Quiz 1

Toy sales have declined by 10 percent each year, forcing many retailers to exit the industry. To eliminate its remaining competition, Bargain Toys sells all of its product at a loss and relies on its significant cash holdings to cover costs until its competition is forced to exit the industry. Is this an example of a successful strategy? Why or why not?

.No. Bargain's strategy and competitive advantage are unsustainable.

The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?

A. It has a competitive advantage in the industry.

The ________ is a model that links strategy analysis, strategy formulation, and strategy implementation, which together helps managers plan and implement a strategy that can improve performance and result in competitive advantage.

AFI strategy framework

Which of the following is typically an economic responsibility of a firm

B. paying adequate returns to the firm's stockholders on the capital invested by them

When the strong dictatorial rule in Arlington unexpectedly collapsed due to the shocking death of the royal family in an explosion, the nation's economy experienced drastic changes. The laws became more restrictive, the country lost many locally produced resources and products, and the distribution of wealth became inequitable. The unexpected event that led to these changes can best be described as a(n) ________ event.

Black Swan

Bill's Auto & Airplane Repair shop is able to generate a positive net income of $10,000 a week; this is the industry average. We can conclude that since he has a positive net income, he also has a competitive parity in the industry.

Correct—competitive parity is achieved by generating average returns, relative to competition in a given industry.

Contour Inc., a vendor, regularly supplies capacitors to All Purpose Electronics for use in its products. Therefore, Contour Inc. is All Purpose Electronics'

External Stakeholder

Green and Good Inc., a multinational company, relies on its media partner OmniSignal to regularly advertise its offers, sales, and new products. OmniSignal is invested in this relationship because it generates most of its revenue from advertising Green and Good's products. In this scenario, OmniSignal is Green and Good Inc.'s

External Stakeholder

Good Ole Cinemas Inc. and HD Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Good Ole Cinemas Inc. pursues a cost-leadership strategy, HD Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario? A) Good Ole Cinemas will charge a premium price for its customers, while HD will implement everyday low pricing. B) HD and Good Ole Cinemas will not be direct competitors to each other, and their customer segments will overlap very little. C) HD will keep its customer service at an acceptable level, while Good Ole Cinemas will provide superior customer service. D) Good Ole Cinemas and HD will use a similar approach to create value for customers by attempting to offer everything to everybody.

HD and Good Ole Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.

Suger & Sweet Sodas has seen its market share erode in recent years, as consumers increasingly turn toward healthier beverage choices such as unsweetened sparkling water. Hoping to rekindle interest in sugary sodas, Suger & Sweet decides to produce a limited run of "throwback" cans using labeling first introduced in the 1980s. What is wrong with this strategy?

It fails to face the competitive challenge

Better Capsules is a highly successful vitamin manufacturer. At the close of its most recent fiscal year, the company's balance sheet showed cash holdings of $110 million. Which of the following actions will provide the most benefit for stakeholders?

Reinvest profits into expanding the company and creating more jobs.

As the legal owners, ________ have the most legitimate claim on a company's profits.

Shareholders

Sean, a retired CEO, invests capital in a start-up company that creates budgeting software. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Vincente is the start-up company's

Stakeholder

is best described as a set of goal-oriented actions a firm takes

Strategy

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?

Strategy Analysis

Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking?

The firms would eventually have no resources to invest in product and process improvements

Which of the following practices of a firm satisfies its ethical responsibilities

Using plastic as the packaging material

While creating its AFI strategy framework, Gordon Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?

corporate strategy

The amount of polyethanal that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment and is considered a legal offense. Consequently, PrismPaints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures polyethanal-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is Prism Paints Corp. primarily compromising in this scenario?

economic responsibilities toward its shareholders

The best example of a firm's external stakeholder is a(n) A. government agency that regulates the prices of products manufactured by the firm. B. board member from a wholly-owned foreign subsidiary of the firm. C. shareholder who has invested money in the firm but is not employed by the firm. D. employee of the firm who is responsible for a contract project.

government agency that regulates the prices of products manufactured by the firm.

After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to

identify stakeholders' interests and claims.

The minimum wage in the country of Hanns is $8 an hour. Delish, a restaurant in the Hanns's capital city, pays its servers $8 per hour. However, the management of the restaurant feels that this amount is excessive for workers whose only job is to clear tables. By continuing to adhere to the rules set by the government of Hanns, which of the following responsibilities is Delish satisfying? A. Legal responsibilities B. Philanthropic responsibilities C. Ethical responsibilities D. Demographic responsibilities

legal responsibilities

Yellow Ride Service is a new entrant to the taxi industry. It has achieved success by staking out a unique position in the industry. How did Yellow Ride Service mostly likely achieve this position?

providing long-distance cab fares at a higher rate than competitors; servicing the same area as competitors

Which of the following was a key motivator for participants in the occupy movement of 2011

the issue of income disparity

During strategy implementation, managers primarily focus on deciding the: A. type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice. B. industries and markets the firm should compete in to be able to gain and sustain a competitive advantage. C. relationship between competitive advantage and firm performance. D. role strategic leaders should play in gaining and sustaining a competitive advantage.

type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice