Midterm Review
_____ are best described as the value of the best forgone alternative use of the resources employed.
opportunity costs
Which of the following strategies does Tesla need to implement or achieve to gain a competitive advantage?
reinvest profits to build successfully better electric automobiles
The executives at San Diego Cotton Co. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of the dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well prepared with its planned responses if any of these situations occurs in the future. Thus, San Diego Cotton Co. is employing _____ as the approach to the development of strategy.
scenario planning
A watchmaking 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. 3 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
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
Cello Electronics incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario?
450
The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.
PESTEL framework
_____ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage
Strategic management
What is the primary difference between tangible and intangible resources?
Tangible is physical attributes and are visible where intangible are not
_____ denotes the dollar amount a consumer would attach to a good or service.
Value
A differentiation strategy works best when a ___.
a company knows its audience
Michelle is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Michelle should ideally compare its strategic position with a _____ company.
a watch maker that sells high end premium watches
Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of ____.
co-opetition
Both Canyo Technologies and Becho Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Canyo Technologies charges a higher price than Becho Inc. does, but it still sells a higher number of phones. What does this imply?
competitive advantage
Denville Dairy is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Denville Dairy best exemplifies a ____.
core competency
Due to political instability in the country of Gilead, the strategic leaders at the headquarters of Tale Manufacturing have decided to close all production facilities in the country until stability returns. Tale 4 Manufacturing's managers have formulated a _____-level strategy.
corporate
Delta Foods is the parent company of several chain restaurants offering a variety of cuisines. The top management at Delta has decided to enter the frozen foods industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate?
corporate strategy
While creating its AFI strategy framework, BUS444 Consultancy decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?
corporate strategy
CostClue Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which generic business strategy is CostClue applying?
cost leadership
Rue Costume Jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Rue using?
cost leadership
_____ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.
economic value created
Sally owns Kyoto Auto Parts, a company that got its start making auto parts related for hybrid vehicles, but his firm has had difficulty establishing itself as a maker of parts for the more-profitable internal combustion engine. What is most likely contributing to Kyoto's problem in this area?
entry barriers
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
San Marcos Shirts Co. had a mission to become the leading producer of environmentally friendly shirts, an emerging and in-demand category in the apparel industry. Its strategy involved leveraging a network of organic cotton farmers and suppliers of environmentally responsible synthetic materials to create a product that is durable, attractive, affordable, and 100% recyclable. However, because it did not upgrade its outdated production facilities, San Marcos Shirts Co. could not assemble its products at a low-enough cost to offer the jeans at a price that was attractive to customers. San Marcos Shirts Co.'s strategy failed because ___.
it was not backed up with strategic commitments
Which of the following is a macroeconomic factor that can affect a firm's strategy?
levels of employment
Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?
strategic analysis
The former CEO of Sam's Club, a division with its own profit-and-loss responsibility, Rosalind Brewer, reported to Walmart's CEO, C. Douglas McMillon, who as corporate executive oversees Walmart's entire operations. Sam's Club, therefore, is a _____ of Walmart.
strategic business unit
Trinity, Alaska, Jinkx, and Eureka are all hardware stores that compete against each other through everyday low pricing and discounts on bulk purchases. All four stores cater to the needs of highly pricesensitive customers. Thus, together these stores form a ____.
strategic group
A traditional top-down strategic planning process typically begins with _____.
strategic leaders adjusting a companies vision and mission based on environmental analysis
When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in ____.
strategic trade offs
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
During an interview for a CEO position, a candidate's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be?
the firm effects due to most impact on those
Samyo Inc. is a manufacturer of smart watches that track the wearer's heart rate and sleep patterns. Which of the following is most likely an implication of new firms entering this industry?
the incumbent firms will spend more to satisfy their existing customers
Which of the following methods of developing a strategy best illustrates scenario planning?
the managers formulated a strategy to tackle any increase in the prices of _____ in the future
What is the primary objective of Porter's five forces model?
understand the profit potential and different industries
The CEO of SK Car Design was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable, low maintenance vehicles that could be bought by low-income households. Which of the following does this example demonstrate?
upper echelon theory
Carlsbad Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-intime manufacturing system, has enabled Carlsbad Tech Inc. to increase its profitability by lowering its production costs. Thus, Carlsbad Tech's competency in designing and manufacturing microprocessors will be considered a(n) _____ resource in the VRIO framework.
valuable