MGMT 475 Ch. 1-8

Which of the following is NOT a governance mechanism that may limit managerial tendencies to over diversify? a. Surveillance technologies b. Executive compensation practices c. Board of directors d. Market for corporate control

a. Surveillance technologies

________ has become one of the world's largest markets, with 700 million potential consumers. a. The European Union b. China c. Japan d. The US

a. The european Union

Strategic leaders are: a. located at different levels, but only in the operating area of the organization b. located only at the executive level c. located in different areas and levels d. the CEO, COO, and CFO only

c. located in different areas and levels

According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT a. high threat of substitute products due to a large number of low-cost alternatives b. low economies of scale needed for new firms to enter c. low supplier power due to commodity inputs d. high bargaining power of buyers due to low switching costs

c. low supplier power due to commodity inputs

The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms: a. growing too large. b. having too much debt. c. with insufficient diversification. d. being unable to achieve synergy.

c. with insufficient diversification.

Managers must adopt a new mind-set that values ____ and the challenges that evolve from constantly changing conditions. a. flexibility b. speed c. innovation d. all of the above

d. all of the above

Successful strategic leaders are: a. committed to nurturing those around them b. decisive c. committed to helping the firm create value for all stakeholder groups d. all of the above

d. all of the above

When implementing a focus strategy, the firm seeks to: a. offer products that are both differentiated and low cost. b. move into the global market. c. target the typical customer in an industry. d. serve the specialized needs of a market segment.

d. serve the specialized needs of a market segment.

Which of the following is NOT a result of overdiversification? a. Managers emphasize strategic controls rather than financial controls. b. Managers become short-term in their orientation. c. Executives do not have a rich understanding of all of the firm's business units. d. Firms use acquisition as a substitute for innovation.

a. Managers emphasize strategic controls rather than financial controls.

Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a widespread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of the following statements is MOST likely true? a. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy. b. The owners of Bubble-Up are unconcerned about Mega-Toy's entry to the market because of the resource dissimilarity between the firms. c. Competitive rivalry will not increase for Bubble-Up because Mega-Toy is not dependent on the educational toy market. d. Bubble-Up's greater organizational slack will allow it to aggressively attack Mega-Toy.

a. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy.

__________ typically result(s) in the acquiring firm being able to prevent valuable human resources in the acquired firm from leaving. a. Friendly acquisitions b. High compensation c. Private synergy d. Financial slack

a. Friendly acquisitions

Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country. Which of the following statements is true? a. The firm is using a regional approach to international expansion. b. The firm is not engaging in international trade. c. The firm will not be able understand the cultures, legal, and social norms of this market. d.Skaredykat is too afraid to implement an international strategy

a. The firm is using a regional approach to international expansion.

All of the following were traditional sources of competitive advantage EXCEPT: a. a highly educated labor market. b. labor costs. c. access to financial resources. d. protected markets.

a. a highly educated labor market

An office management firm has developed a system for efficiently organizing small medical and dental practices both through proprietary software and through unique training programs for staff. It has recently acquired a firm specializing in providing management services for veterinary practices. The office management firm is hoping to: a. achieve economies of scope. b. acquire specialized talent from the veterinary management company. c. achieve financial economies through an unrelated acquisition. d. implement vertical integration.

a. achieve economies of scope.

Without effective due diligence, the: a. acquiring firm is likely to overpay for an acquisition. b. firm may miss its opportunity to buy a well-matched company. c. acquisition may deteriorate into a hostile takeover, reducing the value-creating potential of the action. d.firm may be unable to act quickly and decisively in purchasing the target firm.

a. acquiring firm is likely to overpay for an acquisition.

The strategic leader's work is characterized by a. ambiguous decision situations b. concentration on the practical day-to-day aspects of the organization's operations c. an ability to identify solutions to long-range problems d. a willingness to unify stakeholders through skillful manipulation

a. ambiguous decision situations

In order to meet and exceed customers' expectations, firms must: a. continuously improve, innovate, and upgrade their core competencies. b. successfully defend their established core competencies from imitation by competitors. c. constantly manipulate customers' perceptions of their needs. d. answer the questions: who, what, when, where, how, and why as they apply to customers.

a. continuously improve, innovate, and upgrade their core competencies.

Business-level strategies are concerned specifically with: a. creating differences between the firm's position and its competitors. b. how functional areas will be organized within the firm. c. how a business with multiple physical locations will operate one of those locations. d. selecting the industries in which the firm will compete.

a. creating differences between the firm's position and its competitors.

The industrial organization (I/O) model is grounded in a. economics b. psychology c. anthropology d. accounting

a. economics

When firms lay off employees, they are: a. eroding the organization's knowledge resources. b. treating employees as an intangible resource. c. recognizing the reduced value of labor in the value chain. d. temporarily sacrificing a tangible asset that is easily replaced.

a. eroding the organization's knowledge resources.

A company in a __________ industry is LEAST likely to make heavy use of patents and copyrights. a. fast-cycle b. medium-cycle c. standard-cycle d. slow-cycle

a. fast-cycle

The benefits of expanding into international markets include all of the following opportunities EXCEPT: a. favorable tax concessions and economic incentives by home-country governments. b. increasing the size of the firm's potential markets. c. economies of scale and learning. d. location advantages.

a. favorable tax concessions and economic incentives by home-country governments.

The chief disadvantage of being a first mover is the: a. high degree of risk. b. high level of competition in the new marketplace. c. difficulty of obtaining new customers. d. inability to earn above-average returns unless the production process is very efficient.

a. high degree of risk.

Private synergy: a. is not easy for competitors to understand and imitate. b. is frequently achieved in conglomerates. c. is assessed by managers during the due diligence process. d. occurs in most related acquisitions and allows firms to see increased returns.

a. is not easy for competitors to understand and imitate.

An analysis of the activity map of a successful company such as Southwest Airlines emphasizes how: a. it is harder for rivals to match a configuration of integrated activities than to imitate a single activity. b. the primary and support activities of a successful company capture value all along the value chain. c. understanding the profitability in an industry indicates to companies where above-average returns can be earned. d. the organizational culture of Southwest Airlines is the key to its success.

a. it is harder for rivals to match a configuration of integrated activities than to imitate a single activity.

Without quality, the firm's products: a. lack credibility among customers. b. are associated with predatory competition. c. can compete effectively on the basis of low price. d. must be exported to developing countries, because they are not competitive in the United States or developed countries.

a. lack credibility among customers.

Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of: a. large or extraordinary debt. b. integration difficulties. c. inability to achieve synergy. d. managers overly focused on acquisitions.

a. large or extraordinary debt.

Most firms enter international markets sequentially, introducing their __________ first. a. largest and strongest lines of business b. most generic products, which will be more likely to generate universal product demand, c. products customized to the region d. most innovative products

a. largest and strongest lines of business

Free cash flows are: a. liquid financial assets for which investments in current businesses are no longer economically viable. b. dividends distributed to shareholders that are taxed as capital gains. c. liquid financial assets that for tax purposes must be reinvested in the firm if not distributed as dividends to shareholders. d. the profits resulting after a restructured firm has been sold.

a. liquid financial assets for which investments in current businesses are no longer economically viable.

Value consists of a product's: a. performance characteristics and attributes for which customers are willing to pay. b. performance characteristics and attributes for which customers consider paying. c. proprietary characteristics and attributes for which customers are willing to pay. d. proprietary characteristics and attributes for which customers consider paying.

a. performance characteristics and attributes for which customers are willing to pay.

The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders if it cannot satisfy all of them. The _______ is the MOST critical criterion in prioritizing stakeholders. a. power of each stakeholder b. vulnerability of organizational stakeholder c. social value of each stakeholder d. urgency of satisfying each stakeholder

a. power of each stakeholder

Lobelia's Nursery and Garden Resource Center has long provided high-quality, typical types of seasonal bedding plants to customers in the Mobile, Alabama, metropolitan area. It has traditionally competed with the other plant nurseries within a 50-mile radius of Mobile. Recently, Lobelia has opened a branch in Fairfax, Virginia. Lobelia's research shows that most Fairfax nurseries have only one location. Lobelia can expect the local Fairfax nurseries to: a. respond aggressively because of high market dependence. b. take no competitive response because of the lack of mutual interdependence among the nurseries. c. respond with fierce attacks because of resource dissimilarity. d. be unmotivated to respond because their market position is not threatened by a new competitor from out of town.

a. respond aggressively because of high market dependence.

Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of: a. standard-cycle markets. b. fast-cycle markets. c. slow-cycle markets. d. incremental-cycle markets.

a. standard-cycle markets.

Buyers are powerful when a. switching costs are low b. there is a threat of forward integration c. the buyers' industry is fragmented d. they purchase a small proportion of the supplier's output

a. switching costs are low

A multidomestic corporate-level strategy is one in which: a. the firm customizes the product for each country in which it competes. b. the firm produces a standardized product, but markets it differently in each country in which it competes. c. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. d. the firm competes in a number of countries, but it is centrally coordinated by the home office.

a. the firm customizes the product for each country in which it competes.

One of the primary reasons for failure of cross-border strategic alliances is: a. the incompatibility of the partners. b. high debt financing. c. conflict between legal and business systems. d. security concerns and terrorism.

a. the incompatibility of the partners.

All of the following statements are correct EXCEPT: a. the majority of acquisitions increase long-term value for the acquiring firm. b. shareholders of acquired firms often earn above-average returns from an acquisition. c. immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines. d. shareholders of acquiring firms typically earn returns from the transaction that are close to zero.

a. the majority of acquisitions increase long-term value for the acquiring firm.

Competitor intelligence is a. the set of data and information the firm gathers to better understand competitors' objectives, strategies, assumptions, and capabilities b. illegal to gather under the Sarbanes-Oxley Act c. legally or illegally gained data about about competitors' internal strategic processes and competitive decisions d. strategic information gained from industrial espionage targeting international competitors

a. the set of data and information the firm gathers to better understand competitors' objectives, strategies, assumptions, and capabilities

The basic types of operational economies through which firms seek value from economies of scope are: a. the sharing of value chain activities and support functions. b. joint ventures and outsourcing. c. the leveraging of individual tangible resources. d. synergies between internal and external capital markets.

a. the sharing of value chain activities and support functions.

The goal of the organization's ______ is to point the firm in the direction of where it would like to be in the years to come. a. vision b. mission c. strategy d. culture

a. vision

All of the following complicate the implementation of an international diversification strategy EXCEPT: a. widespread multilingualism. b. logistical costs. c. cultural diversity. d. increased costs of coordination between business units.

a. widespread multilingualism.

Which of the following organizations has the highest market dependence? a. Chain of rapid-service oil change shops b. Company that specializes in making replacement tiles for the space shuttle c. Regional department store having 26 locations in the Northwest d. Manufacturer of chemicals for the international pharmaceutical industry

b. Company that specializes in making replacement tiles for the space shuttle

Which of the following statements is true? a. Customer loyalty is fragile and cannot reliably be considered a factor in firm success. b. Customer satisfaction has a positive relationship with firm profitability. c. As customer loyalty increases, customers are more sensitive to price increases. d. Customer loyalty is of importance only to firms using the differentiation strategy.

b. Customer satisfaction has a positive relationship with firm profitability.

__________ may be necessary because acquisitions create a situation in which the newly formed firm has duplicate organizational functions such as sales, manufacturing, distribution, and human resource management. a. Management buyout b. Downsizing c. Downscoping d. Leveraged buyout

b. Downsizing

Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? a. Firm strategy, structure, and rivalry b. Factors of production c. Related and supporting industries d. Demand conditions

b. Factors of production

Which of the following is NOT one of the three main restructuring strategies? a. Leveraged buyouts b. Realigning c. Downsizing d. Downscoping

b. Realigning

If Southwest Airlines' employees lost their high enthusiasm and commitment to the company: a. the airline could continue without problems because its cost leadership strategy is dependent on its efficient internal procedures. b. Southwest would have lost one of its competitive advantages, and its performance would be threatened. c. there would be no impact on Southwest's profitability because Southwest's customers value the low fares rather than being "entertained" by the employees. d.replacement employees could be hired from rival airlines that are laying off employees and easily be merged into the Southwest culture.

b. Southwest would have lost one of its competitive advantages, and its performance would be threatened.

ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit-board technology. ACME has protected its market leadership with continued advancements in this technology, which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based technology instead of circuit boards. ACME's technology leadership fails which of the following capability tests? a. Costly-to-imitate test b. Substitutability test c. Rareness test d. Value test

b. Substitutability test

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. Which of the following should the investor consider when making a decision? a. The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. b. The investor will find that the restaurant's financial statements undervalue the true value of its resources. c. The investor should search for a firm that has competitive advantages based on tangible resources. d. The investor should be aware that intangible assets are difficult to leverage into additional businesses.

b. The investor will find that the restaurant's financial statements undervalue the true value of its resources.

Dragonfly, publisher of children's books, has purchased White Rabbit, another publisher of children's books. Both companies' books are sold to the same retail stores and schools. Their content is different because Dragonfly produces children's literature, whereas White Rabbit focuses on child-level nonfiction scientific and nature topics. Which of the following statements is probably true about this acquisition? a. Economies of scope are unlikely to result from this acquisition. b. This is a horizontal acquisition. c. This is an example of virtual integration. d. Dragonfly is beginning to build a conglomerate.

b. This is a horizontal acquisition.

Which of the following types of diversification is MOST likely to create value through financial economies? a. Related linked b. Unrelated c. Operational and corporate relatedness d. Related constrained

b. Unrelated

Competitive dynamics refers to the: a. set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position. b. ongoing actions and responses among all firms competing within a market for advantageous positions. c. circumstances in which competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity. d. ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.

b. ongoing actions and responses among all firms competing within a market for advantageous positions.

Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from all-natural ingredients and organically raised lamb. This brand has a strong following and is recommended by veterinarians who practice in affluent neighborhoods. Wholesome's main supplier of lamb has announced that the price for lamb will be 15 percent higher next year. Which of the following statements is true? a. If Wholesome raises its pet food prices, customers will turn to less expensive brands such as Purina. b. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer. c. Wholesome probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns. d. Companies pursuing Wholesome's business strategy are especially vulnerable to this risk.

b. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer.

All of the following are ethical sources of data for external analysis EXCEPT a. trade shows b. a competitor's confidential memos c. a competitor's help-wanted advertisements d. a competitor's annual reports

b. a competitor's confidential memos

By examining the __________ of Southwest Airlines, one can identify the strategic themes around which it has developed its business strategy. These themes include limited passenger service, high aircraft utilization, and highly productive ground and gate crews. a. profit sharing b. activity map c. five forces model d. value diagram

b. activity map

The firm's ______ provide the foundation for choosing one or more _____ and deciding which one(s) to implement. a. abilities, strategies b. analyses, strategies c. abilities, strengths d. analyses, strengths

b. analyses, strategies

Research has shown that horizontal acquisitions: a. result in lower levels of performance than unrelated acquisitions. b. are able to use activity sharing to successfully create economies of scope. c. tend to have disappointing financial results in the long run. d. are being replaced by virtual acquisitions.

b. are able to use activity sharing to successfully create economies of scope.

The value of the assets of a firm using a diversification strategy to create both operational and corporate relatedness tend to be: a. highly valued by investors. b. discounted by investors. c. inflated by investors. d. completely ignored by investors.

b. discounted by investors.

Problems associated with acquisitions include all of the following EXCEPT: a. large or extraordinary debt. b. excessive time spent on the due diligence process. c. managers overly focused on acquisitions. d. integration difficulties.

b. excessive time spent on the due diligence process.

Focus strategies are: a. sheltered from the risks associated with industry-wide strategies because of their niche focus. b. faced with more additional types of risks than are industry-wide strategies. c. more subject to failure than industry-wide strategies. d. able to avoid global risk by focusing on niches in national or regional markets.

b. faced with more additional types of risks than are industry-wide strategies.

An organization's loyalty to its own product is a competitive disadvantage in a(n) __________ market. a. standard cycle b. fast-cycle c. intermediate-cycle d. slow-cycle

b. fast-cycle

A highly important means of building employee skills for the global competitive landscape is through a. establishing first-mover advantage b. international assignments c. rigorous diversity training d. knowledge spillover

b. international assignments

A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised: a. effective strategic thinking. b. judgment. c. decisiveness. d. foresight.

b. judgment.

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT: a. unique historical conditions. b. lack of scientific transference. c. causal ambiguity. d. social complexity.

b. lack of scientific transference.

A global strategy: a. achieves efficient operations without sharing resources across country boundaries. b. lacks responsiveness to local markets. c. increases risk because decision making is centralized at the home office. d. is easy to manage because of common operating decisions across borders.

b. lacks responsiveness to local markets.

The positive results associated with increasing international diversification have been shown to: a. be centered in only one or two industries. b. level off and become negative as diversification increases past some point. c. continue as the level of international diversification increases. d. become negative quickly.

b. level off and become negative as diversification increases past some point.

Disney suffered lawsuits in France, at Disneyland Paris, because of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of the: a. risks of a multidomestic strategy. b. liability of foreignness. c. effects of regionalization. d. effect of demand conditions.

b. liability of foreignness.

The critical executive skill of the current business age is the ability to: a. initiate change and overcome inertia. b. manage intellectual capital. c. coordinate tangible and intangible resources. d. manage technological innovation.

b. manage intellectual capital

Value chain activities include all of the following EXCEPT: a. distribution. b. management information systems. c. operations. d. supply-chain management.

b. management information systems

The drawbacks to transferring competencies by moving key people into new management positions include all of the following EXCEPT: a. top-level managers may resist having these key people transferred. b. managerial competencies are not easily transferable to different organizational cultures. c. the people involved may not want to move. d. managers with these skills are expensive.

b. managerial competencies are not easily transferable to different organizational cultures.

Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of the: a. importance of high-quality raw materials when using the differentiation strategy. b. perception of perceived prestige and status as a means of differentiating a product. c. danger counterfeiting holds for firms pursuing the differentiation strategy. d. risk of product imitation by competitors.

b. perception of perceived prestige and status as a means of differentiating a product.

HP, in response to the Deepwater Horizon oil spill, expected increased scrutiny from which of the following segments of the general environment? a. sociocultural b. political/legal c. global d. technological

b. political/legal

In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the __________ in Porter's model. a. factors of production b. related and supporting industries c. firm strategy, structure, and rivalry d. demand conditions

b. related and supporting industries

Procter & Gamble (P&G) has a paper towel and baby diaper business, both of which use paper products. The firm's paper production plant produces inputs for both businesses. P&G MOST likely uses the __________ diversification strategy to create __________. a. related linked; corporate relatedness b. related constrained; operational relatedness c. related constrained; corporate relatedness d. related linked; operational relatedness

b. related constrained; operational relatedness

Once a firm has determined its competitor's future objectives, current strategy , assumptions, and strengths and weaknesses, its next step is to develop a(n) a. marketing plan b. response profile c. environmental assessment d. task force to implement the plan

b. response profile

After a leveraged buyout, __________ typically occur(s). a. further rounds of acquisitions b. selling of assets c. due diligence d. private synergy

b. selling of assets

In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which of the following segments of the environment did the store owners fail to take into account when they began selling the lingerie? a. economic b. sociocultural c. demographic d. political/legal

b. sociocultural

A ________ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage a. goal b. strategy c. tactic d. mission

b. strategy

All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT: a. success is not guaranteed as the firm implements its chosen international business-level strategy. b. success is guaranteed as the firm implements its chosen international business-level strategy. c. the determinants of national competitive advantage provide a foundation for a firm's competitive advantages. d. the actual strategic choices made are most compelling reasons for success or failure.

b. success is guaranteed as the firm implements its chosen international business-level strategy.

The economic environment refers to a. an analysis of how new environmental regulations will affect the US economy b. the nature and direction of the economy in which a firm competes or may compete c. an analysis of how the environmental movement and world economy interact d. the economic outlook of the world provided by the World Bank

b. the nature and direction of the economy in which a firm competes or may compete

Subscriptions to the New York Times have been decreasing as more customers receive their news through other media. At the same time, advertisers have shifted portions of their spending to other media. The newspaper's managers are making decisions under: a. interorganizational conflict. b. uncertainty. c. intraorganizational conflict. d. certainty.

b. uncertainty.

Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n): a. merger. b. vertical acquisition. c. horizontal acquisition. d. unrelated acquisition.

b. vertical acquisition.

Which of the following is NOT an external event that reveals the "dark side" of core capabilities? a. A new competitor figures out a better way to serve the firm's customers. b. New technologies emerge and replace those used by the firm. c. A firm changes its focus to a new core competence. d. Political or social events shift the foundation of current core capabilities.

c. A firm changes its focus to a new core competence.

Blood banks are highly dependent on donors. In the terminology of industry analysis, which of the following statements about donors is accurate? a. Blood donors are buyers and are not powerful because switching costs to change to alternative inputs are low. b. Blood donors are suppliers and are powerful because of their concentration relative to the blood bank. c. Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank. d. Blood donors are buyers and are powerful because of the volume of blood needed.

c. Blood donors are suppliers and are powerful because of the critical nature of what they provide to the blood bank.

Which of the following is a true statement about capabilities? a. Valuable capabilities are based almost entirely on tangible resources. b. Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated. c. Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing. d. The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources.

c. Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.

Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as schools, prisons, and public administration buildings. It has always competed on a cost leadership basis. Most of its products are purchased by a few commercial construction firms, so it is fairly dependent on these construction firms for selling its product. Durable Ceramics' next most-efficient competitor, Cost-Less Ceramics, Inc., earns average returns, whereas Durable earns above-average returns. The commercial construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its prices below those of Cost-Less's prices, it is likely that: a. both Cost-Less and Durable will go out of business, leaving the customers with fewer alternative sources of low-cost tile. b. both Durable and Cost-Less will devise additional ways to become more efficient in their production processes. c. Cost-Less will go out of business, and Durable will gain higher power over its customers. d. Durable will be unable to absorb the lower cost and will go out of business.

c. Cost-Less will go out of business, and Durable will gain higher power over its customers.

__________ markets are often described as volatile and innovative. a. Slow-cycle b. Sheltered c. Fast-cycle d. Standard-cycle

c. Fast-cycle

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. Japanese cameras and copiers b. U.S. computers and software c. Highway systems and the supply of debt capital d. Italian leather processing and shoes

c. Highway systems and the supply of debt capital

Which of the following pairs of companies would be LEAST likely to be examined together as part of competitor analysis? a. Samsung and Apple b. Wendy's and Taco Bell c. Netflix and Microsoft d. Coca-Cola and PepsiCo

c. Netflix and Microsoft

Which of the following statements is false? a. Private synergy results when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm. b. Private synergy is more likely when the two firms in an acquisition have complementary assets. c. Private synergy is easy for competitors to understand and imitate. d. Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios.

c. Private synergy is easy for competitors to understand and imitate.

After Amazon lowered the price on its tablets, Samsung eventually lowered the price on its tablets. Samsung needed to do this because a. of strategic distinctiveness b. it is outside the strategic group c. it is in the same strategic group d. of inter-strategic group competition

c. it is in the same strategic group

Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The main concern of the committee is probably: a. loss of intellectual property due to Russian piracy. b. the fluctuation in the value of the ruble. c. Russia's recent actions to gain state control of private firms' assets. d. the numerous and conflicting legal authorities in Russia.

c. Russia's recent actions to gain state control of private firms' assets.

Which of the following is NOT an incentive for firms to become multinational? a. To gain access to consumers in emerging markets b. To gain easier access to raw materials c. To avoid high domestic taxation on corporate income d. Opportunities to integrate operations on a global scale

c. To avoid high domestic taxation on corporate income

All of the following are tangible resources EXCEPT: a. production equipment. b. formal reporting structures. c. a firm's reputation. d. distribution centers.

c. a firm's reputation.

The term "leveraged" in leveraged buyouts refers to the: a. process of removing the firm's stock from public trading. b. fact that the employees are purchasing the firm for which they work. c. amount of new debt incurred in buying the firm. d. firm's increased concentration on the firm's core competencies.

c. amount of new debt incurred in buying the firm.

A retail outlet can attempt several remedies to improve profitability to meet the expectations of its ______stakeholders, including closing stores, changing the top management team, and seeking potential buyers. a. governmental b. organizational c. capital market d. product market

c. capital makret

Internal product development is often viewed as: a. critical to the success of biotech and pharmaceutical firms. b. the only reliable method of generating new products for the firm. c. carrying a high risk of failure. d. a quicker method of product launch than acquisition of another firm.

c. carrying a high risk of failure.

Circuit Inc. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component that is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is MOST likely? a. discontinue manufacture of the component due to high supplier stakes b. continue to manufacture the component, even at a loss, due to low supplier power c. continue to manufacture the component, even at a loss, due to high strategic stakes d. discontinue manufacture of the component due to low strategic stakes

c. continue to manufacture the component, even at a loss, due to high strategic stakes

Charmed by Claire is a successful retail boutique that sells women's accessories. Claire, the owner/manager, knows that women have many options when buying jewelry. When customers enter her store, they are greeted by name and given prompt, friendly attention. Customers return to the store because the service is excellent. Claire says the most important decision she makes is hiring the best staff because customer service is vital to her business. Customer service is a(n): a. human resource. b. organizational resource. c. core competency. d. rare resource.

c. core competency.

Firms that have selected a related diversification corporate-level strategy seek to exploit: a. the favorable demand of buyers. b. control shared among business-unit managers. c. economies of scope between business units. d. market power.

c. economies of scope between business units.

It is important to emphasize that primarily because they are related to how a firm interacts with its stakeholders, almost all strategic management process decisions have ______ dimensions. a. local b. political c. ethical d. global

c. ethical

For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent of scale would be if a. access to food and ingredients is difficult b. other competitors have proprietary product technology c. favorable locations are not available d. other competitors have government subsidies

c. favorable locations are not available

Three sources of flexibility in completing primary and support activities are particularly useful for firms using the integrated strategy. These are: a. outsourcing, reengineering, and flexible manufacturing systems. b. flexible manufacturing systems, reengineering, and total quality management. c. flexible manufacturing systems, total quality management, and information networks. d. outsourcing, total quality management, and information networks.

c. flexible manufacturing systems, total quality management, and information networks.

The three parts of the external environment that affect a firm's strategic actions are a. economic, political, and legal b. industry, business, and product c. general, industry, and competitor d. local, national, and global

c. general, industry, and competitor

A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are: a. unobservable. b. common. c. imitable. d. causally ambiguous.

c. imitable

Quality affects competitive rivalry because a competitor whose products suffer from poor quality likely will __________ until __________. a. initiate more competitive actions; the quality problems are corrected b. initiate more competitive actions; the firm returns to profitability c. initiate fewer competitive actions; the quality problems are corrected d. advertise more; customers believe the quality has improved

c. initiate fewer competitive actions; the quality problems are corrected

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for: a. international diversification. b. market discipline. c. innovation. d. risk analysis.

c. innovation.

Target's brand promise "Expect More. Pay Less" and appeal to higher-income, fashion-conscious discount shoppers illustrates the __________ strategy. a. cost leadership b. focused differentiation c. integrated cost leadership/differentiation d. differentiation

c. integrated cost leadership/differentiation

When consumers change mobile phone and data service providers, they may be required to maintain service with the provider for a specified time period. This is an example of a a. cost to a producer to exchange equipment in a facility when new technologies emerge. b. one-time cost suppliers incur when selling to a different customer c. one-time cost customers incur when buying from a different supplier d. cost of changing the firm's strategic group

c. one-time cost customers incur when buying from a different supplier

An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must: a. offer tax advice at a higher quality than the best competitor. b. analyze the reach, richness, and affiliation the company must have with its customers. c. provide tax advice either in a different manner or provide a different kind of tax service than competitors. d. offer tax advice at a price lower than the cheapest competitor.

c. provide tax advice either in a different manner or provide a different kind of tax service than competitors.

One capability that can be learned from failure is when to: a. dig in. b. repeat with a modification. c. quit. d. add more resources.

c. quit.

In order to compete effectively, standard-cycle firms need all of the following EXCEPT: a. large market share. b. customer loyalty through brand name. c. rapid and continuous product introductions. d. careful control of operations to preserve consistency for customers.

c. rapid and continuous product introductions.

Acquisitions to increase market power require that the firm have a(n) __________ diversification strategy. a. dominant-business b. unrelated c. related d. single-business

c. related

The Publicis Groupe uses the digital technology from its digital business to enhance the advertising products in its advertising group. This sharing of activities is characteristic of the __________ diversification strategy. a. related linked b. unrelated c. related constrained d. dominant

c. related constrained

All of the following are assumptions of the industrial organization model EXCEPT a. the external environment is assumed to impose pressures and constraints that determine the strategies that would result in above-average returns b. most firms competing within an industry or within a segment of that industry are assumed to control similar strategically relevant resources and to pursue similar strategies in light of those resources c. resources to implement strategies are firm-specific and attached to firms over the long-term d. organizational decision makers are assumed to be rational and committed to acting in the firm's best interests

c. resources to implement strategies are firm-specific and attached to firms over the long-term

A leveraged buyout refers to a(n): a. firm restructuring itself by selling off unrelated units of the company's portfolio. b. firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. c. restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. d. action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity.

c. restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.

The "liability of foreignness" is the a. political disadvantage that US firms have when doing business abroad b. inability of most US managers to truly comprehend foreign cultures c. risk of participating outside a firm's domestic markets in the global economy d. preference for "buying local," which always puts foreign firms at a disadvantage when competing in the US market

c. risk of participating outside a firm's domestic markets in the global economy

Lawsuits over patent and copyright infringements are more common and intense in: a. standard-cycle markets because innovation is rare, which gives the innovating firm a significant competitive advantage. b. standard-cycle markets because the firm's brand name is such an important competitive advantage. c. slow-cycle markets because of the ability to shelter the company from imitation of its competitive advantage. d.fast-cycle markets because the market is innovation-driven

c. slow-cycle markets because of the ability to shelter the company from imitation of its competitive advantage.

More choices and easily accessible information about the functionality of firms' products are creating increasingly __________ customers. a. dissatisfied b. loyal c. sophisticated and knowledgeable d. content

c. sophisticated and knowledgeable

Because Coca-Cola, Nestlé, and PepsiCo all sell a product (bottled water) that is essentially the same and all three giant companies are engaged in battles for market share using incremental changes in their products and seeking loyalty to brand names, it is MOST likely that the bottled water market is a(n): a. intermediate-cycle market. b. fast-cycle market. c. standard-cycle market. d. slow-cycle market.

c. standard-cycle market.

The environmental segments that make up the general environment typically will NOT include a. technological factors b. demographic factors c. substitute products or services d. sociocultural factors

c. substitute products or services

Strategic fit among many activities (in an activity map) is fundamental to: a. the integrity of the firm's value chain. b. the breadth of competitive scope for a firm. c. the development of core competencies for a firm. d. sustainability of a firm's competitive advantage.

c. the development of core competencies for a firm.

International corporate-level strategy focuses on: a. economies of scale. b. sophistication of monitoring and controlling systems. c. the scope of a firm's operations through geographic diversification. d. competition within each country.

c. the scope of a firm's operations through geographic diversification.

Increasingly, customers worldwide are demanding emphasis on local requirements and companies require efficiency as global competition increases. This has triggered an increase in the number of firms using the __________ strategy. a. universal b. multidomestic c. transnational d. global

c. transnational

All of the following are resources of an organization EXCEPT: a. a charity's board of directors of experienced executives b. an hourly production employee's ability to catch subtle quality defects in products c. weak competitors in the industry d. oil drilling rights in a promising region

c. weak competitors in the industry

Which of the following statements about organizational knowledge is true? a. Firms lacking the appropriate internal knowledge resources are less likely to invest money in research and development. b. Knowledge is an intangible resource. c. The value of knowledge as a proportion of total stakeholder value is increasing. d. All of these are correct

d. All of these are correct

Which of the following are central to implementing value-creating strategies and thereby satisfying customers' needs? a. None of these is correct. b. Capabilities c. Firm resources d. Core competencies

d. Core competencies

The new generation of lunch trucks serving high-end fare in cities such as New York, San Francisco, and Los Angeles share which of the following business strategies? a. Cost leadership b. Integrated cost leadership/differentiation c. Differentiation d. Focused differentiation

d. Focused differentiation

Which of the following is NOT a limitation directly relating to vertical integration? a. Capacity balance and coordination problems from changes in demand b. Bureaucratic costs c. The loss of flexibility through investment in specific technologies d. Imitation of core technology by potential competitors

d. Imitation of core technology by potential competitors

Which of the following statements is true? a. The sharing of intangible resources, such as know-how, between firms is a type of operational sharing in related diversifications. b. Unrelated diversified firms seek to create value through economies of scope. c. Conglomerates no longer exist in the U.S. business scene, but are common in emerging markets. d. Related constrained firms share more tangible resources and activities between businesses than do related linked firms.

d. Related constrained firms share more tangible resources and activities between businesses than do related linked firms.

Which of the following is true of Southwest Airlines? a. Decision-making responsibility is centered at its Dallas headquarters, which allows the firm to respond quickly to competitive attacks. b. Southwest has an unusually low amount of flexibility for a large firm. c. Southwest's success is largely due to the fact that it has little market commonality with other airlines. d. Southwest's advantage lies in its ability to "think small."

d. Southwest's advantage lies in its ability to "think small."

Compared to tangible resources, intangible resources are: a. less likely to be the focus of strategic analysis. b. of less strategic value to the firm. c. more likely to be reflected on the firm's balance sheet. d. a superior source of capabilities.

d. a superior source of capabilities.

Specialty Steel, Inc., needs a particular type of brick to line its kilns in order to safely achieve the high temperatures needed for the unusually strong steel it produces. The clay to make this brick is very rare, and only two brick plants in the United States make this type of brick. Specialty Steel has decided to buy one of these brick plants. This is an example of: a. horizontal integration. b. forward integration. c. virtual integration. d. backward integration.

d. backward integration.

Competitive rivalry has more effect on a firm's __________ strategies than the firm's other strategies. a. international b. acquisition c. corporate-level d. business-level

d. business-level

The more links among businesses, the more __________ is the level of diversification. a. intense b. linked c. integrated d. constrained

d. constrained

In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT a. ethnic mix b. age structure c. distribution of income d. cultural values

d. cultural values

Firms with few competitive resources are more likely to: a. not respond to competitive actions. b. respond to strategic actions, but not to tactical actions. c. respond quickly to competitive actions. d. delay responding to competitive actions.

d. delay responding to competitive actions.

Multipoint competition occurs when: a. firms have multiple products in their primary industry. b. firms have multiple retail outlets. c. firms have diversified portfolios of companies. d. diversified firms compete against each other in several markets.

d. diversified firms compete against each other in several markets.

Firms that achieve competitive parity can expect to: a. earn above-average returns. b. initially earn above-average returns, declining to average returns. c. earn below-average returns. d. earn average returns.

d. earn average returns

A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of: a. a greenfield venture. b. licensing. c. a strategic alliance. d. exporting.

d. exporting.

Competitor analysis focuses on a. companies that might enter the industry b. all firms in the industry c. firms that produce products that are substitutes d. firms with which the company competes directly

d. firms with which the company competes directly

Globalization has led to a. lower operational efficiency as firms must transport raw materials and finished goods farther b. declining returns from investment in research and development c. increasing loyalty of customers for products made domestically d. higher performance standards in competitive dimensions, including quality, and cost

d. higher performance standards in competitive dimensions, including quality, and cost

The purchasing of firms in the same industry is called: a. networking the organization. b. unrelated diversification. c. vertical integration. d. horizontal acquisition.

d. horizontal acquisition.

Consolidation among fuel providers serving airport facilities is viewed in the five forces model of competition as a(n) a. reduction of the airlines' ability to benefit from economies of scale b. increase in the intensity of rivalry among airlines for scarce resources c. increase in switching costs because the airlines have no choice but to use jet fuel and other oil products d. increase in the bargaining power of suppliers of critical input

d. increase in the bargaining power of suppliers of critical input

Firms use both the _____ and _____ models. In fact, these models complement each other in that one focuses outside the firm while the other focuses inside the firm. a. industry, capability b. competition, competency c. industry, competency d. industrial organization (I/O), resource-based

d. industrial organization (I/O), resource-based

By linking companies with their suppliers, distributors, and customers, __________ provide a company with flexibility. a. capabilities b. flexible manufacturing systems c. total quality management systems d. information networks

d. information networks

Quality is: a. an assured way to gain competitive advantage. b. only a major factor in the production of luxury goods, such as BMW cars. c. a viable trade-off with product cost in gaining a competitive advantage. d. meeting or exceeding customer expectations in the goods and/or services offered.

d. meeting or exceeding customer expectations in the goods and/or services offered.

Goods or services in standard-cycle markets reflect: a. an inability to sustain a competitive advantage except for brief periods of time. b. numerous first-mover advantages. c. competitive advantages that are shielded from imitation. d. organizations that serve a mass market.

d. organizations that serve a mass market.

Tools such as __________ help the firm focus on its core competencies as the source of its competitive advantages. a. imitation b. marketing c. manufacturing d. outsourcing

d. outsourcing

Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a(n) __________ resource. a. technological b. organizational c. financial d. physical

d. physical

The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT: a. factors of production. b. related and supporting industries. c. demand conditions. d. political and economic institutions.

d. political and economic institutions.

To have the potential to become sources of competitive advantage, resources, and capabilities must be non-substitutable, valuable, _______, and ________. a. easy to implement, unique b. unique, easy to imitate c. easy to imitate, difficult to implement d. rare, costly to imitate

d. rare, costly to imitate

Customer ratings of products they bought online is an example of: a. affiliation. b. loyalty. c. reach. d. richness.

d. richness.

The use of the Internet by Netflix to collect data on customer preferences is an example of a. assessing b. forecasting c. monitoring d. scanning

d. scanning

A firm may narrow its focus to a specific region of the world: a. because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. b. to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions. c. in order to obtain greater economies of scale. d. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets.

d. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets.

A competitive action can be one of two types, either __________ or __________. a. quality-based; cost-based b. aggressive; defensive c. market-based; resource-based d. strategic; tactical

d. strategic; tactical

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n): a. leveraged buyout. b. stealth raid. c. adversarial acquisition. d. takeover or unfriendly acquisition.

d. takeover or unfriendly acquisition.

The curvilinear relationship of corporate performance and diversification indicates that: a. the less related the businesses acquired, the higher performing the organization. b. none of the strategies consistently outperforms the others. c. dominant-business corporate strategies tend to be higher performing than related constrained or unrelated business strategies. d. the highest performing business strategy is related constrained diversification.

d. the highest performing business strategy is related constrained diversification.

The expenses incurred by firms trying to create synergy through acquisition are called __________ costs. a. interaction b. diversification c. differentiation d. transaction

d. transaction

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n): a. unrelated acquisition. b. horizontal acquisition. c. merger of equals. d.vertical acquisition.

d.vertical acquisition.