MGMT344 Quizzes

Which statement is true of the development stage of the industry life cycle? a. Only successful firms grow to become major businesses in this stage b. Investment requirements are high in relation to profits c. Innovating more efficient processes is the key to success d. Rivalry is high e. The prospective market size is still low

b. Investment requirements are high in relation to profits

In considering the 2015 Paris Agreement on climate change, which of the following would be accurate to say in a PESTEL analysis? a. All of the other three options b. It can be seen as a step within a larger-scale megatrend away from the most climate-adverse activities c. If largely ratified and/or influential, it could become an inflexion point for climate change policy d. It has ramifications under several PESTEL headings including Political and Legal

a. All of the other three options

The cost of a consumer moving from the product offering of an incumbent company to the product offering of a new entrant is called a. Brand loyalty b. Economies of scale c. Switching costs d. Changeover costs e. Competition costs

c. Switching costs

Which of the following is NOT a criticism of the Boston Consulting Group growth-share matrix according to the course textbook? a. Due to its relative complexity, it has never become influential in practice b. It is unkind to animals, in that cash cows and dogs receive ungenerous treatment c. The criteria can be debated and manipulated, for example by redefining the market a business unit operates in d. It erroneously assumes that business units in a multi-business firm are independent of one another e. It fails to account for equity and loan funding available to well-run firms in developed countries

a. Due to its relative complexity, it has never become influential in practice

Cardboard University has a corporate centre run by a leader or Vice Chancellor, with several colleges reporting to the corporate centre. The University is highly decentralised in its strategic planning, so that it allows a lot of autonomy to academics in each of its constituent colleges to decide their own strategic objectives. However, budget cuts mean the Vice Chancellor must keep financial resources under very tight control, so the Vice Chancellor sets strict financial targets for each college, which are used to measure each college's performance. Which of the following control styles (strategy styles) is this an example of? a. Financial Control b. Tyrannical Dictatorship c. Financial Planning d. Strategic Planning e. Strategic Control

a. Financial Control

Which of the following is not true in relation to the industry lifecycle model? a. Some industry lifecycles are short, for example high-tech devices which are re-launched almost annually b. Decline is not inevitable in an strategically relevant timeframe c. Mature industries are not as unattractive as the lifecycle implies d. The stages can vary hugely in length e. Firms need to review their industry competition analyses regularly

a. Some industry lifecycles are short, for example high-tech devices which are re-launched almost annually

What is meant by strategic lock-in? a. When customers face high switching costs if they move to an alternative supplier b. When the front door to the establishment is locked and the local police are invited to the party c. When a firm has been found behaving unethically and therefore has a restrictive strategy imposed d. When imitators and substitutes are locked into accepting new customers e. When customers are contractually obliged to use the same supplier for an extended period

a. When customers face high switching costs if they move to an alternative supplier

A high level of protected intangible resources such as patents, rights, trade secrets and trademarks can: a. None of the three options are true, since the protections can easily be circumvented b. All three options are true c. Form the basis for competitive advantage d. Require significant legal expenditure to defend e. Result in strong licensing and royalty revenues

b. All three options are true

Which of the following does principal-agent theory highlight as a problem within the chain of corporate governance? a. There is an imbalance of knowledge in which individuals higher up the chain (investors, boards) know more than those who are lower in the chain (managers, executives). b. Bonus schemes introduced to incentivise desired management performance are prone to 'gaming' by managers. c. Individuals acting within the chain of governance act both as principals and as agents. d. The shareholder model of governance may leave minority shareholders vulnerable to the actions of majority shareholders. e. It is very difficult for agents such as senior managers to monitor closely the performance of principals such as the board of directors

b. Bonus schemes introduced to incentivise desired management performance are prone to 'gaming' by managers.

Which of the following is a common mistake in drawing up strategic group maps? a. Often there are mobility barriers that prevent free movement between the identified groups b. Often the two chosen axes are related to one another so that all firms plot along the diagonal c. Often the analysis is incomplete, because it includes 'white spaces' or 'black holes' d. Often firms are plotted by characteristics that are not visible to the market, such as size or ownership structure

b. Often the two chosen axes are related to one another so that all firms plot along the diagonal

In the 'value chain' as put forward by Michael Porter within an organisation: a. Can be used to analyse the potential for improved value-creating linkages between firms. b. Once activities are identified, they can be evaluated in terms of cost drivers and in terms of importance to the firm's competitive advantage. c. The way the primary activities are broken down shows that the concept is designed only for manufacturers of physical goods d. The activites map onto the categories on a traditional organisation reporting chart, for example 'human resource management' activities would all be carried out within the specialist HR function. e. It is the primary activities that create value, whereas the support activities do not.

b. Once activities are identified, they can be evaluated in terms of cost drivers and in terms of importance to the firm's competitive advantage.

Which of the following is a risk of cost leadership? a. Attempts to stay ahead of the competition may lead to higher prices b. Marginal utility increases at a faster rate than average costs c. Cost-cutting may lead to the loss of desirable features d. Producers are more able to withstand increases in suppliers' costs e. Cost differences increase as the market matures

c. Cost-cutting may lead to the loss of desirable features

According to the Johnson, Whittington & Scholes textbook, balanced scorecards typically set performance targets based on a number of different perspectives. Which of the items below is NOT specifically referred to as a balanced scorecard perspective? a. Customer perspective b. Innovation and learning perspective c. Dynamic Capabilities perspective d. Financial perspective e. Internal perspective

c. Dynamic Capabilities perspective

What does the horse manure crisis example discussed in class illustrate about firms' analysis of their macro environment? a. The need to differentiate between short-term economic cycles and longer term structural changes. b. Single-point forecasting applies only in limited circumstances. c. It can be a problem that insiders can be biased towards status-quo thinking. d. Industry participants (conference attendees) had failed to recognise the 'megatrend' leading to more horses in cities.

c. It can be a problem that insiders can be biased towards status-quo thinking.

Which one of the following is a value-destroying rationale for diversification, according to the course textbook? a. It gives the firm greater power relative to competitors that have narrower scope. b. It enables the firm to profit from applying the same 'dominant logic' across businesses that share few resources with each other c. It enables the firm to reduce risk by spreading its income streams across markets. d. It enables the firm to profit from having more efficient internal processes than those existing in the wider market. e. It creates greater economies of scope.

c. It enables the firm to reduce risk by spreading its income streams across markets.

Go Faster Stripes Ltd makes graphics to enhance the design of customised second-hand cars for Christchurch's unfeasibly large, noisy and irksome population of 'car enthusiasts' (boy racers). Go Faster tries to delegate strategy to a business unit, whilst retaining the involvement of the centre in a consensual approach and searching for a few key measures of control. Which of the following control styles is this an example of? a. Handbrake turn Planning b. Strategic Planning c. Strategic Control d. Financial Control e. Financial Planning

c. Strategic Control

Which of the following is NOT a constraint or risk associated with one of the corporate strategy directions highlighted by the Ansoff Product-Market matrix? a. Taking market share from competitors can result in retaliation b. New product development inherently involves a degree of execution risk, especially when it incorporates relatively new technologies c. Vertical integration can be risky when it involves operations outside of the firm's existing expertise d. A firm's existing market expertise is often a poor match for new geographic markets e. Big diversified conglomerates often end up with a lower stock market valuation than they would as separate companies

c. Vertical integration can be risky when it involves operations outside of the firm's existing expertise

Which of these behaviours firms may be tempted to adopt in a mature industry would be unlawful in most countries? a. Tacitly following price increases of the least efficient player in the industry b. Not matching competitor price increases c. Matching competitor price cuts quickly d. A firm meets informally with its main competitors to coordinate price changes e. Using various tactics to win customers without aggressively competing on price, hence maintaining healthy margins

d. A firm meets informally with its main competitors to coordinate price changes

In terms of the 'resource-based view of the firm', the relationship between a firm's resources and its capabilities can best be described as follows: a. None of the other answers b. They are essentially different words for the same thing c. Capabilities are based on human resources whereas resources belong to the firm IncorrectThis is an odd statement. The topic is about resources/capabilities that the firm controls and can exploit. d. Capabilities are the outcome of resources working together effectively e. Resources are tangible assets; capabilities are intangible

d. Capabilities are the outcome of resources working together effectively

Which of the following is a true statement about defining the 'right' industry on which to perform industry analysis? a. The scope of the industry should be defined so as to encompass all major substitute products b. The industry boundary should separate firms that have different strategic characteristics (such as scope or resourcing) c. Because the analysis is typically meant for an individual company, the company should be the focus rather than the industry d. It is sometimes useful to conduct industry analysis for distinct segments or markets before assembling a picture for the industry as a whole

d. It is sometimes useful to conduct industry analysis for distinct segments or markets before assembling a picture for the industry as a whole

Which of these characteristics should not be used in identifying a key driver for scenario analysis? a. It should be something that is not closely correlated with other drivers used in the analysis. b. It should be something for which the future is highly uncertain. c. It should be something whose outcome has clearly identifiable high impact on the business. d. It should be sufficiently likely to happen in practice. e. It should be relevant to the scope defined for the analysis

d. It should be sufficiently likely to happen in practice.

When a firm finds itself making losses due to increased competition, lower margins and slower growth, which of the following could be a true statement? a. The firm should respond according to recommendations for a declining industry b. Firms in these circumstances should generally seek to exit the industry c. The firm should build capacity to avoid leaving a 'vacuum' that competitors fill d. The firm could be facing 'shakeout' conditions or subject to unfavourable conditions in an economic cycle e. Firms in these circumstances should generally invest more heavily in product innovation

d. The firm could be facing 'shakeout' conditions or subject to unfavourable conditions in an economic cycle

One can explain the difference between the macro environment and the business environment layers within it as: a. That managers are able to influence the macro environment more effectively than they can industry competition. b. That the industry or sector has a critical influence on the macro environment c. Industry factors can seem too big, complex and unpredictable to grasp, whereas managers tend to grapple with the macro layer on a daily basis. d. The industry (or sector) encompasses players such as customers and suppliers, whereas the macro environment comprises the broad economic, political, social and technological context e. The macro environment is diffuse, whereas the next layer consists of a small group of close competitors.

d. The industry (or sector) encompasses players such as customers and suppliers, whereas the macro environment comprises the broad economic, political, social and technological context

One aspect of using a cost-leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by: a. Only the market leader in a given industry b. Extremely old people doing repetitive tasks for 70 years c. Spreading out a given expense or investment over a greater volume d. The tendency of people to find a process easier once they have repeated in many times e. Hiring more experienced personnel

d. The tendency of people to find a process easier once they have repeated in many times

Which of the following is an accurate statement about the role and conduct of boards of directors? a. The role of executive directors has been advocated more strongly in recent years. b. Board stability and uniformity are important to ensure consensus at all times. c. They are typically expected to work closely with management on a day to day basis. d. They may delegate the strategic management process almost entirely to management, or may engage in it actively. e. Directorships are typically ceremonial in nature, involving minimal responsibilities and long lunches

d. They may delegate the strategic management process almost entirely to management, or may engage in it actively.

Which of the following is untrue about the stances firms can take towards social responsibility? a. A central idea of the 'enlightened self interest' approach is that responsible strategies ultimately reward shareholders. b. The laissez-faire stance may be adopted by smaller businesses that lack the resources to do more than minimally comply with regulations. c. Voluntary publication of sustainability measures such as triple bottom line is part of the 'forum for stakeholder interaction' stance. d. A stance as 'shaper of society' is mostly associated with public sector organisations and social entrepreneurs e. As discussed in the lecture, the laissez-faire stance is ultimately more profitable to owners and shareholders.

e. As discussed in the lecture, the laissez-faire stance is ultimately more profitable to owners and shareholders.

High product differentiation is generally accompanied by: a. An ostentatious fanfare delivered by several golden trumpets b. Higher profit margins and lower costs c. Lower market share and lower costs d. Higher market share e. Decreased emphasis on competition based on price

e. Decreased emphasis on competition based on price

A limitation of using Porter's 5 forces model as the basis to analyse industry competition is a. It cannot be used in industries that experience punctuated equilibrium b. All of these apply c. High mobility barriers prevent companies in a strategic group from earning above-average returns d. It fails to recognise the importance of industry characteristics in determining profit rates e. It de-emphasises the role of innovation

e. It de-emphasises the role of innovation

According to Goold, Campbell and Alexander, which of the following is a valid way for a corporate head office to add value to the businesses in its portfolio? a. The head office adds value principally by optimising use of funds across business units according to their investment needs and income generating capacity b. It can maintain strict control over business unit managers by centralising all key services as well as strategic decisions c. By publishing only consolidated accounts, it can keep from view any poor financial performance in a business unit d. Due to its size and scope, the head office is able to attract and retain higher paid managers and occupy more prestigious premises e. It possesses certain skills/expertise that matches actual needs of the business unit.

e. It possesses certain skills/expertise that matches actual needs of the business unit.

For G. Hamel and C.K. Prahalad in 1990, core competences of the firm can be a. The source of prediction for the future of the firm and the evolution of its external environment, as well as the source of new products b. None of the other answers c. A source of cohesion for a firm's identity d. The basis for the firm's strategy and the unifying concepts behind its corporate culture e. Linked sets of constituent skills, activities and resources that are the basis for differentiation from competitors

e. Linked sets of constituent skills, activities and resources that are the basis for differentiation from competitors

Which of the following is not (according to the textbook) a potential disadvantage of the 'shareholder model of governance' dominant in stock-market listed companies? a. Weak monitoring can allow CEOs to empire-build in ways that do not add value to shareholders. b. If all shareholders have small holdings as a percentage of the whole, monitoring of the board is diluted. c. Minority shareholders can be vulnerable if there are dominant institutional shareholders with different interests. d. It causes managers to emphasise short-term gains at the expense of long-term projects. e. Managers are free to make better decisions in the company's interest, as they are not subject to conflicting demands from different stakeholder groups.

e. Managers are free to make better decisions in the company's interest, as they are not subject to conflicting demands from different stakeholder groups.

Which of the following is NOT a type of (strategic control) "system" mentioned in the Johnson et al. textbook? a. Cultural systems b. Performance targeting c. Internal markets d. Direct supervision e. Multidivisional

e. Multidivisional