Midterm Exam

Due to its large sales volume and low-cost structure, Bunny's Lo-Cost enjoys a cost-leadership position. Which of the following scenarios might threaten Bunny's competitive advantage?

A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout that Bunny's doesn't offer.

Amber is the manager of gardening supplies wholesaler DigIt Inc. The company's vision is to become the leading supplier of gardening materials in the northeast. In assessing the firm's current state, Amber has determined that the firm could differentiate itself from competitors with an easy-to-use online ordering system and a two-day delivery guarantee. To accomplish this, Amber has determined that DigIt must spend the next two quarters honing its capabilities for sourcing materials quickly and improving its web development competencies. According to the balanced-scorecard approach, what is wrong with Amber's thinking?

She has failed to account for external factors such as customer perceptions and shareholder perceptions.

You are the founder of NewexSurfboards, and you are considering methods of gaining and sustaining a competitive advantage. Which of the following changes has the best chance of quickly creating a sustainable advantage?

allowing customers to upload their own image designs and help assemble the finished product at retail locations

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be

availability of complements.

Which of the following statements is true of accounting data?

Accounting data are historical data and thus backward-looking.

One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that

They are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently.

Both UTech Inc. and Mirco Corp. incur a cost of $200 to manufacture a single unit of a cell phone. However, UTech Inc. charges a higher price than Mirco Corp. does, but it still sells a higher number of phones. What does this imply?

UTech Inc. creates more economic value than Mirco Corp. does.

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

an external performance metric.

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

Trader Joe's differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Trader Joe's focuses on

increasing the perceived value created for customers, which allows it to charge a premium price.

Which of the following below is NOT categorized as a primary activity on Porter's Value Chain?

procurement

Dynamic capabilities are especially relevant for surviving and competing in markets that

shift quickly.

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE)?

Any of the five forces on its own, if sufficiently strong, can extract industry profitability.

Buzztronic is a market leader in consumer electronics. If Ficolee and Ficola, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Buzztronic, then

Buzztronic will have a resource that is valuable but no longer rare.

How does a sustainable strategy typically help a firm?

It helps the firm achieve positive results along the social and ecological dimensions

Which of the following is a disadvantage of the balanced-scorecard approach?

It provides limited guidance about which metrics to choose.

________ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.

Organizational core values

The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research and Development expense/Revenue, and

Selling, general, & administrative expense/Revenue.

Dev is a strategist for the firm Stark Industries, which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called LENS Inc. However, this material is difficult to trade. Because of this, which of the following is most likely the best strategy for Dev to suggest?

Stark Industries should acquire LENS.

Which of the following approaches to assess competitive advantage is based on the view that noneconomic factors can have a significant impact on a firm's financial performance?

The triple-bottom-line approach

Under the ________ framework, the question "How do we create value?" is relevant when trying to improve innovation and organizational learning.

balanced scorecard

Which of the following describes a situation in which firms acquire resources at a low cost, laying the foundation for a competitive advantage later?

better expectations of future resource value

A firm incurs $400 to manufacture a computer. In the market, customers are willing to pay a maximum of $600 for the computer priced at $500. The difference of $200 ($600 minus $400) is the

economic value created.

Pharmacat Pharmaceuticals invested $3.4 billion dollars to develop a new drug for individuals with diabetes. After Pharmacat receives FDA approval of the drug, its marginal cost to produce the drug for market will be

low

There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale?

lowering costs

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?

perfect competition

A traditional top-down strategic planning process typically begins with

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

A blue ocean strategy differs from a low-cost strategy in that

the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value.

Tommy, a manager, is writing an analysis of his employer's current and possible future revenues. Which of the following could he identify as an economic factor in his firm's external general environment?

the stage of the business cycle that the country is in

Which of the following best describes a Level 5 manager in the Level-5 leadership pyramid?

Jim is the CEO of Eco Inc.; he has helped his company in gaining and sustaining a competitive advantage through ethical decision making.

Which of the following statements should ideally reflect a firm's strategy for competitive advantage?

Our aim is to create superior customer value while controlling costs

Which of the following statements correctly compares Apple and Microsoft in 2016?

Apple had a higher return on invested capital than Microsoft.

Dana wishes to strengthen her firm's marketing department by partnering with a large marketing firm that can complement her existing value chain. However, she fears potential legal repercussions including potential lawsuits filed by U.S. federal agencies such as the Federal Trade Commission (FTC). Which of the following strategic options should Dana pursue?

Dana should consider forming a strategic alliance with the marketing firm.

Plexzap Sodas has been a market leader in the soft drink industry for several decades. However, its market research shows that consumer tastes have begun to shift to sugar-free flavored seltzer waters, a product that Plexzap is capable of producing with minimal changes to its facilities and production processes. Based on your knowledge of the core competence-market matrix, which diversification strategy should Plexzap pursue?

Redeploy and recombine existing core competencies to compete in markets of the future.

When does a merger between companies typically occur?

When two firms of comparable size join to form a combined entity

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

capabilities

The value a consumer attaches to a product or service is captured in the

consumer's maximum willingness to pay for it.

In the final step of the stakeholder impact analysis, a firm

decides a course of action to address the stakeholders' concerns.

In a focused cost-leadership strategy, a firm

delivers low-cost products and services to a specific, narrow part of the market.

Trader Joe's successfully used a blue ocean strategy by offering lower-cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to

gain a market share and make up the loss in margin through increased sales.

Which of the following is a drawback of vertical integration?

it increases the potential of legal repercussions

Mama Mia's' Pizza & Calzone has been trying to directly copy the strategies of Fuhgeddaboudit Pies. Even though it is evident that the success of Fuhgeddaboudit Pies' success comes from the freshness and variety of ingredients it uses, Mama Mia's Pizza & Calzone' has not been able to introduce the same types of produce into its recipes. This is because Fuhgeddaboudit's network of relationships with local growers, as well as its efficient supply chain, are very difficult to emulate. Which of the following barriers to imitation does this scenario best illustrate?

social complexity

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's

tangible resources.

The management team for Forever Power came up with the following vision statement: "Forever Power will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment." This vision statement is most likely based on the

triple-bottom-line approach.

After conducting a SWOT analysis, your firm has decided to focus on addressing issues located in the Weaknesses-Opportunities quadrant. Which of the following steps are you most likely to take?

Reorganize the inefficient research and development department to bring innovative products to market more quickly.

________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Strategic management

Treequote Industries has produced a new piece of technology that will monitor the soil moisture in a user's garden and send a notification to an app on the user's phone when it is time to water their plants. The goal of this inexpensive technology is to entice users to purchase Treequote's more expensive automated watering system, so that they can trigger the watering process from the app on their phones. Which business model is most likely to help Treequote Industries accomplish its goals?

freemium

Dimitre Corp. has been able to gain and sustain a competitive advantage due to its strong relationship with its employees, customers, suppliers, and local communities. The company believes in lifetime employment and ensures that its employees grow along with the company. Investors are more than satisfied with the returns on their investments. Also, 3 percent of the company's profit is spent on community development. With initiatives like these, customers feel privileged to associate themselves with Dimitre products. This scenario best illustrates the implementation of a

stakeholder strategy.

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-bottom-line