BUAD497 _ NEWWW

Which of the following statements is true of strategy? a) Tactical tools that are a part of a firm's functional and global initiatives are strategy. b) Actions that allow a firm to address a competitive challenge are strategy. c) Statements of desire, on their own, are strategy. d) Operational effectiveness and competitive benchmarking are strategy.

b) Actions that allow a firm to address a competitive challenge are strategy.

In a perfectly competitive industry structure a) resource heterogeneity is high. b) any competitive advantage that one firm has will be short-lived. c) resource immobility is high. d) competitors cannot move quickly to acquire resources that are utilized by the current market leader.

b) any competitive advantage that one firm has will be short-lived.

Economies of scale are cost advantages that accrue for firms with a) low employee turnover. b) high fixed costs. c) larger output. d) high capital risks.

c) larger output.

Owners of coffee plantations in the country of Matterstein grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from each other. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Matterstein best illustrates a(n)___ structure. a) oligopolistic b) monopolistically competitive c) monopolistic d) perfectly competitive

d) perfectly competitive

Restrictions imposed by the government, such as export quotas on certain products, are a part of the _______ environment of the PESTEL framework. a) sociocultural b) economic c) ecological d) political

d) political

A firm that follows the differentiation strategy is protected from the threat of new entrants primarily due to its a) low cost per unit. b) diseconomies of scale. c) low pricing. d) reputation for quality.

d) reputation for quality.

Which of the following statements about competitive advantage is not true? a) A firm's competitive advantage is always absolute, not relative. b) A firm can gain a competitive advantage by providing goods similar to its competitors' goods at a lower price. c) A firm's past performance does not guarantee its future performance. d) A firm will have a sustainable competitive advantage when it outperforms its competitors over a prolonged period of time.

a) A firm's competitive advantage is always absolute, not relative.

ElectroScape Inc. and BestDigital Inc are two competitors in the consumer electronics market. The cost incurred by each company to manufacture laptops is $400 per unit. Although both the companies sell their laptops at the same price, ElectroScape has a larger market share in the laptop industry. What does this imply? a) ElectroScape has been able to offer more perceived value than BestDigital. b) BestDigital has created a higher value gap than ElectroScape. c) BestDigital has a competitive advantage over ElectroScape. d) ElectroScape has a cost advantage over BestDigital.

a) ElectroScape has been able to offer more perceived value than BestDigital.

How do complements affect a primary product or service? a) They increase the demand for the primary product. b) They reduce the value of the primary product. c) They lower the utility of the primary product. d) They act as the strategic equivalent of the primary product.

a) They increase the demand for the primary product.

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities? a) While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies. b) Unlike capabilities, resources of the firm cannot be imitated by its competitors. c) Unlike resources, capabilities do not find their expression in the firm's structure, routines, and culture. d) While a firm's resources are always tangible, its capabilities are by nature intangible.

a) While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

Which of the following firms most likely has the lowest bargaining power as a buyer? a) a cell phone company that requires highly customized software for its phones b) a fast food chain that has multiple suppliers for processed meat c) an automobile company that can backwardly integrate to produce its own component parts d) a government agency that buys large quantities of cement from a private supplier

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

In contrast to a differentiator, a cost-leader will a) focus its research and development on process technologies to improve efficiency. b) charge a premium price for its products and services. c) avoid an organizational structure that relies on strict budget controls. d) build an organizational culture where creativity and customer responsiveness thrive.

a) focus its research and development on process technologies to improve efficiency.

Spark Electronics Inc., One Digital Inc., and Esco Products Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from the same set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) a) industry. b) occupational group. c) focus group. d) plant.

a) industry.

Economic contribution is created when the a) price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it. b) price a customer is willing to pay for a good is less than what it costs the firm to manufacture it. c) value a consumer attaches to a good or service is lesser than what he or she paid for it. d) revenue generated by selling a unit of a product is equal to the cost incurred by the firm in producing it.

a) price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in a) trade-offs that work against each other. b) competitive parity with firms that have adopted either of the strategies. c) a competitive advantage through superior performance. d) an increase in the firm's economic contribution.

a) trade-offs that work against each other.

Which of the following statements with regard to determining firm performance is true? a) Firm and industry effects are independent of each other. b) External analysis will help understand the industry effects that determine a firm's performance. c) Industry effects attribute firm performance to the actions managers take within a chosen industry. d) Industry effects are more important than firm effects in determining a firm's performance.

b) External analysis will help understand the industry effects that determine a firm's performance.

Which of the following companies would most likely benefit from an economic recession? a) Top Grill Inc., which offers expensive steaks and other meats b) Fast Chow Inc., which specializes in selling low-cost Asian food c) Luxury Suites Inc., which provides luxurious hotel accommodations d) Fancy Jewelers Inc., which sells top-end gold and platinum jewelry

b) Fast Chow Inc., which specializes in selling low-cost Asian food

_____ describe the positive externality that one user of a product or service has on the value of that product or service for other users. a) Economies of scope b) Network effects c) Economies of scale d) Experience effects

b) Network effects

The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. a) SWOT analysis b) PESTEL framework c) BCG matrix d) VRIO framework

b) PESTEL framework

Which of the following statements about the five forces in the U.S. airline industry is true? a) Substitutes are not readily available since customers cannot use other means of transport. b) Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry. c) The combination of the competitive forces leads to intense rivalry among existing airlines. d) Entry barriers in the airline industry are relatively high because of the high costs involved.

b) Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry.

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage? a) The resource neutralizes external opportunities. b) The resource is costly to imitate. c) The resource is easy to replicate. d) The resource decreases the perceived value of its products.

b) The resource is costly to imitate.

What is the rule of thumb behind Porter's five forces model? a) The stronger the five forces, the greater the industry's profit potential—making the industry less attractive. b) The weaker the five forces, the greater the industry's profit potential—making the industry more attractive. c) The weaker the five forces, the lower the industry's profit potential—making the industry less attractive. d) The stronger the five forces, the lower the industry's profit potential—making the industry more attractive.

b) The weaker the five forces, the greater the industry's profit potential—making the industry more attractive.

Costs being equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm a) has lost its competitive advantage to its competitor. b) can charge a premium price for its products and services. c) has achieved a competitive parity in its chosen industry. d) can adopt a cost-leadership strategy.

b) can charge a premium price for its products and services.

Rite Shoes competes against the global leaders in the athletic shoes industry by developing and selling acceptable quality shoes at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Rite Shoes applying in this scenario? a) product diversification strategy b) cost-leadership strategy c) liquidation strategy d) differentiation strategy

b) cost-leadership strategy

The viability of a differentiation strategy is severely undermined when the a) differential appeal is based more on intangible resources than tangible resources. b) differentiated products become commoditized throughout the industry. c) difference between perceived value and costs is significant. d) focus of competition shifts to value-creating features rather than price.

b) differentiated products become commoditized throughout the industry.

In an industry, the rivalry among existing competitors is high when a) fixed costs are low and marginal costs are high. b) incumbent firms are highly committed to the business. c) exit barriers are low. d) industry growth is high.

b) incumbent firms are highly committed to the business.

ItsHere.com has successfully created a higher perceived value in the e-commerce industry though it offers the same products at slightly higher prices than the competitors. This has been mainly attributed to the company's easy-to-navigate website, simple return procedures, fast delivery, and cash on delivery option. Thus, the value driver for ItsHere.com is its a) availability of complements. b) superior customer service. c) lower value gap. d) economies of scale.

b) superior customer service.

What are network effects? a) the positive cost effects that standardized commodities have on incumbent industries b) the positive effect that one user of a product or service has on the value of that product or service for other users c) the positive effect that the high price of the entry ticket has on incumbent industries d) the positive cost effects that accrue for firms with larger output because they can spread fixed costs over more units

b) the positive effect that one user of a product or service has on the value of that product or service for other users

Aura Software Inc. has been operating in the country of New Fernsland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Aura Software Inc.? a) Aura Software Inc. will have to expand its operations to meet the increasing consumer demand. b) Aura Software Inc. will find it easier to secure capital to finance future growth. c) Aura Software Inc. will have better access to highly skilled human capital at a lower cost. d) Aura Software Inc. will experience lower competition from rival companies.

c) Aura Software Inc. will have better access to highly skilled human capital at a lower cost.

Which of the following questions does the values espoused by a company primarily answer? a) Which of the value chain activities are primary? b) What is the company's customer lifetime value? c) How do we accomplish our goals? d) What is the value added to a good or service at each step in the production?

c) How do we accomplish our goals?

Which of the following questions would a firm's business strategy ideally answer? a) Where to compete? b) How to implement the functional strategy? c) How to compete? d) Why should we compete?

c) How to compete?

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is a) direct imitation. b) strategic equivalence. c) a temporary competitive advantage. d) a state of perfect competition.

c) a temporary competitive advantage.

Firms pursuing a cost-leadership strategy seek to a) create higher value for customers and offer premium pricing. b) keep their cost structures at the same or similar levels as that of the competitors. c) deliver products or services at a lower cost than competitors. d) gain competitive advantage by reducing the value gap.

c) deliver products or services at a lower cost than competitors.

A firm's business strategy will lead to a competitive advantage if it allows the firm to a) reduce the value gap. b) position itself below the productivity frontier. c) perform different activities than its rivals. d) execute the same activities performed by the rivals in a similar manner.

c) perform different activities than its rivals.

There exist important trade-offs between value creation and low cost because value creation and cost tend to be a) independent of each other. b) negatively correlated. c) positively correlated. d) inversely related.

c) positively correlated.

Which of the following will most likely be considered as an automobile company's core competency? a) the company's ability to follow federal laws just like its competitors b) the company's ability to start distributing its cars in areas where a competitor is the market leader c) the company's ability to make its cars more fuel efficient than most of its competitors d) the company's ability to manufacture cars at a cost that is average in the industry

c) the company's ability to make its cars more fuel efficient than most of its competitors

Which of the following statements accurately brings out the difference between economies of scale and learning effects? a) Economies of scale reduce cost per unit, whereas learning effects increase cost per unit. b) Firms experience economies of scale when output increases, and they experience learning effects when output decreases. c) While there are no diseconomies to scale, there are diseconomies to learning. d) Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.

d) Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.

In the financial year 2014, Apple's return on revenue was 29.30 percent, and Microsoft's return on revenue was 32 percent. This implies that a) Apple's inventory turnover was more than that of Microsoft's. b) Microsoft was more efficient than Apple in producing its goods. c) Microsoft was using its capital more efficiently to generate revenue than Apple. d) Microsoft's return on revenue was higher than that of Apple.

d) Microsoft's return on revenue was higher than that of Apple.

In which of the following situations is the power of suppliers high in an industry? a) Suppliers depend heavily on the industry for their revenues. b) Suppliers offer products that are undifferentiated. c) Suppliers can credibly threaten to backward integrate into the industry. d) Suppliers' industry is more concentrated than the industry it sells to.

d) Suppliers' industry is more concentrated than the industry it sells to.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? a) They cannot employ technology efficiently. b) They benefit from a less specialized division of labor. c) They can spread fixed costs over lesser units. d) They can demand better terms from their suppliers.

d) They can demand better terms from their suppliers.

Which of the following has contributed to Twitter's loss of a competitive advantage? a) Twitter delivers ads in real time, as opposed to competitors such as Facebook. b) Individuals pay nothing to use Twitter, which gives Twitter free user-generated content. c) Core users of Twitter are unable to stay connected permanently. d) Twitter does not allow advertisers to target their online ads precisely enough.

d) Twitter does not allow advertisers to target their online ads precisely enough.

In the context of the VRIO framework, a resource is said to be valuable if it a) results in a perfectly competitive industry structure. b) helps a firm increase its costs. c) leads to competitive parity within an industry. d) allows a firm to take advantage of an external opportunity.

d) allows a firm to take advantage of an external opportunity.

Red Think Inc. is a company that supplies microprocessors to Osion Inc., a computer hardware company. When Osion Inc. demands lower prices for the microprocessors, Red Think Inc. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from Red Think Inc., Osion Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, Red Think Inc., as a supplier, has exercised its bargaining power by threatening to a) crowdsource. b) forward integrate. c) outsource. d) backward integrate.

d) backward integrate.

A company is best described as a _____ to an existing company if customers value the existing company's product or service offering more when they are able to combine it with the other company's product or service. a) competitor b) strategic equivalent c) shareholder d) complementor

d) complementor

The board of directors of Best Digital Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate? a) business strategy b) functional strategy c) divisional strategy d) corporate strategy

d) corporate strategy

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in a) mediation. b) collective bargaining. c) arbitration. d) strategic trade-offs.

d) strategic trade-offs.