MGMT final exam

Which of the following is NOT a factor affecting sustainability of a competitive advantage? a. availability of substitutes... b. rate at which... c. imitability... d. ???

D

Which of the following components of a business model considers all the different places where an organization has to pay money to make sure the product is made and adds value to the customer?

Expenditure model

There are three criteria to assess and evaluate business models. Which of these IS NOT one of those criteria?

Focus on sustainability

Which of the following is not a motive for diversification?

Focus on the core business

An app that offers a game for free, but offers upgrades for purchase uses a ______ model.

Freemium

Harry Woodward developed a business model about a new innovative digital scanner. He presented the business model for that product. As a reviewer, you noticed that Harry had made several assumptions about demand, the availability of raw materials, and the likely salaries of key executives. As you looked at the numbers you noticed that if any of the assumptions were violated the business model would no longer be profitable. Harry had explained that this is normal in business models for new products. A reviewer of the business model should ideally respond by saying:

Harry's business model does not have slack.

Globalization has led to:

Higher performance standards in competitive dimensions, including quality and cost

According to the text, a company's direct and indirect costs determine its_____________.

NOT price

Which of the following increases the power of buyers?

NOT purchase accounts for a small fraction of supplier sales

The CEO of Vital Technologies described the ways in which her companies prevent their products from being imitated. She made two key statements in her description: Statement A: Patents are usually the best and cheapest way to protect technological innovations. Statement B: Depending that company technology and actions will be kept confidential, even for a short time, by company employees is a waste of time because depending on secrecy does not usually work. With respect to the above two statements, please choose the best alternative below:

Neither statement is true.

A company's ability to acquire knowledge is:

an increasingly valuable source of competetive advantage

The ultimate test of the value of a corporate-level strategy is whether the:

businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.

First movers are:

firms that take an initial competitive action.

Competitor analysis focuses on:

firms with which the company competes directly

Successful unrelated diversification through restructuring is typically accomplished by:

focusing on mature, low-technology businesses.

During the Covid-19 pandemic, countries are imposing rules restricting travelers from other nations from entering. Which of the following segments of the general environment do these restrictions represent?

globaal

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n):

hostile takeover.

In order to implement a cost leadership strategy, a firm may do all of the following EXCEPT:

implement extensive market-wide advertising...

Customer loyalty programs such as airline frequent flyer miles are an attempt to

increase customer switching cost

Rodney Razorback wants to start a company in the highly competitive t-shirt business. He knows he must keep his costs as low as possible to give himself pricing flexibility. In order to keep costs low he must do all of the following EXCEPT:

increase his budget for a very extensive ad/social media campaign

Consolidation among fuel providers serving airport facilities is viewed in the five forces model of competition as a(n):

increase in the bargaining power of suppliers of a critical input

_________ is a set of organizations that make similar products and compete with each other, and _________ is the set of entities who purchase the products and who influence the purchase.

industry, customers

Domino's Pizza is looking to create a new competitive advantage. Core competencies are the underlying foundation for competitive advantage, so what characteristics must a capability have to be considered a core competency?

valuable/rare/non-substitutable/organized to capture value

A manufacturer of specialty jams and jellies has decided to enter into an alliance with an orchard and vineyard growing rare strains of fruit. This is a(n) __________ strategy.

vertical complementary

Both __________ and __________ affect the awareness and motivation of a firm to undertake actions and responses.

market commonality; resource similarity

capabilities typically come from

not individual resources

Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is:

obtaining reliable products at the lowest possible prices

Which of the following is NOT a resource, capability, or core competency of T.J. Maxx?

online presence

Mandatory gym closures represent trends in which of the following segments of the general environment?

political/legal

Porter's 5 Forces model of industry attractiveness focuses on these key aspects:

power of buyers/ power of sellers/ threat of entrants/ comp rivalry/ sub products

New entrants to an industry are more likely when:

product differentiation in the indsutry is low

A firm's access and connection to customers defines a particular dimension of customer relationship. Which of the following fits that description?

reach

__________are the source of a firm's __________, which are the source of the firm's __________.

resources. capabilities, core comps

Magma, Inc., acquired Vulcan, Inc., three years ago. Effective integration of the two companies' cultures was never achieved, and the firms' assets were not complementary. It is very likely that Magma will:

restructure

Above-average returns are:

returns in excess of what an investor expects to earn from other investments with a similar level of risk

Customer ratings of products they bought online is an example of:

richness

Capital market stakeholders include:

shareholders

The Walt Disney Company has successfully used related diversification to create value by:

sharing activities and transferring core competencies.

According to the text, ways that differentiators separate themselves from competitors can include all the following EXCEPT__________.

significantly reducing prices

Walmart initially used a focused cost leadership strategy to compete only in small communities by using sophisticated logistics systems and efficient purchasing practices to gain a competitive advantage. The response of local competitors was __________ because they __________.

slow; lacked the ability to line up resources

The increasing popularity of micro gyms is most likely due to shifts in which of the following segments of the general environment?

sociocultural

Because Coca-Cola, Nestlé, and PepsiCo all sell a product (bottled water) that is essentially the same and all three giant companies are engaged in battles for market share using incremental changes in their products and seeking loyalty to brand names, it is MOST likely that the bottled water market is a(n):

standard-cycle market.

In some countries, the only legal way for foreign firms to invest in the country is through:

strategic alliance with a local firm

A ___________ is a set of firms emphasizing similar strategic dimensions and following similar strategies.

strategic group

A __________ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.

strategy

A nonequity strategic alliance exists when:

two or more firms develop a contractual relationship to share some of their resources to create a competitive advantage.

Which of the following is something that firms compete against each other for?

All of the above

Which of the following options are not mentioned in the lecture video as a reason for a business level alliance?

All of the above are mentioned

Wind Airlines was partnering with Earth Airlines to develop a code share agreement. Wind Airlines was a larger firm with a global presence while Earth Airlines was smaller but with a very developed route network in Africa. Wind airlines wanted to make sure that it had better control over the alliance to ensure that Earth Airlines did not take actions that hurt its interests. Which of the following is the best option available to Wind Airlines to guard against this risk?

An equity interest in Earth Airlines, with a seat on its board

Which of the following acquisitions would be considered the LEAST related?

An upscale "white-tablecloth" restaurant chain acquires a travel agency.

Which of the following is NOT a reason for a merger/acquisition?

Avoid increased government regulation

In the Build-Borrow-Buy Framework, what are strategic alliances categorized as?

Borrow

Developing a corporate strategy helps a firm answer which of the following questions?

Both A & B

Consider the two following statements about business models and then choose the best answer. • Statement A: The pay-as-you-go model is when customers only pay for the amount that they use. • Statement B: The razor-razorblades model focuses on selling products at an extremely low price with an emphasis on selling supplementary products.

Both statements A and B are true.

Consider the following two statements about restructuring and choose the best answer: • Statement A: The three alternative restructuring strategies include downsizing, downscoping, and leveraged buyout. • Statement B: Reduced debt costs and an emphasis on strategic controls are short-term outcomes of downscoping as a restructuring strategy.

Both statements are true.

Which of the following firms would MOST likely be a successful candidate for acquisition and restructuring?

Brick manufacturer established in 1915

__________ strategic alliances have a stronger focus on value creation than do __________ alliances.

Complementary; competition-reducing

Revenues for United Parcel Service (UPS) come from the following business segments: 60 percent from U.S. package delivery operations, 22 percent from international package delivery, and 18 percent from non-packaging operations. Which of the following best describes the corporate-level strategy of UPS?

Dominant business

Allee, a bicycle shop owner, offers bicycle sales, rentals, and maintenance. She ties them together with her exclusive "High Rollers" club that offers benefits to her customers. She is also the exclusive franchisee for HighWheel racing bikes. Allee has at least two business models within her company. This shows the ________ nature of business models if they are to stay competitive.

Dynamic

Effective business models are characterized by all of the following EXCEPT:

Effective related diversification strategy

Jude at Just Green is aware of how easily customers can switch to competitors based on price. To avoid this, Jude offers an annual contract that not only cuts and trims lawns but connects and winterizes the customers' sprinkler systems, fertilizes lawns, and spreads mulch. By offering these benefits, Jude is:

Engaging in affiliation with his customers

Which of the following is a value-reducing reason for diversification?

Expanding the business portfolio in order to diversify managerial employment risk

JLC Industries found itself in a bidding war and paid a 40 percent premium to acquire NNC Incorporated. As a result, JLC issued more stock to raise capital. This illustrates what problem associated with acquisitions?

Large or extraordinary debt

A ___________________ shows that when a company first starts manufacturing products, initially its cost of production per unit declines very rapidly but then slows down and begins to flatten.

Learning curve

In the marketplace, business models need to evolve with the needs of their customers and the actions of their competitors. This dynamic change is driven by all of these EXCEPT:

Market boundaries

Diversification is a form of corporate strategy. With respect to that, consider the two following statements below then choose the best answer. • Statement A: Vertical integration occurs when a firm diversifies to make products that use its current products as raw materials. • Statement B: The related linked and related constrained types of diversification are considered to have low levels of diversification.

Only statement A is true.

Being the first mover in a market comes with many advantages. Regarding first movers, consider the following two statements below and then choose the best answer. • Statement A: Deterrent pricing refers to when the first mover keeps the price above their costs and above the costs of the second mover to create a competitive advantage. • Statement B: The first mover has the ability to create strong brand awareness early which makes it difficult for others to compete.

Only statement B is true

Consider the following two statements about cooperative strategy and choose the best answer: • Statement A: When a firm joins an alliance with another firm to use their technology or resources, it is an example of the Build segment of the Build/Buy/Borrow framework. • Statement B: Cross-border alliances are a key trend for firms wanting to overcome geographic barriers.

Only statement B is true.

One of the risks of an alliance is _______________________, where despite the best efforts of both partner firms, the alliance fails.

Performance risk

Bubba owns a barbecue place on Dickson Street. His big secret is the apple wood that comes from his grandfather's old apple orchard. He burns the apple wood to give his barbecue a unique flavor. During slow periods in business, he cuts and sells some of the apple wood. This helps him build up a cash reserve for his barbecue business and adds to the robustness of his business model by:

Providing slack during slow times.

When two rival firms are roughly the same size, they are said to have:

Resource similarity

The Cogswell Cogs Aerospace Company is trying to build a sustainable competitive advantage to earn above average returns. Arthur Spacely, the VP of Strategy, is proposing a strategic model to invest in various aspects of the business toward that goal. What are the key stages that should be included to build a sustainable competitive advantage?

Resources/capabilities/core comp

Bubba's competitor, Leroy, bought a new infrared grill that cooks the meat better than Bubba's old smoker. Bubba responded by buying an expensive compression heater for his grill. It cooks the meat with a steam/heat process. This grill not only does meat, but it also does vegetables. Bubba's purchase of the special steamer is an example of a ____________ move.

Strategic

When a company changes the pricing of its product or service, that is a ____________ decision

Tactical

Which of the following statements about business models is FALSE?

The customer value concept is the least important component of a business model.

The most common reason firms compete against each other is:

To increase market share.

________________ allows us to explain which activities a firm should pursue in-house versus which goods and services a firm should obtain externally from the market.

Transaction cost economics

Downscoping increases the effectiveness of firm management because it allows the top management team to better understand and manage the remaining businesses.

True

Restructuring is a strategy through which a firm changes its set of businesses or its financial structure.

True

The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and Lowe's, and Airbus and Boeing).

True

The term "conglomerates" refers to firms using the __________ diversification strategy.

Unrelated

What are the two types of complementary strategic alliances?

Vertical / Horizontal

What is vertical integration?

When a company produces its own inputs or owns its own output distribution.

A primary reason for a firm to pursue an acquisition is to:

achieve greater market power.

A(n) __________ occurs when one firm buys a controlling, or 100 percent interest, in another firm.

acquisition

Which of the following is NOT a component of internal analysis leading to competitive advantage?

analysis of supplier power

Product differentiation refers to

belief by the customers that a product is unique

Mr. Mo is looking to start a new business in the mattress industry. He knows that Mattress Firm just launched a new mattress with a unique structure that makes it extra soft. Mr. Mo plans to copy the same mattress structure as Mattress Firm's new product, but he will add a unique heating and cooling feature. What form of imitation does Mr. Mo plan to use with the addition of the new temperature feature?

bells and whistles

Blood banks are highly dependent on donors. In the terminology of industry analysis, which of the following statements about donors is accurate?

blood donors are suppliers and are powerful because of critical nature of what they provide to the blood bank

Successful strategic leaders are:

committed to helping the firm create value for all stakeholder groups, nuturing those around them, decisive

Which of the following is NOT a key component of the general environment?

community

In the 1980s and early 90s, Blockbuster Video was a huge success. The franchise locations offered a variety of rental videos as well as concession stand products such as popcorn, soft drinks, and candy. They rented DVDs and charged late fees if they were returned late. In the late 1990s, Reed Hastings founded Netflix. The company also rented DVDs, but by mail. For a monthly fee, customers could get three DVDs by mail. When they returned them, they could get three more. Later, Hastings offered streaming. Blockbuster refused to change its strategy. Blockbuster's refusal to adapt to competition is called a____________.

core rigidity

Taco Bell works very hard to convince its customers that it offers the greatest value at a low cost. This strategy is:

cost leadership

Henry Ford once said, "If I had asked people what they wanted, they would have said faster horses." The invention of the car is an early example of:

disruptive technology

Failing to __________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated.

downsize

A statewide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of __________ resulting from an alliance.

economies of scale

Which of the following would be considered a barrier to entry in Porter's 5 Forces model?

economies of scale

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel adjusts prices or offerings, the other hotels follow suit. It is possible that these hotels are:

engaging in tacit collusion.

The U.S. Hispanic market is the third largest "Latin American" economy behind Brazil and Mexico. This impacts the __________ aspect of demographic segment analysis.

ethnic mix

Verdant, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Verdant:

is likely to raisethe level of comp rivalry in the industry

After Hulu lowered the price on its basic monthly streaming package, Netflix did the same. Netflix needed to do this because:

it is in the same strategic group

A firm that is LEAST likely to launch competitive actions is one that has:

large size

Compared to tangible resources, intangible resources are __________ and __________.

less visible/more difficult to copy

Strategic leaders are:

located in different ares/levels of firm

Customers are charged on a monthly basis for their access to HBO. This business model is the __________ model

subscription

Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which of the following forces is MOST relevant here?

substitutes

Many firms outsource the payroll function of paying employees to firms such as ADP. Payroll is a(n):

support function

A family just changed to a different mobile phone and data service provider. They now need take some time to transfer their content to new phones and learn the features of the new service. This is an example of a:

switching cost customers incur changing to a new supplier

All of the following are business-level cooperative strategic alliances EXCEPT:

synergistic strategic alliances

a business level strategy describes

the action a firm takes to exploit its competitive advantage over rivals

The bankruptcy filings by major corporations during the grate recession illustrate that firms cannot directly control the general environment's segments.

true

All of the following are characteristics of the global economy EXCEPT:

the increased use of tariffs to protect industries

Alibaba is a company in the Internet services industry that has improved its performance by focusing on its unique abilities in the area of innovation and service diversification. This improved performance is best explained by:

the resource based model

in a merger:

two firms agree to integrate their operations on a relatively coequal basis.

All of the following are implications of strategic groups EXCEPT:

the strength of the 5 forces is weaker within strategic groups...