Management 491: Quiz Chapters 1, 2 3, 4, and 5

5.A watch-making company has priced one of its wrist watches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wrist watch?

$170

3. Which of the following firms will most likely NOT be a complementor to a firm that manufactures computers?

A company that manufactures its own brand of desktops and laptops

5.Which of the following statements is true of accounting data?

Accounting data are historical data and thus backward-looking

4.True Home Inc., Super Cart Inc., and Daily Things Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Which of the following is an implication of the market condition indicated in this scenario?

Any advantage that one firm has will be short-lived

3. A key feature of an oligopoly is that the competing firms _____.

Are Interdependent

4.Coral Think Inc. is a new company in the publishing industry. It has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Coral Think Inc. to acquire using its capital?

Brand Name

3. Which of the following factors best contributes to the U.S. automotive industry being characterized by high entry barriers?

Car manufacturers require large-scale production in order to be cost-competitive.

4.It is difficult even for Apple's managers to pinpoint the underlying cause of the company's phenomenal success. The term that best applies to this difficulty is known as _____.

Causal Ambiguity

1. Exis Inc. and Stelma Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Exis Inc. and Stelma Inc. most likely have:

Competitive Parity with each other

2.Strategic leadership pertains to the use of power and influence by _____ to direct the activities of others when pursuing an organization's goals.

Corporate Executives

2.Due to political instability in the country of United Mapa, the strategic leaders at the headquarters of FT Supplies Inc. have decided to divest the company's business from the foreign market in United Mapa. This decision would be applicable to all the business units of FT Supplies Inc. operating in United Mapa. Thus, this is a _____.

Corporate Strategy

5.Threadless is a community-centered online apparel store that leverages user-generated content. The idea is to turn consumers into prosumers, a hybrid between producers and consumers. Members of the Threadless community do most of the work, which they consider fun: They submit T-shirt designs online, and community members vote on which designs they like best. The designs receiving the most votes are put in production, printed, and sold online. It can be said that Threadless uses the _____ technique.

Crowdsourcing

5.Which of the following competitively important assets is typically excluded from a firm's balance sheet?

Customer Experience

1. In the pyramid of corporate social responsibility, _____ are the foundational building block.

Economic Responsibilities

1. Pure Food Inc., a multinational company, relies on its media partner Radio Ex to regularly advertise its offers, sales, and new products. Radio Ex is invested in this relationship because it generates most of its revenue from advertising Pure Food's products. In this scenario, Radio Ex is Pure Food Inc.'s _____.

External Stakeholder

5.Photohome is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this best illustrate?

Freemium

4.How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure?

In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry.

3. With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as?

Industry Convergence

1. Rachel owns a large portion of GM Cube Inc.'s stocks. However, she is not employed by the company. In this scenario, Rachel is the company's _____.

Internal Stakeholder

4._____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

Isolating Mechanisms

1.The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?

It has a competitive advantage in the industry.

4.If a resource is common:

It will result in perfect competition

3. _____ are best described as industry-specific factors that separate one strategic group from another.

Mobility Barriers

3. Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Vietnamese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Curry Rush is most likely operating in a(n) _____.

Monopolistically competitive industry

3. Balmia Ammunition Inc., a firm controlled and managed by the government of Balmia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate?

Monopoly

3. In Galvania Republic, the federal government owns and manages all the nuclear power plants. This is because the business would not be profitable if there was more than one supplier in the nuclear power industry. Which of the following industry competitive structures does the scenario best illustrate?

Natural Monopoly

1. Which of the following scenarios best illustrates a good stakeholder strategy?

PA Corp. distributes only 70 percent of its annual profit after tax to shareholders, while the remaining is distributed among employees and the local community, and invested for further research

1. According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified?

Strategy Analysis

1. Which of the following stages in the AFI strategy framework involves designing a business, corporate, and global strategy?

Strategy Formulation

5.Master's Health Club, a chain of gyms and spas, requires its customers to pay a quarterly or an annual fee to use its services. Irrespective of whether they frequently use the services during the payment period or not, members have to pay in advance. Which of the following business models does this best illustrate?

Subscription-based

4.Talk Age Inc., a telecommunication company, had been drastically losing its market share due to tough competition in the industry. The management hired a reputed consulting firm to advice the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its tedious internal policies and procedures. These ineffective policies and procedures made the company operations, marketing, and after sales service inefficient. Talk Age Inc. can best solve its problem by working on its _____.

Support Activities

4.The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment?

The Company's Machinery

2.Who among the following is responsible for making business strategies in a large conglomerate?

The general managers of individual business units

1. Which of the following statements accurately describes firm effects?

They attribute firm performance to the actions managers take within a chosen industry.

4.When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because most of its competitors had already been in the laptop market for five years. Blue Tech Inc's models were inferior to the ones in the market. In this scenario, Blue Tech Inc.'s failure can be best attributed to:

Time Compression of Diseconomies

2.White Leo Autos manufactures and markets four different cars, Leo Sport, Leo Prestige, Leo Spark, and Leo Ease. These four product variants are operated as individual business units. While the product leaders of Leo Sport, Leo Prestige, and Leo Spark have adopted a differentiation strategy to attract the niche market, the product leader of Leo Ease follows a cost-leadership strategy to suit the mass market. This decision of the product leader of Leo Ease can be ideally categorized as a _____.

business Strategy

4.Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as _____.

capabilities

5.Economic value creation is best expressed as _____.

consumer surplus plus firm profit

5.Janet is a 23-year-old employee at DR Products Inc. As a millennial, she will tend to:

expect her company to be socially responsible

2.A company's strategic business unit:

is responsible for its own profit and los

1. The society and shareholders mandatorily require a firm to perform its _____.

legal responsibilities

2.The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well-prepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing _____ as the approach to the development of strategy.

scenario planning

2.A(n) _____ is best described as a standalone division of a larger conglomerate, with its own profit-and-loss responsibility.

strategic business unit

2.A traditional top-down strategic planning process typically begins with:

strategic leaders adjusting a company's vision and mission based on environmental analysis

3. Which of the following represents an economic factor in a firm's external general environment?

the stage of the business cycle the country is in

2.The critics of top-down strategic planning and scenario planning argue that:

these approaches do not allow for the necessary strategic thinking

3. Buyers are highly price sensitive when:

they earn low profits or are strapped for cash

2.When parts of a firm's intended strategy fall by the wayside due to unpredictable events, it turns into a(n) _____.

unrealized Strategy

5.A defining characteristic of the subscription-based business model is that the:

user pays for access to a product or service whether he or she uses it during the payment term or not.

5.A defining characteristic of the pay-as-you-go business model is that the:

users pay for only the services they consume