Strategic Management Final

EnergyOne wants to install a high-capacity gas pipeline extension in the region. Shareholders anticipate better delivery of energy at lower costs, which will increase profitability. State and local governments are expecting increased tax revenue as well as new jobs in the region during construction of the expansion. Some customers look forward to lower gas rates as a result of more efficient delivery. Residents of the area, including customers and environmental groups, are opposed to the pipeline because of the increased risk for explosion and danger to the surrounding area. If EnergyOne cannot meet the needs of each stakeholder, what is the most critical way the firm prioritize them?

By identifying its level of dependence on each stakeholder

The primary distinction between corporate strategy and business strategy is:

Corporate strategy is concerned with where the firm competes; business strategy with how it competes in particular markets

A firm uses a corporate-level diversification strategy for a variety of reasons, all of which have to do with ways to create value.

False

By studying the internal environment, firms identify what they might choose to do.

False

Compared to tangible resources, intangible resources are an inferior source of core competencies.

False

Customers, suppliers, host communities, and unions are examples of capital market stakeholders.

False

Facebook changes its mission/vision from "Giving people the power to build community and bring the world closer together" to "Making the world more open and connected"

False

Firms can directly control the elements of the seven segments of the general environment.

False

In general, 10-K changes (particularly in the Risk Factors section) significantly predict future positive earnings surprises.

False

Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable) share of the joint venture than do the remaining partner(s).

False

Related linked firms share more resources and assets between their businesses than do related constrained firms.

False

The best of the generic business strategies is the integrated cost leadership/differentiation strategy.

False

The key to Spirit Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation, such as an engaging culture.

False

The lower the barriers to entry, the more likely firms will use acquisition as a means to enter a market.

False

The majority of acquisitions increase short-term value for the acquiring firm.

False

Total value is defined as a buyer's willingness to pay for a product / service and the price of the product/service.

False

According to the build-borrow-buy model, which strategy is most risky?

M&A

2. In the large, complex firm, two main levels of strategy can be distinguished: corporate strategy and business (or competitive) strategy.

True

A horizontal acquisition involves two firms in the same industry.

True

AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. Does it imply that AccuroDisk creates a greater economic value than TD Storage?

True

An unrelated diversification strategy can create value through two types of financial economies: (1) efficient internal capital allocations and (2) purchasing other firms, restructuring their assets, and selling them.

True

Analyzing the internal environment enables a firm to determine what it CAN DO by identifying resources, capabilities, and core competencies in the internal organization.

True

Firms operating in the same market, offering similar products, and targeting similar customers are competitors.

True

Market commonality is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each.

True

One reason for an acquisition is to increase market power.

True

Procter & Gamble (P&G) has a paper towel and baby diaper business that both use paper products. This is an example of value created through the sharing of activities.

True

Strategic choices involve two basic questions: where and how to compete?

True

The dynamic, future-oriented dimension of a firm's strategy is described by its mission and vision statements and its performance targets.

True

The firm's mission is more concrete than its vision.

True

The five competitive forces model expands the arena of competitive analysis beyond direct competitors (i.e., rivals) to include buyers and suppliers who may also be a source of competition.

True

The generalized forms of value that goods and services provide are either low cost with acceptable features or highly differentiated features with acceptable cost.

True

All of the following are tangible resources EXCEPT

a firm's reputation

Assume a firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by

causal ambiguity.

Capabilities typically come from

combining/redeploying resources

In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT:

cultural values.

Firms with __________ market commonality and __________ resource similarity are direct and mutually acknowledged competitors.

high/high

Consolidation among fuel providers serving airport facilities is viewed in the five forces model of competition as a(n):

increase in the bargaining power of suppliers of a critical input.

On average there is a(n) ______ relation between the level of diversification and firm performance.

inverted U-shape

In a(n) __________, two or more firms create a legally independent company to share some of their resources to create a competitive advantage.

joint venture

All of the following are considered generic business-level strategies EXCEPT

product diversification

A key purpose of a vision and mission statement is to inform _________ what a firm is, what it seeks to accomplish, and who it seeks to serve.

stakeholders

The environmental segments that make up the general environment typically will NOT include

substitute products or services

Suppliers are powerful when:

they offer a credible threat of forward integration.