competitors, Parallel competitors
Addition to retained earnings
Net Income - Dividends Paid
Quick 'n' Dirty firm value
Net Income / WACC
Return on Equity (ROE)
Net Income/Total Equity
Earnings Per Share
Net Profit / Shares Outstanding
Interest Coverage Ratio (Times-Interest-Earned)
Operating Profit / Interest Expense
Which of the following models is used for analyzing the general external environment?
PEST (or PESTEL)
Gross Profit (also called Gross Income)
Revenue - Cost of Goods Sold
Operating Profit (also called Operating Income; EBIT)
Revenue - Operating Expenses
A company manufacturing hockey sticks makes an annual assessment of its resources in terms of raw materials, technical expertise, and technological knowhow. It assesses the type of competition that it faces in the sports goods market and also looks out for opportunities that would allow it to expand its business. This is an example of a(n):
SWOT analysis
What are Porter's dimensions of competitive scope discussed in class? (Hint: I added one that is not included in Porter's framework: business model scope). maverick, clone, parallel, off-radar
Segment, Vertical, Industry, Geographic
The internet boom of the 1990s is an example of:
Shumpterian Shock
Which of the following currencies are involved in causing favorable or unfavorable exchange rate adjustments to your company's costs and revenues?
Singapore dollars, euros, and Brazilian reals
The letters in the S-C-P paradigm stand for:
Structure, conduct, performance
Which of the following statements about the impact of a company's competitive efforts in a region on its regional market share and number of branded pairs sold is false?
The biggest possible competitive advantage a company can achieve in a given region's internet segment is to offer free shipping and thereby capture the biggest number of pairs sold and the biggest market share of any company in that region's internet segment
Which of the following is the most important factor in determining a company's unit sales and market share of private-label footwear in a particular geographic region?
The company's bid price
Which of the following is not among the 13 competitive factors that determine a particular company's unit sales and market share of branded footwear in a particular geographic region?
The length of the warranty against materials defects that the company offers buyers (30 days, 60 days, 1 year)
Which of the following is the best example of a horizontal integration strategy?
The merger of Glaxo with Smith-Kline Beechum
Which of the following are factors in determining a company's credit rating?
The percentage by which prior year cash flow from operations covers a company's prior year interest payments, the company's debt-asset ration, its dividend payout ratio, and its default risk ratio
What do the letters V-R-I-O stand for in the VRIO framework (concerning a firm's resources)?
Value : Does the resource strength/capability have competitive value? Rare: Do many or most rivals have much the same resource or capability? Imitability: Is the resource or capability hard or costly to imitate? Organization: Is firm organized to capture value from resource/capability?
Under what circumstances should a company's management team give serious consideration to making an offer to supply private-label footwear to chain retailers in a particular geographic region?
When managers determine that all of the company's available production capacity will not be needed to produce branded footwear and that the total amount of idle production capacity at its production facilities will be sufficient to meet or exceed the 100,000 pair minimum delivery requirement of chain retailers in each region
Based on the industry-low, industry average, and industry-high values, which one of the following would correctly indicate that one or more elements of your company's costs are too high compared to those of rival companies?
Your company's operating profit margin in the Wholesale segment of the North America region is only 5% about the industry low
Which is true concerning the S/Q rating?
a company may have as many as 8 different S/Q ratings in a year
If you offer free shipping in the internet market, the shipping and handling fees that you will have to "absorb" is how much per pair of shoes?
a. 20% of the shoe's retail cost b. $2.75 c. $12.50 per pair d. $20 per pair e. none of the above e. none of the above
The company's shipments of newly-produced, branded and private-label footwear from its plants to its regional distribution centers are subject to
any applicable import tariff and exchange rate adjustments
If Dell Computer were to acquire Intel, it would best be described as an example of ______.
backward vertical integration
An approach to assessing performance that targets manager's attention on four areas: (1) financial, (2) customer, (3) internal business process, and (4) learning and growth is a tool called _______?
balanced scorecard
Creating a new, untapped market rather than competing with rivals in an existing market is a (an) _____.
blue ocean strategy
The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to a company's distribution warehouse in Latin America is to
build production facilities in Latin America and then expand its capacity as may be needed so that the production facility has the capability to supply all of the branded and private-label pairs the company intends to try to sell in Latin America
The sale of one of a firm's SBUs to a competitor, and that SBU continues to operate is a _______.
divestiture
If a company builds a new manufacturing plant dedicated to producing shoes for a region, and later decides to get out of that region but can't find a buyer for the plant, the manufacturing plant might be viewed as a (an) _____.
exit barrier
The three competitive factors that impact only internet sales and market share in a region include
expenditures for search engine advertising
When a shoe manufacturer opens a company-owned retail store, it is an example of
forward vertical integration
The name given to Michael Porter's group of strategies used at the competitive (business) strategy level.
generic strategies
Although Michael Porter is known as an IO economist and his emphasis on industry analysis, his ______ framework allows for competitive advantage to be gained through uniqueness, with firms following a ______ strategy.
generic strategies; differentiation
Pursuing a strategy of social responsibility and corporate citizenship
has a positive impact on a company's image rating, provided company spending on socially responsible activities is a meaningful amount and is sustained over a multi-year period
The formation of HP/Compaq and Daimler/Chrysler are examples of which grand strategy?
horizontal integration
In the private-label benchmarks section, the industry-low, industry-average, and industry-high benchmarks for the margins over direct costs should be interpreted as representing
how much sellers of private-label footwear received over and above the costs per pair sold; these margins, if positive, serve to improve a seller's operating profits in the designated region (negative margins over direct cost act to reduce a seller's operating profits in the region)
Which of the following statements about striving to reduce labor costs per pair produced at each of the company's plants is true?
in managing production worker compensation and expenditures for best practice training, the overriding objective of company managers should be to achieve the lowest feasible labor costs per pair produced at each production facility
Which one of the following actions is most likely to result in higher production costs per branded pair at one of your company's production facilities?
increasing the S/Q rating of branded pairs from 4.5 stars to 5.5 stars
If a company wants to enhance the profitability of differentiating its branded product offering from rivals by offering buyers 500 models/styles to choose from in all four regions, then it should consider reducing the $15 million annual costs for production run setup costs associated with producing 500 models/styles at each of its production facilities by
instituting production improvement option B at each of its production facilities
The interest rate a company pays on 1-year, 5-year, and 10-year loans is a function of
its credit rating and the length of time over repayment is scheduled to occur (1-year, 5-year, or 10-years)
A sign in a store window reads, "going out of business—everything must go" is probably an example of which grand strategy?
liquidation
Exporting products made in the US to new foreign markets is a basic example of which concentration (intensive) strategy?
market development
Which of the following is the most important competitive factor in determining a company's ability to secure contracts to supply large multi-outlet retailers private-label footwear to chain retailers in a particular geographic region?
the price at which the company offers to supply the retailers with private-label pairs
The factors that affect the reject rates at the company's footwear production facilities include
the size of the incentive payment per non-defective pair produced, expenditures for best practices training per worker, spending for TQM/Six Sigma quality control efforts, and the percentage use of new equipment versus refurbished equipment
Which of the following statements about the importance of each competitive factor in determining company sales volumes and market shares in a particular geographic region is false?
tiny cross-company differences in competitive effort on a highly influential competitive factor (like S/Q ratings, the number of models/styles offered, and selling prices) nearly always have a bigger impact on company sales/market share outcomes in a region than do large differences on less influential competitive factors
The factors that affect a company's S/Q rating by the International Footwear Federation include
a company's current and cumulative spending for TQM/Six Sigma quality control programs; whether production improvement option C has been installed (this option entails investing in special production equipment that boosts the S/Q rating of all pairs produced by 1.0 star) and expenditures for new styling features per model
What are the three levels of strategy, and what questions are asked at the top two levels?
Corporate level: What business(es) are we in and which should we be in? Competitive level: (a.k.a. business level or industry level) -Given the business (es) we are in, how should we compete? Functional level - what must we do at the functional level in order to implement chosen strategies? (e.g. resource acquisition, organizational structure, marketing, etc.)
In the business strategy game your company is assessed on how well it meets investor expectations in five categories on a "balanced scorecard". What are these five categories?
Earnings per share Return on Equity Stock price Credit Rating Image Rating
Which of the following most accurately describes your company's production operations?
Standard and superior materials are sourced from outside suppliers at base prices that are currently $6 per pair for 100% use of standard materials and $12 per pair for 100% use of superior materials; however these base prices can vary up or down according to the strength of global demand for footwear materials and the global percentage usage of standard versus superior materials
Which of the following are effective ways for managers to try to boost a company's stock price?
Repurchase shares of common stock and aggressively pursue efforts to achieve annual increases in earnings per share that meet or neat investor expectations
Which of the following statements about the average wholesale price a company charges footwear retailers in a given geographic region is incorrect?
So long as a company has a big price based competitive advantage in a region's wholesale segment, it has the ability to achieve an attractively large sales volume and market share even if it suffers from competitive disadvantages on other competitively relevant factors
Which of the following currencies are involved in affecting the operations of your company's athletic footwear business?
U.S. dollars, Singapore dollars, euros, and Brazilian reals
Perceptual (or position) mapping is used to:
identify strategic groups of competitors identify "gaps" in the market identify industry competitors' position in the market
Which of the following is a result of Best Practices worker training in the simulation?
lowers defect rates improves S/Q rating reduces materials waste increases worker productivity all of the above may result from Best Practices worker training
Which one of the following is the most effective means for a company to grow its wholesale sales of branded footwear in the Latin America region?
market branded footwear to Latin American retailers that has an S/Q rating 1.5 stars higher than the industry average S/Q rating in Latin America
Comfort Shoes Inc. is a firm that manufactures orthopedic shoes and sells them at retail stores in New York. Based on the popularity of the shoes, the firm decides to expand operations to other regions. In this example, Comfort Shoes Inc. uses which of the following strategies?
market development
A company produces fat-free and low-fat snacks under the brand name Healthy Bites. The firm decides to set up counters in the retail stores which stock its products with representatives who will promote the products and explain its health benefits to consumers. The firm aims to increase the sale of Healthy Bites products in these stores. In this example, which of the following best describes the company's strategy?
market penetration
Marketing efforts to increase sales of existing products in existing markets is which concentration (intensive) grand strategy?
market penetration
Difficulties encountered by trying to "reposition" a brand in the market (e.g. moving "upscale") are examples of a (an) _______?.
mobility barrier
A company uses outside suppliers to provide services that it could perform itself. (e.g. a firm might contract a professional cleaning company to come in on a regular basis to clean offices.)
outsourcing
According to the textbook, what are the Five Generic Competitive Strategy Options?
overall low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy, best-cost provider strategy
The most important/essential results from the latest decision round that company managers need to review/study in order to guide their strategic moves and decisions to improve their company's overall performance and competitiveness vis-à-vis rivals in the upcoming decision round are
the Comparative Competitive Efforts section of the Competitive Intelligence Report for each of the four geographic regions
