699 Exam 1

Which of the following statements related to a firm's stakeholders is NOT true?

While ext. st/h are those who make contributions toward the firm, internal st/h are those who reap all the benefits.

Which of the following firms most likely has the lowest bargaining power as a buyer?

a cell phone company that requires highly customized software for its phones.

Oligopoly

a competitive market structure in which there are -a few large firms, -some pricing power, -high barriers to entry, and -differentiated products.

Starbucks case:

a firm's core competency is embedded in the firm itself; it represents that firm's unique, distinctive strength.

Apple was a computer company that introduced the iPhone. This expanded the company into the cellular phone category making them :

a new entrant to BB and direct competitor with existing firms.

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

A customized strategy that considers the unique resources of the company while considering the external env't creates ...

a strategic fit between them

Generally speaking, which of these situations is likely to lead to greater profits?

an industry with fewer but larger competitors

"Time compression diseconomies" refers to the concept that _____________.

attempting to get a good outcome in less time tends to be ineffective.

Time compression diseconomies occur when a firm ___

attempts to reach an outcome in a reduced amount of time.

Isolating mechanisms are considered to be ____

barriers to imitation

To assess comp adv, compare firm performance to a ______

benchmark- either the perf of other firms in the same ind or an ind avg.

Critical assumption in the resource-based model of comp adv is that

bundles of res, cap, and comps differ across firms.

Resources are any assets such as... that a co. can draw on when crafting and executing a strategy.

cash buildings machinery intellectual property

What term is used to describe cooperation by competitors who want to achieve a strategic objective?

co-opetition

Realized strategy

combination of intended and emergent strategy

Key to a successful strategy is to

combine a set of activities to stake out a unique position within an ind.

A firm that achieves superior perf relative to other competitors in the SAME ind or the IND AVE has

comp adv

They help individuals make choices that are both ethical and effective in advancing the company's goals?

company values

Starbucks case: If a resource is no longer rare ___ results?

competitive parity

What are the characteristics of a strategic activity system as it applies to firms?

consists of interconnected activities socially complex causally ambiguous

is a unique strength embedded deep within a firm

core competency

Nike Case: Their core competency?

creating hero's.

Competing to be SIMILAR but just a bit better than a competitor is likely to be a recipe for?

cutthroat competition & low profit potential

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?

decreasing gov't interference in the target market.

Task Env't

described as one that strategic leaders do have some influence over, ex. co. response to a new entrant in the industry.

Vision and mission are often used interchangeably, they are actually:

different

Starbucks case: CEO needed to restore and protect the unique cust experience that ___________ the Starbucks brand and drives ______

differentiates, its value.

Starbucks case: explosive growth came with tradeoffs of sacrificing uniqueness causing?

diluting its core competencies because cust experience is no longer rare

When barriers to entry INCREASE, threat of entry goes___

down

refers to a firm's capacity to modify and leverage its resource base.

dynamic capabilities

Which of these is a way to reconfigure a value chain?

entering an ind by offering sporting events on streaming video when competitors are offering them through cable hookups. Allows new companies to avoid direct competition.

Which of the following is a philanthropic responsibility of a firm?

exhibiting corp citizenship, reflecting the notion of voluntarily giving back to society.

Technological

factors capture the application of knowledge to create new processes and products.

Emergent strategy is planned

false

Blackberry Case: What differentiates Nike from others and allows it to maintain a comp adv?

globally recognized brand, advertising, endorsements of athletes- reflects its differentiation as a premium prod.

The greater the difference between value creation and cost, the

greater a firm's economic contribution & more likely it will gain comp adv.

What should a firm do in order to be organized to capture value?

have a good coordinating systems have a good organizational structure

Having fewer competitors generally equates to?

higher ind profitability.

Firms have a tendency to change the ind structure in their favor, making it more consolidated through

horizontal M&A.

A key macroeconomic variable for managers to track is

i/r

iTunes case:

identifies as a complement and the complement is a value driver of differentiation

Making consistent updates to a prod to steadily improve it is

incremental innovation

Mobility barriers prevent some firms that operate in one strategic group to cross over to another strategic group because of ...

ind specific investments and/or strategic positioning.

Implication of asset values between two companies. Companies who have higher ..... will attain a comp adv.

intangible assets

Starbucks case: its main differentiator (comp adv) is its cust service experience, which is a _____ resource.

intangible,

Helps a firm extend its competitive advantage?

intellectual property protection better expectations of future resource value path dependence

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is best described as a(n)

interest rate

Strengths/weaknesses are >>>> to a firm and Opportunities/threats are >>>> to the firm

internal external

The firm has control over these elements versus opportunities and threats that are external?

internal strength/weaknesses

Too Fast Inc., a motorcycle co. is the mkt leader due to its superior engine tech and service orientation. The unique qualities have helped the co. generate revenues that are consistently higher than other firms in the same ind. Which of the following can be concluded about Too Fast Inc. from this scenario?

it has a competitive advantage over the other firms.

Slowing growth and high growth are stages in the ____ phase of ind life cycle

maturity

An org's ______ describes what the org actually does - the prod/serv it plans to provide, and the markets in which it will compete.

mission

When an organization briefly describes what they do and how they do it, they have more than likely articulated their

mission statement

Does not look at the methods to accomplish the customer needs.

mission stmt

Consolidated industries tend to be .... than fragmented ones.

more profitable

The firm is embedded in a ______ exchange relationship with a number of _____

multifaceted diverse int/ext st/hs.

Stakeholders expect that companies will :

pay taxes provide employment not pollute the env't

Marketing, sales, and distribution are ___ activities in a firm's value chain.

primary

Tesla's capabilities is key to its ability to achieve a comp adv. Rather than keep its ________, Tesla has made them available to the public to expand the overall market of electrical cars.

proprietary technologies secret

VRIO Framework, in order for a firm to gain a temporary competitive advantage, a resource must be at least both ____

rare and valuable

Company develops an intended strategy to make the company more competitive. The company's ultimate _____ strategy contained elements not only of the intended strategy but also unplanned elements from a(n) _____ strategy.

realized; emergent

Ind incumbents have an incentive to ____ the number of competitors in the ind. With fewer but larger competitors, incumbent firms can...

reduce mitigate the threat of strong competitive forces such as sup/buyer power more effectively.

Suppliers offer products that are differentiated, the bargaining power of buyers...

reduces

Which of the following has contributed to Tesla's comp adv in terms of stock appreciation?

reinvesting profits to continually improve its design and produce better electric vehicles.

Isolating mechanisms offer protection to a successful firm by making it more difficult for competitors to imitate the

res, cap, or competencies that underlie its competitive advantage; they form barriers to imitation.

____ are the firm's level of investments to maintain or build a resource.

resource flows

Two firms operate in the same industry but have different and loyal cust base. -1. young professions attracted by efficient network coverage and pricing. 2. elderly cust attracted by its excellent cust serv. Both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of comp adv does this scenario best illustrate?

resource heterogeneity

Demand is slowing, excess capacity develops, and companies begin to initiate cut-throat price-competition to move inventory. While GM filed for bankruptcy, it did not exit the industry because it chose to...

restructure. Excess capacity to remain in the industry.

Which of the following is an example of a firm's capabilities?

skills involved in training and managing a workforce.

Blackberry Case: Execs and their contributions to Nike's success exemplify which aspect of competitive advantage?

social complexity

The interaction of the many individual systems in the operation of a company often leads to causal ambiguity because of ...

social complexity

Blackberry Case: Change from IT issued devices to BYOT (bring your own technology) is a failure for co. due to failure to recognize and respond to this change. (pestel factor)

sociocultural

Buyer power is High when the ind's prods are

standardized or undifferentiated commodities.

Co-opetition occurs when otherwise competition firms form _____ in order to take on a larger, more established firm.

strategic alliances

Which of the following SWOT factors are internal to the firm?

strength/weaknesses

An intended strategy is the outcome of a plan that has which of the following characteristics?

structured rational top-down

R&D, HR, IT are examples of ____ activities.

support

Blackberry Case: The threat of the iPhone came from which env't?

task env't

Blackberry Case: using PESTEL, what factors were the most powerful in influencing their failure?

tech and sociocultural

What does the concept of resource heterogeneity imply?

that each firm has different resources.

A firm has to ensure that its primary stakeholders __________ achieve their objectives.

the firm's shareholders and other investors

Intended strategy

the outcome of a rational and structured top-down strategic plan

Blackberry Case: Which 5 forces is likely the most powerful factor influencing the failure of BB?

threat of entry

Describes the risk of new competitors entering the ind?

threat of entry

The pressure of rivalry increases when which of the following forces increase in intensity?

threat of substitutes threat of entry power of buy/supplier

A resource that is costly to imitate if firms that DO NOT possess the resource are

unable to develop or buy the resource at a reasonable price.

Is not considered an isolating mechanism?

uncertainty about future resource value

A resource is considered ____ if it helps a firm to deal with an external threat.

valuable

___ concerned with internal activities, not the external env't.

value chain

Using the ____, managers can see how competitive advantage flows from a firm's distinct set of activities.

value chain analysis

_____________ captures the company's aspirations.

vision

A company's vision primarily states

what the company wants to ultimately accomplish.

Dimensions of strategic groups differ from one another?

-distr channels -cust serv -market segments -R&D

Likely outcomes of a competitive rivalry based entirely on price cutting?

-investments from firms drop off -most or all value is transferred to customers -firms struggle to make profits

Blackberry Case: Changes in tech env't:

-rapid growth of iPhone and its diverse functionality. -changed the competitive landscape and required a strong response.

Leadership pyramid levels

1. executive 2. effective leader 3. competent manager 4. contributing team member 5. highly capable individual

When asked to explore the strengths and weaknesses of a firm, which of the following would be the best framework to employ?

5 forces PESTEL Value Chain Analysis None of the above

Which of the following real-world examples best supports the statement that strategic commitments to a specific ind may be the result of political rather than economic considerations?

A # of European gov'ts created Airbus through direct subsidies to provide a countervailing power to Boeing.

Which of the following statements about competitive advantage is NOT true?

A firm's comp adv is always absolute, NOT relative.

Concerns the question of how to compete (cost-leadership, differentiation, or integration).

Business strategy

____ are the organizational and managerial skills necessary to orchestrate a diverse se of resources and to deploy them strategically?

Capabilities

__________ tends to be more fierce when exit barriers in the ind are high, resulting in some firms being locked into the ind.

Competitive rivalry

EatNow is a Fast-food restaurant that has recently entered the hospitality ind. Since most of its competitors are pursuing a low cost position and doing well, EatNow also wants to adopt the same strategy. Which of the following will be a likely implication of this decision?

EatNow will face low profit potential.

Which of the following statements does the upper-echelons theory support?

Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained?

GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

Competitive rivalry increases when exit barriers are _______

HIGH because it prevents firms from selling their assets/breaking leases without substantial asset loss.

Which of the following questions would a firm's business strategy ideally answer?

How should we compete?

Which of the following is NOT true concerning a customer-oriented mission?

It defines the means of how a customer need will be met.

What approaches answer the question "How to enter?" when a firm is considering entering an industry?

Leverage existing assets establishing a niche reconfiguring value chains

___ are ind-specific factors that separate one strategic group from another.

Mobility barriers

Blackberry Case: Which best describes the comp ind structure in which BB found itself?

Oligopoly

rare resource

One of the four key criteria in the VRIO framework. A resource is ___ if the number of firms that possess it is < the number of firms it would require to reach a state of perfect competition.

valuable resource

One of the four key criteria in the VRIO framework. A resource is ____if it helps a firm exploit an external opportunity or offset an external threat.

___ suggests that sometimes even random events may have a large impacts on an outcome.

Path dependence

___ activities add value directly by transforming inputs into outputs as the firm moves a prod/serv horizontally along the internal value chain.

Primary

____ are the firm's current level of intangible resources.

Resource stocks

helps to identify the integrated set of res and cap that are the building blocks of core comps.

Resource-based view.

Which of the following statements accurately brings out the distinction b/w resources and capabilities?

Resources reinforce core comp, capabilities allow managers to orchestrate their their core comps.

The annual net profit after taxes for Tele Corp, a MNE conglomerate, is 5.5 billion. As legal owners, which of the following stakeholder groups has the most legitimate claim on this profit?

Shareholders

describes a situation in which different social and business systems interact with each other?

Social complexity 1. former coach (social system) partnered with founder and nike (business system)

PESTEL factor that captures a society's cultures, norms and values.

Sociocultural factor

________________ is best described as executives' use of power and influence to direct the activities of others when pursuing organizational comp adv or goals.

Strategic leadership

concerns the choice of strategy in terms of where and how to compete. It is helpful to break down strategy formulation into three distinct areas:

Strategy formulation corp, bus, functional

Why are black swan events such as accounting scandals and the global financial crisis perceived as caused by cheap credit and subprime mortgages offered by financial institutions, bad for business?

They erode the implicit trust between the corp world and society.

How do complements affect a primary prod/serv

They increase the demand for the primary prod. Thereby enhancing the profit potential for the ind and the firm.

Their leadership actions reflect characteristics of age, education, and career experiences filtered through personal interpretations of the situations they face.

Upper-echelons theory

In performing a SWOT analysis to generate insights from external and internal analysis, internal strengths and weaknesses can be determined by applying _____ and external strengths can be evaluated in part by applying ____.

VRIO framework; PESTEL

The VRIO framework is used to evaluate a firm's resources. VRIO is an acronym for which of the following?

Valuable Rare Imitate

___ perspective enables managers to see how competitive adv flows from the firm's distinct set of activities.

Value chain

Which of the following statements accurately brings out the difference between an organization's vision and mission?

Vision defines "what the organization wants to accomplish ultimately", thus the goal can be described by the verb "to". Whereas the mission describes "what an org does"; the means "by" which vision is accomplished.

In which of the following cases was a co. at a major comp adv?

W/out a clear strategic position, Sears tried to be too many things for too many types of customers.

Org'l core values are the answer to which of the following questions?

What commitments do we make to act both legally and ethically?