MGMT 699 Exam 1 Multiple Choice

Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of political rather than economic considerations? A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing. Airbus and Boeing are likely to exit the aircraft manufacturing industry when industry profit potential falls to zero. The traditional U.S. airlines Delta, United, and American Airlines have large fixed costs to maintain their network of routes that affords global coverage, frequently in conjunction with foreign partner airlines. Given their strategic commitments, neither Delta nor United is likely to merge with other airlines.

A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing.

Stakeholder impact analysis is a decision tool that helps a company do which of the following? (Check all that apply.) Decide where to compete Act as a good corporate citizen Describe the role of functional managers in strategy formulation Achieve a competitive advantage

Act as a good corporate citizen Achieve a competitive advantage

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

Decline in the firm's market share

One of Howard Schultz's strategic initiatives after retaining the reins of Starbucks in 2008 was to shut the company's 7,000 stores for one day so baristas could relearn what makes the Starbucks brand unique. This initiative reflects a focus on which type of strategy? Differentiation cost leadership blue ocean industry effect strategic tradeoff

Differentiation

Which of the following explains how dynamic capabilities are different from the resource-based view? Dynamic capabilities deal with resource heterogeneity. Dynamic capabilities deal with intangible resources. Dynamic capabilities deal with tangible resources. Dynamic capabilities deal with applying resources over time.

Dynamic capabilities deal with applying resources over time.

Visionary companies differ from their competition in that

Employees in visionary organizations find meaning in their work and are motivated.

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because

Entering the aircraft manufacturing industry requires huge capital investments

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.? Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost. Ez Solutions Inc. will have to expand its operations to meet the increasing consumer demand. Ez Solutions Inc. will experience less competition from rival companies. Ez Solutions Inc. will find it easier to raise prices to increase profits.

Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities.

False

Apple developed iTunes as a complement to drive iPod sales...

False

Which of the following is not true concerning a customer-oriented mission? It defines the means of how a customer need will be met. It has more flexibility than a product-oriented mission. It has a higher likelihood of remaining relevant in the long-term. Organizations that have customer-oriented missions are more likely to be successful.

It defines the means of how a customer need will be met.

Stan has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Stan is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Stan is currently at __________ of the Level-5 leadership pyramid. Level 1 Level 3 Level 4 Level 5

Level 4

Toy sales have declined by 10 percent each year ....

No. Bargain's strategy and competitive advantage are unsustainable

STRIKEBYTE. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets will best enable it to gain and sustain a competitive advantage?

The expertise acquired by the employees in the company

Which of the following statements will effectively guide a strategist? It is necessary to isolate the key stakeholders and their needs when formulating a strategy. Industry and firm effects that determine firm performance are independent of each other. Strategy is all about competitive benchmarking and operational effectiveness. The principles of strategic management can be applied universally to all organizations.

The principles of strategic management can be applied universally to all organizations.

a firms strategic resources and capabilities are the unique assets and skills it possesses

True?

Which of the following features about a buyer indicates that the buyer has high bargaining power?

When the buyer operates in an industry where products are undifferentiated.

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities? While a firm's resources are always tangible, its capabilities are by their very nature intangible. While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies. Unlike resources, capabilities do not find their expression in the firm's structure, routines, and culture. Unlike capabilities, the resources of the firm cannot be imitated by its competitors.

While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

In which of the following cases was a company at a major competitive disadvantage? Facebook hired Sheryl Sandberg because Mark Zuckerberg, Facebook's founder, lacked important business skills. Without a clear strategic position, Sears tried to be too many things for too many types of customers. Sam's Club decided to prescreen its customers via required membership to establish creditworthiness. Strategy executives at UPS used scenario planning to identify issues critical to shaping the firm's future.

Without a clear strategic position, Sears tried to be too many things for too many types of customers.

You are the manager of value printing.....

You have failed to take into account resource immobility

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is a temporary competitive advantage. a state of perfect competition. strategic equivalence. direct imitation.

a temporary competitive advantage.

Generally speaking, which of these situations is likely to lead to greater profits? an industry that is about to undergo deregulation a situation that encourages operating at excess capacity a fragmented industry rather than a consolidated one an industry with fewer but larger competitors

an industry with fewer but larger competitors

In a perfectly competitive industry structure resource immobility is high. resource heterogeneity is high. any competitive advantage that one firm has will be short-lived. competitors cannot quickly acquire resources used by the current market leader.

any competitive advantage that one firm has will be short-lived.

21) Threadbare Industries is a new high-end textile company that has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Threadbare Industries to acquire using its capital?

brand name

In the dynamic capabilities perspective, for an asset or a capability to be included in a firm's resource stock, it should be readily available for purchase using cash. commonly shared by other firms in the same industry. built through investments over time. capable of reducing the barriers to entry in an industry.

built through investments over time.

How has Walmart staked out a unique strategic position? by paying high wages to attract the most talented employees by providing excellent customer service in a luxury setting by cutting costs to offer lower prices than competitors by investing 100% of profits in community development programs

by providing excellent customer service in a luxury setting

Strategic-group mapping establishes that competitive pressures within an industry are similar among all strategic groups. competitive rivalry is strongest between firms that are within the same strategic group. product features and prices are irrelevant to a strategic group. rivals inside a strategic group serve different customers.

competitive rivalry is strongest between firms that are within the same strategic group.

All of the following are sources of strategic initiatives except ______. the resource allocation process consumer demand autonomous actions serendipity

consumer demand

Which of the following is Nike's core competency? manufacturing high-end athletic gear building customer loyalty inspiring athletes at all levels creating heroes

creating heroes

Due to resource immobility, a critical assumption in the resource-based model of a firm, the

d) resource differences between firms last for a long time.

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm? increasing productivity of the employees decreasing employee attrition within the firm decreasing government interference in the target market increasing inflation rates in the target market

decreasing government interference in the target market

or a firm to sustain its competitive advantage, any fit between its internal strengths and the external environment must be dynamic. static. valuable. permanent.

dynamic.

Which of the four corporate social responsibilities is considered first and foremost for business enterprises? ethical philanthropic legal economic

economic

According to the Level-5 Pyramid, a Level-4 leader is also referred to as a(n) ______. contributing team member highly capable individual effective leader executive

effective leader

The metaphor of a black swan best applies to small businesses that become successful enough to raise capital through initial public offering. events that are considered highly unexpected and highly impactful when they do occur. highly profitable business units in low growth markets that are to be sustained solely for revenue generation. low profitable strategic business units within a large enterprise that are best divested or liquidated.

events that are considered highly unexpected and highly impactful when they do occur.

In the ______ step of the stakeholder impact analysis, the firm identifies how to effectively address stakeholder concerns

fifth

In the ______ step of a stakeholder impact analysis, firms identify those stakeholders that currently have, or potentially can have, a material effect on the company.

first

In the ______ step of the stakeholder impact analysis, the firm identifies social responsibilities.

fourth

Strategy ______ concerns the organization, coordination, and integration of how work gets done. implementation organization formulation analysis

implementation

Top-down strategy is derived from ______. representational political systems planned emergence strategy military strategy scenario planning

military strategy

An organization's ________ describes what the organization does—the products and services it plans to provide, and the markets in which it will compete. mission vision promissory note code of conduct

mission

Hot Wok cuisine is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Chinese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Hot Wok is most likely operating in a(n) _____.

monopolistically competitive industry

In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n) perfectly competitive structure. monopolistically competitive structure. monogopoly. oligopoly.

monopolistically competitive structure.

Which best describes the competitive industry structure in which Blackberry found itself? perfect competition monopolistic competition monopoly natural monopoly oligopoly

oligopoly

In the ______ step of the stakeholder impact analysis, the firm identifies stakeholder interests and claims

second

The relationship between Phil Knight and Bill Bowerman and their contributions to Nike's success exemplify which aspect of competitive advantage? isolating mechanisms path dependence resource heterogeneity tangible resources social complexity

social complexity

A customer-oriented vision statement focuses employees to think about how best to

solve a problem for a consumer.

In the ______ step of the stakeholder impact analysis, the firm identifies the opportunities and threats that stakeholders present to the firm.

third

Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in? scenario planning top-down strategic planning bottom-up strategic planning strategy as planned emergence

top-down strategic planning

Apple developed iTunes as a complement to drive iPod sales. Which aspect of differentiation strategy does this move represent? competitive advantage cost parity value driver economies of scope economic value

value driver

Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish? vision inspiration mission values

vision

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

An increase in its customers' disposable income

Which of the following statements is true of strategy? Statements of desire, on their own, are strategy. Tactical tools that are a part of a firm's functional and global initiatives are strategy. Operational effectiveness and competitive benchmarking are strategy. Actions that allow a firm to address a competitive challenge are strategy.

Actions that allow a firm to address a competitive challenge are strategy.

Big Wheel, Inc. is a company that manufactures a variety of generators that run on wind power. The company envisions that wind technology will replace all forms of exhaustible energy sources in the near future. Which of the following statements will make an accurate vision for Big Wheel?

All nations around the globe should be able to provide energy produced by sustainable sources.

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE) in 2008?

Any of the five forces on its own, if sufficiently strong, can extract industry profitability.

________ tends to be more fierce when exit barriers in the industry are high, resulting in some firms being locked into the industry. Competitive rivalry Strategic complements Co-opetition Strategic Commitments

Competitive rivalry

What must a firm do after diagnosing its specific competitive challenge? Create an effective guiding policy Collect investments from stockholders Implement a set of coherent actions Identify its primary competitors

Create an effective guiding policy

Which of the following statements does the upper-echelons theory support? Organizational outcomes including strategic choices and performance levels reflect the values of external stakeholders. The leadership actions of executives are independent of their characteristics like age, education, and career experiences. Strong leadership is solely the result of innate abilities and not learning. Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Alan has been an employee with Starts Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Alan has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far?

Level 4

Which of the following factors best contributes to the U.S. automotive industry being characterized by high entry barriers?

car manufacturers require large scale production in order to be cost competitive

According to the Level-5 leadership pyramid, the Level 2 manager is a(n) strategic leader. competent manager. contributing team member. effective leader.

contributing team member.

MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to forward integrate. crowdsource. outsource. backward integrate.

forward integrate.

Smartphone sales have stagnated in developed countries, but they continue to experience high growth in emerging economies. Which aspect of the industry does this trend reflect? chasm framework cost leadership industry life cycle first-mover disadvantage network effects

industry life cycle

Every September, Apple releases new versions of its iPhone, boasting improved functions—for example, wireless charging. Which type of innovation does this action reflect? architectural radical and disruptive radical disruptive incremental

radical

A key feature of an oligopoly is that competing firms behave interdependently with each other

true

The relationship between Phil Knight and Bill Bowerman and their contributions to Nike's success exemplify ?SOCIAL? competitive advantage

true

Which of the following topics should be considered during the analysis phase of the AFI framework? the firm's business model and competitive advantages the external environment and associated challenges the role of strategic leadership and the strategy process the firm's internal strengths and resources all of the above

All of the above

Which of the following scenarios illustrates a firm that has a sustainable competitive advantage?

GoNow Inc. was able to hold its market share of 68 percent in the social networking industry for more than three years.

Which of the following statements should ideally reflect a firm's strategy for competitive advantage?

Our aim is to create superior customer value while controlling costs

The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

PESTEL framework

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be the implication of that decision? The company will tend to be more flexible when adapting to changing environments. The company will clearly define how it means to satisfy a customer need. The company will fail to establish a positive relationship between its vision statement and performance. The company will have a short-term, unidirectional focus.

The company will tend to be more flexible when adapting to changing environments.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? They cannot employ technology efficiently. They can spread fixed costs over lesser units. They benefit from a less specialized division of labor. They can demand better terms from their suppliers.

They can demand better terms from their suppliers.

Which of the following statements is true of customer-oriented visions? They tend to force managers to take a myopic view of the business environment. They define a business in terms of providing solutions to people's needs. They are inflexible regarding adapting to changing environments. They state an organization's goals in terms of a good or service provided to customers.

They tend to force managers to take a myopic view of the business environment.

A surprise event that leads to a change in strategic initiatives, such as the accidental discovery of a new use for an existing product, is known as serendipity.

True

Between 2004 and 2008, Starbucks diversified into businesses like ice cream....; Starbucks performance in the period showed.... ??competitive parity??

True

TransNational Inc., is a large conglomerate that operates in 17 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity, or the value of potential future revenues generated by all its customers in a lifetime. Based on this guideline received from the top management team, the product leader of the home audio division has decided to adopt a cost-leadership strategy in all his 17 units. Thus, the decision made by the product leader best illustrates a ________ strategy.

business

The success of Starbucks lies in its ability to create for the customer a unique experience or "third place" between home and work. This unique experience is also known as Starbucks' resource heterogeneity. value chain. tangible resources. core competency.

core competency.

A fragmented industry turns into a consolidated industry when there are no restrictive government policies introduced in the industry. firms reduce competition within the industry through mergers and acquisitions. the barriers to enter the industry are reduced. the products/services are seen as commodities.

firms reduce competition within the industry through mergers and acquisitions.

Which of these is a way to reconfigure a value chain? thinking about new combinations of resources and capabilities that a firm already possesses, such as repurposing a movie theater as a location for off-site corporate meetings creating a partnership through strategic alliances, such as a bakery partnering with a restaurant preparing to leave an industry rather than supply unreliable or substandard products to customers entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups

entering an industry by offering sporting events on streaming video when competitors are offering them through cable hookups

Gadgets n' Stuff Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Gadgets n' Stuff Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Widgets Inc. is a(n) _________ for the appliance manufacturing company. external stakeholder focus group representative sample internal stakeholder

external stakeholder

The best example of a firm's external stakeholder is a(n)

government agency that regulates the prices of products manufactured by the firm.

The greater the difference between value creation and cost, the less likely a firm will gain competitive advantage. greater a firm's economic contribution. greater a firm's competitive parity. less likely that a firm's strategic position will be competitive.

greater a firm's economic contribution.

The pattern of faulty and biased decision making that occurs in groups whose members strive for argument at the expense of good decision making is called brainstorming. groupthink. devil's advocacy. bounded rationality. Satisficing

groupthink.

Starbucks' adoption of social media and an app that focuses on customer satisfaction suggests that competitive advantage is more likely to spring from ________ resources than from ________ resources. tangible; intangible visible; rare equivalent; substitutable intangible; tangible costly; reputational

intangible; tangible

ECO 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. ECO's strategy failed because

it was not backed up with strategic commitments.

What differentiates Nike from other firms in the athletic shoe and apparel industry and allows it to maintain a competitive advantage over other firms? waffle design of the running shoe its dynamic capabilities Phil Knight's leadership its strategic fit with its environment its globally recognized brand

its globally recognized brand

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

levels of employment

We Build & Build's core competency is building multi-family housing in urban areas. This competency is based primarily on the decisions made by the company's top management over several years to focus on building in densely populated cities. This process is called

path dependence.

Between 2004 and 2008, Starbucks expanded operations rapidly and attempted to diversity from its core business. These efforts diluted its core culture, resulting in competitive parity because the customer experience that was its core competency was no longer organized to capture value. tangible. rare. valuable. Imitable.

rare.

Which of the following has contributed to Tesla's competitive advantage in terms of stock appreciation? copying the most popular features of competitors' vehicles reinvesting profits to continually design and produce better electric vehicles keeping its proprietary technologies secret using inexpensive materials to keep costs low

reinvesting profits to continually design and produce better electric vehicles

Which of the following is an example of a firm's capabilities? routine activities performed in the firm, like physical delivery of products specific tasks involved in the invoicing of customers assets such as plant and machinery owned by the firm skills involved in training and managing a workforce

skills involved in training and managing a workforce

Dimitre Corp. has been able to gain and sustain a competitive advantage due to its strong relationship with its employees, customers, suppliers, and local communities. The company believes in lifetime employment and ensures that its employees grow along with the company. Investors are more than satisfied with the returns on their investments. Also, 3 percent of the company's profit is spent on community development. With initiatives like these, customers feel privileged to associate themselves with RedSteel products. This scenario best illustrates the implementation of a _____

stakeholder strategy

EverMart Inc. is a large company that sells a variety of products such as apparel, jewelry, canned foods, consumer electronics, and automobiles. Apart from this, the company also has a strong presence in the service industry through its chain of hotels, fast food restaurants, and amusement parks. Each of its product divisions operates as an individual business and is responsible for its own profits and losses. Thus, these product divisions under Red Million can be referred to as _____.

strategic business units

Which of the following groups will not be considered a company's internal stakeholder? suppliers board members shareholders Managers

suppliers

Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period? consistent power position long-term capital gain strategic positioning sustainable competitive advantage

sustainable competitive advantage

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's

tangible resources.

Blackberry's response to the introduction of the iPhone was described in the case. The threat of the iPhone came from which environment? task environment political environment legal environment general environment social environment

task environment

A firm's strategic position is likely to be strong when

the gap between the value the firm's product generates and the cost to produce it is large.

Evaluating the data collected from environmental analysis, the corporate executives of BigPharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate? scenario planning bottom-up strategic approach reverse mentoring top-down strategic planning

top-down strategic planning

When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in a competitive advantage through superior performance. trade-offs that work against each other. an increase in the firm's economic contribution. competitive parity with firms that have adopted either of the strategies.

trade-offs that work against each other.

a company that owns failing movie theaters could leverage existing assets by turning the buildings into.....sites

true

Tommy wants to open his own food truck but doesn't know anything about business. He needs help determining who his competition is, how he should craft his strategy to compete and how he'll implement his strategy to achieve a competitive advantage. He's hired you to help him get started. As a result, you know that you will probably use the

AFI strategy framework.

Nuke It is a major manufacturer of microwave ovens. Which of the following statements will best inspire the organization with a shared vision for Fuentes Electronics?

At Nuke It employees at all levels are motivated to make the best microwave ovens on the market.

The _______suggest(s) that because the external environment changes, strategic leaders must choose their current and future investments carefully over time in order to best maintain their firm's competitive advantage.

Dynamic capabilities perspective

A SWOT analysis would provide a definitive answer as to whether a firm's growing footprint in overseas markets is a strength or weakness.

F

Apple releases new version....disruptive innovation

FALSE

As a rule of thumb, the stronger the five forces, the higher the industry's profit potential, .....

False

One of Howard Schultz's strategic initiatives after retaining the reins of ... to shut the company's 7,000 stores for one day so baristas could relearn; this initiative reflects a focus on blue ocean strategy

False

One of Tiffany & Co's tangible resources is...

False

Three large firms dominate the telecommunications industry: AD Telecom Inc., Mystic Telecom Corp., and Total Talk Inc. Instead of cutting prices competitively, these firms have resorted to non-price competition through branding and product differentiation. Which of the following industry competitive structures are these companies most likely in?

oligopoly