MGT Strategy Exam 1

In the context of the experience curve, what did early work by the Boston Consulting Group show?

A company's relative market share was a key indicator of competitive advantage and profit performance.

Which one of the following is NOT an important danger to consider when vertically integrating?

A loss of control

What is the value chain?

A sequence of activities where each activity adds value to the prior activity turning raw material into a finished product.

The employees at Voyage Ink Corp. were asked to draw a chart that explains the elements which go into making one of their products. They were asked to create a diagram showing the different types of materials that help create the whole product. Which of the following are the employees at Voyage Ink Corp. creating in this scenario?

A value chain

Which of the following companies is most likely to experience the benefits of outsourcing?

Black Inc., a consumer electronics company, which has been importing its supplies from other companies and focuses only on the critical aspects of its work

Which of the following best illustrates a vertically integrated company with control?

Blueberry Inc., a confectionery company, which has a stronghold over an important resource of the company that helps in differentiating its final product

Identify an intangible resource from the following choices.

Brand

Suede Inc., a company that manufactures bags, makes extensive use of advertising to compete in the market. The features of its product are similar to existing products in the market. It uses other promotional tools such as discounts, coupons, and rebates to increase its customer base. In this scenario, which of the following elements does Suede rely on to differentiate its products?

Brand image

_________ is defined as products that are differentiated through marketing, via advertisements, promotions, and other marketing activities.

Brand image

Which one of the following is not a way to lower input costs?

Building a new business model

Identify a primary way in which companies achieve cost advantage through lower-cost inputs.

By cooperating especially well with suppliers

Identify a way in which companies can create a new business model to achieve cost advantage.

By eliminating activities in the value chain

How do companies pursuing customer segmentation as a differentiation strategy become successful?

By grouping customers based on similar needs

Sweetmeats Inc., a deli, produces its own grains, such as corn, wheat, rice, and oats. The employees create different types of breads without having to buy the grains from other sources. This has helped them sell their bread items to customers at much lower prices than other neighboring delis. This scenario best illustrates a(n) ________.

Cost Advantage

In the context of rivalry, which of the following statements is true of products by a firm?

Differentiated products engender loyalty in customers.

What are the two generic strategies for offering unique value to customers?

Differentiation advantage and cost advantage

Identify a true statement about competition among firms within an industry.

Each move by a firm provokes countermoves among competitors, resulting in a constantly shifting competitive landscape.

Li, the president of Lavender Inc , believes that when employees are trained, they should work on one particular task till they know how to perform it perfectly. Thus, the employees are usually encouraged to repeatedly perform their designated tasks. Li claims that the more an employee engages in a particular task, the more skilled he or she will become at it. Which of the following statements strengthens Li's belief?

Employees will find better ways at completing the same task.

Why should we care about internal analysis?

External analysis is often incomplete and Some research suggests internal factors explain more of the variance in company profitability than external factors

According to Mintzberg, your planned strategy is more important than what you actually end up doing.

False

According to Porter and McGahan's study, external factors have a bigger impact on firm performance than internal factors.

False

Being in the best industry guarantees outstanding profits.

False

Porter's five forces have no limitations when conducting an industry analysis.

False

When a company chooses a low cost strategy, it will be successful by keeping its focus on cost to the exclusion of everything else.

False

Which of the following is true about economies of scale?

Fixed costs of production are spread from a higher volume of sales

For a luxury high-end product, which of three "job" dimensions is not as important?

Functional

Where does IKEA compete?

Global low-end furniture market

Scale and experience curves are useful tools for making which of the following strategic decisions?

Growth/Investment strategy Pricing strategy Cost-Management strategy Acquisition strategy

Which of the following questions denotes the last step in a consumption chain?

How is your product repaired, serviced, or disposed of?

Which of the following is a feature of task specialization?

It enables workers to be more efficient and thus enables them to avoid loss of time.

Which of the following statement is true of a fragmented industry?

It has a lot of competitors responding to one another and tend to create intense rivalry.

Which of the following is true of a tangible resource?

It has a physical presence such as land, machinery, and cash.

Which of the following is an advantage of the value chain?

It helps to identify which activities represent a firm's competitive strength.

Which of the following is true of product differentiation?

It is a matter of customer thought and perception.

Identify a true statement about the Net Promoter Score.

It is a useful tool for assessing customer satisfaction.

Which of the following is true of tacit knowledge?

It is difficult to imitate by competitors.

Which of the following statements is true of standardization of products?

It is easier to convince the customers to switch brands.

Which of the following statement is true of the learning curve?

It is the concept that labor costs per unit decrease with increases in volume due to learning.

Identify a true statement about network effects.

It is the growth in demand for a firm's product that results from a growth in the number of existing customers.

Identify a true statement about a functional strategy.

It refers to decisions about how to effectively implement the business unit strategy within functional areas.

Which of the following is true of competitive advantage?

It requires a company to consistently outperform its rivals in generating above-average profits.

What is true about a minimum efficient scale?

It shows the optimal quantity for a company to produce.

Which of the following statements is true of external analysis?

It studies the factors that influence an organization's appeal and environment.

The exclusive sofa company, Seaterz Inc., has the best resources in terms of equipment, employees, infrastructure, and technology. Yet, it is not able to keep pace with its competitor SoftSofa Corp. After extensive analyses, the CEO of Seaterz stated the reason for their limitation. He stated that their company did not have a definite administrative system to audit and retain the profits created by the employees. Which of the following statements can be inferred about Seaterz Inc. from this scenario?

It was not organized to exploit.

A product that is differentiated with quality or reliability does which of the following:

Lasts longer

"Practice makes perfect" applies to which cost advantage?

Learning and experience

________ consists of identifying all the steps through which customers pass, from the time they first become aware of your product to the time when they finally have to dispose of it or discontinue using it.

Mapping the consumption chain

The industry and geographic area that a company competes in, is referred to as its ________.

Market

Which one of the following is NOT an internal factor?

Market trends

A group of four people wants to start an office supply chain. They realize that if their company has to function well, they must set the primary aim for which the company has entered that particular business. This aim will help the company function in an organized manner and provide the staff with a focus to meet their goals. Which of the following does this scenario depict?

Mission

Which of the following is a source of differentiation advantage?

More convenient to find, purchase, or use

Nate, the managing director of Juniper Inc., believes that instead of making auto parts on its own, it should rather outsource these tasks to other companies so that the company can focus only on the critical aspects of the final product. His colleague, Salma, believes that the company would have more competitive advantage if it made its own auto parts. Which of the following statements strengthens Nate's belief?

Outsourcing will minimize the capital investment Juniper Inc. requires to grow.

What barriers make it costly for competitors to imitate?

Path dependence Causal ambiguity Social complexity

How did Amazon create a different business model?

Performing different activities altogether

Substitutes are:

Products/services that perform a similar function as an industry's products/services by different means

Gear-up Inc., an apparel brand, differentiates its products by manufacturing jeans that last longer than those of other brands. The fabric is durable and does not wear out even after years of regular use. This attracts customers despite Gear-up's high prices. Which of the following elements of product differentiation is Gear-up primarily providing?

Quality

A patent makes a product:

Rare

The managers at Spring Hotels want to find out how their competitor, Crimson Valley Hotels, consistently outdoes them. Spring Hotels have the same facilities and equipment as Crimson Valley Hotels, but each month its efforts to reach the benchmark set by Crimson Valley Hotels fails. This is because Crimson Valley has elements such as great location, beautiful architectural design, and customer-friendly employees that create an edge over other companies in its industry. Which of the following does this scenario exemplify?

Resource-based view of firm

What exactly are internal factors?

Resources and capabilities that allow companies to deliver unique value to customers

What is the difference between resources and capabilities?

Resources are assets (tangible or intangible) whereas capabilities are processes or ways a company uses resources towards an end goal.

The companies LaceThings Inc. and BellePrints Corp. sell the same product. They constantly try to outdo each other in terms of resources, price, and customer satisfaction. The companies try to outperform each other in order to gain customer loyalty and generate more sales. This scenario is an example of ________.

Rivalry

Which correctly lists Porter's five forces?

Rivalry, Buyer Power, Supplier Power, Entrants, Substitutes

________ requires acquiring and allocating resources.

Segmentation of the market

Which of the following statements is true of cost advantage?

Size and scale do not always guarantee a cost advantage.

The management of Neptune Inc. creates a definite plan of action that will surely create profits for the company. It allocates and sectionalizes its machinery and personnel. The main office is moved to a prime location that helps attract customers and facilitates competitive development. This plan of action helps Neptune Inc. retain its competitive advantage and has also grow as a company. Which of the following terms does this scenario best illustrate?

Strategic management process

MouseTag Inc. has incorporated a new type of technology that has increased the potential of the company by two fold. Its machinery can now work faster and produce more products in a day than any of its previous machines ever could. This has also helped increase the profits of the company. Which of the following trends does this scenario best illustrate?

Technology change

To a strategist, what does the logic of the experience curve suggest?

The company with the highest volume in an industry will also be the lowest-cost producer.

As a company experiences economies of scale,

The cost per unit decreases with increases in volume

In the context of the primary reasons for vertical integration in companies, which of the following statements is true of coordination?

The greater the interdependence between activities, the more a company should vertically integrate.

Mercury Corp., a startup company, is sure that it will achieve a steep curve of 75 percent as it is selling a unique product that has not been introduced into the market before. The company is confident that this product will be sold at a fast rate due to two reasons: the product is a necessity in every home and it is a break-through solution. Mercury sees this product as helping the company grow at a fast pace. Which of the following strategies has Mercury Corp. adopted?

The growth/investment strategy

Juan, the manager of Pvari, a chain of jewelry stores, claims that mass customization is the best way to create value for their products. Nate, the senior designer, believes that every product must be customized from the pre-production stage. Which of the following statements will strengthen Juan's claim?

The production costs will reduce to half if products are made in large scale.

If a resource is the tool, then a capability is ___________.

The skill to use the tool that brings unique value to customers

Which of the following BEST describes the products sold on Amazon's website?

They are manufactured by third parties.

Which of the following statements is true of the strategies of successful companies?

They are partly deliberate and partly emergent.

Which of the following statements is true of strategic leaders?

They are responsible for explaining strategy in a way that employees will understand.

_________ can be most accurately defined as conditions in the competitive environment that endanger the profitability of a firm.

Threats

What is VRIO used for?

To assess whether a resource or capability is likely to create a competitive advantage

Which of the following is NOT a way to differentiate with product features?

To have products that do less-expensive job

Historically, which company has differentiated through quality or reliability?

Toyota

If an oil exploring company wants to start refining the oil that they find, this company is forward integrating.

True

In most industries there is a strong correlation between market share and profitability.

True

Large firms may be at a disadvantage during economic downturns because they have more difficulty spreading fixed costs when demand declines.

True

Product differentiation is always a matter of customer perception.

True

Tata Nano represents how a company can be the low-cost producer through proprietary knowledge.

True

Two products with the exact same technical features can be differentiated because of customer perception.

True

Which of the following statements is true about customer needs?

Understanding them can be very helpful in defining the boundaries of an industry.

________ can be best defined as the reason a firm wins with customers or the value proposition it offers to customers, such as a low cost advantage or differentiation advantage.

Unique value

What does VRIO stand for?

Valuable, Rare, Imitate, Organized

The sequence of all activities that are performed by a firm to turn raw materials into a finished product that is sold to a buyer best describes the term _________.

Value Chain

Which of the following scenarios illustrates the concept of outsourcing?

Virgo Corp., a company that contracts out a business activity to another company

What key question can you use to help define an industry and determine your direct competitors?

What job are customers hiring our product/service to do?

Which of the following best describes competitive parity?

When a company survives but has no real competitive advantage over rivals

Identify a true statement about product differentiation.

When the perceived value of a product increases in the mind of the customer, it also increases the customer's willingness to pay a higher price.

Generally, how does the number of buyers affect buyer power?

When there are few buyers, buyer power is high.

A good strategy provides clear answers to four key questions. Which one of the following is NOT one of the four questions?

Where will we be as a company in 10 years?

In the context of the primary reasons for vertical integration in companies, what do capabilities refer to?

Whether a company has the right resources to perform an activity better than other firms

Great generals/CEOs think about the ______.

Whole

The airline industry is a profitable industry. The firms in this industry create barriers to entry through patents and regulations in order to reduce the threat of new entrants. It also minimizes the threat of substitutes while keeping rivalry to a minimum. The airline industry can be best categorized as a(n) _________.

attractive industry

Browns Inc., a well-established suitcase brand, started manufacturing its own suitcases. It added new features in its suitcases such as water-resistance and extra storage space. The initiation by Browns Inc. to manufacture its own suitcases best illustrates _________.

backward integration

Satchels Corp. has been in the retail bag business for 10 years. It has created unique value and attained brand loyalty from its customers. Recently, a new bag company started up in the same area as Satchels. In order to retain the reputation that it has established and avoid competition with the new company, Satchels introduced a new line of fashion bags, conducted a sale, and also increased its advertising. This made it difficult for the new company to gain profits. This scenario best illustrates ________.

barriers to entry

When products are differentiated through marketing, via advertisements, promotions, and other marketing activities, it is known as __________.

brand image

Vertical integration can be best defined as _________.

bringing business processes or activities previously conducted by outside companies in-house

SunLite Corp. runs fitness centers which are owned by the parent company Cyan Inc. Ryan, the manager of Cyan Inc., needs to decide on how to overcome competition by other fitness centers. He finally decides to bring in advanced facilities, such as imported gym equipment, to give faster results and keep SunLite centers open for patrons 24×7. Ryan feels that this will allow the company to gain more profits. This scenario best illustrates a ________.

business unit strategy

Dave's is a retail chain that offers all utility products ranging from home appliances, stationery, and groceries. Its customers prefer the store as they can buy everything they need under one roof. Dave's has more than a 100 outlets across the state, which makes the store easily accessible for customers easy. These features of Dave's best exemplify the element of __________.

convenience

White Flower Corp. and DLG Inc. are competitors in the crockery industry. Claude, the head of operations at White Flower, says that the company is able to undertake its in-house business processes and activities much better than DLG. This, Claude says, helps White Flower produce better quality products that DLG. In the context of vertical integration, Claude's statements refer to the concept of _________.

coordination

Orange Superstore is largely customer centric and economical in its methods. The store sells the best quality products at prices that are lower than other stores. The store depends on the fact that its salespeople get better at completing their tasks over time. This method used by Orange Superstore is an example of _____.

cost advantage strategy

Trends Inc has been awarded the best branded clothing company award for three years consecutively. The CEO of the company stated that this was possible due to the company strategically lowering the cost of each unit produced, and successfully maintaining that method in order to effectively contain finances. While comparing Trends with other similar production companies, it was found out that the company did certainly collect more profit than the others. The scenario best illustrates the:

cost-management strategy.

The goal of a strategic business plan is to ________.

create competitive advantage

The managers at Marker Inc., a movers and packers company, wants to formulate a plan of action to implement their mission, "We deliver what we promise. Always." To achieve this, the company chooses the best markets to invest in, buys state-of-the-art transportation vehicles, employs spill and damage proof style of packaging equipment, and develops a service-oriented mentality. This method of conducting business earns them a reputation. This scenario is an example of ________.

deliberate strategy

OneTick Shop Inc. experienced a loss of finances in the small town of Brightland as a lot of people from the town moved to bigger cities in search of jobs. This resulted in a loss of both returning as well as new customers. This scenario primarily reflects ________.

demographic forces

Delivering unique value requires ________.

developing resources and capabilities that allow a company to perform activities better than competitors

Procedures, processes, and routines that continuously expand existing resources or improve operating capabilities most accurately define the term __________.

dynamic capabilities

Taurus Inc usually produces 5,000 handcrafted products in a day. Recently, the demand for handcrafted products drastically increased as one of its products became a popular item for home décor. Due to this increase, the company had to up its production level to 10,000 products per day. This, however, decreased the price of individual products. This scenario best illustrates _____.

economies of scale

The management of Winters Corp., a small company, pursued an unexpected opportunity and gained huge profits over a period of 10 years. At the end of this period, Winters Corp. grew as a company and successfully established itself as a highly valued brand in the industry. This is an example of a(n) ________.

emergent strategy

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

fixed cost of production

Bright Inc. is a toothpaste manufacturing company that is facing intense competition from its rivals. In order to encourage higher consumption of its products as well as minimize brand switching among its existing consumers, Bright introduced sweepstakes as a consumer sales promotion strategy. However, its rivals retaliated by introducing deals such as a featured price which is lower than the regular price, buy one, get one free offers, and large package offers that give a percentage more free. This scenario best illustrates a ________.

fragmented industry

In terms of product differentiation, convenience refers to ________.

how easy it is for customers to purchase a product

Proprietary knowledge refers to _____.

information that is not public and that is viewed as the property of the holder

LuxeDrive Inc. is an automobile company with unmatched competition because it has certain qualifications and assets that set it apart from the rest of the companies selling similar products. These act as qualifications that rival companies find hard to configure and replicate. This scenario regarding LuxeDrive Inc. can be best categorized as an example of __________.

inimitability

The board of directors of Colors Corp., a new startup, chalked out a list of resources that would be needed to optimize the efficiency of the company. It needed a human resources department to take care of recruitment, a few suppliers to provide raw materials, a few data recording equipment such as computers to store and manage data, and a large geographical area to start the company. The board stated that these provisions would help the company obtain desired profits. The resources and provisions mentioned in this scenario are examples of _____.

inputs

Which of the following business-level strategies best describes Amazon's on-line marketplace?

integrated low-cost and differentiation

Violet Inc. has been undertaking a lot of responsibilities as a company in order to be the best in its industry. Over time, however, these responsibilities become tough to handle and the company finds it difficult to efficiently manage the time and effort to perform its activities. In contrast, other firms in the industry that outsource some of their activities to smaller companies find it easier to generate more profit than Violet Inc. The situation faced by Violet Inc. in this example illustrates one of the important disadvantages of vertical integration that is _________.

loss of focus

Having more flexibility, or being less vertically integrated, is more valuable when _________.

new technologies are innovated

Bertha, a business analyst, wants to analyze Shop Wise Inc., a software company. She wants to know how the company, supplying its products and services for over a decade, still maintains competitive advantage over other companies. She does the analysis simply by walking around the company and taking notes. She even tries out one of the company's software programs and finds it useful. This scenario illustrates the use of __________.

observation

The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term ________.

opportunities

North Road LLC, an apparel company, found that its fashion supplies and accessories section was not generating much profit. Thus, the company contracted this section of its business to another company that designs and manufactures these products in a better way. The management of North Road realized that the employees of North Road could use the time to focus on other aspects that bring profit to the company. This scenario best illustrates _________.

outsourcing

Lavender Inc , a computer manufacturing company, sells its products at costs that are lesser than its competitors as it wishes to gain profits in order to cover more of the competitive market. The company follows this method as it has high unit volumes. The scenario best illustrates the _____.

pricing strategy

A firm's values and rankings of what is most important most accurately defines the term __________.

priorities

The marketing department of a cosmetics brand conducts a research. 40% of its customers said that they prefer the brand because they do not need to reapply the product often, while 30% said that they chose the brand because the products are organic. If the brand segments the customers by the features of the cosmetics they prefer, the segmentation is primarily based on __________.

product attributes

The marketing function within companies is typically charged with the challenge of market segmentation. One way to segment customers is based on product attributes, which involves ________.

product customizability

A strategy whereby companies attempt to gain competitive advantage by offering value that is not available in other products or services or that other products don't do as well is known as ________.

product differentiation

Purple Inc., an interior design company, offers its clients unique design solutions. Clients can choose from Purple's in-house products, customize them to meet their needs, and see how their home would appear using a 3D visualization software in a mini-theatre at Purple's office. This gives Purple a competitive advantage over its rivals since none of them offer this unique combination of services. Purple's advantage is due to its __________.

product differentiation strategy

UniFront Corp., a telecommunications company, has launched a new limited edition smartphone called zNINE that has advanced technology features and is built using high-grade material. The company has made only 99 of these zNINE cellphones and customers are ready to pay more than what the cellphone is worth because it is so limited in number. This scenario can be best categorized as an example of __________.

rarity

All assets, capabilities, organizational processes, firm attributes, information, knowledge, and so on, controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness most accurately defines the term __________.

resources

A car has to go through several different levels of manufacturing processes before it can be painted. The painting process cannot be initiated until a car is externally assembled and then inspected. This type of interdependence can be best termed as _________.

sequential interdependence

A product that is fundamentally different yet serves the same function or purpose as another product best defines the term ________.

substitute

Rize Inc. has been running efficiently as a real estate organization for 25 years. It has consistently provided customer satisfaction by maintaining a customer-friendly culture in the organization. Their competitors have not been able to replicate Rize's services. This has helped them generate and hold on to profits accrued by its vast and rare resource pool. This is an example of __________.

sustained competitive advantage

Companies focus most on establishing brand image when _________.

they have trouble differentiating their product based on convenience

Activities closer to the beginning of the industry value chain are referred to as _________.

upstream activities

Activities with great interdependence should highly consider being ________.

vertically integrated

When a company takes on more activities in the value chain, it is ________.

vertically integrating

A company that participates in just one activity in the value chain is _____.

vertically specialized

A company that participates in only one activity in the value chain is ________.

vertically specialized

Yellow Express LLC is a company in the computer hardware industry that solely manufactures microchips. Yellow Express LLC is _________.

vertically specialized

Every "job" has three dimensions. Which of the following is NOT one of those three dimensions

Aesthetical

What is meant by diseconomies of scale?

An increase in marginal cost when output is increased

Which is not one of the three reasons a company should vertically integrate?

Capacity

Clearly defining your industry tells you where you _______.

Compete

Gems Corp. is a leading jewelry brand that finds it hard to make as much profit as its competitors. In order to overcome this, the employees of Gems Corp. decide to work harder to provide unique value to customers and increase the sales of the company. After a year, it is able to make more profits than its competitors. This scenario best illustrates ________.

Competitive advantage

Speed Express, a courier company, proves to be a definite challenge to its competitors. The technology, personnel, services, and organizational structure of the company are intricately bound together to create a system that is widely appreciated by its customers. Speed Express has state-of-the-art facilities for its transportation, delivery, or packaging operations. Speed Express also has a range of travelling bags and brand of wrist watches. The company's success rests on the complex interplay between all of its functions, products, and operations. Customers remain loyal to the company and prefer it over other brands and services. Which of the following factors of inimitability does Speed Express have?

Complexity

McDonald's can be found on many street corners in cities across the world. Because of its many locations, McDonald's is differentiated through _________.

Convenience

String Line Inc has established a loyal supplier base. The management at String Line had created a system in which it chooses a supplier that is reasonably affordable, and instead of quoting the company's price and demanding that it be met, it complies with the supplier's quotes. Over time, this has established a bond of loyalty with the supplier. When String Line opened a new branch, the supplier built its plant close to the branch so as to save transportation costs. Which of the following has String Line Inc established with the supplier?

Cooperation

Which of the following is the most relevant direct competitor that BMW should pay attention to?

Lexus

The management of GNH Corp., a chemical plant in the city of Werkshore, has promised to take care of its surroundings. It assured to dispose its factory wastes in a way that does not affect the habitat. In order to do so, the company had to go through renovations that allow the plant to take up green initiatives. Which of the following is the source of change for GNH Corp.?

Natural environment

Which of the following statements is true of buyer power?

If buyers can easily switch firms, then buyers have increased power.

Identify a true statement about the role of external analysis in creating a business strategy.

It involves an examination of the competition and the forces that shape industry competition and profitability.

Identify a true statement about substitutes.

It is a product that is fundamentally different yet serves the same basic function as another product.

Which of the following best describes rarity?

It is an attribute of a resource which means to be uncommon, or not available to other competitors.

Which of the following statements is true about rivalry?

It is an important driving force to increase profitability.

Lavender Furniture established itself in 1965 as a small firm. It was situated on a small stretch of land located miles away from the town. Over the years, due to the high quality of its products, it acquires enough profits to own multiple assets, such as a bigger plot and machinery, recruit employees and establish itself as a brand. Which of the following is an element of the strategic management process that Lavender Furniture has acquired?

Resources

The top executives of Willow Inc., a furniture company, have decided what markets to compete in. Willow Inc. now has to adopt a set of organizational processes that enables it to effectively carry out these decisions. In order to translate these decisions into organizational action in a successful manner, the functional activities of the company are being measured for their efficacy to support organizational decisions. Which of the following does this scenario best illustrate?

Strategy implementation

Readmore Publishing House, the publisher of a regional daily, has been slowly losing profits as its readers prefer to get news through the internet. A recent study on the readers who made the switch stated that it is more accessible and faster to attain up-to-date news through the internet rather than to wait for the next day for an update on current events. Which of the following is Readmore Publishing House is facing?

Substitute

A popular food company, Crunchez Corp., is finding it difficult to retain its buyers as another food company, MidnightSnax Inc., has started to provide the same product with the same taste for a lesser price. Which of the following is a threat to Crunchez Corp.?

Switching cost

Weavers Inc., a popular clothing brand, has been providing its customers with the best quality silk products for many years. The employees of Weavers Inc. use pink berry silkworms for their silk products and weave their greased silk threads in such a way that they produce different shades of colors when held at different angles. Weavers Inc. has been providing unmatched service toward millions of customers around the world. Other companies have tried to imitate their products and services, but have not been successful. Few competitors who captured these silkworms did not know the precise temperatures that were essential for their breeding and survival. Which of the following factors of inimitability does this scenario regarding Weavers Inc. best reflect?

Tacit knowledge

Which of the following statements best describes a firm's capabilities?

They explain why firms allocate critical resources to achieve key objectives.

Which of the following statements best describes a firm's priorities?

They explain why firms allocate critical resources to achieve key objectives.

Which of the following accurately defines a firm's values?

They refer to its leaders' beliefs about what is right and wrong, good and bad, desirable and undesirable.

Which of the following statements best describes a firm's resources?

They represent how firms do things and which processes they use.

SevenCloud Inc., a soft drink company, provided service to fair amount of customers for a whole year until a new company called Sparkle Inc. came up. Sparkle provided flavored water as a new product in the beverage market. Customers were eager to try out this new product and purchased it because they believed that it a better substitute for aerated beverages. SevenCloud was afraid that if the trend continued, it would soon run the risk of going out of business. In this scenario, which of the following did SevenCloud Inc. experience?

Threat

What "job(s)" did the morning customers buy milkshakes for in the Clayton Christenson example?

To be able to use one hand for the commute to work and keep them busy and full for a longer period

Hyundai is more of potential entrant rather than a direct competitor to BMW.

True

Intangible assets are resources.

True

Microsoft (supplier) has more power than PC makers (buyer)?

True

Timing matters in strategy.

True

The household appliance industry has few major manufacturers like Nebula Corp., Cook Well Inc., and Mercury Corp. and a few smaller manufacturers. There is not much competition in this industry because the smaller companies cannot afford to compete aggressively with the large firms which do not engage in price wars. This scenario best illustrates a ________.

concentrated industry

CharmingBells Inc. has been running into a loss gradually, but the board of directors are reluctant to shut the company down because it has invested millions of dollars' worth of equipment which can only be used in that industry. Moreover, the people in CharmingBells Inc. have become emotionally attached to the company and do not want the company completely shut down. This scenario best illustrates ________.

high exit barriers

GetYoung Inc., a cosmetic company, recently launched a beauty bar soap that claims to soften the users' skin, giving it a natural glow, and also make them look up to 5 years younger. A lot of women eagerly tried out this soap and received positive results and thus encouraged their friends to try out the soap. GetYoung Inc. gained profits very fast through this word-of-mouth advertising. This scenario best illustrates ________.

network effects

The procedures, processes, or routines for delivering value to customers, employees, suppliers, or investors most accurately define the term __________.

operating capabilities

Pancake Platter Inc. opens a new breakfast deli in the small town of Lakeville. It makes a lot of profit during its first year because it is the only deli in the area. Customers choose to have breakfast at this deli because their only other options for availing this type of service would be to travel several miles to the next town. This scenario best illustrates ________.

opportunity

Todd & Tyler Inc. is an organization that has gained reputation in the market primarily because of its values. The managers of this organization have created a list that ranks the most important job of the day and then consecutively lists the other jobs according to a descending order of importance. In this way, the managers of Todd & Tyler Inc. ensure that the organization's deadlines are handled efficiently. From the information given in this scenario, we can infer that Todd & Tyler Inc. has worked out its __________.

priorities

CoolDrink Inc., a beverage company, had to change its medical insurance policies because of a new federal law. The new law required all companies with over 50 full-time employees to provide health insurance for their employees. In case these companies are unable to do so, they would have to face penalty. CoolDrink Inc. had to implement changes due to ________.

regulatory forces

Jupiter Bank was one of the first banks to adopt intelligent imaging that helps in classifying, storing, and retrieval of data. It was also among the first to practice virtual banking and transfer data electronically. As such, Jupiter Bank was an early adopter of these new and faster techniques of banking. This helped the bank to gain a large market share which consequently enabled it to generate huge profits. Jupiter Bank yielded such profits because it paid importance to ________.

technology changes

The attractiveness of an industry is ________.

the degree to which an average firm in the industry can earn good profits

Value is usually created when ________.

the end user enjoys direct pleasure and satisfaction from a company's product

A survey is conducted among the customers of a supermarket chain. This survey reveals that the majority of these customers prefer to buy Lia, a brand of soap, because they feel that the company Lia Products Inc. has created a product that is of worth to the customers. The reason for the customers' preference is because the company constantly delivers what it promises. In this scenario, the factor that has made the brand of soap named Lia popular among these customers can be best categorized as __________.

value

ZipTag Inc. is an online company that allows venders of varied products to display their products to prospective buyers. This company has been providing service to both customers and sellers and has established itself in the market as a credible company to conduct business with. This has caused more dealers to display their products in ZipTag as they trust that the company will provide the necessary advertising to pull in prospective customers. This is an example of a __________.

virtuous circle