Strategic Management Test 2

competitive industry structure

Elements and features common to all industries, including the number and size of competitors, the firms' degree of pricing power, the type of product or service offered, and the height of entry barriers.

Strategic Comminments

Firm actions that costly, long term oriented and difficult to reverse

Industrys Effects

Firm performance attributed to be structure of the industry in which the firm competes

Firm Effects

Firm performance attributed to the actions managers take

Strategic Position

A firms strategic profile based on the difference between value creation and cost

Industry Analysis

A method to identify an industry's profit potential and derive implications for a firms strategic position within an industry

Five Force Model

A framework that identifies five forces that determine the profit potential of an industry and shapes a firm's competitive strategy

Industry

A group of incumbent companies that face more or less the same set of suppliers and buyers

During an interview for a CEO position, Elena'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

"Firm effects. I will be able to have the most impact on those."

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is

$3 billion, that is, 30 million shares × $100

Producer Surplus

Another terns for profit

Oligopoly

Consolidated with a few large firms, differentiated products, high barriers to entry and some degree of pricing power

Profit

Difference between price cahrged and the cost to produce

shareholders

Investors who purchase shares of stock in a corporation.

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

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

are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

Isolating mechanisms

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

It provides limited guidance about which metrics to choose.

Exit barriers

Obstacles that determine how easily a firm cal lave an industry

are best described as the value of the best forgone alternative use of the resources employed.

Opportunity costs

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

PESTEL framework

describes a process in which the options one faces in a current situation are limited by decisions made in the past.

Path dependence

PESTEL model

Political, Economical, Sociocultural, Technological, Ecological, Legal

balance scoreboard

Strategy implementation tool that harnesses multiple internal and external performance metrics

n which of the following situations is the power of suppliers high in an industry?

Suppliers' industry is more concentrated than the industry it sells to.

Direct Imitation

The client echoes the clinician immediately after the stimulus is presented

Value

The dollar amount a consumer attaches to a good or service

opportunity cost

The value of the best forgone alternative use of the resources employed

The VRIO Framework

Valuable Rare Costly to Imitate Organized to Capture Value

resource-based view

a model that sees certain types of resources as key to superior firm performance

complement

a product, service, or competency that adds value to the original product offering when the two are used in tandem

casual ambiguity

a situation in which the cause and effect of a phenomenon are not readily apparent

Path Dependence

a situation in which the options one faces in the current situation are limited by decisions made in the past

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

an external performance metric

recently experienced an economic boom because of fracking and high oil prices. What is most likely to happen when there is too much money in the tri-county economy?

an increase in prices

The translation of strategy into action primarily takes place in a firm's

business model.

This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by

causal ambiguity

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

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

conomic value created

Which of the following competitively important assets is typically excluded from a firm's balance sheet?

customer experience

In a firm's external environment, ________ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

demographic trends

Network Effect

describes how products in a network increase in value to users as the number of users increases

Companies in the same strategic group are ________ to each other.

direct competitors

Its latest range of smartphones are visually similar to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.?

direct imitation

activities

distinct and fine-grained business processes that enable firms to add incremental value by transforming inputs into goods and services

According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were

easy to imitate

Due to resource immobility, a critical assumption in the resource-based model of a firm, the

esource differences between firms last for a long time

perfect competition

fragmented and has many small firms, a commodity product, ease of entry

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength?

increase in a firm's customer loyalty

A firm will fail to create a sustained competitive advantage when the

it between its internal strengths and the external environment is static

Which of the following is a macroeconomic factor that can affect a firm's strategy?

levels of employment

Monopolistic Competition

many firms, a differentiated product, some obstacle to entry and the ability to raise prices for a relatively unique product

According to the value chain analysis, which of the following is a primary activity?

marketing and sales

a firm controlled and managed by the government of Fadia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate?

monopoly

Entry barriers

obstacles that determine how easily a firm can enter an industry and often significantly predict industry profit potential

The ratio Cost of goods sold/Revenue indicates how efficiently a company can

produce a good

The difference between the price charged for a product and the cost to manufacture it is referred to as the

producer surplus

tangible resources

resources that have physical attributes and thus are visible

Business model

stipulates how the firm conducts its business with its buyers, suppliers and partners in order to make money

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period

risk capital

the money provided by shareholders in exchange for an equity share in a company; it cannot be recovered if the firm goes bankrupt

Threat of Entry

the risk that potential competitors will enter an industry

The primary objective of Porter's five forces model is to

understand the profit potential of industries.