Strategic Management (MGMT 3013) Exam 3

Which of the following modes are entering a foreign market allows for the lowest level of control? A. greenfield ventures B. exporting C. joint ventures D. acquisitions

B. exporting

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with A. differences in climates and time zones B. the absence of a trading bloc C. physical remoteness D. the lack of connective ethnic and social networks

B. the absence of a trading bloc

A firm pursuing a differentiation strategy as opposed to a low-cost strategy will A. focus its research and development on product technologies to add uniqueness B. concentrate on leveraging its economies of scale through process technologies C. build an organization structure that relies on strict budget controls D. create a lower economic value as compared to its competitors

A. focus its research and development on product technologies to add uniqueness

Hitoro Inc. developed a superior touch screen technology for tablet computers that enabled multiple users to operate the screen at the same time. The technology was leased to Revox Inc. , a consumer electronics company, for fives years. Which of the following alternatives to integration does this best illustrate? A. licensing B. franchising C. crowdsourcing D. bootlegging

A. licensing

Which of the following describes an airline that is most likely stuck in the middle? A. Red Carpet Airline that offers complementary drinks and meals, coast-to-coast coverage via connecting hubs, plush airport lounges, and high prices B. Plush Airline that offers international routes and global coverage, high customer service, high reliability, and high prices C. Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices D. Bottom Line Airlines that offers no assigned seating, no in-flight amenities, no drinks or meals, no airport lounges, and low prices

C. Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices

Which of the following is a disadvantage of equity alliance? A. They are reflective of weaker ties between firms B. They do not permit the exchange of explicit knowledge C. They bring about a lack of commitment D. They can entail significant investments

D. They can entail significant investments

Which of the following best illustrates physical-asset specificity? A. a unique program developed in an organization B. a ship container designed to carry more than the average load of iron ore C. a generic machine that can be used to churn different mixtures D. a machine solely designed to give a candy its trademarked shape

D. a machine solely designed to give a candy its trademarked shape

Susan is strategist for the firm, DigiVision Inc., which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called Tech Resources Inc. However, this material is difficult to trade for. Because of this, which of the following is most likely the best strategy for Susan to suggest? A. DigiVision should acquire Tech Resources B. DigiVision should form a short-term agreement with Tech Resources C. DigiVision should form a long-term agreement with Tech Resources D. DigiVision should enter into co-opetition with Tech Resources

A. DigiVision should acquire Tech Resources

PureSource Pharma Inc. recently aquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma? A. PureSource Pharma will lower its costs through economies of scale B. PureSource Pharma will diminish its economic value creation C. PureSource Pharma will increase its cost of distribution D. PureSource Pharma will reduce the size of its sales force

A. PureSource Pharma will lower its costs through economies of scale

Which of the following best illustrates a non-equity alliance? A. a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc. B. an alliance between RedGate Systems Inc. and DB Computers Inc. that results in DB Gate Inc., an independent third firm C. a collusion between two competitors, RP Pharma Inc. and Vital Pharma Inc., to fix prices D. an alliance that allows Virtue Insurance Inc. to claim 49 percent ownership in Mercury Insurance Inc.

A. a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc.

Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A. multi-domestic strategy B. an international strategy C. global-standardization strategy D. a one-product strategy

A. multi-domestic strategy

Home Smart Inc. is a chain of supermarkets that sells its products at higher prices than its competitors. Yet, the supermarket chain has a larger customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Home Smart adopted in this scenario? A. cost-leadership B. differentiation C. market penetration D. product diversification

B. differentiation

KitchenThings Inc. is a company that manufactures plastic kitchenware. It operates at an output level that allows it to keep its unit cost per output to the lowest in the industry. This in turn allows KitchenThings to be the price leader. Other competing companies cannot operate at the same level due to a lack of consumer demand for their products. This puts them at a competitive disadvantage. In this scenario, the cost driver behind KitchenThing's strategic position is A. superior customer service B. economies of scale C. availability of complements D. learning-curve effects

B. economies of scale

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting. What is this situation referred to as? A. principal-agent problem B. information asymmetry C. experience-curve effect D. learning-curve effect

B. information asymmetry

Dream Slope 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 Sleek Phantom Inc. This company produced bobsleds, but its sales had slowed. The managers of Dream Slope convinced themselves that they were able to manage the business of Sleek Phantom more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleek Phantom's bobsleds plummeted. Which of the following terms is often used to describe this scenario? A. managerial disadvantage B. managerial hubris C. managerial sympathy D. managerial empathy

B. managerial hubris

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate? A. diseconomies of scale B. principal-agent problem C. experience-curve effects D. information asymmetries

B. principal-agent problem

FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with each other. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as? A. takeover B. buyout C. co-opetition D. acquisition

C. co-opetition

Which of the following scenarios best illustrates horizontal integration? A. Regal Autos Inc. enters into a licensing contract with a distributor in a new international market B. Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Autos' competitor C. Regal Autos Inc. sets up its own distribution channel and retail stores D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors

D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors

When internet service providers offer free routers for subscriptions to their wireless internet packs, the perceived value of the service offering increases. In this case, the value driver would be A. economies of scale B. learning-curve effects C. experience-curve effects D. availability of complements

D. availability of complements

Firms pursuing a differentiation strategy primarily seek to A. keep their cost structures lower than that of the cost leader. B. reduce the value gap to gain competitive advantage. C. provide products that are a direct imitation of the competitors' products. D. create higher customer perceived value than the value that competitors create.

D. create higher customer perceived value than the value that competitors create.

Which of the following drivers simultaneously increases value while lowering cost? A. economies of scale B. superior customer service C. availability of complements D. innovation

D. innovation

Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. this is an example of A. monopsony B. geographic diversification C. crowdsourcing D. taper integration

D. taper integration

Which of the following is a firm effect that has an impact on the competitive advantage of a firm? A. the exit barriers within the industry in which the firm operates B. the number of companies operating in the industry in which the firm operates C. the intensity of rivalry among existing companies in the firm's chosen industry D. the value and the cost position of the firm relative to it's competitors

D. the value and the cost position of the firm relative to it's competitors