Strategic Management Exam 1 Practice

________ describes a process in which the options one faces in a current situation are limited by decisions made in the past. A) Social complexity B) Path dependence C) Cannibalization D) Causal ambiguity

B

How does causal ambiguity act as an isolating mechanism for organizations? A) It makes it difficult for the competitors to understand why a company has been so successful. B) It creates a situation in which different social and business systems interact with one another. C) It makes it difficult for competitors to deploy their resources by creating ambiguity within their organizational structures. D) It makes it difficult for competitors to imitate core competencies quickly due to time compression diseconomies.

A

In an industry, the threat of entry is high when A) capital requirements are low. B) expected returns are low. C) technological know-how is industry specific. D) switching costs are high.

A

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit? A) Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry. B) Suppliers have weak bargaining power because they offer products that are not differentiated. C) Entry barriers in the industry are high, resulting in hardly any new airlines popping up. D) Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

A

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines? A) The overall industry profitability will increase. B) The threat of strong competitive forces such as supplier power will increase. C) The industry will face excess capacity in the future. D) The structure of the industry will change from consolidated to one that is fragmented.

A

The competitive advantage that one firm has will be short-lived in an industry in which A) resource immobility is high. B) perfect competition exists. C) resource heterogeneity is high. D) capabilities of a firm are not easily replicable.

B

The primary objective of Porter's five forces model is to A) understand valuable, rare, and hard-to-imitate resources. B) understand the profit potential of industries. C) reduce the gap between the value of a firm's product and its cost of production. D) break down a firm's value chain activities into primary and support.

B

Which of the following is the best characterization of sociocultural forces? A) a firm's culture, norms, and values B) a society's culture, norms, and values C) a competitor's culture, norms, and values D) a focus group's culture, norms, and values

B

Which of the following statements accurately brings out the difference between tangible and intangible resources? A) Tangible resources contribute to a company's competitive advantage, whereas intangible resources have little effect on competitive advantage. B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased. C) Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. D) Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily replicated.

B

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 A) core competency. B) intangible resources. C) tangible resources. D) capabilities.

C

________ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy. A) Embargoes B) Cartel arrangements C) Isolating mechanisms D) Market niches

C

Economies of scale are cost advantages that accrue for firms with A) high fixed costs. B) low employee turnover. C) larger output. D) high capital risks.

C

Which of the following is a macroeconomic factor that can affect a firm's strategy? A) power of buyers B) power of suppliers C) levels of employment D) threat of substitutes

C

A firm's strategic position is likely to be strong when A) the entry barriers within the industry it operates in are low and the exit barriers are high. B) its suppliers and vendors can easily forward integrate, and buyers can backward integrate. C) all the five forces in Porter's model are strong. D) the gap between the value the firm's product generates and the cost to produce it is large.

D

According to the value chain analysis, which of the following is a primary activity? A) research and development B) human resources management C) accounting and finance D) marketing and sales

D

In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness? A) fall in the purchasing power of the firm's customers B) increased competition in the industry where the firm operates C) irregularity in the raw materials supply throughout the industry D) decline in the firm's market share

D

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as A) tangible resources. B) reserves. C) capital gains. D) capabilities.

D

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A) VRIO framework B) SWOT analysis C) BCG matrix D) PESTEL framework

D

The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment? A) a reputation for fast customer service B) a culture of proactive communication C) patents for electronic components D) the punch presses that produce parts

D

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly? A) Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized. B) In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four. C) Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices. D) In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

D