Strategy Final

Competitive advantage is based: upon the possession of distinctive competencies. on low barriers to imitation. on a higher cost structure. on low utility. on barriers to change in a company.

upon the possession of distinctive competencies.

Anna bakes cookies for $10 per batch, she charges customers $15 to a batch, and customers perceive that the cookies are worth $25 per batch. Anna's profit margin is:

$5.

Donna can make a chair for $100; she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is:

$75.

Which of the following is a difference between a general manger and a functional manager? A general manager has no responsibility to the performance of the individuals of the company while the functional manager has an integral relationship with employee performance. A general manager is responsible for overall performance while the functional manager is responsible for a specific task or activity. A functional manager has the profit-and-loss responsibility for a product while the general manager is strictly dedicated to strategic planning. A functional manager oversees the operation of an entire division while a general manager develops strategies that help fulfill strategic objectives. General managers are closer to the customer than functional managers and their ideas may develop into effective strategic plans for the business.

A general manager is responsible for overall performance while the functional manager is responsible for a specific task or activity.

Which of the following organizational arrangements does NOT support a company taking a low-cost position? Incentive systems that empower employees to suggest and pursue initiatives that are consistent with productivity improvements. A frugal company culture that emphasizes the need to control costs. Measurement and control systems that focus on productivity and cost containment. A multi-level structure with several tiers in the management hierarchy. Clear lines of accountability and control.

A multi-level structure with several tiers in the management hierarchy.

Which of the following statements is true in the context of local demand conditions? Companies are typically least sensitive to the needs of their closest customers. Home demand plays little role in helping companies upgrade their national competitive advantage. A nation's companies gain competitive advantage if their domestic customers are sophisticated and demanding. The characteristics of international demand alone shape the attributes of a company's products; not local demand. Local demand characteristics have little role to play in creating pressure for innovation and quality.

A nation's companies gain competitive advantage if their domestic customers are sophisticated and demanding.

Which of the following is NOT true about the implications for cost and revenue and market segmentation? A segmentation strategy is typically associated with lower costs than a standardization strategy. A standardization strategy involves a company producing one basic offering and trying to attain economies of scale by achieving high-volume sales. A segmentation strategy requires that a company customize its product offering to different segment which causes it to sell less of each offering, making it harder to achieve economies of scale. A segmentation strategy requires that a company customize its product offering to different segments and products targeted at segments at the higher-income end of the market may require more functions and features, which can raise the costs of production and delivery. A segmentation strategy can allow a company to capture incremental revenues by customizing its offerings to the needs of different groups of consumers and thus selling more in total.

A segmentation strategy is typically associated with lower costs than a standardization strategy.

Which of the following is a difference between a standardization and segmentation strategy? A standardization strategy has several advantages over a segmentation strategy Standardization allows the company to capture incremental revenues by customizing its offerings while segmentation has products aimed at the average consumer A standardization strategy may lose sales from customers who desire more functions and features and are prepared to pay more for them while a segmentation strategy meets the needs of different groups of consumers and thus sells more in total. A standardization strategy prices product to allow for a wider customer base while segmentation may lose sales from customers who cannot afford to purchase the average product. Standardization strategy may have higher costs than a segmentation strategy

A standardization strategy may lose sales from customers who desire more functions and features and are prepared to pay more for them while a segmentation strategy meets the needs of different groups of consumers and thus sells more in total.

Which of the following statements about customer categories in growing industries is true? Laggards frequently adopt new products even when the benefits are not obvious. Innovators are the customers who are the last ones to adopt a new product. A typical late majority customer group is a behaviorally conservative set of customers. Customers in the early majority generally do not understand the value of new technology. Laggards form the leading wave or edge of the mass market.

A typical late majority customer group is a behaviorally conservative set of customers.

Julian was asked to examine the demographic forces facing his employer, a clothing manufacturer. Which of the following factors is Julian most likely to examine? Government regulations Inflation rates Manufacturing technology Age of the population Society's growing interest in exercise

Age of the population

Comparing the history of a firm's performance as well as its performance against competitors can benefit a firm in which of the following ways? It can help determine whether the company's performance has improved or deteriorated over time. It can measure whether strategies are maximizing the value that is being created. It can ascertain if the firm's cost structure is in line with competitors. It can establish if company resources are being used effectively. All of these are benefits of comparing the history of a firm's performance as well as its performance against competitors.

All of these are benefits of comparing the history of a firm's performance as well as its performance against competitors.

How does value innovation achieve sustained competitive advantage for the innovating company? It shifts the basis of competition. It can catch rivals off guard and make it difficult for them to catch up. It forces the innovative company to think differently than rivals in order to create an offering and strategic position that is unique. Rivals are unable to change focus from prior strategic commitments. All of these are reasons why value innovation can achieve sustained competitive advantage for an innovating company.

All of these are reasons why value innovation can achieve sustained competitive advantage for an innovating company.

Which of the following does the philosophy underlying total quality management (TQM) include? Greater quantity results in cost decreases. Better quality leads to higher market share. Greater quantity increases a company's profitability. Opinions of employees are irrelevant in manufacturing products. Work standards should only be defined as numbers or quotas.

Better quality leads to higher market share.

Delta Air Lines used to advertise its high-quality air travel service by saying it flew "anywhere, anytime." What generic business-level strategy is represented by this advertisement? Broad low-cost strategy Broad differentiation strategy Vertical integration strategy Right-time marketing strategy Rapid growth strategy

Broad differentiation strategy

Which of the following generic competitive strategies would a producer of commodity such as steel most likely pursue? Exclusive dealing Broad differentiation Focus differentiation Broad low cost Horizontal integration

Broad low cost

Which of the following is a difference between the bargaining power of buyers and the bargaining power of suppliers? A powerful buyer lowers costs, while suppliers raise costs to squeeze profits out of an industry. Buyers have the most bargaining power in a monopoly, while suppliers need multiple product substitutes to have bargaining power. Only suppliers have the ability to make demands based on their power relative to that of the company. Buyers bargaining power can raise costs by demanding better quality, while suppliers can raise costs by providing lower quality products. The potential of a supplier with strong bargaining power is considered a threat, while a buyer with strong bargaining power does not pose a threat to the industry.

Buyers bargaining power can raise costs by demanding better quality, while suppliers can raise costs by providing lower quality products.

First-time demand expands rapidly due to new customers entering the market in which of the following stages of the industry life cycle? Embryonic Growth Shakeout Maturity Decline

Growth

Which of the following measures how effectively the company uses its capital to generate revenues and is calculated by taking revenues and dividing it by invested capital? Return on invested capital Return on sales Capital turnover Cost of goods sold Sales, general, and administrative expenses

Capital turnover

Mikayla, a cost accountant, is responsible for gathering and monitoring data used for controlling the organization's costs. In which value-chain activity does Mikayla work? Research and development Human resources Materials management Marketing and sales Company infrastructure

Company infrastructure

Using the value-chain model, which of the following primary activities is performed last, as inputs are transformed into outputs? Research and development Marketing and sales Logistics Production Customer service

Customer service

Which of the following is NOT one of the principles commonly found in companies that have successfully embraced the total quality management (TQM) philosophy? Building an organizational commitment to quality Enhancing the philosophy that mistakes, defects, and poor-quality materials are not acceptable Allowing more time for supervisors to work with employees Training employees in appropriate skills for the job Defining work standards only in terms of numbers or quotas

Defining work standards only in terms of numbers or quotas

Americans are currently living longer now than in the past because of advances in medicine. As a result, the sale of products that meet the needs of older individuals, such as devices that assist in walking and movement, have increased. In the context of an industry's macroenvironment, age is considered which type of force? Technological Demographic Social Political Legal

Demographic

Which of the following is NOT a way that standards can emerge in an industry? Lobbying the government to mandate an industry standard when the benefits of establishing a standard are recognized Emerging rules and regulations about resource use and worker safety Government- or association-set standards fall into the public domain Market demand Industry association between cooperating businesses without government assistance

Emerging rules and regulations about resource use and worker safety

Which of the following cognitive biases occurs when decision makers commit even more resources to a project after they receive feedback that the project is failing? Prior hypothesis bias Reasoning by analogy Illusion of control Escalating commitment Representativeness

Escalating commitment

Which of the following statements about government regulations in the context of entry barriers of an industry is true? Government deregulation in an industry results in significant reduction in competition. Government regulation is not a major entry barrier for any industries. Falling entry barriers due to government deregulation results in higher competition and lower industry profit rates. The threat of new entrants is reduced when the government deregulates an industry. Companies that enjoy brand loyalty and have significant scale economies are the ones who face major threat of competition due to government deregulation.

Falling entry barriers due to government deregulation results in higher competition and lower industry profit rates.

Research suggests that the adoption of which of the following may increase efficiency and lower unit costs relative to what can be achieved by the mass production of a standardized output? Just-in-time manufacturing Quick technology Flexible production technologies Stable production Unscheduled manufacturing

Flexible production technologies

Jordan's Ice Creams is strategically located near a university. After realizing that most of its customers, who are mostly students, prefer a wide range of flavors, it started offering different combinations of premium flavors, cones, and toppings to create hundreds of extravagant, customized products. Which generic business-level strategy is Jordan pursuing? Broad low-cost strategy Broad differentiation strategy Focus low-cost strategy Focus differentiation strategy Product substitution strategy

Focus differentiation strategy

Dave's Construction Company conducted a SWOT analysis which resulted in a need to implement business strategies that increase customer awareness and widen their customer base through better customer service to gain a competitive advantage in their industry. Which of the following business strategies would this describe? Functional-level strategies Business-level strategies Global strategies Corporate-level strategies None of the strategies are correct.

Functional-level strategies

Which of the following factors of a product tends to accelerate customer demand for it? High observability Minimum relative advantage High complexity Minimal value Low trialability

High observability

Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks. In which value-chain activity does Mike work? Research and development Human resources Materials management Production Company infrastructure

Human resources

Which of the following are primarily the digital systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries? Information systems Logistics Corporate infrastructure Marketing and sales Materials management

Information systems

Which of the following is NOT a reason why innovation is the primary source of competitive advantage? Innovation brings new products better suited to meet customer needs. Innovation improves the quality of existing products. Innovation raises the cost of production. Innovation can allow companies to differentiate its products. Innovation can allow companies to lower their cost structure below its rivals.

Innovation raises the cost of production.

WKL Entertainment Inc. is a service-based firm with very few competitors. The company is looking to sell the same basic product services in different nations and charge a relatively high price for it. WKL does not face direct competitors, so the company does not have to deal with strong pressures to minimize its costs. Which of the following strategies should WKL Entertainment Inc. managers pursue? Global standardization Transnational Localization International Multinational

International

Which of the following is NOT a benefit of rapid response time? It can help gain competitive advantage over rival companies. It strengthens brand loyalty. It decreases the amount the company can charge for products. It allows for differentiation of product offerings. It gives the opportunity for a company to charge a premium price.

It decreases the amount the company can charge for products.

Which of the following is a disadvantage of franchising? It doesn't ensure consistent product quality. It hinders companies ability to engage in differentiation. It involves high development costs and risks. It enables the company to collect all the profits made by the franchisees. It frees companies from the task of monitoring and assisting operations at franchisees.

It doesn't ensure consistent product quality

Which of the following statements about a SWOT analysis is true? It does not encompass the analysis of an organization's external environment. It essentially results in the generation of a single strategy that deals with one internal function of an organization. It does not encompass functional-level strategies directed at improving the effectiveness of operations within a company. It essentially produces strategies that are incongruent with each other. It is a methodology for choosing between competing business models.

It is a methodology for choosing between competing business models.

Which of the following is NOT considered a benefit of industry analysis? It can be a powerful tool to aid in a manager's strategic thinking. It recognizes how competitive forces are isolated and do not impact each other. It stimulates systematic thinking about strategic choices. It makes it easier to identify opportunities and threats within an industry. It can result in profitable changes to existing strategies.

It recognizes how competitive forces are isolated and do not impact each other.

What is a consequence of the lack of integration between Research & Development (R&D) and production when innovating new products? Lack of integration lowers manufacturing costs and leaves less room for error. Lack of integration helps lower development costs and speed products to market Lack of integration ensures that products are designed with manufacturing requirements in mind. Lack of integration lowers costs and increases product quality. Lack of integration can lead to increases in time to market and development costs due to redesigns.

Lack of integration can lead to increases in time to market and development costs due to redesigns.

When dealing with a declining industry, which of the following strategies should be used if a company has distinctive strengths that allow it to capture market share or if the speed of decline and the intensity of competition is moderate? Divestment Harvest Price signaling Leadership Capacity control

Leadership

Which of the following is NOT a role played by infrastructure leadership in implementing reliability improvement methodologies? Providing leadership and commitment quality Finding ways to manage quality Setting goals and creating incentives Soliciting input from employees Lengthening production runs

Lengthening production runs

Nutrimax Corp., a breakfast cereal company, has designed extensive and elaborate advertising campaigns for its existing products. The campaigns mainly focus on the features and benefits of the products that differentiate the cereals from the competition. Nutrimax Corp. is most likely to be using which of the following strategies? Market penetration Product development Product proliferation Market development Capacity control

Market penetration

Demand reaches total saturation in which of the following stages of the industry life cycle? Embryonic Growth Shakeout Maturity Decline

Maturity

Which of the following factors increases pressures for cost reductions? Meaningful differentiation between products Reduced international competition Competitors that are based in high-cost locations High switching costs Persistent excess capacity

Persistent excess capacity

Due to a recent relaxation in the pollution control laws by the government, Alpha Motors has reduced the production of its electric-powered cars. The company is responding to a change in which of the following macroenvironmental forces? Macroeconomic Demographic Political and legal Social Global

Political and legal

Which of the following is a reason for the higher barrier to imitation for a company's that possesses rare and valuable process knowledge? Process knowledge is often hidden from view within the firm and socially complex. In most companies, employees have a complete understanding and direct access to the process knowledge of the firm. Individuals hired by rival firms are able to provide a complete picture of a company's process knowledge due to their overall knowledge base. By making small changes to the way a firm operates, implementation of a rival firm's process knowledge is relatively easy to achieve. Rival organization's employees who possess the power and influence to implement change are often driven to appropriate another firm's process knowledge.

Process knowledge is often hidden from view within the firm and socially complex.

Which of the following is true about rareness and advanced factors of production? Process knowledge, organizational architecture, and intellectual property are more difficult to imitate which results in a better chance in achieving long-term, sustainable competitive advantage. Intellectual property is the only advanced factor of production that is unique enough to capture long-term, sustainable competitive advantage. Since most process knowledge and organizational architecture is purchased from outside providers, it can be copied by other firms and does not lead to the rarity necessary to result in long-term, sustainable competitive advantage. Advanced factors of production are not able to capture the uniqueness that basic factors of production can achieve and therefore do not factor into the pursuit of long-term, sustainable competitive advantage. Advanced factors of production are less likely to be rare and are in general easier for rivals to imitate resulting in the inability for firms to achieve long-term, sustainable competitive advantage.

Process knowledge, organizational architecture, and intellectual property are more difficult to imitate which results in a better chance in achieving long-term, sustainable competitive advantage.

Ray, a toymaker, knits a stuffed unicorn for Belle. Which function of the value chain is illustrated in this scenario? Marketing and sales Distribution Research and development Production Customer service

Production

Which of the following correctly describes the events that occur as an industry experiences a technological paradigm shift? R&D investments in a new technology tend to yield rapid improvements and increasing returns, inflection point, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, technology starts to approach its natural limit, research attention turns to possible alternative technologies Inflection point, R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, technology starts to approach its natural limit, research attention turns to possible alternative technologies Technology starts to approach its natural limit, research attention turns to possible alternative technologies. inflection point, R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, inflection point, research attention turns to possible alternative technologies, technology starts to approach its natural limit Technology starts to approach its natural limit, inflection point, R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, research attention turns to possible alternative technologies

R&D investments in a new technology tend to yield rapid improvements and increasing returns, inflection point, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, technology starts to approach its natural limit, research attention turns to possible alternative technologies

Libra Electronics has invented a new technology to make laptops that are extremely lightweight and unbreakable. The company is advertising aggressively and wishes to create demand for its new range of laptops. To attract customers, the company has priced the laptops attractively. However, to earn a profit, the company has priced the batteries required for the laptops extremely high. Which of the following is illustrated in this scenario? Downsizing strategy Harvest strategy Razor and blade strategy Divestment strategy Switching costs

Razor and blade strategy

Which of the following correctly pairs the function with its role in defining product excellence? Human Resources: Manufactures to continually upgrade the quality of the attributes that are designed into the company's product offerings. Marketing: Collects marketing information in order to determine which attributes are important to customers and helps create the perception of high quality. Research and Development: Creates and innovates to meet the continuous product improvements made by competitors. Production: Trains personnel so that the appropriate attributes are emphasized during design creation. Infrastructure (leadership): Tailors the message so that it creates a consistent image in the minds of customers.

Research and Development: Creates and innovates to meet the continuous product improvements made by competitors.

Which of the following refers to the investment that shareholders make in a company that cannot be recovered if the company fails and goes bankrupt? Profitability Shareholder value Debt Risk capital Return on invested capital

Risk capital

Lilly's Beauty Company sells general haircare products such as shampoo, conditioner, and hairspray. The company does not sell new or customized products to meet the specific needs of certain groups of people. Which of the following approaches is illustrated in this scenario? Standardization strategy Focus strategy Medium market segmentation strategy High market segmentation strategy Focus market segmentation strategy

Standardization strategy

Which of the following costs arise when a customer invests time, energy, and money shifting from the products offered by one established company to the products offered by a new entrant? Overhead Incremental Marginal Opportunity Switching

Switching

Which of the following is a source of competitive advantage for a company and is the basis for the product differentiation that tends to dominate the industry? Paradigm shift First mover Public domain Technical standard Dominant design

Technical standard

Adam's boss tells him that their company is pursuing the strategy of horizontal integration. Which of the following is true of this scenario? The company will acquire one of its suppliers. The company will buy or merge with one of its rivals. The company will begin to distribute its own products. The company will change the organizational structure to make it increasingly flat. The company will merge with another company that belongs to a different industry.

The company will buy or merge with one of its rivals.

What makes up the competitive structure of an industry? Market segments The number and size distribution of companies The number of consumers The number of manufacturing plants The quality of products produced

The number and size distribution of companies

Which of the following is NOT a reason for fragmentation? Lack of scale economies may mean that there are few, if any, cost advantages to large size. There is no established brand loyalty in the market segment. The lack of scale economies and national brand loyalty often implies low entry barriers. The company is specialty company that operates in local or regional markets or is focused on specialized or custom-made products. Brand loyalty in the industry may primarily be local.

There is no established brand loyalty in the market segment.

Which of the following is NOT a characteristic of well-constructed goals? They are precise and measurable. They are lengthy and wordy. They specify a time period in which the goals should be achieved. They are challenging but realistic. They address crucial issues.

They are lengthy and wordy.

Which of the following statements about nonprofit organizations is true? They compete for scarce resources, just as businesses do. Their priority is to maximize shareholder value in order to attract risk capital. Their managers do not need to develop careful strategies, because making a profit is not the organization's goal. They do not have to worry about exceeding budgets. They seldom set any performance goals like profit-seeking organizations.

They compete for scarce resources, just as businesses do.

Which of the following statements about embryonic industries is true? They are characterized by very a high initial customer demand. They are characterized by well-developed distribution channels. They involve low production costs because of large volumes of production. They face the challenge of educating customers who are not familiar with their product benefits. They enjoy the abundance of complementary products that help increase sales.

They face the challenge of educating customers who are not familiar with their product benefits.

Which of the following statements about fragmented industries is true? They are usually characterized by large, mass-production operations. They essentially enjoy a national brand loyalty. They require companies to use focus strategies to meet specialized customer needs. They do not attract new entrants as they have extremely high entry barriers due to economies of scale. They are usually dominated by one or two large companies that enjoy the power to influence industry prices.

They require companies to use focus strategies to meet specialized customer needs.

Which of the following is a disadvantage of first movers? They cannot establish significant brand loyalty due to high costs. They cannot create switching costs for their customers, thus making it difficult to enter the market. They decrease sales volume compared to their rivals, and thus operate at a loss. They run the risk of building the wrong resources and capabilities. They do not have the power to exploit network effects and positive feedback loops

They run the risk of building the wrong resources and capabilities.

Which of the following statements correctly describes potential competitors in an industry? They threaten the profitability of established companies. They are usually encouraged by established companies. They find it easier to enter an industry when the entry barriers are high. They find it easier to enter an industry when established companies have economies of scale. They usually have an absolute cost advantage over established companies.

They threaten the profitability of established companies.

Company A has a product that hasn't hit the market yet but has already constructed efficient manufacturing facilities and has lowered costs through learning effects. It has a marketing team in place that has initiated an aggressive advertising campaign with sales promotions that have stimulated demand for the product and accumulate sales volume. Which of the following is true of Company A? This strategy would help Company A move down the experience curve quickly. This strategy would hinder Company A's move down the experience curve and allow rival companies to have a cost advantage. This strategy would allow Company A to decrease product volume and market share. This strategy would not allow Company A to reach superior efficiency. This strategy would enable Company A to ride up the experience curve and gain a competitive advantage over its rivals.

This strategy would help Company A move down the experience curve quickly.

Which of the following market growth factors that accelerates customer demand allows customers to experiment with a new product during a hands-on trial basis? Complexity Relative advantage Compatibility Trialability Observability

Trialability

Return on invested capital (ROIC) is a measure of how efficiently and effectively managers use the capital at their disposal to produce profitability.

True

Strategic leadership is concerned with how to most effectively manage a company's strategy-making process to create competitive advantage.

True

The term value chain refers to the idea that a company is: one of a series of units that comprise an industry segment. the producer of a series of customer-valued products that are linked together. a chain of functional activities that transform inputs into products. one of a series of economic functions. a collection of various products and their attributes.

a chain of functional activities that transform inputs into products.

Focus strategy can be defined as the strategy: of merging with an established company to gain monopoly over the market. a company uses when it decides to allocate the company resources equally among all the marketing segments. a company uses when it decides to serve a limited number of segments, or just one segment of the market. a company uses when it decides to ignore the different needs of different market segments to produce one standardized product for all the customers. of closing one or more business units in order to minimize the losses.

a company uses when it decides to serve a limited number of segments, or just one segment of the market.

SparklingLeaves is one of the major suppliers of automobile tools to StanMotors, a leading automobile company. Many of the tools are customized to meet the specific needs of StanMotors and hence have little other value. In return, StanMotors has agreed to make SparklingLeaves its sole supplier of automobile equipment for a period of 15 years. This scenario illustrates: horizontal integration. a credible commitment. competitive bidding. vertical integration. parallel sourcing.

a credible commitment.

Economies of scale can arise from: cost reductions gained through decreased production. high prices on bulk purchases of raw material inputs and component parts. an advantage gained by spreading fixed production costs over a large production volume. increased spending on marketing and advertising activities. poor production operations.

an advantage gained by spreading fixed production costs over a large production volume.

Strategy formulation refers to: executing corporate- and business-level plans. putting strategies into action. designing organizational structures and control systems. implementing emergent strategies. analyzing an organization's external and internal environments and then selecting appropriate strategies.

analyzing an organization's external and internal environments and then selecting appropriate strategies.

Customer response time is the time it takes for: value to be placed on a company's products by customers. development of a new process for producing products and delivering them to customers. given inputs to be converted into an output. development of products that have superior attributes to existing products. a good to be delivered or a service to be performed.

a good to be delivered or a service to be performed.

Compared to a differentiator, the company that follows a low-cost strategy: distinguishes its products from those of rivals by offering something that they find hard to match. absorbs cost increases by powerful suppliers while keeping to their lower pricing. allows the company to charge a premium price for its good or service, should it choose to do so. uses perceived superior value to generate growth in demand among customers. creates entry barriers for rivals with greater brand loyalty to the specific products offered.

absorbs cost increases by powerful suppliers while keeping to their lower pricing.

The concept of efficiency as a building block of competitive advantage applies to: all products produced by a firm. only those products that consumers believe to be high quality. only those products of a firm popular among a large customer base. custom-made products only. only those products that have been redesigned.

all products produced by a firm.

Factors leading to the slow growth of demand for products in embryonic industries include all of the following EXCEPT: the poor quality of the first products. a lack of complementary products. customer passion for the products. high production costs. poorly developed distribution channels.

customer passion for the products.

A market segment consists of a group of: similar products. customers who have similar needs. products that are considered obsolete. diverse products produced by the same manufacturer. customers who have diverse needs.

customers who have similar needs.

Differentiation allows a company to: respond to demands of deep price demands from powerful buyers and still make money. lower its cost structure. charge a premium price for its good or service, should it choose to do so. charge low prices and still make profits. initiate a price war to grow volume and drive its weaker rivals out of the industry.

charge a premium price for its good or service, should it choose to do so.

The first component of the strategic management process is: crafting the organization's mission statement. coming up with a damage control plan. analyzing the macroenvironment. determining the firm's employee turnover rate. deciding on a fit between the organization's strengths and weaknesses and the environment's opportunities and threats.

crafting the organization's mission statement.

The extent of rivalry among established companies is lowest when: the industry's product is a commodity. demand is growing rapidly. exit barriers are substantial. the industry is entering a decline stage. the fixed costs are high.

demand is growing rapidly.

The scenario approach to strategic planning involves: devising plans for coping with several different possible future states of the world. designing the best organizational structure and the best culture and control systems to put a chosen strategy into action. functional-level managers setting key corporate objectives. anticipating the reoccurrence of problems that were previously encountered and designing solutions accordingly. designing plans for problems that the company believes it will most certainly face in the immediate future.

devising plans for coping with several different possible future states of the world.

Common exit barriers include all the following EXCEPT: emotional attachments to an industry. high fixed costs associated with leaving an industry. bankruptcy regulations that keep unprofitable assets in the industry. economic independence because a company is able to rely on a single industry for its entire revenue and all profits.

economic independence because a company is able to rely on a single industry for its entire revenue and all profits.

When a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should: license the innovation to others. enter into a joint venture to protect the product. lower the barriers for imitation. sell the technology outright to another firm. wait until competitors develop an alternative product.

enter into a joint venture to protect the product.

The intensity of competition is greater in declining industries in which: the industry is declining slowly instead of rapidly. the product is easy to differentiate. exit barriers are high. entry barriers are high. technology is stable.

exit barriers are high.

Self-managing teams: are limited to only very large organizations. require members to coordinate their own activities and make decisions. typically increase the need for supervisors. create a tall organizational structure. show negligible increase in productivity and substantial decrease in product quality.

require members to coordinate their own activities and make decisions.

Cost of goods sold is reported on the: balance sheet. financial position statement. cash budget. income statement. overhead expense statement.

income statement.

Mature industries generally adopt all of the following strategies and tactics EXCEPT: protecting their competitive advantage. moderating the intensity of industry competition. preserving both company and industry profitability. deterring entry into an industry. increasing the level of rivalry within an industry.

increasing the level of rivalry within an industry.

Mass customization: limits a company's ability to customize products. reduces the use of individual machines and hinders quality control at all stages of the manufacturing process. increases the setup times for complex equipment. is the use of technology to produce large quantities of standardized outputs. is a company's ability to reconcile low cost and differentiation.

is a company's ability to reconcile low cost and differentiation.

A consolidated industry structure: consists of several small companies or medium-size companies, none of which is positioned to determine industry price. constitutes a threat rather than an opportunity. is dominated by a small number of companies or, in extreme cases, by just one company, and such companies often are positioned to determine industry prices. provides no scope for an oligopoly to exist. is characterized by low-entry barriers and commodity-type products.

is dominated by a small number of companies or, in extreme cases, by just one company, and such companies often are positioned to determine industry prices.

When conducting an internal analysis, a manager must do all of the following EXCEPT: look at the way in which forces in the macroenvironment affect industry structure and influence opportunities and threats. understand the role of rare, valuable, and hard-to-imitate resources in the establishment of competitive advantage. appreciate how rare, valuable, and hard-to-imitate resources lead to superior efficiency, innovation, quality, and customer responsiveness. analyze the sources of their company's competitive advantage to identify what drives the profitability of their enterprise. analyze the sources of their company's competitive advantage to identify where opportunities for improvement might be.

look at the way in which forces in the macroenvironment affect industry structure and influence opportunities and threats.

Unlike traditional manufacturing, flexible manufacturing: decreases efficiency. lowers unit costs. limits an organization's ability to customize products. allows the production of only standardized products. limits an organization's ability to offer greater product variety.

lowers unit costs.

Benchmarking can be defined as the practice of: monitoring activities related to the design, creation, and delivery of a product, its marketing, and its support and after-sales service. developing products that are new to the world or have superior attributes to existing products in the market. measuring the time that it takes for a good to be delivered or a service to be performed. measuring how well a company is doing by comparing it to another company, or to itself, over time. analyzing the financial position of a company and creating the income statements and the balance sheets.

measuring how well a company is doing by comparing it to another company, or to itself, over time.

An adequate supply of complements to a product can result in: more customers opting for the product. higher switching costs. a significant decrease in sales of the product. a significant decrease in customer demand for the product. the company failing to win a format war.

more customers opting for the product.

Ted is an accountant at ABC Company. He calculates the difference between total revenues and total costs before tax. Ted calculates the: net profit. capital turnover. cost of goods sold. return on sales. invested capital.

net profit.

The simplest measure of efficiency is the: amount of money the company budgets for work in the short term. ratio of revenues divided by invested capital. net profit expressed as a percentage of sales. total costs of producing products. quantity of inputs required to produce a given output.

quantity of inputs required to produce a given output.

Global economies of scale can be realized by: restricting the expansion of overseas sales. limiting the utilization of production facilities. curbing bargaining power with suppliers. decreasing cost savings through learning effects. spreading the fixed costs associated with developing a product.

spreading the fixed costs associated with developing a product.

Horizontal integration may be thought of as: moving into a new unrelated industry. giving control to suppliers. gaining control of distributors. staying inside the industry in which the company currently operates. combining functional units within the company.

staying inside the industry in which the company currently operates.

As a barrier to new entry, absolute cost advantages can be based on: continuous advertising of brand and company names, and product innovation achieved through research and development. high product quality, service-oriented innovations, and good after-sales service. cost reductions that arise from the mass production of standardized output. the unique ability of established companies to spread fixed costs over a large volume. superior production operations and processes due to accumulated experience, patents, or trade secrets.

superior production operations and processes due to accumulated experience, patents, or trade secrets.

Entry barriers in embryonic industries tend to be based on: brand loyalty. economies of scale. absolute cost advantages. regulatory advantage. technological knowhow.

technological knowhow.