Strategic Test #1
Resources are considered rare when they have no structural equivalent. a. True b. False
False
All of the following were traditional sources of competitive advantage EXCEPT a. labor costs. b. access to financial resources. c. protected markets. d. a highly educated labor market.
d
Profit pools allow strategic leaders to predict the outcomes of their decisions before taking efforts to implement them. a. True b. False
True
Relative power is the most critical criterion for prioritizing the demands of stakeholders . a. True b. False
True
The resource-based model assumes that if firms have resources that are rare or costly to imitate, this is sufficient to form a basis for competitive advantage. a. True b. False
True
The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and determines its ability to earn above-average returns under the I/O view. a. True b. False
True
While patents may be an effective way of protecting proprietary technology in some industries such as pharmaceuticals, many firms competing in the electronics industry do not apply for patents. a. True b. False
True
By linking companies with their suppliers, distributors, and customers, provide a company with flexibility. a. flexible manufacturing systems b. information networks c. total quality management systems d. capabilities
B
Consumers in the United States are known for their a. low income. b. impatience. c. loyalty. d. group think.
B
The ability to effectively and efficiently access and use information is a. vitally important at the point where a domestic firm enters the global market. b. an important source of competitive advantage in virtually all industries. c. the minimum required for survival in virtually any industry. d. critically important mainly in high technology industries.
B
The concepts of Guanxi, Wa, and Inhwa all convey the general idea of a. entrepreneurial risk-taking. b. interpersonal relationships. c. the value of hard work. d. personal achievement.
B
Value consists of a. a product's proprietary characteristics and attributes for which customers are willing to pay. b. a product's performance characteristics and attributes for which customers are willing to pay. c. a product's proprietary characteristics and attributes for which customers consider paying. d. a product's performance characteristics and attributes for which customers consider paying.
B
Strategic groups are firms in different industries following the same or similar strategies.
FALSE
. Developed countries still have major advantages in access to information technology over emerging economies because of the significant cost of the infrastructure needed for computing power. a. True b. False
False
An effective vision statement will specify the market to be served. a. True b. False
False
Technology is a critical resource for helping organizations learn how to continually innovate. a. True b. False
False
. All of the following are forces that create high rivalry within an industry EXCEPT a. numerous or equally balanced competitors. b. high fixed costs. c. fast industry growth. d. high storage costs.
c
. If McDonald's is considering growing potatoes, the step of the profit pool analysis is the one that a. defines the pool's boundaries. b. estimates the pool's overall size. c. estimates the size of the value-chain activity in the pool. d. reconciles the calculations.
c
. McDonald's culture, with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics, illustrates which of the following criteria for sustainable competitive advantage? a. valuable b. rare c. costly to imitate d. nonsubstitutable
c
. Which of the following is NOT an external event that reveals the "dark side" of core capabilities? a. A new competitor figures out a better way to serve the firm's customers. b. New technologies emerge and replace those used by the firm. c. A firm changes its focus to a new core competence. d. Political or social events shift the foundation of current core capabilities.
c
The value of tangible assets such as the firm's borrowing capacity and its physical plant is high because they can be easily leveraged to derive additional value. a. True b. False
false
Value chain activities in the value chain create value, whereas support functions generate costs. a. True b. False
false
. TQM is most helpful to firms following the business strategy. a. cost leadership b. integrated cost leadership/differentiation c. focused cost leadership d. focused differentiation
B
A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised a. foresight. b. judgment. c. effective strategic thinking. d. decisiveness.
B
. The benefit of a flexible manufacturing system is that a. the lot size needed to manufacture a firm's product efficiently is reduced. b. the necessary skill levels of workers are reduced, allowing the firm to reduce costs. c. it lends itself to empowerment of employees. d. it captures the cost savings of economies of scale.
A
A nationwide chain of pet stores wishes to identify the tradeoffs that its customers are willing to make between low-cost products such as generic pet foods and differentiated features such as pick-up and delivery of pets for grooming. The best technique for this firm to learn this information would be to use a. information networks. b. a flexible manufacturing system. c. differentiation development planning. d. Enterprise Resource Planning.
A
The risks of a focus strategy include a. a competitor's ability to use its core competencies to outfocus the focuser by serving an even more narrowly defined segment. b. a competitor's ability to use its core competencies to outfocus the focuser by serving an even more broadly defined segment. c. decisions by industry-wide competitors to use their resources to serve a wider range of customers' needs than the focuser has been serving. d. decisions by focused competitors to use their resources to serve a wider range of customers' needs.
A
A competitive advantage a. can be permanent if the firm has successfully implemented the strategic management process. b. entails reducing investors' risk to near zero. c. can be identified only if it has been unsuccessfully challenged by competitors. d. exists when competing firms are unable to find investors.
C
Recently, the only type of car available for Anthony to rent on a business trip was a compact, fuel-efficient Japanese import. Anthony was surprised at the comfort and performance of the car. He is in the market for a new car and had previously considered only buying another luxury SUV. Now, he is thinking about the significant cost savings he would have if he bought the compact vehicle rather than a new SUV. This is an example of the competitive risk that a. a competitor's products can convey a product's differentiated features to a customer at a significantly reduced price. b. a product imitation can cause customers to perceive that competitors offer essentially the same good. c. experience can narrow a customer's perceptions of the value of a product's differentiated features. d. brand loyalty insulates a company from rivalry with competitors.
C
Religious beliefs are an example of customer segmentation by factors. a. demographic b. socioeconomic c. geographic d. psychological
D
A firm's mission tends to be enduring while its vision can change in light of changing environmental conditions. a. True b. False
False
Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche, the firm's owners can feel secure that Alligator has established a competitive advantage. True or False
False
Corporate-level strategy in a diversified organization requires a common business strategy for each component business. a. True b. False
False
The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities is its main source of above-average returns. a. True b. False
False
When the firm earns lower-than-average returns, the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders. a. True b. False
False
. Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT a. lack of scientific transference. b. social complexity. c. unique historical conditions. d. causal ambiguity.
a
. Generally speaking, product market stakeholders are satisfied when a. a firm's profit margin yields the lowest return to capital market stakeholders that is acceptable to them. b. a firm's profit margin yields an above-average return to its capital market stakeholders. c. the interests of the firm's organizational stakeholders have been maximized. d. the interests of all stakeholders have been at least minimally satisfied.
a
. If Southwest Airlines is considering the consequences of videoconferencing on business travel, it is in the profit pool analysis step known as a. defining the pool's boundaries. b. estimating the pool's overall size. c. estimating the size of the value-chain activity in the pool. d. reconciling the calculations.
a
. The ___ dimension of relationships with customers is particularly important for social networking sites such as Facebook and MySpace. a. reach b. richness c. affiliation d. social
a
. The goal of the organization's ____ is to point the firm in the direction of where it would like to be in the years to come a. vision b. mission c. culture d. strategy
a
A cost leadership strategy targets the industry's customers. a. most typical b. poorest c. least educated d. most frugal
a
A product's value is created by each of the following EXCEPT a. high cost and highly differentiated features. b. low cost. c. highly differentiated features. d. low cost and highly differentiated features.
a
Business-level strategies are concerned specifically with a. creating differences between the firm's position and its competitors. b. selecting the industries in which the firm will compete. c. how functional areas will be organized within the firm. d. how a business with multiple physical locations will operate one of those locations.
a
Compared to tangible resources, intangible resources are ____ and ___ a. less visible; more difficult to copy. b. less visible; less difficult to copy. c. more visible; more difficult to copy. d. more visible; less difficult to copy.
a
Effective strategic leaders a. are willing to be brutally honest. b. focus on strategy formation. c. focus on strategy implementation. d. focus on innovation.
a
Essentially, has become one of the world's largest markets with 700 million potential consumers. a. the European Union b. the United States c. China d. Japan
a
Exit barriers to a firm include all of the following EXCEPT a. generic assets. b. loyalty to employees. c. governmental concern about job loss. d. restrictive labor agreements.
a
In the animal food products business, food-product needs of owners of companion animals pets (e.g., dogs and cats) differ from the needs for food and health-related products of those owning production animals (e.g., livestock). Which of the following aspects of managing customer relationships does this choice refer to? a. Who: Determining the Customers to Serve b. What: Determining Which Customer Needs to Satisfy c. How: Determining Core Competencies Necessary to satisfy Customer Needs d. When: Determining When to Satisfy Customer Needs
a
One reason executive judgment can be a particularly important source of competitive advantage is that judgment a. allows a firm to build a strong reputation. b. gains the loyalty of shareholders. c. increases human intellectual capacity. d. allows for superior bundling of resources.
a
The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry? a. It will make the airline industry more attractive because of decreased supplier power. b. It will make the airline industry less attractive because of decreased supplier power. c. It will make the airline industry more attractive because of increased supplier power. d. It will make the airline industry more attractive because of a new entrant.
a
The competition within each strategic group is a. more intense than is the competition between strategic groups. b. less intense than is the competition between strategic groups. c. typically very low. d. an unknown factor in the analysis of competitive practices within a firm's strategic group.
a
The culmination of the strategic management process is a. performance. b. strategy implementation. c. strategy formulation. d. analysis.
a
The economic environment refers to a. the nature and direction of the economy in which a firm competes or may compete. b. the economic outlook of the world provided by the World Bank. c. an analysis of how the environmental movement and world economy interact. d. an analysis of how new environmental regulations will affect the U.S. economy.
a
The final responsibility for forming the organization's mission lies with the a. CEO. b. top-management team. c. employees. d. organization's stakeholders.
a
The global economy, globalization, rapid technological change, and the increasing importance of knowledge are creating the need to a. delegate strategic responsibilities to employees "closer to the action." b. split responsibilities between the CEO and the board of directors as a result of corporate scandals triggered by unethical CEOs. c. re-centralize the responsibility for strategy to the CEO. d. expand the strategic responsibilities to all organizational stakeholders.
a
The resource-based view of the firm a. emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone. b. argues that the industry environment has a stronger influence on firms' ability to implement strategies successfully than does the competitor environment. c. calls for firms to focus on their homogeneous capabilities to compete against their rivals. d. suggests that vision and mission are closely linked to sustainable competitive advantage.
a
The strategic leader's work is characterized by a. ambiguous decision situations which make effective decisions difficult to determine. b. a willingness to unify stakeholders through skillful manipulation. c. an ability to identify the correct solutions to long-range problems. d. concentration on the practical day-to-day aspects of the organization's operations.
a
To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT a. be technologically innovative. b. be hard for competing firms to duplicate. c. be without good substitutes. d. be valuable to customers.
a
William Ackman is a hedge fund manager who owned a large share of J.C. Penney stock. He was also a member of the Penney board. He tried to get the CEO fired, but the board and top management said he breached his boardroom duties when he publicly disclosed information on the CEO search and financial condition of the company. He resigned from the board of directors. This is an example of a contentious relationship between a. the capital market stakeholders and the organizational stakeholders. b. the organizational stakeholders and the product market stakeholders. c. the capital market stakeholders and the product market stakeholders. d. all the stakeholders.
a
New Jersey and New York have the highest state taxes in the United States. They also have high ratios of people moving out compared to people moving into the state. This impacts the aspect of demographic analysis. a. age structure b. geographic distribution c. income distribution d. ethnic mix
b
. The three parts of the external environment which affect a firm's strategic actions are a. economic, political, and legal. b. general, industry, and competitor. c. industry, business, and product. d. local, national, and global.
b
A firm successfully implementing a differentiation strategy would expect a. customers to be sensitive to price increases. b. to charge premium prices. c. customers to perceive the product as standard. d. to have high levels of power over suppliers.
b
Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should a. concentrate on maintaining Acme's current core competencies. b. focus on developing Acme's future competitive advantages. c. place more emphasis on tangible resources, which are less vulnerable to obsolescence than intangible resources. d. recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resources.
b
An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must a. analyze the reach, richness, and affiliation the company must have with its customers. b. provide tax advice either in a different manner or provide a different kind of tax service than competitors. c. offer tax advice at a price lower than the cheapest competitor. d. offer tax advice at a higher quality than the best competitor.
b
An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef, and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision? a. The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. b. The investor will find that the restaurant's financial statements undervalue the true value of its resources. c. The investor should be aware that intangible assets are difficult to leverage into additional business. d. The investor should search for a firm which has competitive advantages based on tangible resources.
b
An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using its concepts to make a decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization? a. Green Pastures Foods b. RexRich Foods c. Both firms are consistent with the I/O approach. d. At the entrepreneurial stage, the model which companies follow is not important.
b
Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in a. the selection of industries in which the firm will compete. b. specific product markets. c. primary value chain activities. d. particular geographic locations.
b
Circuit Corp. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component which is an essential differentiating feature for most of its consumer products. The costs to manufacture this component have risen sharply in recent months. Internal cost accounting estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely? a. Circuit will likely continue to manufacture the component, even at a loss, due to low supplier power. b. Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes. c. Circuit will likely discontinue manufacture of the component due to low strategic stakes. d. Circuit will likely discontinue manufacture of the component due to high supplier stakes.
b
Environmental scanning would be most important for which of the following organizations? a. a provider of hospice services for the terminally ill b. a web design company catering to small businesses c. a neighborhood sewer and water utility d. a manufacturer of household linens
b
Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here? a. buyers b. substitutes c. entry barriers d. suppliers
b
The critical executive skill of the current business age is the ability to a. manage technological innovation. b. manage human intellect. c. initiate change and overcome inertia. d. coordinate tangible and intangible resources.
b
The observation that China, despite a 37 percent surge in car sales in 2010, is expected to reach production overcapacity by 2015 and have a glut of extra cars, is an aspect of the ____ segment of the general environment. a. demographic b. global c. physical d. technological
b
An analysis of income distribution would include all of the following EXCEPT a. the purchasing power of various age groups. b. the discretionary income of various ethnic groups. c. wage differentials between male and female employees working for a large manufacturer. d. how income is distributed among regions of the United States.
c
Because of threats and risks in the global environment, some firms choose to take a more cautious approach by a. avoiding global markets altogether. b. expanding only to developed countries. c. focusing on global niche markets. d. acquiring already established firms in foreign markets.
c
In a diversified firm, corporate-level strategy is concerned with a. operating each individual business under the corporate umbrella. b. determining how each functional department of the firm will operate. c. determining in which businesses to compete and how resources will be allocated between businesses. d. coordinating the vision and mission of each subsidiary firm.
c
Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy. a. marketing and sales b. technology development c. logistics d. human resource management
c
Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples illustrate which of the following criteria for sustainable competitive advantage? a. valuable b. rare c. costly to imitate d. nonsubstitutable
c
Suppliers are powerful when a. satisfactory substitutes are available. b. they sell a commodity product. c. they offer a credible threat of forward integration. d. they are in a highly fragmented industry.
c
The Princeton Alliance Church states in its website that "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope." This pronouncement is most precisely a statement of organizational a. values. b. mission. c. vision. d. culture.
c
The analysis of the activity map of a successful company such as Southwest Airlines emphasizes how a. the organizational culture of Southwest Airlines is the key to the success of the organization. b. understanding of the profit pool in an industry indicates to companies where above-average returns can be earned. c. it is hard for rivals to match a configuration of integrated activities than to imitate a single activity. d. the primary and support activities of a successful company capture value all along the value chain.
c
The firm's provide the foundation for choosing one or more ______ and deciding how to implement them. a. analyses; strengths b. abilities; strengths c. analyses; strategies d. abilities; strategies
c
The political/legal segment of an environment represents a. the political preferences of different ethnic groups in the society. b. the technological values of different political entities in society. c. how organizations and governments mutually try to influence each other. d. the system of regulations governments at all levels place on businesses.
c
Value chain activities include all of the following EXCEPT a. supply-chain management. b. operations. c. management information systems. d. distribution.
c
When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of a. an industry with low exit barriers. b. increasing economies of scale. c. slow industry growth. d. high bargaining power among buyers.
c
Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis? a. Wendy's and Taco Bell b. Sony and Apple c. Dell and Microsoft d. Coca-Cola and PepsiCo
c
Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to a. the power of the financial market stakeholders. b. the resources the firm possesses. c. the profitability of the industry in which the firm competes. d. hypercompetition within the industry.
c
_____ may exist among managers making decisions as well as among those affected by the decisions. a. Certainty b. Simplicity c. Intraorganizatioinal conflicts d. Interorganizational conflicts
c
should establish a firm's individuality and should be inspiring and relevant to all stakeholders. a. A strategy b. A vision c. A mission d. A goal
c
The large amount of advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry? a. access to distribution channels b. capital requirements c. economies of scale d. product differentiation
d
The next critical technological opportunity for organizations is predicted to be a. the Internet. b. multiphasic interventions. c. biological engineering. d. wireless communications.
d
The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market? a. telephone b. television c. personal computer d. Internet
d
. A competitor analysis includes all of the following about competitors EXCEPT a. future objectives. b. current strategy. c. assumptions. d. traditions.
d
. When the costs of supplies increase in an industry, the low-cost leader a. may continue competing with rivals on the basis of product features. b. will lose customers as a result of price increases. c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins. d. may be the only firm able to pay the higher prices and continue to earn average or above-average returns.
d
Dissatisfied capital market stakeholders may a. sell their stock. b. tighten loan covenants. c. seek to increase their power. d. All of these options are correct.
d
Firms use the five forces model to identify the of the industry as measured by its a. size; number of competitors. b. globalization; exports. c. hypercompetition; technology diffusion. d. attractiveness; profitability.
d
If McDonald's were to map the profit pool in the quick-service restaurant industry, it would do all of the following EXCEPT a. define the industry's boundaries and size. b. estimate the profit potential in each part of the value chain. c. focus on unattractive industries ignored by competitors. d. select the strategy to use where the largest profit pools are located.
d
Research shows that approximately ___ percent of a firm's profitability is explained by the industry in which it competes, whereas ____percent is explained by the firm's characteristics and actions. a. 90; 10 b. 60; 40 c. 36; 20 d. 20; 36
d
The use of the Internet by Netflix to collect data on customer preferences is an example of a. assessing. b. monitoring. c. forecasting. d. scanning.
d
Viewing the world through the customer's eyes and constantly seeking ways to create more value for the company enhances a. the reach of the company toward the customer. b. the ability to identify the customer. c. the richness of the relationship with the customer. d. affiliation with the customer.
d
The key to Southwest Airlines' success has been its ability to continuously reduce costs while providing customers with superior levels of differentiation such as an engaging culture. a. True b. False
false
The more distant strategic groups are in terms of their strategies, the greater the likelihood of rivalry between the groups.
false
. Flexible manufacturing systems, information networks, and total quality management are three techniques that make it possible for firms to implement the focused differentiation strategy. a. True b. False
false
. Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment. a. True b. False
false
A company can earn above-average returns only when the value it creates is less than the costs incurred to create that value. a. True b. False
false
Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity. a. True b. False
false
An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, and low rivalry among firms.
false
Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources. a. True b. False
false
Firms should never outsource a primary activity because of the danger of the activity being imitated by rivals. a. True b. False
false
Generally, the stronger the competitive forces, the higher the profit potential of an industry. a. True b. False
false
Globalfocusing is often used by firms with high levels of international operations who further increase their internationalization by focusing on global niche markets. a. True b. False
false
In general, firms can be most effective if they develop business-level strategies that will serve the needs of the "typical customer" in the industry. a. True b. False
false
In recent times, businesspeople have become more confident in the ability of economists to provide valid and reliable predictions about the world's economic environment. a. True b. False
false
Scanning involves detecting meaning through early signals of environmental trends. a. True b. False
false
Switching costs, access to distribution channels, economies of scale, large numbers of competing firms, and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry.
false
The difference between the cost leadership and differentiation business-level strategies, and the focused cost leadership and focused differentiation strategies, is their basis for customer value. a. True b. False
false
Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing industry, and switching costs are high. a. True b. False
true