practice questions
A business-level manager in a multidivisional company is: a. a strategic manager who is the head of an entire division, responsible for translating the corporate strategy into concrete strategies for the business unit. b. a strategic manager responsible for a specific business function, such as marketing or human resources. c. a member of the Board of Directors, responsible for setting the strategic direction for the entire multi-divisional company. d. a vice president, C-suite, or other company officer, responsible for the financial performance of the company across all business units.
a
A firm can develop its competitive advantage through its resources. Resources include: a. both the physical elements of production, such as machines and workforce, and the knowledge and expertise of how to make and sell a product or service. b. only inputs that are bought and sold on the open market at fair and reasonable prices. c. the competitors within an industry who seek to serve the same group of customers and serve the same customers' needs. d. the customers who choose to buy products or services from a company.
a
A grocery store chain makes a decision to limit its size and scope by offering only what it considers to be the best product in each food category, reducing the options available to its customers. It employs and recruits a highly paid team of tasters who travel the world evaluating foods to introduce on its shelves. It has attracted a team with an excellent track record of identifying top sellers and earned a reputation for delivering high-quality goods. This is an example of: a. a distinctive competency. b. intellectual property. c. a basic factor of production. d. a poorly organized resource.
a
All of the following are examples of a cognitive bias that can lead to poor strategic decisions EXCEPT: a. willingness to delegate. b. illusion of control. c. escalating commitment. d. confirmation bias.
a
All of the following would be part of a business model that outlines strategies for a company wanting to achieve competitive advantage EXCEPT: a. the changes to be made in the external environment. b. the creation of value for its customers. c. the production of specific goods or services. d. the organization of activities within the company.
a
Companies can reduce the impact of the substitute products force in the competitive forces model by: a. identifying an industry by the customers that it serves and the needs it fulfills rather than by the products it sells and staying focused on ensuring its products meet those needs. b. increasing its sales volume to spread its overhead and reduce its per-piece production costs. c. working with affiliated companies in other industries to develop accessories for their products that enhance the benefits and functionality of their offerings. d. pitting component parts manufacturers in competition against each other to reduce production costs and improve quality.
a
Compare the identified resources for each of the following four companies. Which company's resource could be considered valuable, rare, inimitable, and organized? a. Nike's swoosh logo b. Coca-Cola's aluminum can c. Delta Air Lines' flights to and from Chicago O'Hare Airport d. Charles Schwab's online trading software
a
Customer responsiveness includes: a. serving customers quickly with quality products, meeting their after-sale service and follow-up needs, and developing new products to fill unmet customer needs. b. the development of new processes for manufacturing products. c. the output of a company's production workforce. d. the price a customer is willing to pay for a product based on the customer's perceived value.
a
Emotional intelligence is a term used to describe a group of psychological attributes that strong and effective leaders exhibit. Which of these is an emotional intelligence attribute? a. Self-regulation b. Dialectic inquiry skills c. Vision and eloquence d. Reasoning by analogy
a
Experts who study strategic leadership have identified the key characteristics of high-performing leaders. Which of these is a characteristic for strategic leadership? a. Willingness to delegate and empower b. Devil's advocacy c. Decentralized planning d. Autonomous action
a
Lake, the vice president of sales and marketing for a software development company, has been working with the sales force in recent months to develop a promotion strategy to sell obsolete software quickly at a reduced price rather than the original suggested price. Which strategic manager role is Lake fulfilling with this approach? a. Functional-level manager b. Corporate-level manager c. Business-level manager
a
Mickey is the CEO of a multidivisional company who has determined that it is time for the company to revisit its strategic plan and is working on the agenda for the meeting, beginning with a review of the company's mission, vision, and values. On day 2, Mickey plans to conduct an analysis of internal and external forces affecting the company. The invitee list for the strategic planning session includes the CFO, the COO, the vice president of human resources, and the vice president of sales. Mickey believes this smaller team will be able to reach a greater consensus and be efficient in developing the strategic plan for the next five years. Which potential pitfall could impact the strategic plan for this company? a. An "ivory tower" approach could lead the executive team to a plan created in a vacuum without an understanding of current operating realities. b. The cognitive bias of the illusion of control could lead the CEO to believe the leadership role means being the only person to direct the company's strategic plan. c. The utilization of outside view could lead the strategic plan to exclude data that doesn't reinforce the team's preconceived ideas about the company's direction. d. The scenario planning approach could lead the company to split its focus and prevent any meaningful progress toward the development of a competitive advantage.
a
Process knowledge and organizational architecture that are path dependent and consequences of the history of the company would be categorized as: a. rare resources. b. production outputs. c. part of the blue-collar workforce. d. marketing primary activities.
a
Sasha is a manager for an ice cream company. The company recently developed a delicious, low-calorie version of its product. At current volumes, the per-gallon cost is the same to produce this new line as to produce its traditional ice cream, and the new ice cream is produced on the same equipment. The company could improve profitability by: a. setting the price for this product line higher than that of its typical offering because of the increased perceived value by customers. b. marketing the product line as better tasting than the existing ice cream line. c. eliminating its other product offering entirely and focusing only on this new, low-calorie option. d. setting the price for this product at less than that of the traditional ice cream because the new product has fewer calories and a smaller audience.
a
Strategic groups exist because: a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies. b. government regulators have different rules for companies based on the size of the company, geographic headquarters, and number of employees. c. customers want variety in the products and services they select, and different brands can serve customers' needs differently. d. industries are one-dimensional, and all businesses within an industry utilize the same resources and same strategies to achieve their goals.
a
The hubris hypothesis of takeovers is a term that describes: a. the overconfidence of leaders in their ability to create value by acquiring another company. b. a strategic plan for building a company through mergers and acquisitions. c. a commitment by managers to continue investing in a strategic plan even after they have received information that the project is failing. d. a manager deciding an acquisition is the right choice for a company because serendipity put the other firm in his or her path.
a
Which of these describes a marketing and sales activity contributing value in the personal care industry? a. The Dove campaign for real beauty, which revealed results about women's assumptions about beauty, sparked increased sales of the company's products within months of the campaign's launch. b. Crest launched Crest Complete mouthwash developed by its team with new ingredients designed not only to clean mouths but to protect teeth in between brushings from tartar build-up. c. The cosmetics company Aveda adopted a strategy of environmental sustainability in its formulation of cosmetic products. d. Avon utilizes its direct seller, home party approach to empower sales people in every city and neighborhood to share its products with friends and family.
a
A company's profitability depends on: a. only the industry, strategic group, and industry life-cycle stage in which the company operates. b. the value customers place on the company's products, the price it charges for its products, and the costs of creating its products. c. the demand for the product in the marketplace and the number of competitors providing similar products. d. the quality of the managers and employees a company hires to manage its resources.
b
A company's rare and valuable process knowledge elements can be hard to copy because they are often unwritten, spread among many team members, and kept secret within the firm. This is an example of: a. poorly organized inventory. b. causal ambiguity. c. organizational architecture. d. scarcity.
b
A discount membership general merchandise store has been educating customers about its business model of a membership fee based on the volume of products they buy. The store has been focused on reducing cost through the development of its supply chain and inventory systems. What would you add to the company's strategy as the industry moves from the shakeout stage to the mature stage? a. The company should expand the number of stores to serve the growing number of customers who are joining discount membership stores. b. The company should monitor prices of similar products at other discount membership stores, such as Costco and Sam's Club, matching prices to maximize profitability and avoid a price war. c. The company should close its lowest-performing stores, regardless of their profitability, to reduce its excess capacity. d. The company should educate customers about the features of discount store membership because not enough customers are aware of the benefits.
b
A leader's use of power can influence his or her overall effectiveness as a strategic manager. Which of these statements is true? a. Edward Wrapp says that effective leaders should use their power in a dictatorial fashion to ensure team members understand who the final decision maker is. b. Jeffrey Pfeffer explains that ultimately a manager's power comes from his or her control over resources, such as budgets, capital, positions, information, and knowledge. c. Jeffrey Pfeffer believes that only those with a title and official position can exert power within an organization. d. Edward Wrapp argues that organizational leaders do not have anything in common with political leaders and should not behave democratically.
b
A nonprofit organization dedicated to providing homeless people with hot meals served at a local church is reviewing its internal resources. The organization is seeking to invite and serve all homeless people within a 20-mile radius of the church. Which strategy best aligns with the goal for each option? a. Quality: The nonprofit is considering reducing the portion sizes of the meals to be able to serve more people. b. Efficiency: The nonprofit is seeking a partnership with a food pantry to purchase food at a discount compared to the supermarket supplier it has been using. c. Innovation: The nonprofit has a volunteer who is working on a cold-meal substitute that will be distributed on the streets instead of at the church. d. Customer responsiveness: The nonprofit is considering changing its policy and now requires everyone to stand outside in a line to receive their meals, rather than coming in and sitting down to be served.
b
A small brewery is working to determine the appropriate price for some of its products to achieve competitive advantage and greater profitability. In the past, the brewery released summer ale at the same price as its regular year-round beer. In the last three summers, the company sold out of the beer by early August. If the company raises its summer ale price and it continues to sell at a steady pace, this is a sign that: a. the company produces less of its summer ale than of its regular beer and therefore must increase prices on it to maintain profitability. b. the customer is assigning a greater value to the summer ale and the company can increase its price to gain profitability. c. the cost of the basic factors of production has increased, forcing the company to increase the price of all of its products. d. the company must address the cost of its inputs to improve profitability.
b
A telecommunications company is impacted by government regulations of the wireless spectrum, cell tower locations, and Internet accessibility. The company decides to hire a lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and Congress. This is an example of a company managing which forces in the macroenvironment? a. Social forces b. Political and legal forces c. Technological forces d. Global forces
b
Advanced factors of production are more likely to be rare and harder to imitate. Strategically, managers who have identified these advanced factors should: a. let these resources manage themselves as they are already working and don't require interference from a manager. b. take steps to protect these assets either formally or as a trade secret, optimize the company's use of them, and not outsource them to other firms. c. abandon them and start over to seek out different resources to develop, manage, and utilize to make the company more profitable. d. share them with competitors to improve the overall profitability of the industry.
b
All of the following would be in the same strategic group within the auto industry EXCEPT: a. Honda. b. Mercedes. c. Ford. d. Toyota.
b
An analysis using the competitive forces model of an industry can indicate: a. whether a company is a good choice for shareholders to invest in. b. areas of threat and areas of opportunity that can serve as the basis of strategy formulation and implementation. c. the stage of the life cycle of industries in which the industry is currently operating. d. the extent to which globalization is having an impact on the industry.
b
An entrepreneur is starting a new online service for job seekers. He is assessing his internal resources to determine his distinctive competencies. He developed software capable of managing a large quantity of job applicants simultaneously without slowing down. The result is a system that operates more quickly than the competitors' systems. Which value chain activity does the software development represent? a. Sales and marketing b. Research and development c. Logistics d. Human resources
b
Binh was recently named general manager of a newly created business unit of a multidivisional company. His first order of business will be to implement the new division's strategic plan. Which of these statements about Binh's responsibilities for the company is true? a. Binh isn't concerned with the performance of the other business units in his company. The other general managers are on their own. b. Binh works with managers within his business unit to develop and implement concrete strategies for his division that align with corporate goals. c. Binh should spend the majority of his time concerned with the human resources operations of his business unit, focusing on the employee team. d. Binh will manage the entire corporation's finance structure, working with the finance directors of each division to implement the company's strategies.
b
Compare the resources for each of the following four companies. Which resource represents an advanced factor of production, specifically a competency in process knowledge? a. Starbucks' locations in downtown areas b. Toyota's lean manufacturing systems c. Kellogg's food processing equipment d. General Motors' union workforce
b
Efficiency is a measure of the quantity of inputs required to produce a given output. It can be measured by: a. product price. b. employee productivity and capital productivity. c. overall profitability. d. customer satisfaction.
b
In articulating what a company does in terms of its customers, their needs, and through what core competencies, managers first formulate the company's: a. vision statement. b. mission statement. c. SWOT analysis. d. emergent strategies.
b
In reviewing the competitive forces model through an industry life-cycle analysis, which of these could be true of an embryonic industry? a. Bargaining power of suppliers: The industry will have an established supplier network, making the bargaining power of suppliers weak and giving companies an opportunity to pit suppliers against each other for the best cost and quality. b. Complementors: The industry will likely have few complementors, with few products available that would add value when used in combination with the product or service. c. Bargaining power of buyers: The industry will have weak buyers who will be eager to take on the products and services of the new industry, regardless of its cost or level of customer awareness. d. Risk of entry by potential competitors: Potential competitors will be strong, with multiple companies working in the industry achieving economies of scale quickly.
b
In which of the following situations would a buyer be the most powerful? a. The buyer orders in small quantities, with no purchasers representing more than 1 percent of total sales. b. Because of the industry's competitive nature, its participants have virtually eliminated switching costs for industry customers. c. Buyers are unable to independently produce the product. d. The industry is essentially a monopoly.
b
Industry competitive structure identifies the number and size of companies. Fragmented industries often: a. follow prices set by the industry leader to achieve higher profits. b. suffer from excess capacity and price wars. c. result in high barriers to entry and fewer companies operating in an industry. d. avoid being commoditized because product and service offerings are varied.
b
Market saturation is an indication that an industry has entered the: a. growth stage. b. mature stage. c. shakeout stage. d. embryonic stage
b
Research and development is one area of the value chain dedicated to: a. the identification of new industries and ways to meet customers' needs through technology. b. developing new products, enhancing existing products, and improving processes to reduce the production cost for existing products. c. the description of customer markets and demographics to which companies can market existing products. d. the improvement of ways to support customers after they've purchased a product and require service.
b
Scenario planning is one methodology strategic managers can use to avoid pitfalls in their planning process. In scenario planning, managers: a. plan a sequence of events that a manager will execute in order, regardless of the circumstances or changing industry environment. b. create a what-if scenario for the future and develop strategic options associated with that future state. c. develop a single, deliberate strategy through an organized process with its top leaders. d. change directions, adapt a strategy, or develop a new strategy based on the results of an accidental event or unexpected opportunity.
b
The industry life-cycle analysis has several potential limitations. Which of these is a limitation that strategic managers should be aware of? a. Industry life cycles have very few strategic implications and shouldn't be used to determine potential strategies. b. Industries will not always travel through the stages in a predictable way. c. Companies cannot do anything to alter the course of an industry as it evolves through the life-cycle stages. d. All companies within an industry should employ similar strategies based on the life cycle of the industry they're operating in.
b
The most immediate threat to a company's profitability comes from: a. companies in other industries who have substitute products that meet the same customer needs. b. its closest competitors, companies within the same strategic group. c. companies within the same industry but in different strategic groups. d. a lack of investment from capital stakeholders.
b
Where a company operates and sells its product can have an impact on its profitability because: a. government-owned companies set the prices for most of the world's products and will raise or lower prices based on local economies. b. the health of a country's economy, measured by growth rate and other factors, can affect both the customers' ability to purchase products and the price they're willing to pay. c. companies operating solely within a single country have greater opportunities for higher profits. d. companies selling their goods in countries that have a negative growth rate can raise their prices and gain greater profitability.
b
Which of the following statements about complementors as a strategic force is true? a. Complementors are an essential element in Porter's Five Forces model. b. Complementors can gain so much power that they become a competitive threat to the industry rather than a complementor. c. A complementor presents the threat of a substitute product to an industry. d. A desktop computer and a laptop computer are the ultimate example of complementors.
b
Which of these companies in the news in recent years would have benefited from a strategy that enhanced quality to build and maintain its competitive advantage? a. Comcast was consistently criticized for its call center wait times and communications. b. Takata Corporation issued a recall for 34 million air bags installed on a variety of car models due to potential faults and defects. c. BlackBerry Limited worked to launch new smartphones but continued to fall behind Apple and Android sales because of a lack of Blackberry apps. d. Delta's cost per available seat-mile flown was $16.80 compared to rivals American Airlines' $15.84 and Southwest's $13.76.
b
Which of these could be an example of a competitive advantage? a. The status of a company with the largest top line sales number in an industry b. The ability of a firm to outperform its rivals by achieving greater profitability and growth than others in the industry c. A solid company with predictable sales and profitability every year, delivering predictability for its shareholders d. A start-up company with an innovative new product that changes an industry
b
Which of these is a definition for an emergent strategy making process? a. A process that leaves strategies up to chance and happenstance, waiting for technological discoveries, acquisition opportunities, and changes in the industry environment to drive action b. Strategies that evolve as the unplanned responses to unforeseen circumstances, arising from autonomous action by individual managers, serendipitous events, and changed circumstances c. A strategy process that utilizes "what-if" scenarios to arrive at a company's corporate strategy, including multiple views of the company's future state d. Planning that relies on rules of thumb and cognitive biases to define strategies that will be successful despite a competitive industry environment
b
Which parts of the SWOT analysis deal with the external environment and which parts deal with the internal environment? a. External: strengths and opportunities. Internal: weaknesses and threats. b. External: opportunities and threats. Internal: strengths and weaknesses. c. External: scenario planning. Internal: vision and values. d. External: strengths and weaknesses. Internal: threats and opportunities.
b
Why should strategic managers be concerned with the life cycle of the industry in which their companies operate? a. The life cycle of an industry will only indicate the amount of investment a manager should put into research and development. b. Recognizing the crucial points in an industry's development is essential to forecasting and strategizing for the future. c. The stage an industry is in will predict whether the company can be successful. d. An industry life cycle is the driver for developing a mission and vision statement.
b
A building block of a competitive advantage can impact profitability by accomplishing one of three goals. Which of the following would NOT be included among those goals? a. Allowing the company to increase the price it charges b. Reducing the costs of producing products c. Reducing prices to levels that undercut its nearest competitor d. Increasing value as perceived by customers
c
A company's functional activities transform its inputs into outputs, and: a. customers purchase products to meet their needs regardless of the price. b. profitability is improved only through support activities in the value chain. c. value is added to the product at each stage in the value chain. d. functional success is measured by the consumer surplus.
c
A description of Sidney's management job is to lower the cost of procurement, production, and distribution to create more profit. Sidney is involved in: a. customer service, a primary activity in the value chain. b. human resources, a support activity in the value chain. c. materials management, a support activity in the value chain. d. human resources, a primary activity in the value chain.
c
A nonprofit organization is considering holding a series of sessions to develop its mission, vision, goals, operation model, and strategic plan. Differentiate between planning for charities versus for companies. How will the process be different for the nonprofit? a. Nonprofit organizations do not conduct strategic planning. This meeting would be primarily symbolic for the charity's stakeholders to energize them and help them feel like they're involved in the cause. b. A nonprofit organization will not utilize a SWOT analysis or employ strategic managers at a variety of levels to participate in their strategic planning process. c. The strategic goals of the organization will include a combination of performance goals toward the charity's mission, revenue, and fundraising goals. d. The nonprofit organization will be most concerned about creating a strategic plan that creates a high income for its board of directors.
c
Adrian is vice president for product management at a Brazilian-based skin care company. As a functional leader, Adrian led a strategy planning process with his team to create a new tan-enhancing cream. After a thorough strategy process, the team built consensus around a deployment plan for this new product. They introduced the tan enhancer to a regional segment of the marketplace as a prototype. Sales were dismal. After some focus groups, the team learned that consumers were not interested in it.But Adrian didn't give up, insisting the team continue to promote the product, pushing a deployment plan and launching to the entire market, along with a robust and expensive television and magazine ad campaign. Just like during the regional trial, it was a dismal failure with limited sales. The executive team suggested that Adrian's strategy planning was flawed in selecting this type of new product as the core of his strategy. Consider the potential techniques for improving decision making that Adrian could have utilized to avoid defects in his planning process. a. Astute use of power: Adrian could have shut down the entire strategy by unilaterally deciding it was not workable. b. Representativeness: Adrian could have insisted that the team continue to sell because he saw data from a small subsection of the sample that liked the product. c. Devil's advocacy: Adrian could have assigned one member of his team to identify potential problems with the plan and present them to team members, who would agree to take them into consideration. d. Escalating commitment: Adrian could have rescued the project by assigning additional team members to it and giving it more time.
c
An HVAC contractor is considering expanding into a new business line, offering commercial facility maintenance and service in addition to construction contracting services. As the contractor considers this potential strategy, it conducts a strategic planning process for this business unit, analyzing external and internal factors. Which of these can be classified as a part of the external operating environment of the company? a. The company has a handful of HVAC technicians with prior experience working for a service firm. b. The skills required to construct, assemble, and install HVAC equipment currently possessed by the contractor's employees would be required to service the equipment in existing buildings. c. Local commercial properties are most often served by one of three big national HVAC service firms and a handful of local smaller firms. d. Selling HVAC services is different from selling construction services. The contractor's team doesn't have anyone with experience selling to facilities managers.
c
An analysis of the macroenvironment includes the: a. internal leadership structure of a company, including CEO, CFO, and board of directors. b. geographic location in which a company operates, manufactures products, and serves customers. c. economic, global, technological, demographic, social, and political context within which a company operates. d. environmental factors that are impacted by the company's operations, such as its consumption of water, effect on air quality, and consumption of natural resources.
c
An industry that is attracting large numbers of new customers through increased interest and education is at the _____ stage of industry life cycle. a. embryonic b. declining c. growth d. shakeout
c
As an industry environment evolves over time, the: a. industry becomes more profitable. b. strategic groups become less attractive to new entrants. c. strength of the competitive forces in the industry change. d. number of companies is reduced and the industry becomes more consolidated.
c
As vice president for sales and marketing, Carole conducts a survey asking customers their impressions of the product offering, the quality of the product, and their level of customer satisfaction. Carole can use the survey results to: a. determine the most effective hiring strategy for recruiting future employees. b. improve employee efficiency by identifying bottlenecks in the manufacturing process that slow down production and add cost. c. identify the building blocks of competitive advantage and develop strategies to use them to increase profitability. d. set pricing strategy for the company's upcoming product line offering.
c
At Hy-Vee grocery stores, a frequent shopper card for customers tracks their purchases and automatically offers discounts on the products they buy most often, building brand loyalty to the store. At which stage of the industry life cycle is this approach most effective? a. Embryonic b. Complementor c. Shakeout d. Declining
c
Candace is the research and development manager at a pharmaceutical company. The firm is in the process of developing a new heart medication that could be more effective than existing treatments for several heart conditions. To ensure the company's profitability after the new medication is cleared by the FDA, Candace should: a. work with the sales and marketing team to include all of the medication's chemical components in the sales literature. b. recruit additional research and development team members from a competitor's lab to attempt to imitate their heart medication research. c. supervise the filing of appropriate patent paperwork for the new medication to protect the company's intellectual property. d. fire all of the researchers who have been working on the new heart medication research.
c
In the competitive forces model, the central element that the other four elements contribute directly to strength is: a. risk of entry by a potential competitor. b. closeness of substitutes to an industry's products. c. rivalry among established firms in the industry. d. bargaining power of suppliers.
c
Innovation is the result of: a. reliable products that meet the needs of customers predictably and consistently. b. the acquisition of technologies from rivals through imitation and poaching of talent. c. work in research and development to create superior product attributes and/or superior processes for delivering products. d. improving the time it takes for a good to be delivered or a service to be performed.
c
Jordan's mobile communications device company is conducting an industry analysis as it considers new strategies for its five-year strategic plan. The analysis reveals that recent government deregulation has reduced the barriers to entry and several start-ups are entering the industry. Which of these strategies could be a part of the plan to counteract this? a. Expand into a different industry, serving a different set of customers and their needs. b. Acquire the company's biggest supplier, bringing the capability of manufacturing critical component parts into the business structure. c. Utilize an intensive advertising campaign to build brand loyalty. d. Grow industry demand by educating consumers about the features and benefits of products in the mobile communications device industry.
c
Logan is an entrepreneur with a new idea for a software product. His start-up company grows quickly to a team of about 25. A new federal law recently passed by Congress will cause the software to become obsolete without a major change in the programming. The investment in the programming is going to be costly, and the company faces some hard choices. Logan announces a move back to his programming roots and an intention to work alongside the software development team, taking the salary of a programmer, to ensure that the newest version of the software will be compliant with the new law. Which of these characteristics of an effective leader is Logan demonstrating the most? a. Being well informed b. Willingness to delegate and empower c. Commitment d. Outside view
c
Macroeconomic forces contribute to an industry's ability to be profitable. Which of the following examples shows how a company might appeal to new customers and increase its revenues by focusing on a macroeconomic force? a. A department store expands into three new states. b. A company that processes honey products purchases a research facility to improve conditions for honey bees as a way to ensure its supply. c. A home mortgage company creates a sales promotion with incentives for potential home buyers to take advantage of a particularly favorable interest rate. d. A pharmaceutical company changes its company name to the name of its best-selling product.
c
Michael Porter's theory of punctuated equilibrium suggests periods of freezing and reshaping of industries. Which of these represents a formerly declining industry now in a reshaping period? a. The gas-powered car industry is experiencing a rebound after a period of decline, but without meaningful innovation. b. The trucking industry has seen cyclical demand for the delivery of products from manufacturers to distribution centers and then to stores and customers. c. The global mass transit industry is reshaping as people in developed countries seek environmental benefits and those in developing nations look for ways to serve dense populations. d. The river barge transportation system has sustained barriers to entry, mainly because of the cost of equipment and availability of appropriate, cost-effective riverside property.
c
Potential competitors may enter an industry and begin to take market share from existing companies. What would be one of the largest challenges a new entrant would need to overcome to be successful when entering the industry? a. Very few customers are currently buying a product. b. Several powerful retailers provide the only access to customers. c. Production costs are high and require high volumes to achieve profitability. d. Complementors are lacking that go along with the product.
c
Rowan is the manager of sales and marketing for one of the organization's products. He was invited to participate in the strategic planning process for launching a new type of sunglasses to the millennial market. Rowan, age 25, was excited to be able to contribute to this product because he liked these new sunglasses and, when he showed them to his three best buddies, they also liked them. During the planning session, Rowan convinced the team that they did not need to conduct expensive focus groups to test the viability of the sunglasses. Rowan also convinced the team that the glasses would sell because of the numerous compliments he received when wearing a pilot pair of the sunglasses. Ultimately, the management team decided to go with Rowan's strategy and did not conduct focus groups before launching the new product. Which cognitive bias was at work in this situation? a. Illusion of control b. Escalating commitment c. Representativeness d. Reasoning by analogy
c
Strategic managers may believe that they have to choose between what is best for the shareholders versus what is best for the company's customers and employees to achieve a competitive advantage. However, there is good evidence to suggest that the best way to maximize the return to shareholders is to focus on the customers and employees. Which of these scenarios is an illustration of that evidence? a. A manufacturing business routinely hires full-time employees to fill seasonal spikes in demand and then cuts their hours during slow times to lower costs and continue to pay high shareholder dividends. b. A restaurant company decides to operate with fewer employees, causing customer service to suffer, in order to increase its return to shareholders. c. A tech company determines that it should pay its top-performing employees above-market wages, decreasing shareholder returns in the short-term. But the employee longevity pays off through sustained research and development and breakthrough products that result in sales growth and lower recruitment costs. d. An airline decides to revamp its loyalty program to create more blackout dates, ensuring it can sell more tickets at full price and return greater profitability to shareholders. Customers call to complain and stop utilizing the loyalty program.
c
The idea that the strategy-making process is constantly ongoing and adapting over time with the input of additional information is: a. autonomous action. b. scenario planning. c. the feedback loop. d. a SWOT analysis.
c
The price of a product or service is typically less than the customer's perceived value for the product because: a. companies operate as monopolies and can set the price at the minimum to meet the consumer's perception of value. b. prices are set at a random amount above the cost of producing the product. c. it is impossible to offer a product to each customer at the exact price at which he or she values it because customer definitions of value will vary. d. government regulations limit the maximum price that companies can charge in a given industry for their products and services.
c
There are four main categories of strategies that managers may define to create and sustain a competitive advantage. Which of these is an example of a business-level strategy? a. A finance director developing a plan to improve the return on invested capital (ROIC) by negotiating more favorable payment terms with customers and vendors b. A CEO of a multidivisional company selecting a new customer market segment to pursue and establishing a new business unit to serve the segment c. A general manager defining a superior customer service strategy for his division to better deliver its products d. The vice president of human resources approving a 10% increase in staff in the company's Midwest division
c
There are multiple techniques for improving decision making in the formulation and implementation of strategic plans. Which of these is a means of improving decision making? a. Reasoning by analogy b. Emphasizing all the reasons a proposal is unacceptable using dialectic inquiry c. Comparing a strategic plan against previous similar plans and reviewing the results of those experiences to gain an outside view d. Imagining the outcome and results of your strategic plan and deciding it will work because you believe there will be positive results
c
Through research and development, a cable company has found a way to use its existing network lines to serve customers with a new product offering - home security systems. The company is offering the service for a lower monthly fee than most security companies. However, the sales force didn't see a lot of interest among its customers who had an existing security system from a competitor until they ran a promotion for reduced prices on equipment and free installation. Which of the competitive forces is at play? a. Cost conditions b. Bargaining power of suppliers c. Customer switching costs d. Complementors
c
Which of the following statements about cognitive biases is true? a. The bias of representativeness arises from our predisposition to estimate the probability of an outcome based on how easy the outcome is to imagine. b. The bias of the availability error is rooted in the tendency to generalize from a small sample or even a single, vivid anecdote. c. An awareness of cognitive biases allows managers to analyze whether the decision is being made strategically or relying on a "rule of thumb" or heuristic. d. The benefits of using heuristics in decision making far outweighs any drawbacks of cognitive biases that may occur.
c
Which of these mission statements is customer-focused? a. AutoNation: To be America's best run, most profitable automotive retailer. b. General Electric: To invent the next industrial era, to build, move, power and cure the world. c. Nike: To bring inspiration and innovation to every athlete in the world. d. Google: To organize the world's information and make it universally accessible and useful.
c
A competitive advantage is based on the possession of distinctive competencies. By definition, distinctive competencies are: a. resources available to all firms operating in a given industry and easily shared and copied by rivals. b. differences between companies in how they structure their companies and compensate their employees. c. characteristics, skills, or knowledge that cannot be written down and must be understood through experience or intuition. d. firm-specific strengths that allow a company to differentiate its products from rivals or achieve lower costs than rivals.
d
A division of a large corporation is presenting its financial results for the year to the board of directors for the parent company. The company has achieved a competitive advantage and would like to report on its profitability. Which of these financial results provides the best indicator of the company's success? a. Net sales of $350 million b. Invested capital of $18 million c. 65% cost of goods sold d. 20% return on invested capital
d
According to this text's authors, Hill and Schilling, which of these would be considered an important step in a formal strategic management process? a. Building the company's organizational chart of strategic leaders b. Research and development into the company's first prototype product c. Market research surveys of customer attitudes toward the recent product launch d. Defining the company's corporate mission and major corporate goals
d
Activities such as the design, creation, and delivery of a product are part of a company's: a. logistics. b. price maximization. c. support activities. d. value chain.
d
An industrial tool manufacturer relies on a distributor network with the largest online outlet and store network aimed at construction workers. The distributor network is seeking a manufacturer to provide them with private label products. They've decided they will offer only their own product line and not any other brand in this category of industrial tools. Now the industrial tool company must decide whether to agree to this proposition or lose this company as a customer. This is an example of which of the competitive forces at play in this industry? a. Industry competitive structure b. Rivalry among established companies c. Bargaining power of suppliers d. Bargaining power of buyers
d
Chris is a mid-level manager who has been working with an executive coach to become a better leader within his organization. One of Chris's goals has been to develop his emotional intelligence. Recently, Chris scheduled a meeting with a challenging objective - to inform his team of employees that the executive team has decided to abandon the project they've been working on. When Chris discusses the situation with the team, which of these approaches would best demonstrate emotional intelligence? a. Chris should inform them all that the project they are working on is no longer aligned with the company and that all of their work has been in vain. b. Chris should take a few promising leaders aside and tell them first that the project is being killed but that their jobs are safe, and then announce the change in direction to everyone else and tell them that their inferior work is the reason management is stopping the project. c. Chris should blame the executive management for killing this project and tell everyone on the team that he was passionate about their work, the company is dropping the project anyway. d. Chris should start by complimenting the team on their hard work on the project so far and then explain that the company is shifting direction and is no longer pursuing the project. He should have as much information as is available for the employees on how this change will affect their job status.
d
In the toy industry, Mattel is one of the world leaders with its line of Barbie dolls. However, it has faced competition from MGA Entertainment with its Bratz dolls since the 1990s. Which of these statements is true about the strategic group in which these companies compete? a. The two companies occupy different strategic groups and likely will have very different competitive forces and different strategies. b. The companies are dealing with the same competitive forces as all other companies across the toy industry. c. As toy companies, they both have the ability to quickly pursue the toy truck market with minimal investment. d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.
d
Linden begins a VRIO analysis of the quality of company resources within his company. Which of the following would be Linden's first step? a. Treat each resource identified as equally important to the company and develop a strategy that utilizes each one to achieve superior profitability. b. Evaluate each resource to determine whether it can help the company take advantage of opportunities in the industry, whether it's a resource that competitors don't have or would have trouble copying, and whether the company is managing the resource. c. Test each resource by removing it from production for a defined length of time and track productivity, sales, and profitability in each of those timeframes. Then, use the data collected to quantify how important each resource is to the company. d. Identify the land, labor, management, plant and equipment, organizational architecture, process knowledge, and intellectual property that make up the resources of the company.
d
The Baby Boomer generation (those born immediately after World War II) is aging. A local healthcare network is looking at several expansion strategies. Which strategy might be the best response to this demographic force in the macroenvironment? a. The network will add more than 100 maternity beds to three of its suburban hospitals. b. The network will enter into official referral agreements with six new physician practice groups that focus on pediatrics. c. The network will invest in genetic testing options tailored to identifying the future health needs of people currently in their twenties. d. The network will build a blended-use community that offers independent retirement living, assisted living, and skilled nursing care.
d
The best-selling gaming system consistently performs the function it was designed for, performs it well, and rarely, if ever, breaks down. Therefore, this gaming system possesses: a. greater capital productivity. b. quality as excellence. c. employee productivity. d. quality as reliability.
d
The four building blocks of competitive advantage have an interdependent relationship. Which of the following describes a strategy that adds value to multiple factors as it goes through several activities in the value chain? a. A grocery store recognizes that its checkout lines are longest between 4 and 7 p.m. on weeknights. The company decides to add cashiers during these peak hours even though it results in a lower rate of sales per employee-hour. b. A sporting goods store recognizes the increased customer demand for running shoes in the early spring and implements a 5% price increase at the beginning of the season each year. c. A coffee shop replaces its espresso machines with newer models that utilize less energy but create the same quality of coffee drink. d. In response to requests from customers for healthier food on the menu, a restaurant tweaks its recipe for its most popular sandwich to replace processed ingredients with fresh vegetables.
d
The pace of technological change has accelerated. Technological forces can have an impact on the macroenvironment, creating conditions that are: a. easy for established companies to take advantage of to introduce their products to new markets. b. threats to embryonic industries, preventing them from growing to maturity. c. raising the cost of entry for potential new entrants into industries and protecting established companies in mature industries. d. both creative and destructive, making established products obsolete overnight and creating new product possibilities at the same time.
d
Which of these is an example of a product or service in an industry operating in the growth stage? a. Video and record stores b. Legal services c. Residential solar panels d. Employee performance management software
d
Which of these is characteristic of a well-constructed goal? a. My company's goal is to create a more diverse employee base. We've decided we want to attract employees of different races, but our management team is uncomfortable with any kind of system that would count the number of employees we have of different races. b. My company's CEO has many pet projects. She's thinking about starting side businesses that are unrelated to our core competency and has set goals surrounding these new areas. c. My company has decided that we will pursue a goal to become the largest, ranked by revenue, grocery retailer in North America within three years. We currently operate 50 stores in five states. d. My company has set a goal of launching five new products each year for the next five years through at least a 10% annual investment in research and development.
d
Which of the following steps precedes a SWOT analysis in the strategic planning process? a. Engaging in ivory tower planning b. Formulating a viable business model c. Implementing the strategic goals for the organization d. Crafting an organization's mission statement
d
