MAN4720 All Quiz Questions

The process of merging with a competitor at the same stage of the value chain is best described as

horizontal integration.

"The process of joining two independent companies with their consent to form a combined entity on a permanent basis" is the definition of a

merger.

Amazon expanded its single-product business by leveraging spare capacity into cloud computing and by offering its Kindle line of tablet computers. This is an example of

related-linked diversification.

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

reputation for quality.

An inverted U-shaped relationship between the type of diversification and overall firm performance indicates that

high and low levels of diversification are generally associated with lower overall performance.

To secure a strong strategic position in fast-growing emerging markets, which of the following corporate strategies did Kraft Foods primarily pursue by acquiring Cadbury?

horizontal integration

The starting point of the build-borrow-or-buy framework is management's

identification of a strategic resource gap that will impede future growth.

Firms often consolidate industries through horizontal mergers and acquisitions to

increase their market power.

A financial advisor has heard from a relative of NR Industries Inc.'s CEO that the company is planning to shut down its operations in Europe next year. The financial advisor realizes that this decision may cause a decline in the value of the company's shares and decides to sell them off. A buyer, unaware of the company's future plans, sees this as a potential opportunity and invests in the company. What does this scenario best illustrate?

information asymmetries

"A form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary" is the definition of

managerial hubris.

A disadvantage associated with obtaining goods and services externally includes

nontrivial search costs to be borne by the firm.

A blue ocean strategy typically allows a firm to - provide unique product or service features at a premium price. - add product features that raise costs without raising the perceived value. - reduce the value gap created by their products. - offer a differentiated product or service at low cost.

offer a differentiated product or service at low cost.

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

positively correlated.

Dr. Shetty is able to drive down the cost of complex medical procedures from $100,000 to $2,000 not by doing one big thing, but rather by doing a thousand small things. This approach focuses on driving down the cost of healthcare through - value of input factors. - cost of input factors. - process innovation. - product innovation.

process innovation.

As differentiation and cost leadership are distinct strategic positions that require important trade-offs, it is - easy to build an ambidextrous organization. - best for firms to avoid pursuing a generic business-level strategy. - quite difficult to translate a blue ocean strategy into reality. - easy to increase value and lower cost at the same time.

quite difficult to translate a blue ocean strategy into reality.

GiftBasket.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 GiftBasket.com is its - lower value gap. - superior customer service. - economies of scale. - availability of complements.

superior customer service.

When Moon Star Products Inc. planned to start its operations in United Cadvia, an emerging nation, it realized that it will have to set up its own distribution channels. This would be a risky and an expensive strategic move. The company had an option of hiring a small supply chain management company, Gold Logistics Inc., to reach its ultimate customers. However, this would require Gold Logistics to make huge investments, which would be of no use to it if Moon Star decided to exit the market. Thus, to gain Gold Logistics's confidence, Moon Star purchased 40 percent of the stock of Gold Logistics. What does this scenario best illustrate?

equity alliance

There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is - adding unique features that turn standard commodities into differentiated products. - combining experience-based learning and process innovation to move onto a steeper learning curve. - creating personalized customer service in order to minimize price sensitivity among customers. - shifting to small-scale production processes in order to create highly customized products.

combining experience-based learning and process innovation to move onto a steeper learning curve.

Contour Autos competes against the global leaders in the automobile industry by developing and selling acceptable quality vehicles 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 Contour Autos applying in this scenario? - differentiation strategy - product diversification strategy - cost-leadership strategy - liquidation strategy

cost-leadership strategy

4. The invention of small desktop copiers out of the same technology used to create large, standalone copiers, is an example of a(n) a. Incremental innovation b. Disruptive innovation c. Radical innovation d. Architectural innovation

d. Architectural innovation

22. Entrepreneurs innovate by a. Limiting competition in a given market b. Increasing demand for existing products c. Acquiring promising start-up companies d. Commercializing new ideas and inventions

d. Commercializing new ideas and inventions

23. In the _____ stage of the industry life cycle, falling demand leads to a reduction in market size a. Introduction b. Growth c. Consolidation d. Decline e. Shakeout

d. Decline

14. A significant difference between technology enthusiasts and early adopters is that a. Early adopters dominate the decline stage of the industry life cycle b. Technology enthusiasts have much more disposable income c. Early adopters are primarily interested in technical details rather than practical applications d. Early adopters are interested in how a new technology will improve their lives, rather than in the details of the technology itself

d. Early adopters are interested in how a new technology will improve their lives, rather than in the details of the technology itself

30. A significant difference between the early majority and the late majority is a. The early majority enjoys providing voluntary feedback to producers b. The late majority is comfortable purchasing from new or unknown firms c. The late majority is more adept with technology d. The late majority is not confident in using new technologies

d. The late majority is not confident in using new technologies

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

deliver products or services at a lower cost than competitors.

In a focused differentiation strategy, a firm seeks to - offer low-priced products and services with a narrow focus on a niche market. - create higher customer value than the competitors in different segments of a mass market. - deliver products or services with unique features to a specific, narrow part of the market. - focus on reducing the value gap to differentiate itself from the competitors.

deliver products or services with unique features to a specific, narrow part of the market.

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

differentiated products become commoditized throughout the industry.

Mega Products Inc., a large multinational conglomerate, has hired an external consultant to process and audit its payroll. This allows the company to focus on manufacturing and marketing activities rather than developing and maintaining its own human resource management systems. Which of the following alternatives to vertical integration has Mega Products adopted?

strategic outsourcing

Which of the following best illustrates horizontal integration?

Denali Electronics Inc. acquires its competitor, Mariana Electronics Inc., to gain access to its core competencies.

Which of the following best illustrates a strategic alliance?

Velociraptor Pharma Inc. teaming up with a research company to invent and market breakthrough vaccines

35. A firm's ability to integrate external technological developments into its own current products is known as _____ capacity a. Absorptive b. Production c. Intake d. Retention

a. Absorptive

12. Successfully transitioning from one stage of the industry to the next is referred to as a. Crossing the chasm b. Stage-transitioning c. Stepping over the bridge d. Jumping the gap

a. Crossing the chasm

The purchase or takeover of one company by another is a(n)

acquisition.

Which of the following is an example of related-constrained diversification?

an automobile company that manufactures petrol cars expanding into the diesel car industry

Highly diversified firms experience a diversification discount in the stock market because they

are unable to create additional value.

21. The development of most industries follows an: a. M-curve b. S-curve c. C-curve d. I-curve

b. S-curve

The rationale behind related diversification is to

benefit from economies of scale and scope.

32. Introducing a new technology to an existing market to better address consumer needs is known as _______ innovation a. Incremental b. Architectural c. Radical d. Disruptive

d. Disruptive

24. At which stage of the industry life cycle does the size of the market expand rapidly? a. Maturity b. Introduction c. Shakeout d. Growth e. Decline

d. Growth

33. The innovation process is a four-step process that exists of idea, invention, innovation, and _____ a. Imagination b. Irrigation c. Inspiration d. Imitation

d. Imitation

29. The most common type of innovation is a. Technological innovation b. Disruptive innovation c. Radical innovation d. Incremental innovation

d. Incremental innovation

27. It is common for firms to start by introducing a(n) _____ innovation a. Incremental b. Disruptive c. Entrepreneurial d. Radical

d. Radical

A strategic alliance has the potential to help a firm gain and sustain a competitive advantage when it joins resources and knowledge that are

difficult to imitate.

In the _____, firms change the underlying technology while holding cumulative output constant. - learning curve - experience curve - minimum efficient scale - maximum efficient scale

experience curve

HTC started as an original equipment manufacturing firm (OEM) for brand-name mobile device companies. Later, it started offering a lineup of innovative and high-performance smartphones by acquiring One & Co., a San Francisco-based design firm. This strategic move of HTC is known as

forward vertical integration.

When a blue ocean strategy is successfully formulated and implemented, investments in differentiation and low costs are not - value drivers but cost drivers. - cost drivers but value drivers. - complements but substitutes. - substitutes but complements.

substitutes but complements.

Which of the following is an example of internal transaction costs?

the costs pertaining to setting up a shop floor

Which of the following is one of the reasons that firms make acquisitions?

to gain access to a new capability or competency

5. GE's decision to let a GE team in China develop an inexpensive and portable ultrasound machine for developing markets is an example of _______ a. A top-down innovation strategy b. A failure to innovate c. A roundabout innovation strategy d. A bottom-up innovation strategy

d. A bottom-up innovation strategy

3. Which of the following is most likely to produce a radical innovation? a. An established restaurant chain with a clear organizations structure and strictly defined roles for employees b. A financial services firm that has been in business for 75 years and has longstanding customer relationships c. A leading toy manufacturer with a significant interest in maintaining the status quo d. A new sportswear company with a handful of employees that perform a number of loosely-defined roles

d. A new sportswear company with a handful of employees that perform a number of loosely-defined roles

20. Which of the following is an example of innovation? a. Walmart increasing the number of local and organic products in its stores b. McDonald's cutting items from its dollar menu c. Nike re-releasing an exact replica of a popular sneaker from the 1980's d. Apple combining smart phone and wristwatch technologies to create the Apple Watch

d. Apple combining smart phone and wristwatch technologies to create the Apple Watch

6. A large incumbent firm that has established a number of formalized practices and procedures may have a difficult time producing radical innovations due to its a. High labor costs b. Organizational inertia c. Competitive complacency d. Conflicting investor interests

b. Organizational inertia

28. Innovation helps firms to achieve a competitive advantage by a. Raising prices b. Redefining the market in their favor c. Eliminating competition d. Identifying key business activities

b. Redefining the market in their favor

16. An agreed-upon solution about a common set of engineering features and design choices is known as a _______ a. Strategic objective b. Dominant currency c. Link d. Standard

d. Standard

A non-equity alliance is the most common type of strategic alliance because

it is easy to initiate and terminate.

All of the following are tools primarily used to achieve cost-leadership except - controlling the cost of inputs. - leveraging economies of scale. - offering products at a premium price. - learning by doing.

offering products at a premium price.

Which of the following is an example of explicit knowledge?

the findings of a research published in a scientific journal

The executives of BlueWind Products Inc., a large conglomerate, are making decisions on the stages of the industry value chain the firm must participate in, the range of products and services it should offer, and the global markets it should compete in. What are the executives primarily determining?

the boundaries of the firm

Firms enter strategic alliances to

have a positive effect on economic value creation.

Which of the following best illustrates a dominant-business firm?

Siova Inc. is a luxury brand that derives 90 percent of its revenues from its apparel line and 10 percent of its revenues from its premium furniture business unit.

Which of the following statements is true of the real-options perspective?

The approach allows the incumbent firm to obtain additional information at predetermined stages.

An experience curve attempts to capture both - network effects and diseconomies of scale. - time compression diseconomies and mass customizations. - learning effects and process improvements. - economies of scope and network effects.

learning effects and process improvements.

A large conglomerate is deciding on the range of new products and services it can offer to its customers to further expand its operations. This decision determines the firm's

level of diversification.

North Carolina National Bank (NCNB) used its unique core competency of identifying, appraising, and integrating acquisition targets to be rebranded as Bank of America, one of the largest banks in the United States. This is an example of a firm

leveraging existing core competencies to improve current market position.

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

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

Which of the following examples would most likely limit a firm's growth?

A social entrepreneur makes conservation of the environment the primary goal of his firm.

What happens in the third phase of alliance management?

Alliance partners make relation-specific investments.

_______ is best described as the changes in an industry value chain that involve moving ownership of activities upstream to the originating (inputs) point of the value chain.

Backward vertical integration

While Influx Electronics Inc. incurs $350 to manufacture a laptop, its competitor, Hearthstone Electronics Inc., incurs $300. However, laptops of both the companies have been able to create the same value among customers. From the given scenario, it can be inferred that - Influx Electronics has a competitive advantage over Hearthstone Electronics. - Influx Electronics is a cost leader when compared to Hearthstone Electronics. - Hearthstone Electronics and Influx Electronics share a differentiation parity. - Hearthstone Electronics can charge a higher price for its laptops.

Hearthstone Electronics and Influx Electronics share a differentiation parity.

Best Mobile and Turbo Tech Inc. are two competitors in the mobile phone market. The cost incurred by each company to manufacture smartphones is $200 per unit. Although both the companies sell their smartphones at the same price, Turbo Tech has a larger market share in the laptop industry. What does this imply? - Turbo Tech has a cost advantage over Best Mobile. - Best Mobile has a competitive advantage over Turbo Tech. - Turbo Tech has been able to offer more perceived value than Best Mobile. - Best Mobile has created a higher value gap than Turbo Tech.

Turbo Tech has been able to offer more perceived value than Best Mobile.

Which of the following best illustrates backward vertical integration?

a chocolate manufacturing company setting up its own cocoa plantations

The management at Just Right Autos Inc. and Blue Skies Automobiles Inc. realized that by combining the two entities, the stakeholders of both the companies would benefit. Their core competencies would act as complementary assets to each other. Consequently, Blue Skies Automobiles joined with Just Right Autos to form a combined entity called Just Blue Autos Inc. Which of the following does this scenario best illustrate?

a merger

9. During the shakeout stage of the industry life cycle, profits degrade for a. All but the most efficient firms b. The most efficient firms only c. A few of the weakest firms d. All firms in the industry

a. All but the most efficient firms

7. Using known components, based on existing technologies, in a new configuration to create a new market, is known as _______ a. Architectural innovation b. Planned emergence c. Strategic implication d. Disruptive creation

a. Architectural innovation

19. Applying concepts from strategic management to the innovation process is known as a. Strategic entrepreneurship b. Animated innovation c. Leverage invention d. Consolidation

a. Strategic entrepreneurship

In order to rejuvenate its floundering product lineup, Disney

acquired Pixar.

Which of the following was one of the primary reasons why Adidas acquired Reebok?

to overcome a competitive disadvantage

Which of the following best illustrates human-asset specificity?

training employees on how to operate a customized furnace

Anderson Products Inc., a large conglomerate, took over a small startup company that had made some breakthrough innovations in the field of telecommunications. This purchase would help Anderson Products to gain access to the startup company's superior technology and human capital. This transaction is an example of a(n)

acquisition.

8. An innovation that targets existing markets with new technologies, is called a. An incremental innovation b. A disruptive innovation c. An architectural innovation d. A radical innovation

b. A disruptive innovation

2. An innovation that targets a new market with existing technologies is called a. A disruptive innovation b. An architectural innovation c. An incremental innovation d. A radical innovation

b. An architectural innovation

11. According to the crossing-the-chasm framework, the largest difference in consumer expectations is between a. The late majority and laggards b. Early adopters and the early majority c. Technology enthusiasts and early adopters d. The early majority and the late majority

b. Early adopters and the early majority

34. Which type of innovation applies to existing markets and existing technologies? a. Radical b. Incremental c. Disruptive d. Architectural

b. Incremental

26. The commercialization of an invention by entrepreneurs is called: a. Invention b. Innovation c. Patenting d. Imitation

b. Innovation

31. Innovations that target NEW markets and represent a major break from existing technologies or ways of thinking, such as the digital camera, the touch-screen smart phone, or the decoding of the human genome, are examples of a. Incremental innovations b. Radical innovations c. Architectural innovations d. Disruptive innovations

b. Radical innovations

25. The four strategic options that managers have in the decline stage are: exit, harvest, maintain, or a. Innovate b. Revive c. Consolidate d. Restart

c. Consolidate

Downtown Coffee Roasters is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Budget Beans, in contrast, is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Perky's Coffee Inc. has found a balance between these two strategic groups by using automated ordering to free up its employees to work as master baristas and bakers, thus focusing on creating excellent products. It charges a price slightly above that of Budget Beans. In this scenario, Perky's Coffee is following a - liquidation strategy. - product diversification strategy. - market penetration strategy. - blue ocean strategy.

blue ocean strategy.

17. The negative effect of innovative ride-sharing services like Uber and Lyft on traditional taxi cab companies is an example of a. Corporate social responsibility b. Peer management c. Creative destruction d. An adoption process

c. Creative destruction

13. The ________ identifies how industries tend to develop and change over time a. Network effect b. AFI framework c. Industry life cycle d. VRIO strategy

c. Industry life cycle

15. Which of the following allows a firm to redefine a market in its favor? a. Implementation b. Identification c. Innovation d. Invention

c. Innovation

18. In the ________ stage of the industry life cycle, a moderate amount of large films compete for a share of a market that has reached its maximum size a. Introduction b. Growth c. Maturity d. Shakeout e. Decline

c. Maturity

Most firms consider laggards to be a. The most likely to purchase innovative products b. A valuable source of product feedback c. Not worth the effort of pursuing d. The most prized customer segment

c. Not worth the effort of pursuing

1. The shakeout stage of the industry life cycle is dominated by a. The late majority b. Early adopters c. The early majority d. Laggards

c. The early majority

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

can charge a premium price for its products and services.

The local real estate companies in a city have joined together and arranged a "Property Fair." The sponsors will equally share the expenses of the event. Though many companies compete against each other, they have joined together because the medium will help the companies market themselves through a dedicated forum at an extremely low cost. This arrangement is best referred to as

co-opetition.