MGT 491

Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms?

Unlike incumbent firms, new entrants do not have formal organizational structures and processes

Which of the following statements accurately brings out hte difference between technology enthusiasts and early adopters?

Unlike technology enthusiasts, early adopters demand is fueled more by intuition and vision rather than technology concerns

The goal of a strategic position is to create the largest gap possible between the ________ that a firm creates through its offerings and the ________ required to create these offerings.

value : cost

AcerWare Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. Data Driver Inc. is a competitor of AcerWare Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply?

AcerWare create a greater economic values then Data Driver

a _____ primarily details the goal directed actions managers take in their quest for competitive advantage when competing in a single product market

business level strategy

When pursuing a cost leadership strategy, a business must remember that

buyers will be reluctant to pay for a product unless the quality is accpetable

A differentiator is least likely to be threatened by increases in inpout prices due to powerful suppliers when the

differentiator is able to create a significant difference between perceived value and current market prices

The concept of ____ attempts to capture both learning effects and process improvement at firms

experience curve

The four step innovation process ends with

imitation

From an investor's or shareholder's perspective, the measure of competitive advantage that matters the most is the

return on risk capital

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period

How does availability of complements act as a value driver?

Complements add value to a product when they are consumerd in tandem with it

At the time when Laura decided to purchase a tablet computer, the product had just become accessible to the mass market. She did not purchase the tablet until after she was convinced that the benefits it would offer her would far exceed its price. Also, she waited for her friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Laura best represent?

Early majority

Both Tom's Car Repair and Fast Engines. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Fast Engines. is more than that created by Tom's Car Repair. What does this indicate?

Fast Enginscan charge a premium price on its automobiles

Jimmy can be categorized under hte late majority customer segment. which of the following behaviors is he most likely ot exhibit

He will prefer to buy from well-established brands rather than unknown new ventures

Which is a disadvantage of measuring firm performance through total return to shareholders and the firm market capitalization

Market Volatility makes it difficult to assess firm performance through these measures particularly in the short term

How did Marriott use economies of scope to achieve greater economic value than its competitors

Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal

In order to achieve a competitive advantage, the Heavenly Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?

Take advantage of economies of scale and scope by opening a chain of lower priced economy hotels that leverage the Hotels brand image

which of the following is true of the early majority?

They weight the benefits and costs carefully when adopting a new product

Tablette Corp. is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Tablette Corp. should ideally compare its strategic position with

a consumer electronic company popular among price conscious customers

Which of the following best illustrates physical asset specificity

a machine solely desgined to give a candy its trademarked shape

Pete's Bikes enjoys a competitive advantage as a cost-leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Pete's Bikes?

a major winter storm shuts down Pete's production for several days

A primary advantage of organizing economic activity within the firm is the

ability to coordinate highly complex tasks to allows for specialized division of labor

Golddex Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Golddex should pursue

backward integration

Economic Value Creation is best expressed as

consumer surplus plus firm profit

When japanese carmakers entered the existing U.S automobile market by first offering small fuel-efficient cars, and then leveraging their low cost and high quality advantages into high end luxury segmetns, they were engaging in

disruptive innovation

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it

gains market share from other firms

Although Dynatrace Holdings still sells its DVD players, a product in its decline stage, the investments made by the company on improving or marketing the product are very low. The company has allocated the least amount of human and financial capital to this department. Which of the following strategies has Dynatrace Holdings adopted in this scenario?

harvest strategy

WHich is an advantage of applying hte economic value creation perspective to assess a firm's performance

in economic value perspective, analysts not only consider historical costs but also opportunity costs

Which of the following lists the stages of the industry life cycle in the correct order?

introduction, growth, shakeout, maturity and decline

Which of the following statements is true of the balanced scorecard

it attempts to provide a holistic perspective on firm performance

What expression accurately describes market cap

it is the product of the number of outstanding shares and hte share price

After the creation of social networking websites were introduced, their value increased exponentially as the number of users increased. This is the positive effect of a

network effect

A firm's business strategy can lead to a competitive advantage if it allows the firm to

perform activities different than its rivals

the difference between the price charged for a product and the cost to manufacture it is referred to as the

producer surplus

J-Texon Manufacturing is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate?

product diversification

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are

tangible

What is an invention

the transformation of an idea into a new product or process

Which is an external performance metric

total return to sharehodlers

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?

There is more strategic variety in the growth stage when compared to the introduction stage

Drawback of vertical integration

it increases the potential of legal repercussions

____ denotes the follar amount a consumer would attach to a good or service

value

When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale?

3000-4000 units

which of the following correctly compares Apple and Microsoft in 2016

Apple had a higher return on invested capital than Microsoft

Janet wants to restructure the portfolio of all of her firm's strategic business units. Janet will more than likely employ the _______ tool

Boston Consulting Group Matric

Which of the following provides an example of a firm in a red ocean?

Cool Apparel offered clothing at a low price but failed to differentiate its product as being exclusive

Fun Robotics produces components used in electronic toys. In fiscal year 2017, Fun Robotics earned an accounting profit of $3 million. However, Fun Robotics' production facilities might have also been used to produce components for mobile phones, which would have generated $2 million in revenues and saved the company $500,000 in production costs. Which of the following statements is true?

Fun Robotics earned an economic profit of $500,000

Which of the following is an advantage of the balanced scorecard?

It allows managers to translate a firm;s vision into measurable operational goals

Plexzap Products started as a luxury brand for designer apparel. Soon, the company expanded by launching its own line of premium perfumes, watches, bags, and home furnishings. This expansion allowed the businesses under the company to share a few of the common competencies in products, services, technology, and distribution. Which of the following corporate strategies is Plexzap pursuing in this scenario?

Related-linked strategy

Salesforce is one of the leading providers of platform as a service (PaaS) tools and services. They developed a new competency in delivering software development that allows its customers to better customize their future needs. Viewing this through the lens of the Core Competence-Market Matrix, which of the following four options below does Salesforce best exemplify?

Salesfroce built new core competencies to create and compete in markets of the future

The top management at Konex Vitamins, through rigorous testing, ensures that the company develops and sells vitamins that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept to a bare minimum and is disposed of according to the regulations of the Environmental Protection Agency. The management assesses its overall performance based on these dimensions. Thus, the managers at Konex Vitamins are applying the ________ approach to measure firm performance.

Triple-ottom line

Ticker Inc. is a wristwatch company known for its luxury watches, and it follows a differentiation strategy. In this scenario, Ticker Inc. should ideally compare its strategic position with a

Watch maker that sells high -end premium watches

The tenet behind the triple bottom line is that

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy

Which of the following best illustrates forward vertical integration?

a firm that manufactures and sells car engines to major automobile companies launches its own line of cars.

Unlike the financial ratios based on accounting data, total return to shareholders is

an external performance metric

Tindel Inc. competes on cost with Nirvana Sites in the web design industry. Both firms operate on a 90 percent learning curve, and neither firm is capable of increasing its cumulative output any further. How might Tindel Inc. achieve a cost-leadership position while maintaining customer satisfaction?

by incorporating new programming techniques to take advantage of experience curve effects

Bright PAD introduced a tablet that could run completely on solar energy and was less expensive than competitors' tablets. On the downside, it required more frequent charging than the competition's tablets. However, the technology of the Bright PAD tablet improved rapidly, thereby improving its recharge frequency. This example describes ________ innovation.

disruptive

Ontomedia Inc. is a large multinational conglomerate. As a single business unit, the company's stock price is estimated to be $200. However, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300. What is Ontomedia experiencing in this scenario?

diversification discount

Pete E' Gee sell's Big Dog Choppers, a special type of motorcycle. His business generates roughly 80 percent of his revenues from selling these motorcycles and about 20 percent on motorcycle repair and service. Pete E' Gee would be classified as a ________ firm.

dominate business

A differentiation strategy works bes thwen a

firm has intangible resources, is able to pass on increase in supplier cost to the customer and its differentiation appeal creates customer loyalty

Peloton Interactive is a manufacturer of high-definition televisions. The industry has gone through a period of rapid growth and expansion and has started to experience a decline in the rate of growth. Several smaller firms have been bought out by larger competitors, and competition for market share is intensifying. Which of the following strategies is most likely to give Peloton Interactive a competitive advantage?

implement process innovations that lower per unit costs

Which of the following MOST accurately describes a difference between incremental innovation and radical innovation??

incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base

Which of the following best explains why a blue ocean strategy is difficult to implement?

it requires hte reconciliations of fundamentally different strategic positions - differentiation and low cost

the typical four step innovation process beings with

the presentation of an idea as findings derived from basic research

Why is the phrase after the growth stage of the industry life cycle referred to as the shakeout stage>

the weaker firms are forced out of hte industry in this stage

A wearable technology company has priced one of its wristwatches 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 wristwatch?

170

Louis Secondhand Store offers slightly lower quality merchandise than competitors at a much lower price? What strategy are tehy using?

Cost leadership

The demand for flip phones has drastically reduced and there are only a few consumer electronics companies selling them at extremely low prices. Also, the current buyers of flip phones are mainly categorized under laggards. Which of the following stages of the industry life cycle is the flip phone industry in current;y?

decline stage

In which of hte following stages of the industry life cycle is a standard first established

growth stage

Combining economies of learning with the existing production technology allows a firm to

jump to a less steeper learning curve

NuLiver Corp. has recently introduced a new production method that will make the production of their medical devices more cost-effective. Which of the following will most likely be the result of this innovation?

jumps to a steeper learning curve

_____ is the benefit that is missed or given up when an investor, an individual or business chooses one alternative over another

opportunity costs

As the level of ____ innovation decliens, the level of _____ innovation increases

product, process

teh strategic objective of a first mover during the introduction stage of the industry life cycle is to

achieve market acceptance

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true?

while the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation

Bigger & Better Inc. is a big box retailer who is in direct competition with Walmart and Target. Bigger & Better Inc. initially tried to respond to Walmart by cutting its prices and reducing costs. Walmart has greater buying power and a more efficient supply chain, therefore, Bigger & Better Inc. was not able to compete on costs. The company then tried to differentiate itself by signing a celebrity to create an in-house line of clothing. However, Target has a celebrity clothing line that has a more differentiated appeal. The economic value created by Bigger & Better Inc. is currently less than Target and Walmart. It can be said that

Bigger and better inc is stuck in the middle and has a competitive advantage

Bath & Chill is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Bath & Chill is following a

focused differentiation strategey

Condax Electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones, and televisions and also to provide customer service and technical support. However, that retailer outsourced its service departments, and customers began to complain that they could not get reliable tech support for Condax products. In response, Condax Electronics decided to set up its own tech support department, and it also began to investigate opening its own brand-based retail stores. What does this scenario best illustrate?

forward vertical integration

Hot Potatoes, a fast food restaurant, operates through a business model in which individuals can buy the rights to set up Hot Potatoes stores and sell the company's food in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to offer a menu approved by the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate?

franchising

the three financial ratios that constitute return on revenue are COsts of goods sold/revenue, research and development expense/revenue, and

selling, general and admin expense/revenue

Because Facebook receives almost all of its revenues from online advertising, we would conclude that Facebook would be characterized as a(n) ________ firm, which has the lowest levels of corporate diversification.

single business

A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?

180

While KFC focuses on international markets, its competitor, Chic fil a focuses on the domestic US market

KFC has more financial resources than chic fil a since it is a publicly traded stock company

Hottechi Laminate has developed a new customer-oriented business model. Rather than maintain a network of showrooms across the country, the business will now let customers choose several styles that interest them from an online site, and will ship samples of each of the styles to the customer to test in their home free of charge. Once they have settled on a tile choice, Hottechi Laminate will send a representative to their home to schedule installation. The company has determined that busy middle-class customers will value the convenience of the new model, which allow them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales personnel. What question remains for Hottechi Laminate to ask in order to put its strategy into action?

What activities need to be performed to create and deliver the offerings to consumers?

Revolve Group is a mobile platform that matches independent fashion designers with consumers who want a personalized wardrobe. Which of the following initiatives would best allow Revolve Group to fine-tune its offerings to better meet the needs of its consumers?

allowing users to provide feedback to producers on the style and fit of clothing

Vehement Capital Partners wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, Vehement Capital Partners invested $100 million in the project. This investment made by Vehement Capital Partners will result in a

credible commitment

the balanced scored framework is a tool for strategy _____, NOT ______

implementation, not formulation

Anheuser-Busch InBev sold Busch Entertainment, its theme park unit that owns SeaWorld and Busch Gardens, to a group of private investors for roughly $3 billion. This strategic move allowed InBev to focus more fully on its core business of brewing and distributing beer across the world. This is an example of

restructuring

______ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources and capabilities with the intent of developing processes, products, or services ot lead to a competitive advantage

strategic alliances

How does a conglomerate benefit from following an unrelated diversifcation strategy

the conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies

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

the cost of maintaining a production unit

Decisions relating to "what stages of the industry value chain to participate in" determine a firms

vertical integration