Business Policy and Strategy

As an industry enters the decline stage: a. competitive pressures abate. b. growth becomes negative. c. demand remains the same. d. capacity reduces. e. rivalry among established companies usually decreases

b. growth becomes negative

Cost reductions gained through mass-producing a standardized output are a source of scale economies. a. True b. False

A. True

Dale Smith opened his forklift dealership twenty years ago. Over the last five years he has been approached by several larger operations looking to buy him out. He had hoped to pass the business onto his sons, but they aren't interested in continuing the business and he is having a hard time letting go. This is an example of the exit barrier known as emotional attachment. a. True b. False

A. True

Mikayla, a cost accountant, is responsible for gathering and monitoring data used for controlling the organization's costs. In which value-chain activity does Mikayla work? a. Materials management b. Human resources c. Company infrastructure d. Research and development e. Marketing and sales

c. Company infrastructure

There are multiple techniques for improving decision making in the formulation and implementation of strategic plans. Which of these is a means of improving decision making? a. Reasoning by analogy b. Emphasizing all the reasons a proposal is unacceptable using dialectic inquiry c. Comparing a strategic plan against previous similar plans and reviewing the results of those experiences to gain an outside view d. Imagining the outcome and results of your strategic plan and deciding it will work because you believe there will be positive results

c. Comparing a strategic plan against previous similar plans and reviewing the results of those experiences to gain an outside view

In the wireless telecommunications industry, different technical standards are found in different parts of the world. A technical standard known as GSM is common in Europe, and an alternative standard, CDMA, is more common in the United States and parts of Asia. Equipment designed for GSM will not work on a CDMA network and vice versa. Which of the following pressures for local responsiveness does this represent? a. Host government demands b. Differences in customer tastes and preferences c. Differences in distribution channels d. Differences in infrastructure e. Global environmental demand

d. Differences in infrastructure

Which of the following support activities in the value chain controls the transmission of physical materials through the value chain, from procurement through production and into distribution? a. Research and development b. Information systems c. Operations d. Logistics e. Human resources

d. Logistics

Which of the following is NOT a determinant of the extent of rivalry among established companies? a. Cost conditions b. The height of exit barriers in the industry c. Demand conditions d. Industry competitive structure e. The bargaining power of buyers

e. The bargaining power of buyers

The Achilles heel of international strategy is that: a. non-price differences among products hold little importance. b. customer preferences eventually become identical. c. economies of scale cannot be achieved. d. customization of products makes the company lose its credibility. e. competitors inevitably emerge.

e. competitors inevitably emerge.

A business-level manager in a multidivisional company is: a. a strategic manager who is the head of an entire division, responsible for translating the corporate strategy into concrete strategies for the business unit. b. a strategic manager responsible for a specific business function, such as marketing or human resources. c. a member of the Board of Directors, responsible for setting the strategic direction for the entire multi-divisional company. d. a vice president, C-suite, or other company officer, responsible for the financial performance of the company across all business units

a. a strategic manager who is the head of an entire division, responsible for translating the corporate strategy into concrete strategies for the business unit.

Raye is the CEO and founder of a startup health food company. To improve customer responsiveness in her company, she can: a. make personal phone calls to five customers per week thanking them each time they purchase products from the company. b. prioritize efficiency and cost controls above all corporate initiatives and incentivize employees to cut costs whenever possible. c. design a bonus program that rewards the engineer or technical researcher who develops the best-tasting health food each quarter. d. develop a total quality management (TQM) system in the company.

a. make personal phone calls to five customers per week thanking them each time they purchase products from the company.

All of the following would be part of a business model that outlines strategies for a company wanting to achieve competitive advantage EXCEPT: a. the changes to be made in the external environment. b. the creation of value for its customers. c. the production of specific goods or services. d. the organization of activities within the company.

a. the changes to be made in the external environment.

Swedish strength in fabricated steel products (such as ball bearings and cutting tools) has drawn on strengths in Sweden's specialty steel industry. This is an example of which of the following attributes that impact national competitive advantage? a. Factor endowments b. Competitiveness of related and supporting industries c. Differences in distribution channels d. Local demand conditions e. Intensity of rivalry in an industry

b. Competitiveness of related and supporting industries

Nutrimax, a sports foods manufacturer, has recently expanded its operations to different countries. The company has realized that customers in different countries have different tastes and preferences. So, the company customizes its products based on the country where it's selling. In this scenario, Nutrimax is most likely to be using which of the following strategies? a. Global standardization b. Localization c. Achilles heel d. Centralization e. Transnational

b. Localization

Jeffrey Pfeffer believes that a manager's power comes from his or her: a. ability to cut overhead costs. b. control over important organizational resources. c. ability to prioritize the well-being of the company over personal well-being. d. ability to be emphatic and understanding of the feelings and emotions of subordinates. e. personal rapport with the senior management

b. control over important organizational resources.

Mobility barriers: a. inhibit companies from shifting between suppliers for raw materials. b. inhibit the movement of companies between strategic groups in an industry. c. allow industries to change their strategy and compete in an alternate strategic group. d. are factors that operate outside of an industry. e. exclude the barriers to entry into a group and the barriers to exit from a company's existing strategic group.

b. inhibit the movement of companies between strategic groups in an industry.

As a barrier to new entry, absolute cost advantages can be based on: a. continuous advertising of brand and company names, and product innovation achieved through research and development. b. superior production operations and processes due to accumulated experience, patents, or trade secrets. c. the unique ability of established companies to spread fixed costs over a large volume. d. high product quality, service-oriented innovations, and good after-sales service. e. cost reductions that arise from the mass production of standardized output.

b. superior production operations and processes due to accumulated experience, patents, or trade secrets.

A functional-level strategy is designed to: a. define a company's overall competitive theme and the way it positions itself to the marketplace to gain a competitive advantage. b. improve the efficiency and effectiveness of one or more value creation activities of the company. c. serve many market segments with different strategies for different groups of customers. d. create products based on four main dimensions - price, distribution, promotion and advertising, and product features

b. improve the efficiency and effectiveness of one or more value creation activities of the company.

In articulating what a company does in terms of its customers, their needs, and through what core competencies, managers first formulate the company's: a. vision statement. b. mission statement. c. SWOT analysis. d. emergent strategies.

b. mission statement.

The goal of finding ways to make network effects work in a company's favor and against competitors can be achieved by: a. relying on other industry members to establish a technological standard or format such that it becomes as quickly as possible as the industry standard. b. focusing on a slow role out and moderating consumer demand. c. leveraging the positive feedback loop. d. making sure consumers remain hesitant to bear switching costs. e. taking the time to build a quality installed base for its standard after several tests and redesigns.

c. leveraging the positive feedback loop.

Consumers will bear switching costs if: a. there is a lack of complementary products. b. the new products are packaged attractively. c. the benefits of adopting the new technology outweigh the costs of switching. d. the new technology is advertised subtly. e. switching costs are substantial.

c. the benefits of adopting the new technology outweigh the costs of switching.

Achieving quality as excellence is just as important in a service business as it is in a product business. A web services company that has a difficult and confusing online interface for consumers to select the services they need could increase its quality by focusing on which attribute? a. Responsiveness b. Maintenance and repair c. Ordering ease d. Durability

c. Ordering ease

When quality is assessed in terms of how well a product or service consistently does the job it was designed to do, what dimension does this expression take? a. Cost effectiveness b. Total quality management c. Quality as excellence d. Quality as reliability

c. Quality as excellence

Network effects arise in industries where: a. companies network together and lobby for establishing certain technical standards. b. a large network of companies in an industry use the same business model and strategies. c. companies that are not in favor of a technical standard network together. d. the size of the network of complementary products is a primary determinant of demand for an industry's product. e. a company adheres to the same technical standards across its network of outlets.

d. the size of the network of complementary products is a primary determinant of demand for an industry's product.

Suppliers in an industry are most powerful when: a. switching costs are low. b. they refrain from entering their customers' industry because of lack of resources. c. companies in the industry threaten to enter the suppliers' industry. d. there are few substitutes for the products that they sell. e. their profitability is significantly affected by the purchases of companies in a particular industry.

d. there are few substitutes for the products that they sell

Which of the following is an advantage of international licensing? a. It enables the company to realize scale economies and location economies through manufacturing products in a centralized location. b. It eliminates the risk of losing control over a technology that the company owns. c. It enables the company to coordinate its strategy efficiently to achieve competitive advantage. d. It allows the company to collect profits from one licensee and use them to support others. e. It takes away the pressure of development costs and risks associated with opening a foreign market from the company

e. It takes away the pressure of development costs and risks associated with opening a foreign market from the company

Mathematica 1.0 was one of the most distinctive applications for the short-lived NeXT Computer. It still sets the standard for symbolic math and visualization on Windows, Mac, Linux, and Unix. Mathematica 1.0 can be described as which of the following applications? a. Hardware b. Strategic c. Dominant d. Analogous e. Killer

e. Killer

Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as which type of innovation? a. Customer b. Resource c. Process d. Value-chain e. Product

e. Product

Although several different measures of profitability exist, many authorities in the measurement of profitability argue that which of the following is the best measurement because "it focuses on the true operating performance of the company"? a. Capital turnover b. Return on sales c. Net profit margin d. Return on equity e. Return on invested capital

e. Return on invested capital

Rebecca, a manager, was very annoyed after noticing several negligent errors in a critical report. However, while talking to the subordinate who created the report, Rebecca was calm and composed; she did not act impulsively and lose her temper. Which of the following aspects of emotional intelligence is illustrated in this scenario? a. Self-awareness b. Social skills c. Empathy d. Motivation e. Self-regulation

e. Self-regulation

Which of the following is a source of competitive advantage for a company and is the basis for the product differentiation that tends to dominate the industry? a. First mover b. Paradigm shift c. Public domain d. Dominant design e. Technical standard

e. Technical standard

As an industry enters the shakeout stage: a. rivalry among companies declines. b. new entrants come into the market. c. demand grows at a high rate. d. prices of products increase. e. excess productive capacity emerges

e. excess productive capacity emerges

Which of the following is a disadvantage of franchising? a. It enables the company to collect all the profits made by the franchisees. b. It involves high development costs and risks. c. It hinders companies ability to engage in global strategic coordination. d. It frees companies from the task of monitoring and assisting operations at franchisees. e. It doesn't ensure consistent product quality.

e. It doesn't ensure consistent product quality.

Which of the following is not a result of intense rivalry within an industry? a. Lowered prices b. Threat to profitability c. Raised costs d. None of these are results of intense rivalry within an industry. e. Reduced spending on non-price-competitive strategies

e. Reduced spending on non-price-competitive strategies

Marginal costs in high-technology industries tend to stay very low as production rises. a. True b. False

a. True

There are no significant benefits to owning a technical standard in an industry. a. True b. False

b. False

Anna bakes cookies for $10 per batch, she charges customers $15 to a batch, and customers perceive that the cookies are worth $25 per batch. Anna's profit margin is: a. $7.50. b. $25. c. $5. d. $10. e. $15.

c. $5.

Company A has established itself in a global market. Company B entered the market with a lower cost structure due to efficient manufacturing and lower priced products and has taken the global market share from Company A. This is an example of a negative aspect of pursuing an international strategy. a. True b. False

a. True

Creating a signature scent, choosing an original name, and configuring the shape and look of the bottle are all decisions made in the production phase of the value chain for a perfume company. a. True b. False

B. False

The price a company charges for a good or service is typically more than the utility placed upon that good or service by the customer. a. True b. False

B. False

The punctuated equilibrium view can be described as a freezing, but not an unfreezing, process in an industry's life cycle. a. True b. False

B. False

Which of the following is a difference between the bargaining power of buyers and the bargaining power of suppliers? a. Buyers bargaining power can raise costs by demanding better quality, while suppliers can raise costs by providing lower quality products. b. Buyers have the most bargaining power in a monopoly, while suppliers need multiple product substitutes to have bargaining power. c. Only suppliers have the ability to make demands based on their power relative to that of the company. d. The potential of a supplier with strong bargaining power is considered a threat, while a buyer with strong bargaining power does not pose a threat to the industry. e. A powerful buyer lower costs, while suppliers raise costs to squeeze profits out of an industry.

a. Buyers bargaining power can raise costs by demanding better quality, while suppliers can raise costs by providing lower quality products

Which of the following best describes product innovation? a. Creating products that have superior attributes than existing products b. Measuring the quantity of outputs produced per employee c. Identifying and satisfying a customer's needs d. Developing a new process that focuses on quantity rather than quality e. Transforming a quantity of inputs into a given output

a. Creating products that have superior attributes than existing products

Which of the following statements about the impact of high product quality on competitive advantage is true? a. It increases the need for after-sales services. b. It lowers unit costs of the products and allows room for product differentiation. c. It decreases the utility of the products. d. It limits the company's ability to differentiate its products. e. It adversely affects employee productivity.

a. It increases the need for after-sales services.

Libra Electronics has invented a new technology to make laptops that are extremely lightweight and unbreakable. The company is advertising aggressively and wishes to create demand for its new range of laptops. To attract customers, the company has priced the laptops attractively. However, to earn a profit, the company has priced the batteries required for the laptops extremely high. Which of the following is illustrated in this scenario? a. Razor and blade strategy b. Switching costs c. Downsizing strategy d. Harvest strategy e. Divestment strategy

a. Razor and blade strategy

Which of the following occurs immediately after the growth stage of the industry life cycle? a. Saturation of demand is approached because fewer first-time buyers remain. b. Growth is dependent on new entrants to the market, such as population increases. c. Growth slows because buyers are unfamiliar with the product. d. Social changes, demographics, and international competition cause negative growth. e. Demand is limited to replacements only and growth is zero.

a. Saturation of demand is approached because fewer first-time buyers remain.

Which of the following has occurred in international trade over the past half-century? a. Tariff rates on manufactured goods traded by advanced nations have fallen. b. The volume of world trade has decreased dramatically. c. There has been a dramatic increase in the barriers to international trade. d. Regulations prohibiting foreign companies from entering domestic markets and establishing production facilities have increased. e. There has been a decline in the value of foreign direct investment.

a. Tariff rates on manufactured goods traded by advanced nations have fallen.

Global expansion: a. can enable companies to increase their profitability and grow their profits more rapidly. b. is feasible only for non-technology-based companies. c. has significantly decreased in the recent years as the industry barriers are now higher. d. does not involve selling existing products to new markets in different countries. e. is not feasible for service-based firms

a. can enable companies to increase their profitability and grow their profits more rapidly

Most manufacturing companies begin their global expansion by: a. exporting. b. setting up a wholly owned subsidiary in the host country. c. licensing. d. forming a joint venture. e. franchising.

a. exporting.

Mickey is the CEO of a multidivisional company who has determined that it is time for the company to revisit its strategic plan and is working on the agenda for the meeting, beginning with a review of the company's mission, vision, and values. On day 2, Mickey plans to conduct an analysis of internal and external forces affecting the company. The invitee list for the strategic planning session includes the CFO, the COO, the vice president of human resources, and the vice president of sales. Mickey believes this smaller team will be able to reach a greater consensus and be efficient in developing the strategic plan for the next five years. Which potential pitfall could impact the strategic plan for this company? a. An "ivory tower" approach could lead the executive team to a plan created in a vacuum without an understanding of current operating realities. b. The cognitive bias of the illusion of control could lead the CEO to believe the leadership role means being the only person to direct the company's strategic plan. c. The utilization of outside view could lead the strategic plan to exclude data that doesn't reinforce the team's preconceived ideas about the company's direction. d. The scenario planning approach could lead the company to split its focus and prevent any meaningful progress toward the development of a competitive advantage.

a. An "ivory tower" approach could lead the executive team to a plan created in a vacuum without an understanding of current operating realities.

Which of the following can be considered a strategy for increasing efficiency? a. Implementing self-managing teams b. Reducing new product launch failures c. Researching customer needs d. Using information systems to monitor defect rates

a. Implementing self-managing teams

The IT team at a bank has a role to play in efficiency. As a service provider, the company must learn and develop more efficient ways to process customer requests and meet customer needs. Which of these is an example of the IT team contributing to increases in efficiency? a. The team builds a network that connects all of the branches to each other virtually so that transactions that occur in one branch of the bank are visible throughout the company in real-time. b. The team has a system that tracks IT support tickets - requests for support from the IT help desk. The metrics collected by the system report that it takes 7% longer to get an answer from IT this year than it did last year. c. The team implements a new system for entering new customer data that adds more than 50 additional fields to be collected at the time of sign-up. d. The team evaluates the current software platform and a potential new software platform and determines the cost of the upgrade investment is too great to justify installing the new software

a. The team builds a network that connects all of the branches to each other virtually so that transactions that occur in one branch of the bank are visible throughout the company in real-time.

Shop floor employees can be a major source of ideas for improving product quality. Which of these represents a potential strategy for collecting ideas from team members for improving quality? a. An intranet site where employees can read articles from the CEO and vice presidents about their commitment to quality b. A poster in the break room about everyone doing their part for quality along with a suggestion box encouraging employees to submit their ideas c. A chart on the communication board that lists the percentage of defective products found during inspections each day d. Monthly training meeting about quality in which the quality manager presents the proper way to perform specific production tasks

b. A poster in the break room about everyone doing their part for quality along with a suggestion box encouraging employees to submit their ideas

Binh was recently named general manager of a newly created business unit of a multidivisional company. His first order of business will be to implement the new division's strategic plan. Which of these statements about Binh's responsibilities for the company is true? a. Binh isn't concerned with the performance of the other business units in his company. The other general managers are on their own. b. Binh works with managers within his business unit to develop and implement concrete strategies for his division that align with corporate goals. c. Binh should spend the majority of his time concerned with the human resources operations of his business unit, focusing on the employee team. d. Binh will manage the entire corporation's finance structure, working with the finance directors of each division to implement the company's strategies.

b. Binh works with managers within his business unit to develop and implement concrete strategies for his division that align with corporate goals.

Creating a signature scent, choosing an original name, and configuring the shape and look of the bottle are all decisions made in the production phase of the value chain for a perfume company. a. True b. False

b. False

First movers and late movers that are large companies are able to develop complementary assets at the same rate to quickly develop a presence in the new industry. a. True b. False

b. False

The globalization of production has been decreasing as companies have been facing lower barriers to international trade and location economies. a. True b. False

b. False

The only way to exploit successful differentiation is to keep prices the same or only increase them moderately, leading to increased demand, economies of scale and lower costs which results in higher profitability and profit growth. a. True b. False

b. False

A leader's use of power can influence his or her overall effectiveness as a strategic manager. Which of these statements is true? a. Edward Wrapp says that effective leaders should use their power in a dictatorial fashion to ensure team members understand who the final decision maker is. b. Jeffrey Pfeffer explains that ultimately a manager's power comes from his or her control over resources, such as budgets, capital, positions, information, and knowledge. c. Jeffrey Pfeffer believes that only those with a title and official position can exert power within an organization. d. Edward Wrapp argues that organizational leaders do not have anything in common with political leaders and should not behave democratically.

b. Jeffrey Pfeffer explains that ultimately a manager's power comes from his or her control over resources, such as budgets, capital, positions, information, and knowledge.

Which of these properly identifies the role a function can play in implementing reliability improvement methodologies? a. The marketing team provides feedback from customers about new product features they are seeking. b. The HR team institutes a Six Sigma training program. c. The production team offers mass customization options through a flexible manufacturing technology. d. The leadership team models a commitment to customer focus

b. The HR team institutes a Six Sigma training program.

Which of these could be an example of a competitive advantage? a. The status of a company with the largest top line sales number in an industry b. The ability of a firm to outperform its rivals by achieving greater profitability and growth than others in the industry c. A solid company with predictable sales and profitability every year, delivering predictability for its shareholders d. A start-up company with an innovative new product that changes an industry

b. The ability of a firm to outperform its rivals by achieving greater profitability and growth than others in the industry

Which of the following would not diminish the risk of entry of potential competitors for an established company within an industry? a. Government prohibition of market entry in the company's industry. b. The established company does not benefit from cost reductions due to mass production of standardized products. c. Customers are locked into the established company's product due to the high amount of energy, time, and money it would take to switch to a new product. d. Potential competitors cannot match the established company's lower cost structure. e. Consumers prefer the established company's product

b. The established company does not benefit from cost reductions due to mass production of standardized products.

An entrepreneur started a small consulting business to provide training on multicultural communication to large corporations, teaching managers how to communicate with people whose ethnic backgrounds are different from their own. In his conversations with customers, he learned there is a need for training on socioeconomic issues as well. He developed a training class for teaching managers the differences in communication and perception across socioeconomic backgrounds. This is an example of a strategy to improve: a. positioning. b. customer responsiveness and innovation. c. efficiency. d. mass customization

b. customer responsiveness and innovation

Innovation can be a source of competitive advantage in two ways, including: a. tapping into new markets and working against competitors with a streamlined product portfolio. b. finding ways to distribute or manufacture the product with fewer inputs and making the product better so that the company can charge more for it. c. preventing competitors from releasing their own new products and retaining existing customers. d. increasing the cost structure of the company through overhead and hiring the most talented team members.

b. finding ways to distribute or manufacture the product with fewer inputs and making the product better so that the company can charge more for it.

As companies gain more experience producing their products, they are able to reduce unit costs because: a. suppliers and distributors offer lower costs to more established companies. b. the combination of learning effects and economies of scale lead to more efficient manufacturing. c. they can charge more for their products as their brands become more established and well-known in the marketplace. d. their equipment is more specialized to manufacture products, reducing the cost structure.

b. the combination of learning effects and economies of scale lead to more efficient manufacturing.

Which of the following is NOT a basic strategy for a first mover? a. Develop and market the innovation jointly with other companies through a strategic alliance or joint venture b. License the innovation to others c. Discourage development of complementary assets d. Increase height of imitation barriers e. Develop and market the innovation itself

c. Discourage development of complementary assets

Which of the following is NOT a risk of exporting? a. Tariff barriers b. Delegation of marketing activities to a local agent c. High manufacturing costs d. Transportation costs e. Location diseconomies

c. High manufacturing costs

Armando, a technology enthusiast, is often willing to pay premium prices to always have the newest tech gadgets. Armando most likely belongs to which of the following group of customers? a. Early majority b. Early adopter c. Innovator d. Late majority e. Laggard

c. Innovator

Which of the following statements is true about transnational strategy? a. It gives little emphasis to cost reduction and achieving scale economies. b. It is an easy one to pursue because it places minimal demands on the company. c. It fosters a flow of resources such as process knowledge between different subsidiaries in the company's global network of operations. d. It is adopted by companies that produce standardized goods that do not require product differentiation. e. It makes little sense when the pressures for local responsiveness are intense.

c. It fosters a flow of resources such as process knowledge between different subsidiaries in the company's global network of operations.

Which of the following is currently an embryonic industry? a. Personal computers b. Wireless communications c. Nanotechnology d. Internet retailing e. Biotechnology

c. Nanotechnology

Which of the following identifies the main difference between an opportunity and a threat for a company's environment? a. Opportunities arise in the external environment while threats primarily play out in the internal environment of a company. b. Opportunities generally relate to the increased competition provided by new arrivals to the industry and threats are focused on the exiting of competitors in the industry. c. Opportunities provide a company the freedom to take advantage of conditions in the environment while threats can mean peril for a company's integrity and profitability. d. Opportunities open a company up for risks to their profitability while threats allow for implementation of strategies which can increase profitability. e. The only difference between an opportunity and a threat is whether a company decides to pursue new strategies or to stick with proven strategies as a result of the new element or condition

c. Opportunities provide a company the freedom to take advantage of conditions in the environment while threats can mean peril for a company's integrity and profitability.

Which of the following correctly describes the difference between product and process innovation? a. Product innovation decreases a company's pricing options while process innovation increases production costs. b. Product innovation lowers production costs while process innovation provides enhanced versions of existing products that customers perceive as having more value. c. Product innovation generates value by creating new products while process innovation often allows a company to create more value by lowering production costs. d. An example of product innovation is just-in-time inventory systems while an example of process innovation is Cisco's development of the router. e. Product innovation is more important than process innovation in achieving competitive advantage

c. Product innovation generates value by creating new products while process innovation often allows a company to create more value by lowering production costs.

The Smith boys want to get the new Xbox console for Christmas, but their parents are hesitant to buy it because the family already owns the two latest versions of the PlayStation consoles with multiple games and extra controllers. Their decision to remain with the PlayStation is due to which of the following? a. Bargaining power b. Lack of economies of scale c. Switching costs d. Risk of entry e. Brand loyalty

c. Switching costs

Which of the following statements is true about marginal costs in high-technology industries? a. They are extremely high in software-making companies. b. They are invariably higher than fixed costs. c. They include the costs of packaging and product distribution. d. They do not exist if the product is sold by a sales force directly to end-users. e. They are the costs that customers need to bear to adopt a new technology.

c. They include the costs of packaging and product distribution.

Kodak possesses the leading imaging technology. This technology has allowed the company to differentiate its products from those offered by rivals. Imaging technology is Kodak's: a. organizational architecture. b. support activity. c. distinctive competence. d. profit. e. value chain.

c. distinctive competence

Which of these companies is most in need of a strategy to improve customer responsiveness? a. A television manufacturer has had trouble keeping up with its competitors. The company hasn't released a significant new technology in the last three years. All of its new televisions are using preexisting technology. b. A grocery store chain has an inventory challenge. The store is purchasing fresh produce at a rate that is faster than customers are buying it, leading to excess produce that goes bad on the shelf and must be discarded. c. A cable television company has a public relations problem. Customers have been posting on social media that the phone lines are clogged and it takes more than 30 minutes on hold for them to speak to a representative about their cable bill. d. A fast-food restaurant has seen a steep decline in sales of its previously top-selling burger since making a small change to its sauce recipe ingredients. It used to purchase its mayonnaise from one distributor and now purchases from a different seller

c. A cable television company has a public relations problem. Customers have been posting on social media that the phone lines are clogged and it takes more than 30 minutes on hold for them to speak to a representative about their cable bill.

Which of these companies is experiencing a benefit of tight cross-functional integration in its innovation strategy? a. A company has a 5% success rate on its R&D projects in comparison to a 25% average success rate in its industry. b. A company's cycle time is three times longer than that of most of its competitors. c. A company manages its R&D costs to shorten the length of time for return on investment in new products from one year after launch to six months after launch. d. A company's newest product meets customer needs but is challenging to manufacture due to the complexity of its assembly process.

c. A company manages its R&D costs to shorten the length of time for return on investment in new products from one year after launch to six months after launch.

Strategic managers may believe that they have to choose between what is best for the shareholders versus what is best for the company's customers and employees to achieve a competitive advantage. However, there is good evidence to suggest that the best way to maximize the return to shareholders is to focus on the customers and employees. Which of these scenarios is an illustration of that evidence? a. A manufacturing business routinely hires full-time employees to fill seasonal spikes in demand and then cuts their hours during slow times to lower costs and continue to pay high shareholder dividends. b. A restaurant company decides to operate with fewer employees, causing customer service to suffer, in order to increase its return to shareholders. c. A tech company determines that it should pay its top-performing employees above-market wages, decreasing shareholder returns in the short-term. But the employee longevity pays off through sustained research and development and breakthrough products that result in sales growth and lower recruitment costs. d. An airline decides to revamp its loyalty program to create more blackout dates, ensuring it can sell more tickets at full price and return greater profitability to shareholders. Customers call to complain and stop utilizing the loyalty program.

c. A tech company determines that it should pay its top-performing employees above-market wages, decreasing shareholder returns in the short-term. But the employee longevity pays off through sustained research and development and breakthrough products that result in sales growth and lower recruitment costs.

Which of the following statements about cognitive biases is true? a. The bias of representativeness arises from our predisposition to estimate the probability of an outcome based on how easy the outcome is to imagine. b. The bias of the availability error is rooted in the tendency to generalize from a small sample or even a single, vivid anecdote. c. An awareness of cognitive biases allows managers to analyze whether the decision is being made strategically or relying on a "rule of thumb" or heuristic. d. The benefits of using heuristics in decision making far outweighs any drawbacks of cognitive biases that may occur

c. An awareness of cognitive biases allows managers to analyze whether the decision is being made strategically or relying on a "rule of thumb" or heuristic.

Adrian is vice president for product management at a Brazilian-based skin care company. As a functional leader, Adrian led a strategy planning process with his team to create a new tan-enhancing cream. After a thorough strategy process, the team built consensus around a deployment plan for this new product. They introduced the tan enhancer to a regional segment of the marketplace as a prototype. Sales were dismal. After some focus groups, the team learned that consumers were not interested in it.But Adrian didn't give up, insisting the team continue to promote the product, pushing a deployment plan and launching to the entire market, along with a robust and expensive television and magazine ad campaign. Just like during the regional trial, it was a dismal failure with limited sales. The executive team suggested that Adrian's strategy planning was flawed in selecting this type of new product as the core of his strategy. Consider the potential techniques for improving decision making that Adrian could have utilized to avoid defects in his planning process. a. Astute use of power: Adrian could have shut down the entire strategy by unilaterally deciding it was not workable. b. Representativeness: Adrian could have insisted that the team continue to sell because he saw data from a small subsection of the sample that liked the product. c. Devil's advocacy: Adrian could have assigned one member of his team to identify potential problems with the plan and present them to team members, who would agree to take them into consideration. d. Escalating commitment: Adrian could have rescued the project by assigning additional team members to it and giving it more time.

c. Devil's advocacy: Adrian could have assigned one member of his team to identify potential problems with the plan and present them to team members, who would agree to take them into consideration.

An HVAC contractor is considering expanding into a new business line, offering commercial facility maintenance and service in addition to construction contracting services. As the contractor considers this potential strategy, it conducts a strategic planning process for this business unit, analyzing external and internal factors. Which of these can be classified as a part of the external operating environment of the company? a. The company has a handful of HVAC technicians with prior experience working for a service firm. b. The skills required to construct, assemble, and install HVAC equipment currently possessed by the contractor's employees would be required to service the equipment in existing buildings. c. Local commercial properties are most often served by one of three big national HVAC service firms and a handful of local smaller firms. d. Selling HVAC services is different from selling construction services. The contractor's team doesn't have anyone with experience selling to facilities managers.

c. Local commercial properties are most often served by one of three big national HVAC service firms and a handful of local smaller firms.

A nonprofit organization is considering holding a series of sessions to develop its mission, vision, goals, operation model, and strategic plan. Differentiate between planning for charities versus for companies. How will the process be different for the nonprofit? a. Nonprofit organizations do not conduct strategic planning. This meeting would be primarily symbolic for the charity's stakeholders to energize them and help them feel like they're involved in the cause. b. A nonprofit organization will not utilize a SWOT analysis or employ strategic managers at a variety of levels to participate in their strategic planning process. c. The strategic goals of the organization will include a combination of performance goals toward the charity's mission, revenue, and fundraising goals. d. The nonprofit organization will be most concerned about creating a strategic plan that creates a high income for its board of directors.

c. The strategic goals of the organization will include a combination of performance goals toward the charity's mission, revenue, and fundraising goals

Cross-functional teams are critical to reducing innovation failures. One benefit of integration among departments is that: a. it allows for fewer people to be involved in research and development, making it easier to keep new products a secret from competitors. b. it ensures that only engineers and technical specialists are making product development decisions. c. it speeds up product development by streamlining the team that is working on projects. d. R&D, marketing, and production teams work together to ensure the new product can be efficiently manufactured and will have a demand in the marketplace

c. it speeds up product development by streamlining the team that is working on projects.

Which of the following strategies should a company NOT adopt if it wants to win a format war? a. Aggressively marketing to jump-start demand b. Developing complementary products c. Developing killer applications d. Charging extremely high license fee for the technology e. Joining forces with other companies to develop new technologies

d. Charging extremely high license fee for the technology

Distinctive competencies shape the which of the following strategies that a company can pursue? a. Corporate level b. Industry level c. Global level d. Functional level e. Business level

d. Functional level

Which of the following statements about growing industries is true? a. Companies serving innovators need to have large-scale mass production and very low prices. b. Companies competing in an embryonic market typically pay more attention to increasing the reliability of a product than to its performance. c. Reaching the early majority rarely requires advertising and is usually achieved through word of mouth. d. Innovators and early adopters are typically reached through specialized distribution channels. e. Innovators and early adopters have the same customer needs as the early majority.

d. Innovators and early adopters are typically reached through specialized distribution channels.

Which of the following statements is true about international strategy? a. It often involves decentralizing product development functions such as R&D to different subsidiaries. b. It is usually adopted by companies that face intense cost pressures due to competition. c. It makes most sense when the pressures for local responsiveness are very intense. d. It often involves the head office retaining tight control over marketing and product strategy. e. It involves extensive scope for localization and product differentiation

d. It often involves the head office retaining tight control over marketing and product strategy.

Which of the following statements is true about new entrants in the context of a technological paradigm shift? a. New entrants are not constrained by lack of capital. b. Pressures to continue the existing out-of-date business model hamstring new entrants. c. New entrants often face the risks of product cannibalization. d. New entrants do not need to worry about their established customer base. e. It is difficult for new entrants to focus all their energies on the opportunities offered by the new disruptive technology.

d. New entrants do not need to worry about their established customer base.

Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as which type of innovation? a. Resource b. Customer c. Value-chain d. Product e. Process

d. Product

What is the role of output controls in a firm with a minimal need for integration? a. Controls in the form of budgets are used to allocate financial resources to each function and control spending by the functions. b. The CEO using personal supervision to influence the behavior of functional heads. c. May reduce the need for personal controls and bureaucratic rules. d. Used to assess how well a function is performing. e. Allow the firm to operate with a flatter organization structure and wider spans of control.

d. Used to assess how well a function is performing.

The extent of rivalry among established companies is lowest when: a. the industry's product is a commodity. b. the industry is entering a decline stage. c. exit barriers are substantial. d. demand is growing rapidly. e. the fixed costs are high.

d. demand is growing rapidly.

Cooperating with competitors: a. creates confusion among customers and often leads them to delay their purchases. b. curbs network effects by discouraging complementary products. c. helps lower the entry barriers of the industry, thus allowing new entrants to bring in their own formats. d. reduces competition in the market. e. results in the creation of several new formats, thus intensifying format wars.

d. reduces competition in the market.

Chris is a mid-level manager who has been working with an executive coach to become a better leader within his organization. One of Chris's goals has been to develop his emotional intelligence. Recently, Chris scheduled a meeting with a challenging objective - to inform his team of employees that the executive team has decided to abandon the project they've been working on. When Chris discusses the situation with the team, which of these approaches would best demonstrate emotional intelligence? a. Chris should inform them all that the project they are working on is no longer aligned with the company and that all of their work has been in vain. b. Chris should take a few promising leaders aside and tell them first that the project is being killed but that their jobs are safe, and then announce the change in direction to everyone else and tell them that their inferior work is the reason management is stopping the project. c. Chris should blame the executive management for killing this project and tell everyone on the team that he was passionate about their work, the company is dropping the project anyway. d. Chris should start by complimenting the team on their hard work on the project so far and then explain that the company is shifting direction and is no longer pursuing the project. He should have as much information as is available for the employees on how this change will affect their job status.

d. Chris should start by complimenting the team on their hard work on the project so far and then explain that the company is shifting direction and is no longer pursuing the project. He should have as much information as is available for the employees on how this change will affect their job status.

Which of these is characteristic of a well-constructed goal? a. My company's goal is to create a more diverse employee base. We've decided we want to attract employees of different races, but our management team is uncomfortable with any kind of system that would count the number of employees we have of different races. b. My company's CEO has many pet projects. She's thinking about starting side businesses that are unrelated to our core competency and has set goals surrounding these new areas. c. My company has decided that we will pursue a goal to become the largest, ranked by revenue, grocery retailer in North America within three years. We currently operate 50 stores in five states. d. My company has set a goal of launching five new products each year for the next five years through at least a 10% annual investment in research and development.

d. My company has set a goal of launching five new products each year for the next five years through at least a 10% annual investment in research and development.

A potato chip manufacturer currently has a manufacturing line devoted to regular chips as well as individual lines dedicated to each variety, such as barbeque, sour cream and onion, and cheese. The regular chip line operates for three shifts per day, but the varieties only run for one shift per day. To maximize efficiency, the company should consider: a. just-in-time systems to ensure that the raw material supplies - potatoes - are arriving several days before they are needed in the production process. b. counteracting diseconomies of scale by splitting the company into separate divisions, each one devoted to a specific variety. c. learning effects to improve the manufacturing speed of its regular chip line to reduce the number of shifts it is running and reduce overhead. d. flexible production technology, which would allow the company to produce different varieties off of the same line with brief setups in between.

d. flexible production technology, which would allow the company to produce different varieties off of the same line with brief setups in between.

Julian was asked to examine the demographic forces facing his employer, a clothing manufacturer. Which of the following factors is Julian most likely to examine? a. Manufacturing technology b. Inflation rates c. Society's growing interest in exercise d. Government regulations e. Age of the population

e. Age of the population

Americans are currently living longer now than in the past because of advances in medicine. As a result, the sale of products that meet the needs of older individuals, such as devices that assist in walking and movement, have increased. In the context of an industry's macroenvironment, age is considered which type of force? a. Technological b. Social c. Political d. Legal e. Demographic

e. Demographic

Which of the following factors increases pressures for local responsiveness? a. Powerful buyers b. Uniformity in distribution channels c. Competitors that are based in high-cost locations d. Similarities in customer tastes and preferences e. Host government demands

e. Host government demands

Pressures for cost reductions are intense in which of the following industries? a. Industries where major competitors are based in high-cost locations b. Industries where consumers are not powerful and face high switching costs c. Industries where there is persistent lowered capacity d. Industries producing commodity-type products that serve specific needs e. Industrial and consumer products such as handheld calculators and personal computers

e. Industrial and consumer products such as handheld calculators and personal computers

Which of the following is NOT considered a benefit of industry analysis? a. It can result in profitable changes to existing strategies. b. It stimulates systematic thinking about strategic choices. c. It can be a powerful tool to aid in a manager's strategic thinking. d. It makes it easier to identify opportunities and threats within an industry. e. It recognizes how competitive forces are isolated and do not impact each other.

e. It recognizes how competitive forces are isolated and do not impact each other.