Strategic final Exam Review

Industry has become increasingly profitable over last 5 years. Inspect increased competition

True

Macadams enterprises sells the same spark plugs in more than 30 countries. Mac adam is an example that helps to support the globalization hypothesis

True

Smartphones including camera and voice recorders is example of industry convergence

True

When industry is at the end of its life cycle the level of process innovation reaches its max

True

When smartphone manufacturers began including cameras and voice recorders in their products, that was an example of industry convergence.

True

Difference between incremental and radical innovation

Incremental builds on established, radical uses a new base

Which is true of accounting data

Its historical data and backward-looking

Competitive advantage goes to the firm that maximizes the difference between the cost of producing a good and the retail price

false

Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by sparrow Inc. is more than that created by Bison Autos. What does this indicate?

Sparrow Inc. can charge a premium price on it's automobile.

A company's total asset base consists of its current assets plus plant, property, and equipment (PPE)

False

A manager's only responsibility is to monitor and assess the performance of his or her firm.

False

Accounting, HR, R&D are primary activities that directly add value

False

Corporate strategy focuses solely on geographic location

False

Corporate strategy is focused solely on determining the geographic locations in which the firm should compete

False

Even if a merger ma not increase shareholder value as planned, it is often a wise idea to champion it so that managers will have the greater opportunities of working at an expanding company

False

Fabulous Jewelry inc. is considering a takeover of its competitor, cranberry dream jewelry LLC. In general, fabolous should go ahead with the acquisition as long as cranberry is more valuable as a continued standalone company than it would be inside fabulous

False

Sleeprite mattresses Inc. wants to become the largest and most profitable mattress supplier in three-state area. To do this, sleeprite should try to create the smallest possible difference between the value thats its mattresses create and the expenses that the company must spend to produce the mattresses.

False

The internal and external costs associated with an economic exchange are known as interaction costs

False

There are exactly 2 choices for firm boundaries

False

When deciding whether to build, barrow, or buy as a mean of growth, firms no longer need to consider the need for physical closeness to their resource partners

False

When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to outcompete rivals on both cost and product features with the goal of gaining market share at the expense of other competitors in the same industry.

False

Bryan is a manager at a software firm. The CEO tells him that the industry as a whole has become increasingly profitable over the past five years. Based on this information, Bryan is most likely to expect.

Increased competition in the future and therefore he should recommend that the company upgrade its product to slow the entry of rival companies.

Which of the following most accurately describes a difference between incremental innovation innovation and radical innovation?

Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.

Which of the following lists the stages of the industry life cycle in the correct order?

Introduction, growth, maturity, shakeout, and decline

Planet resource, Inc. is a global internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries it serves. Planet resource is most likely doing this to.

Reduce its cultural distance from the countries

Which is a result of horizontal integration?

Reduction of excess capacity

Drawback of pursuing transnational strategy

Requires global matrix structure, difficult to implement

Brian Boost Inc. is a leading educational toy company. Competitors across the globe have failed to imitate brain boost production models, supply chain systems, Knowledge systems, and culture. These attributes have remained unique to brain boosts Inc. for a competitive advantage does this scenario best illustrate?

Resource Immobility

Cord King electronics has entered a stage in which the demand for their innovation fax machines has declined. Now most customers are buying replacement parts or buying their second fax machine from the firm. What stage in the industry life cycle does this scenario describe?

Shakeout Stage

Strategic leaders spend majority of their time working alone on new strategies

False

Managers have exactly two choices when determining the boundaries of the firm: produce goods and services in-house ("make") or purchase them externally ("buy")

False

A conglomerate receives less than 70 percent of its revenues from any single business and features a number of strategic business units that have little to no relationship with each other

True

Advantage of balanced scorecard

Translate vision into measurable operational goals

Which of the following statements is true about accounting data?

Accounting data are historical data and thus backwards looking.

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be

Availability

The primary objective of porter's five forces model is to

Break down a firm's value chain activities into primary and support.

Differentiator least likely to be threatened by input price increases

Can create difference between perceived value and market price

Cloud cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of cloud cones best exemplifies a

Capital gain

You are the CEO of a home appliance manufacturing company and have recently undertaken a review of your company's and have recently undertake a review of your company's strategy. In comparing your stock market valuation to that of your closest competitor, you note that your firm is currently valued at $50 billion, while your competitor is valued at $40 billion. How should you proceed?

Compare the current valuations with past valuations to determine a trend.

Tangles costume jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is tangles using?

Cost-leadership

With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as?

Customer Myopia

Beach Grub is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. Yet, the restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has beach grub adopted in this scenario?

Differentiation

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the

Differentiator is able to create a significant difference between perceived value and current market prices.

when simple semiconductors was operating at the minimum efficient scale of 10,000- 12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear and tear of the machinery, and complexities of managing coordinating. What is the phenomenon known as?

Diseconomies of scale.

As a start-up company, digiWrist entered the low end of the highly competitive smartwatch industry with its low-cost smartwatches. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartwatches in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?

Disruptive innovation

ESB group is the parent company of many related businesses under its banner. Each share of the parent company is quoted at $220. However, if this had to be assessed by adding the stock prices of each of its strategic business units, the value would only be $200 per share. In this scenario, what haas ESB group created?

Diversification premium

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ( $600 minus $400) is the

Economic value created

Manager who are eager to forge business alliances often forget that the expected benefits of the partnership must represent only a small percentage of its monetary and time related costs.

Flase

Nendry is the owner of a firm that produces sports drinks. SInce there are a number of firms in the industry competing on cost, Nendry has decided to pursue a differentiation strategy. In this case, she should?

Focus on adding unique features to her product that customers will value

Incline Electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones, and televisions and also to provide customer service and technical support. However, that retailer outsourced its service departments, and customers began to complain that they could not get reliable tech support for incline products. In response, incline electronics decided to set up its own tech support department, and it also began to investigate opening its own brand-based retailer stores. What does this scenario best illustrate?

Forward vertical integration

Ira can be categorized under the late majority customer segment. Which of the following behaviors is he most likely to exhibit?

He will prefer to buy from well-established brands rather than unknown new ventures

How does causal ambiguity act as an isolating mechanism for organizations?

It makes it difficult for the competitors to understand why a company has been so successful.

Which of following is a drawback of pursuing a transnational strategy?

It requires a global matrix structure, which is difficult to implement.

Elemental Pharma Inc. recently acquired crick pharmaceuticals Inc. it now sells its own products along with the products originally sold by Crick Pharmaceuticals. As a result, Elemental Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect elemental pharma?

It will lower its costs through economies of scale.

GN Corp. and BC Inc. are two competing firms in the same industry. GN Corps tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc S tangible are values at $5 billion and its its intangible assets are valued at $45 billion. What can be concluded from this information?

Judging from the assets listed, BC Inc. has probably been in the industry a much shorter time than GN corp.

When ReGen Pharmaceuticals released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. however, any attempt by competitors to copy the chemical composition would result in infringement of ReGen pharmaceuticals intellectual property rights. Thus, the drug is protected by a

Patent

Both countries have similar consumer incomes and knowledge bases and share common language. Also, the transportation networks between the countries are strong. Even so, the two nation have a long-standing dispute concerning the control of an area of land along their common border. Currently West Fenwick rules this land. Which of the following would most likely prevent Calabash from expanding into East Fenwick?

Political distance

Which of the following statements is true about strategic groups?

Profitability varies between strategic groups.

Which involves evaluation of internal/External environment?

Strategy analysis

Firm put guiding policy into practice by employing a set of coherent actions through

Strategy implementation

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

The german multimedia conglomerate bertelsmann operates in more that 60 countries throughout the world and owns many regional leaders in their specific product categories, including random house publishing in the United States. Bertelsmann operations its more than 500 regional media divsion as more or less autonomous profit-and-loss centers, but it attempts to share best practices across units. Global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is following a

Transnational strategy

The top management at Sunshine Vitamins, through rigorous testing, ensures that the company develops and sells vitiams that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept at a bare minimum and is disposed of according to the regulations of the environmental protection agency. The management assesses its overall performance based on these dimensions. Thus, the managers at sunshine Vitamins are applying the ________ approach to measure firm performance.

Triple-bottom - line

A small coffee shop faces significant potential competition because of the low capital requirements compared with business environment such as universities and laboratories.

True

It is april 2018 and mark is a novice investor who wants to decide between purchasing shares in eaglecorp or myna bird inc. in fiscal year 2017, eagle corps return on invested capital (ROIC) was 15 percent, and its cost of capital wad 12 percent. During the same period, myna bird incs ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell mark?

Eaglecorp is more likely to create value while Myna Bird Inc. is more likely to destroy value

Firm introduces new products that can be made with existing resources, resulting in lower cost

Economies of scope

Heirloom furniture is a brand reputed for its wide variants of sofas that introduced a new range of mattresses and bed frames a few years ago. since most of its products could be produced using the same resources and technology, the company's costs structure lowered, while its product portfolio widended. In this scenario, which of the following value and cost drivers is heirloom applying.

Economies of scope

It is important for a firm to win over the early majority section of the market to ensure the commercial success of an invitation because they

Enter into the market in large numbers, creating a herding effect.

In Vue, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, In Vue's competitors have begun to produce more-advanced technologies like 4K ultra HD and internet- enabled smart televisions. According to the dynamic capabilities perspective, what should In Vue do?

In Vue should start working on Ultra HD and Smart televisions technologies to adapt its core competency to suit external environment

Which of the following is an advantage of the balanced-scorecard?

It allows managers to translate a firm's vision into measurable operational goals.

Which of the following is a disadvantage of a horizontal integration corporate strategy

It increases the potential for legal repercussions

How does causal ambiguity act as isolating mechanism

Makes it difficult for competitors to understand source \

Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific websites that offer textbook and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of

Product diversification

Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?

The framework does not explain everything about changes in industries.

Which of following conditions prevails when an industry is at the end of its lifecycle?

The level of process innovation reaches its maximum as firms attempt to lower cost.

Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc. a rival company. What does this imply?

The resource flow into unicorn autos Inc. was reduced.

Which of the following is a result of horizontal integration in terms of porter's five forces model?

There is a reduction of excess capacity in the market.

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?

There is more strategic variety in the growth stage when compared to the introduction stage

The administrative and political distance between two trading countries decreases when

There is well-funding capital market in the host country.

Firm offers country specific versions of product aware of language and other differences. Why?

To reduce cultural difference

A video-streaming service provider such as netflix is a complement to a manufacturer of streaming video devices such as Ruku.

True

Accounting, human resources, and research and Development are examples of primary activities that add value directly to the value chain.

True

Drawback of Porter's Five Force is managers cannot determine rate of innovation of change

True

Managers of firm A buy from Firm B. no previous experience with product B but sure they can run firm B

Managerial

Invoro is a market leader in consumer electronics. If Phenol and ether, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then

Enviro will have sustainable competitive advantage in the industry.

A candy company called hearts Aflame Inc. forms an agreement with another candy company called Dreamcatch Inc. Though this agreement, heart Aflame owns 30 percent of Dreamcatcher. However, Dreamcatcher does not own any of hearts Aflame. This type of agreement is called a(n)

Equity alliance

Firm in the same industry are automatically in same strategic groups

False

Firms within the same industry automatically belong to the same strategic group.

False

Mergers are good even if no increase in firm value because they increase manager opportunities

False

Facing Stiff competition in the E-reader market, sumac Industries wants to protect its competitive advantage by increasing the perceived value of its reader. Sumac's best strategy to accomplish this would be to?

Highlight the number of celebrities who use Sumac e-readers.

Differentiators tend to score highly on most competitive elements on a strategy canvas, while cost leaders tend to hover near the bottom of the strategy

True

Wacky Pop Inc. produces an inexpensive microwave popcorn that is well tailored for the tastes of the U.S consumers. However, it has failed to satisfy the consumer preferences of its host country, Japan. Which of the following categories has WackyPop performed poorly in?

Local responsiveness

Make sense Inc. a company that manufactures and sell premium perfumes is pursuing an international strategy. Pice smasher Inc.,. A supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario?

Makes sense Inc. will pursue a differentiation strategy at the business level, Whereas price smasher Inc. will pursue a cost-leadership strategy at the business level

Winter Wonder Inc. is a leader in producing winter sports equipment, including skis and skates. recently , the firm decided to expand into the bobsled market and acquired sleds by bob inc. This company produced bobsleds, but it sales had slowed. The managers of winter wonder convinced themselves that they were able to manage the manage the business of sleds by Bob more effectively even though they had no experience in the bobsled market. However, this move backfired and the scale of Sleds by Bob's bobsleds plummeted. Which of the following terms is often used to described this scenario?

Managerial Hubris

Which of the following is a drawback of porter's five forces model?

Managers cannot determine the changing speed of an industry or the rate of innovation.

The managers at speed automobile Inc. want to diversify the business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the application in shareholder value. In this scenario, this acquisition by speed automobile is most likely a result of

Principal - agent problems

Groundswell Industries, U.S- based large conglomerate, competes in the hospitality, education, telecommunications, entertainment, airlines, and chemical industries. It currently operates in about 30 nations, and is planning to expand its portfolio by investing in rapidly developing countries. Which of the following strategies is Groundswell industries pursuing?

Product-market diversification strategy

Market segment with unsteady earning that might be growing

Question Mark

TimeEnough Inc. Entered the low-priced digital watch market several years ago. This firm's earning have been unsteady, but might be growing. According to the BCG growth matrix, TimeEnough is a

Question Mark

Firms are more capable than markets at coordinating highly complex tasks, while markets are more capable of providing high-powered incentives for entrepreneurship

True

Janessa Inc. a reputed brand for fine art supplies, is implementing an international strategy. Slalom Corp.. a maker of mini computer tablets, is pursuing a global-standardization strategy. Which of the following statements most likely holds true in this scenario?

Slalom Corp. focuses more on cost-reduction when compared to Janess Inc.

The company has determined that busy-middle class customers will value the convenience of the new model, which allows them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales of personal. What question remains for rock bottom to ask in order to put its strategy in action?

What activities need to be performed to create and deliver the offerings to consumer?