Strategic Management Exam 2

The airline industry seems to show

???

When companies developed their own software in the United States they were engaging in backward vertical integration, but when they started using independent companies to develop these software, they were more vertically integrated

False

The _______ focus(es) on the relationship between the cumulative volume of production and average unit costs, the _______ focus(es) on the relationship between the volume of production at a given point in time and average unit costs.

Learning curve; economies of scale

When thinking about the car industry, we would say that the bargain power of the dealer is

Low

We can say that when the industry competes by cost:

Margins are low

What was the problem of Disney's alliance with Mattel?

Mattel was prioritizing production and marketing of their own product over that of the alliance

According to the opportunism-based explanations of vertical integration, which of the following would be the most appropriate type of compensation to support strategic implementation?

Stock grants for individual performance

Considering the case context (Zara). When analyzing the focal industry rivalry.

Storage and fixed costs are the main drivers to high rivalry

When analyzing the industry's direct competitors rivalry:

Having a large number of direct competitors increases the rivalry due to thesimilarity to perfect competition market structures

Why was Michael Jordan good at basketball but not baseball?

He was specialized towards basketball

When considering firm's internal capabilities:

Internal capabilities are the source of the potential competitive advantage.

What is the primary reason assembly lines are efficient?

Labor at each step can be highly specialized

When considering firms such as ford, what change in manufacturing may allows a firm to efficiently create goods and services ( to obtain economies of scale)

Labor specialization and production loss

Large exit barriers decrease the rivalry because

Large exit barriers do not decrease the rivalry

What needs to be the case for an alliance when entering a new market or technology in order to make sense?

The cost of forming the alliance needs to be lower than the cost of entering alone

In general, first-mover advantages can arise from

The creation of customer switching costs

When considering Microsoft acquisition of Nokia

They acquired Nokia as a driver to attempt to massify their mobile OS to the smartphone industry

Which of these features in Sergio's definition of internal capabilities?

They are the source of potential competitive advantage

Why do firms pursue mergers and acquisitions even though most fail?

They believe that they will unlock some synergy between the two firms that will make them more profitable

When considering Southwest's value chain

They can create value from their cost leadership business- level strategy, but they need to share part of it with the passengers.

Why does a new entrant to an industry care about switching costs for the industry's customers?

They know that if they are high, it will be expensive for prospective customers to try their product

When considering Inditrex's corporate strategy, it seems correct to say that:

They vertically integrated forward to for Zara

By the time the case was written. Which of the five forces is not high in the PC industry?

Threat of Substitution

How did Tesla achieve differentiation in its product at its start?

Unique car features and electric engines

In an industry that competes by cost and intensively uses electricity

Using Diesel fuel to generate electricity seems as a bad idea

As long as the cost of _____ to enter a new industry is less than the cost of ________, an alliance can be a valuable strategic opportunity.

Using an alliance; learning new skills and capabilities

The set of business activities in which a firm engages to develop, produce, and market its products or services is known as its

Value Chain

What is the typical result of most mergers and acquisitions?

Value destruction

Considering the suppliers for the retail fashion industry

We could say that the suppliers are substantially more fragmented than the focal industry

What does it mean if you can perform a step in a value chain more efficiently than an outside firm?

You should do it internally

If Digpics were to agree to spend a significant amount of money to establish a new assembly line for a large client, picpro that has unique needs that would be largely useless for any other customer, the funds Digpics spent in establishing this line would be an example of

A transaction-specific investment.

Which of this M&A were announced but never happened?

All are correct

Alliances can be used to:

All are correct (access to new markets, access to valuable resources/capabilities...)

In terms of new entrants, one could say

Accessing distribution channels would be difficult

In terms of new entrants, one could say:

Accessing distribution channels would be difficult

In terms of recommendations to tesla production and internal capability problems, would you recommend:

Acquiring a small car manufacturing firm that has more experience with production.

When considering Boeing M&As

Airbus acquired Embraer as driver to enter short-haul segment, but as a response to Airbus acquisition of Bombadier

Which is not a functional strategy?

All are acceptable. (Technology, operations, size)

Considering the case (Zara) context. When analyzing threats of new entrants.

All are correct

From a functional strategy prospective:

All are correct

When considering partner selection:

All are correct

When considering the car industry competitive rivalry:

All are correct

Which of the following seems a better alternative: (regarding strategic alliances)

All are correct

Which of the followings are impediments for successful M&A

All are correct

Strategic alliances serve as the vehicles that carry out the partner's collaboration. Alliances are defined "Cooperative agreements between two or more companies to work together and share resources to achieve a common business objective" Unlike competitive strategy, cooperative strategy focuses on how firms work together to enhance both of their competitive positions and achieve their shared objectives. Strategic alliances are formal agreements that demand the partners commitment and grants the partners control over the alliance. Firms engage into alliances with...

All are correct (distributors, competitors suppliers)

Expanding to international markets

All are correct (knowledge, regulations, networks)

Which is not a factor of partner selection?

All are factors (Access to new industries and technologies, combining synergistic resources and capabilities, access to new international markets)

Which is not a potential upside of a successful merger of acquisition?

All are potential upsides (Geographic market extension, increased firm value, product market extension)

Functional- Level Strategy consistent with cost competition may include

All of the above. Increase firm size, Technology, Efficient operation

How much (minimum) of a firm needs to be bought to be considered an acquisition?

Any percentage

When considering the product mix and Apple we can say:

Apple is an infrequent case where its differentiation strategy emerges from a corporate strategy involving integration with other industries

Google creating their own data centers is an example of _________ integration.

Backwards

What is a short selling strategy?

Borrow stocks to buying low after selling low

When comparing vertical integrations with corporate diversifications:

Both can be classified as corporate strategies

Why might a merger be preferable to an alliance?

Cheating in alliance is more likely

Which of the following statements regarding the resource-based view is accurate?

Competitive advantage is too important to remain the sole property of senior management.

Why is the automobile industry unattractive?

Competitive rivalry due to proximity to perfect competition

Southwest's strategy considers the following options.

Cost leadership business level strategy

When considering cost competition

Cost leadership implies you need to have a minor cost compared to your competitors

What is defined as innovation that drastically changes the economy?

Creative Destruction

How do you sustain competitive advantage?

Creativity to keep differentiating

What allows rolex to charge more for a watch that does the same basic function made of the same steel as other brands?

Differentiation

What is the primary benefit the Shark Tank offers entrepreneurs?

Distribution channels

Which of these things necessary to make a tortilla is not a commodity?

Energy

A firm's ability to conceive and implement vertical integration strategies tends to be highly susceptible to direct duplication.

False

A sustained competitive advantage can be competed away by strategic imitation if competing firms face an important cost disadvantage in duplicating a successful firm's valuable resources.

False

Financial resources include only the profits a firm had made earlier in its history and it has reinvested in itself.

False

The threat of direct competition tends to be low when

Firms are able to differentiate their products

Why do mergers and acquisitions fail?

Firms pay more than they should

When Apple Inc. opened retail stores to sell computers this is

Forward vertical integration

Tesla creating their own dealerships is an example of _________ integration.

Forwards

Which of the following is not used to determine a firm's level of vertical integration using the value added as a percentage of sales approach

Gross Margin

Diseconomies of scale. If production grows a firm starts

Increasing their production cost

inputs whose quantity of supply is fixed and does not respond to price increases are said to be

Inelastic

Southwest Airlines strong internal culture that helps ensure that employees act in ways consistent with the company's strategy is an example of a(n)

Informal Management Control

A value chain

It contains the elements of a supply chain that the firm decided to have in- house.

When considered corporate diversifications:

It is a corporate strategy

Why would an account not use an ipad for an excel sheet?

It is an inferior substitute

What does future of self driving look like?

It will become a standard feature in most cars

Which of these is an equity alliance per se?

Joint ownerships

Fundamentally , a patent is a _______ granted by the government.

Monopoly

Industry competition ranges from

Monopoly to perfect competition

In a related acquisition, if there is one target firm and twenty bidding firms, and the value of each of the bidding firms as a stand- alone entity is $40,000 and the value of the target firms as a stand- alone entity is $20,000, the market value of the combined entity is likely to be

More than $60,000

Why is the government strategic stake in the automobile industry?

No politician wants to take blame for letting automotive industry die

As a commodity, what do we compare gala apples to when buying them?

Only other gala apples

A firm's formal reporting structure, its formal and informal planning and its controlling and coordinating systems are examples of which type of resources?

Organizational Resources

When differentiation is based on product complexity, we can say that it will be frequent to observe

Patenting protecting intellectual rights

What is the problem with a commodity for bargain power?

Price is set wholly by the market

In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered ________ and a potential source of competitive advantage.

Rare

When referring to Rolex, while nowadays they are linked to an accessory communicating status and luxury, but we can say their differentiation started based on

Reputation

Firms that possess and exploit costly-to-imitate, rare valuable resources in choosing and implementing their strategies may enjoy a period of

Sustained Competitive Advantage

Considering the industry analysis and Tesla . What would be the major concerns in terms of Tesla's future profitability?

Tesla seems to lack the internal capabilities to position in the luxury car segment

What do we mean when we say mergers and acquisitions "fail"?

The acquiring firm's value afterwards is less than the original separate values of the two firms

What do we mean when we say mergers and acquisitions "fail"?

The acquiring firm's value afterwards its less than the original separate values of the two firms

When considering internal capabilities and the resources involved to produce such capabilities

The resources are required to be rare and difficult to imitate

What is the first rule of alliances?

The synergy the two firms create together must be of greater value than working alone

When comparing pizza hut and little Ceaser's value chain:

Their primary activities are organized differently, even though they compete in the same industry.

We could say about the PC industry's storage cost:

Their storage cost is high, which increases the rivalry between direct competitors

If firms that do not possess valuable and rare resources or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed

perfectly imitable