Exam #1

low; many

A perfectly competitive industry has ______ entry barriers and ______ small firms A. high; many B. low; many C. high; few D. low; few

management affects the performance of a firm

Firm effects refers to the way in which A. Firms react to the strategic moves of rival firms B. management affects the performance of a firm C. the structure of an industry affects individual firm perfromance D. firm the performance of the firm affects the overall economy

low

In a period of economic boom, unemployment is ____ and human resources become expensive A. fluctuating B. variable C. high D. low

customer service

Managers can increase the perceived value of their firms' product or service offerings by focusing on A. strategic contributions B. customer service C. salient costs D. supply chains

entry barriers

Obstacles that determine how easily a firm can enter an industry, are called A. supplier barriers B. threats of substitutes C. entry barriers D. threats to entry E. rivalry barriers

intedependent

The relationship between the natural environment and business organizations can best be described as A. interdependent B. a U-shape C. insignificant D. unconnected

Charge premium pricing

Unique features and attributes that differentiate a product from competitors' offerings allow the firm to A. charge only as much as the competition charges for its products B. charge premium pricing C. reduce the cost of raw materials D. hire employees away from competitors

underperform

When a firm does unfavorably compared to similar firms, it is said to ________ A. go out of business B. exceed benchmarks C. underperform D. file for bankruptcy

traditional

Wholesaling is considered a _______ model for retail A. traditional B. revolutionary C. groundbreaking D. unsuitable

complements

Value drivers known as ____ add value to a product or service when they are consumed in tandem with the focal product A. citations B. complements C. customizations D. constructs

Analysis

What is the first step in the AFI strategy network? A. assurance B. acceptance C. application D. analysis

strategic trade-off

A ______ is a situation that requires choosing between a cost or value position A. generic business level strategy B. industry effect C. value proposition D. strategic trade-off

control costs

An important requirement for increasing economic value creation under a differentiation strategy is to A. stimulate demand through celebrity endorsements B. eliminate unnecessary product features C. control costs D. increase prices

a monopoly

An industry in which only one firm supplies the market is known as A. a monopolistic competition B. a monopoly C. an oligopoly D. a perfect competition

strategic position

Choosing a business-level strategy helps to define a firm's ______ in a given product market A. ethical climate B. strategic position C. industry structure D. mission statement

the increase in perceived value exceeds the corresponding cost increase

Different value drivers contribute to competitive advantage if A. product customization is offered B. customer service prices exceeds the cost of product features C. premium pricing is used D. the increase in perceived value exceeds the corresponding cost increase

comparative analysis of firms

Public companies are required by law to release detailed accounting data in order to enable ________ A. shareholder value creation B. a balanced scorecard system C. comparative analysis of firms D. economic value creation

55

Researchers have determined that a firm's strategy can explain up to ____ % of its performance A. 30 B. 15 C. 55 D. 75

False

T/F: Emergent strategy is planned

lower

The stronger the five forces, the ______ the industry's profit potential A. higher B. stronger C. less differentiated D. lower

convergence

Industry ______ is the process by which formerly unrelated industries begin to satisfy the same customer need A. convergence B. parity C. emergence D. complementariness

strategic group

A _____ is a set of companies that pursue a similar strategy within a specific industry to achieve competitive advantage A. competitive rival B. technological force C. strategic group D. dynamic performer

implementation

A balanced scorecard is a tool for strategy __________ A. formulation B. metrics C. implementation D. survival

premium

A differentiation strategy is typically associated with ____ pricing A. excessive B. disadvantaged C. virtual D. premium

Strategic postition

A firm's strategic profile based on value creation and cost is called its _____ A. strategic trade-offs B. strategic control C. strategic alliance D. strategic position

What not to do and what to do

A well-devised strategy helps a firm understand

core values statement

A(n) ______ i a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission A. upper echelons theory B. core values statement C. strategic commitment D. business strategy

intended

A(n) _______ strategy is the outcome of a rational and structured, top-down strategic plan A. realized B. serendipitous C. emergent D. intended

upper-echelons theory

According to the _____, effective leadership is the outcome of certain intrinsic talents as well as education A. strategic formulation B. upper-echelons theory C. strategic management process D. leadership pyramid

cube square

According to the ______ rule, increasing the surface area (size) of a storage unit or retail facility results in a disproportionate increase in volume (space). A. maximum effective B. minimum efficient C. cube square D. superstore

the repay the debts it has with suppliers and to give investors a return on invested capital

Among the various types of responsibilities a business firm has, which of the following are considered to be economic responsibilities? (more than 1) A. the repay the debts it has with suppliers B. to obey consumer protection laws C. to do what society deems just and fair D. to give investors a return on invested capital

Mission

An organization's ________ is what an organization actually does--the products and services its plans to provide and the markets in which it will compete A. mission B. vision C. intent D. commitment

Total return to shareholders

Because external factors create volatility in stock prices, a better measure of a firm's performance over the long term is to ________ A. sum total of the market's trajectory B. unemployment rate C. the NASDAQ computer index D. total return to shareholders

decrease in cost per unit as output increases

Economies of scale are A. decrease in economic value due to competitive parity B. increase in minimum efficiencies of scale C. increase in cost-leadership business level strategy D. decrease in cost per unit as output increases

product differentiation

Firms are able to create near monopoly by maximizing A. prices and cost B. their advertising revenue C. competition D. product differentiation

consumer surplus

If Tom would have paid $1,000 for a new laptop but was able to purchase one for $800, the $200 he saved is considered his ________ A. consumer surplus B. producer surplus C. reservation price D. economic value

be organized to capture value

In order to be successful, a firm must have a resource that is valuable, rare, costly to imitate, and the firm must __________ A. identify primary actitivites B. identify support activities C. be organized to capture value D. be mobile and virtual in its value chain

the performance of other firms in the industry

In order to determine if The Home Depot has a competitive advantage, we must compare The Home Depot's performance to A. only non-US-based firms B. its past financial performance C. the performance of other firms in the industry D. a firm in the technology industry.

audit the company's results in fulfilling its social and ecological obligations

In order to ensure that a firm is implementing the triple-bottom-line approach successfully, managers must _______ A. compare data with competing firms to ensure scorecard goals are not being met B. fill out a balanced scorecard C. audit the company's results in fulfilling its social and ecological obligations D. file their taxes with auditors before turning them over to the federal governement

Organizational design

In the _____ step of the strategy implementation phase of the AFI strategy framework, managers would examine how the firm should be structured in oder to implement the desired strategy A. business ethics B. organizational design C. internal analysis D. corporate governance

fourth

In the ______ step of the stakeholder impact analysis, firms identify their various social responsibilities to stakeholder A. second B. fourth C. third D. fifth E. first

fifth

In the ______ step of the stakeholder impact analysis, managers need to decided the appropriate course of action for the firm in relation to stakeholder concerns A. second B. fifth C. first D. thrid E. fourth

how do external forces affect our strategy and competitive advantage?

In the external analysis phase of the AFI strategy framework, manager should ask A. how do external forces affect our strategy and competitive advantage? B. what is our process for making strategy so that we can be competitive? C. how does strategy come about? D. what is our mission and purpose?

steeper

In the learning curve, _______ the learning curve, the more learning takes place A. linear B. wider C. flatter D. steeper

Ethical

Starbucks' commitment to fair trade and responsible growing practices indicates that the firm takes its _________ responsibilities seriously A. philanthropic B. ethical C. economic D. legal

Implementation

Strategy _______ concerns the organization, coordination, and integration of how work gets done. A. formulation B. analysis C. implementation D. organization

False

T/F: A statement such as, "we will be the biggest company in the world," is an example of strategy

True

T/F: According to the five forces model, competition involved not only creating economic value but also capturing a significant share of the economic value created

True

T/F: High exit barriers lead to intense rivalry

False

T/F: Sociocultural factors tend to be fixed

false

T/F: When companies commit to sustainable strategies, they do so purely out of a spirit of charity, when an understanding that doing so will hurt the bottom line

1,000,000

The Luminarium Corporation has a market capitalization of $100,000,000 and each share is worth $100. How many outstanding shares of Luminarium Corporation are there? A. 1,000,000 B. 1,000 C. 10,000,000 D. 50,000,00

scope of competition

The _____ determines whether to pursue a specific narrow part of the market or to go after the broader market A. range of differentiation B. scope of competition C. fundamental business orientation D. likely combination of generics

value chain

The _______ describes the internal activities a firm engages in when transforming inputs into outputs A. value chain B. complementary chain C. supply chain D. primary chain

threat of substitutes

The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers A. threat of new entrants B. power of buyers C. rivalry of existing competitors D. threat of substitutes

an interest rate

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is known as A. an economic boom B. a level of employment C. a currency rate D. an interest rate

directly, intensely

The closer firms are on the strategic group map, the more ____ they are competing with each other (pick two) A. differently B. indirectly C. directly D. intensely

the stronger the forces, the lower the industry's ability to earn profits

The key take away from the Five Forces Model is A. the more stable the forces, the greater the new entrants B. the weaker the forces, the lower the industry's ability to earn profits C. the stronger the forces, the lower the industry's ability to earn profits D. the higher the threat of new suppliers, the more buyers exit

the future can be predicted based on information from the past

The major assumption in the top-down strategic planning process is that A. the future cannot be planned for B. the future can be predicted based on information from the past C. the future has no relationship to the past D. bigger is better

total return on their risk capital

The measure of competitive advantage that matters the most to shareholders is ________ A. opportunity cost B. total return on their risk capital C. planned emergence D. return on invested assets

bring down

The minimum efficient scale indicates the level of output needed to ______ the cost per unit as much as possible A. keep steady B. bring down C. inflate D. increase

fixed

The money a firm spends to build a manufacturing facility can be considered a ________ cost A. variable B. low C. competitive D. fixed

The firm's strategy

The most important factor in determining firm performance is A. network effects B. industry structure C. the firm's strategy D. the intensity of competition

reservation

The subjectively determined maximum amount a customer would pay for a product is its ________ price A. overwhelming B. unfair C. exploitative D. reservation

few sellers

The term oligopoly comes from the Greek for: A. many sellers B. few sellers C. interdependence D. differentiated product

outlining the vision, mission, and values of the organization

What is the first step in the strategic management process? A. understanding the customers' needs B. hiring a new CEO C. outlining the vision, mission, and values of the organization D. redesigning the product or service of the organization

more efficient management is paying creditors and generating interest-free loans from suppliers

When a company has a low payables turnover ratio, it indicates A. less efficient management is paying creditors and generating interest-free loans from suppliers B. more efficient management is paying creditors and generating interest-free loans from suppliers C. the firm has increased its number of invoices

profitability per unit

When a firm tries to meet the prices of its competitors, it typically sacrifices _________ A. profitability per unit B. market share C. number of consumers D. overhead

relative profitability

When comparing different firms of different sizes over a period of time, it is most useful to look at A. the sales per year B. how customers fill out in-store survey cards C. relative profitability D. the sales per day

accounting profitability

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its __________ A. accounting profitability B. economic value created C. the triple bottom line D. the balanced scorecard

the balanced scorecard

When managers analyze a wide variety of internal and external performance metrics in order to balance financial and strategic goals, they often turn to a framework known as ________ A. the accounting metric framework B. shareholder analysis C. strategic emergence D. the balanced scorecard

intangibles

When the high market valuation of internet-based firms, such as Facebook or Google, is analyzed, the importance of _______ becomes clear A. fixed assets B. tangibles C. intangibles D. plant and property

The NASDAQ

Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms? A. the S&P 500 B. the Dow Jones Industrial Average C. the value of the yen D. The NASDAQ index

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planned emergence

____ allows for bottom-up strategic initiatives to occur within a company and to be reviewed by executives A. a vision statement B. a strategic initiative C. planned emergence D. serendipity

path dependence

__________ suggests that sometimes even random events may have a large impacts on an outcome A. the VRIO framework B. path dependence C. agency theory D. upper-echelons theory

near monopoly

A _____ occurs when a firm has accrued significant market power and is changing the industry structure in its favor A. natural monopoly B. near monopoly C. strategic emergent monoploy D. accrued liable monopoly

customer-oriented

A _______ vision statement defines a company by describing its interest in developing solutions to consumer problems A. business-oriented B. product-oriented C. marketing-oriented D. customer-oriented

customers value your product more when they can use it with the other company's product

A company is a complementor to your company if A. customers private label your product B. that company praises your company for excellence C. customers value your product more when they can use it with the other company's product D. the market is fragmented and you can gain solidarity with a former rival

Ethics and Morals

A core values statement provides information to employees regarding the company's A. vision and mission B. strategic planning C. marketing strategy D. ethics and morals

value creation and cost

A frim's strategic position is determined by the relationship of which two variables? A. number of different products in the firm's portfolio and countries in which they are sold B. value creation and cost C. supply and demand D. number of products sold and price of the product

an industry

A group of companies that deal with more or less the same set of suppliers and buyers comprise A. a business group B. an industry C. a state D. a multi-environment

standalone division of a larger conglomerate

A strategic business unit (SBU) is defined as a(n) A. easy way to divide a company B. standalone division of a larger conglomerate C. fortune 500 company D. parent company that oversees standalone divisions

intensifies

A strategic commitments increase, rivalry within an industry A. intensifies B. dissipates C. disappears D. declines

firm effects

As a CEO, Maya's actions influence company performance far more than any forces exerted by the external environment. Maya's actions are classified as: A. general effects B. industry effects C. firm effects D. environment effects

general managers in strategic business units

Business strategy is developed by A. the federal government B. retail outlets C. executives at corporate headquarters D. general managers in strategic business units

consolidated

Firms have a tendency to change the industry structure in their favor, for example by making industries more _____ through mergers and acquistitions A. competitive B. intuitive C. consolidated D. diffuse

provides low-cost products to a niche market

In a focused cost-leadership strategy, a firm A. provides low-cost products to a niche market B. provides low-cost products to a wide market C. provides differentiated products to a niche market D. provides differentiated products to a wide market

achieving competitive advantage

In a perfectly competitive industry, firms have difficulty A. making purchasing decisions B. avoiding profitability C. keeping prices low D. achieving competitive advantage

business

In a(n) _______ strategy formulation, managers focus on deciding HOW the firm should compete A. business B. external C. corporate D. global

Large and diverse

In order for a firm such as Threadless to benefit from the "wisdom of the crowds", the crowds must be

Strategy

In order to achieve and sustain competitive advantage, a company devises and adopts a set of goal-directed actions known collectively as a(n) ____________.

non-market strategies

In order to influence changes in their political environment, firms pursue A. revolutionary change B. non-market strategies C. constitutional amendments D. market strategies

First

In the _______ step of a stakeholder impact analysis, firms identify those stakeholders that currently have, or potentially can have, a material effect on the company A. fifth B. second C. third D. fourth E. first

interest and claims

In the second step of the stakeholder impact analysis, managers need to identify and understand stakeholders' A. likelihood of bringing legal action against the firm or its investors B. entire investment portolio C. interest and claims D. political and cultural affilication

the way in which the structure of an industry affects the performance of individual firms

Industry effects refers to A. the extent to which consumer preferences influence the types of products that a firm produces B. the organizational structure of rival firms C. the effects of management decisions on firm performance D. the way in which the structure of an industry affects the performance of individual firms

less

Managers have _____ direct influence over external forces in the firm's general environment than those in the firm's task environment A. less B. vastly more C. more D. the same

Stakeholder

Managing the interactions of individuals and groups that affect and are effected by the activities of a firm is known as _________ strategy

False

T/F: The only legal means of retaliation against new entrants is price competition

False

T/F: The strategist's job is to focus on shareholders only

False

T/F: The stronger the five forces, the greater the industry's ability to earn above-average competitive advantage

False

T/F: Top-down strategic planning is most effective when the environment is constantly changing

False

T/F: Twitter's plan to charge advertisers to promote their goods to users is an example of an effective business strategy.

The Bulbs must have a lower cost than competitors' bulbs

The Bright Bulb light bulb company produces a line of LED bulbs that customers consider very similar to competitors' LED bulbs. Which of the following conditions must be true for Bright Bulb to have a competitive advantage?

suppliers and buyers

The Five Forces of Porter's model include the threat of entry and substitutes, rivalry among existing competitors and the power of A. complementors B. substitutes C. competitors or rivals D. suppliers and buyers

20%

The industry of a firm is in determines about ______ of a firm's profitability. A. 20% B. 80% C. 2% D. 100%

rivalry

The intensity with which companies in an industry jockey for market share and profitability is known as A. rivalry B. barriers C. identification D. threats

a five forces anlaysis

The most rigorous means of analyzing the profit potential within a specific industry is to conduct A. an industry PET scan B. a market analysis C. a five forces analysis D. a PESTEL analysis

buyers

The power of ________ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality A. new entrants B. existing competitors C. supplier D. buyers

bargaining power of suppliers

The pressure that industry suppliers can exert on an industry's profit potential, is also called A. bargaining power of suppliers B. bargaining power of buyers C. rivalry amongst existing competitors D. threat of new entry

threat of entry

The risk that potential competitors will enter the industry is known as the A. threat of entry B. rivalry among existing competitors C. power of buyers D. power of suppliers E. threat of subsititutes

opportunities and threats

The third step of the stakeholder impact analysis requires managers to identify the ________ and _________ presented by internal and external stakeholders

actions that are costly, long-term oriented, and difficult to reverse

What are strategic commitments? A. mission statements for technological innovators B. relationships between strategic planning, competitive parity, and mission statements C. comparisons of scenario planning and planned emergence D. actions that are costly, long-term oriented, and difficult to reverse

strategy can be planned or emerge from the bottom-up

What is the premise of Henry Mintzberg's position regarding strategic planning A. strategic planning is too flexible B. strategy can be planned or emerge from the bottom-up C. top-down strategic planning is the most effective D. strategic planning does not impact overall strategy

to create a sustainable competitive advantage

What is the purpose of the strategic management process? A. to create a product oriented organization B. to coincide with scenario planning and planned emergencies C. to create a sustainable competitive advantage D. fulfillment of organization values

able to influence the company to pursue a course of action it would not otherwise take

When a stakeholder has power over a company it is A. able to get the company to take immediate and urgent action B. able to influence the company to pursue a course of action it would not otherwise take C. helping to implement the firm's strategy D. perceived to have a legally valid claim

mitigate threats and leverage opportunities

When managers understand the forces in the external environment, they are better able to A. achieve price stability B. illustrate the impact of strategic actions C. understand the firm's internal resources D. mitigate threats and leverage opportunities

high

When suppliers do not depend heavily on the industry for a large portion of their revenues, the power of suppliers is A. moderate B. high C. insignificatn D. low

Competitive Forces & Strategic Groups

Which of the following factors would be examined in the external analysis stage of the AFI strategy framework? (More than 1) A. The firms own resources B. Company culture C. Competitive forces D. Strategic groups E. Corporate Strategy

employee stock ownership plans

Which of the following incentivize employees by offering them discounted shares or retirement plans based on company stock? A. stock buyback plans B. initial public offerings C. employee stock ownership plans D. employee welfare benefit plans

creating long lasting greatness

Which of the following is NOT a capability that a level-2 manager typically exhibits? A. creating long lasting greatness B. helps realize the goals of a team C. has a superior individual capability to get things done D. collaborates well with others

Black Swan Event

Which of the following is a term used to describe a highly unlikely event that has a significant impact on society? A. black swan event B. unicorn event C. white knight event D. blue bird event

Stakeholder impact analysis

Which of the following is a tool that managers can use to address the needs of stakeholders while maintaining a competitive advantage? A. ethical choice analysis B. corporate citizen strategy C. stakeholder impact analysis D. group happiness strategy

Property rights and contract enforcement

Which of the following legal developments allow business to function as an institution?(more than one) A. property rights B. contract enforcement C. voting rights D. freedom of speeh

vision

Which of the following terms best describes an organization's primary objective and want it ultimately wants to accomplish? A. values B. visions C. mission D. inspiration

Business

_____ strategy addresses the question of HOW to compete

Serendipity

______ describes random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives A. strategic initiatives B. resource-allocation process (RAP) C. autonomous actions D. serendipity