MGTS 4481

Companies that pursue related diversification are able to create a diversification premium because they:

are able to increase value due to economies of scope

Which of the following best illustrates a process innovation as opposed to product innovation?

An automobile company using computer-aided design in its production

While KFC focuses on international markets, its competitor, Chick-fil-A, focuses on the domestic U.S. market. What is the reason behind this strategic difference? A. KFC has more financial resources than Chick-fil-A since it is a publicly traded stock company. B. Chick-fil-A has a larger customer base and number of outlets in the U.S. market than its competitor KFC. C. KFC wants to follow a differentiation strategy, and Chick-fil-A wants to pursue a cost-leadership strategy. D. Chick-fil-A is part of a large conglomerate, whereas KFC has more flexibility to pursue a geographic diversification strategy.

A. KFC has more financial resources than Chick-fil-A since it is a publicly traded stock company

Which of the following is NOT a reason why firms enter alliances? A. To replace competitive advantage with competitive parity B. To strengthen competitive position C. To enter new markets, either in terms of geography or products and services D. To learn new capabilities

A.To replace competitive advantage with competitive parity

How is the early majority section of consumers different from the late majority section?

Although the early majority is confident in their ability to master a new tech., the late majority is not.

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply? A. The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be non-price based. B. The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation. C. The electric car industry will move to the maturity stage, whereas the industry for MP3 players will enter the growth stage next. D. The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.

B. The industry for electric cars will focus more on product innovation whereas in the MP3 player industry, the focus will be on process innovation

The typical four-step innovation process begins with: A. the modification and recombination of an existing product or process. B. the presentation of an idea as findings derived from basic research. C. the commercialization of an invention by entrepreneurs. D. a competitor's attempt to imitate an innovation.

B. The presentation of an idea as findings derived from basic research.

Which of the following is an example of an external transaction cost? A. the cost of setting up a production unit B. the cost of searching for a contract manufacturer C. the cost of recruiting and retaining employees D. the cost of maintaining plant and machinery

B. the cost of searching for a contract manufacturer

How has Apple been able to sustain its competitive advantage in the smartphone industry? A. by reducing its network effects B. by targeting its new products and services toward laggards C. by driving the price for the end user to zero D. by regularly introducing incremental improvements in its products

By regularly introducing incremental improvements in its products.

Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its technological competencies along with Cadvia Autos's marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A. Backward integration B. Forward integration C. Horizontal integration D. Vertical integration

C. Horizontal integration

How does taking a real-options perspective by entering strategic alliances help incumbent firms?

C. It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade.

Which of the following states is NOT true of tacit knowledge? A. it is concerned with knowing how to do a certain task B. It is knowledge that cannot be easily codified. C. It is regularly shared between partners in a non-equity alliance. D. It is acquired only through actively participating in the process.

C. It is regularly shared between partners in a non-equity alliance

Real Goods Inc. is a large conglomerate. The company's beverages strategic business unit (SBU) has been recognized as a cash cow, and its tobacco SBU has been categorized as a dog. Which of the following can be inferred from this scenario? A.While the tobacco SBU operates in a low-growth market, the beverages SBU operates in a high-growth market. B. The management of the company should use the cash inflow from the beverages SBU and invest it in the tobacco SBU. C. While the market share of the company in the beverages industry will be high, the market share in the tobacco industry will be low. D. The tobacco SBU should follow a backward integration strategy, and the beverages SBU should pursue a forward integration strategy.

C. While the market share of the company in the beverages industry will be high, the market share in the tobacco industry will be low.

Both Myoco Electronics Inc. and Electra Series Inc. have achieved cost parity in the television market. To gain and sustain a competitive advantage against Electra Series, Myoco Electronics should: A. achieve differentiation parity with Electra Series. B. keep its value gap lower than that of Electra Series. C. create greater perceived economic value than Electra Series. D. increase its cost of production to more than that of Electra Series.

C. create greater perceived economic value that Electra Series

Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to:

C. fill gaps in its competency lineup.

Silver Weave Inc., an apparel company, operates through a business model in which individuals can buy the rights to set up Silver Weave stores and sell the company's merchandise in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to stock the collection approved from the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate? A. crowdsourcing B. credit rationing C. franchising D. bootstrapping

C. franchising

Free Color Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Free Color applying? A. Cost-leadership B. Differentiation C. Niche marketing D. Product diversification

Cost-Leadership

In the Boston Consulting Group (BCG) growth-share matrix, strategic business units categorized under dogs: A. compete in a low-growth market but hold considerable market share. B. hold a high market share in a fast-growing market. C. compete in a high-growth market but have low and unstable earnings. D. hold a small market share in a low-growth market.

D. hold a small market share in a low-growth market.

_________ is best described as decreases in cost per unit as output increase

Economies of Scale

BuyMart Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against BuyMart's low prices. Thus, BuyMart has a competitive advantage due to its:

Economies of scale

Which of the following is an ineffective practice in alliance management?

Focusing on developing an alliance-management capability in isolation

_____ is best described as a situation in which one party is more informed than another, because of the possession of private information.

Information asymmetry

______ is best described as the commercialization of any new product, process, or the modification and recombination of existing ones

Innovation

How has the long tail business model affected eBay as an online retailer.

It has helped overcome the problem of thin markets, at no cost to the buyer.

Rosa Apparels Inc. outsources its production to contract manufacturers located in underdeveloped nations where unskilled labor is available in plenty for very low wages. This has helped the apparel brand become a price leader in the industry. Which of the following is the key driver behind Rosa Apparel's strategic position? A. Network effects B. Superior customer service C. Availability of complements D. Low-cost input factors

Low-cost input factors

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage. Which of the following stages of the industry life cycle will they move to next?

Maturity stage

_______ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale

Minimum efficient scale

Which of the following is a drawback of joint ventures?

They necessitate the sharing of rewards between the partners.

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance.

Related-linked diversification.

Which of the following is more of a value driver than a cost driver?

Superior customer service

In Eli Lilly's Office of Alliance Management, who is responsible for providing alliance training and development?

The alliance manager

In a non-equity alliance, which of the following types of information would firms most likely share?

The documented information about the material composition of a product

The productivity frontier function is concave, and it captures the

Trade-off between value creation and production cost.

Why is it easier for new entrants to involve in radical innovations when compared to incumbent firms?

Unlike incumbent firms, new entrants do not have formal organizational structures and processes.

Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters?

Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns.

A company that uses differentiation strategy can achieve a competitive advantage as long as its:

economic value created is greater than that of its competitors

A differentiation strategy works best when a:

firm has intangible resources, is able to pass on increases in supplier cost to the customer and its differentiation appeal creates customer loyalty.

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.

industry

The success of the Pixar-Disney strategic alliance demonstrated that:

the two entities' complementary asset matched.

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's:

vertical integration