Test #1 Strategic
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."
Which of the following best qualifies as a firm's internal stakeholder?
A manager taking care of the firm's operations in a foreign market
Golden Harvest is a restaurant located inside a five-star hotel. It caters mainly to customers who are concerned about quality dining rather than the prices. In this scenario, which of the following will be a part of Golden Harvest's strategic group?
A premium rooftop restaurant in the same city
According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were
According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were
Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply?
Bass Automobiles Inc. faced resource leakage
Which of the following factors most contributes to the U.S. automotive industry being characterized by high entry barriers?
Car manufacturers require large-scale production in order to be cost-competitive.
To help a firm achieve a competitive advantage, activity performed in the value chain needs to:
Contribute to the firm's strategic position
Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Cloud Cones best exemplifies a
Core competency
The first step in the strategic management process is to
Define a firm's vision, mission, and values
Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario?
Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.
Any unplanned strategic initiative undertaken by mid-level employees of their own volition.
Emergent strategy
XZY incurs higher costs because of its refuses to use child labor. This reflects XZY's
Ethical responsibility
In the AFI strategy framework, strategy analysis primarily involves
Evaluating the effects of internal resources and core competencies on a firm's potential to gain and sustain a competitive advantage
Esturo is a management consultant. Baker Corp asks him to evaluate their company, and he finds that the difference between the cost of producing the firms products and the value of those products is extremely narrow. What should Esturo suggest Baker Corp management do?
Find a way to widen the gap between cost and value.
Pioneer Pharma Inc. and GH Medicines Corp. are two competing firms in the pharmaceutical industry. While Pioneer Pharma Inc.'s vision is "to be a preeminent drug manufacturer in the industry," GH Medicines Corp.'s vision is "to make good health a reality for everyone around the world." Which of the following is an implication of these different visions?
GH Medicines will be more flexible than Pioneer Pharma when adapting to changing environments.
Hannah is the Chief Operating Officer of the startup AppPalace. In which of the following scenarios does Hannah exhibit strategic leadership?
Hannah schedules a meeting with the manager of the marketing department and overcomes his skepticism about a new campaign aimed at customers in the 55+ age group. Over the next three months, AppPalace gains 250,000 new users in that group.
nVue, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, InVue's competitors have now begun to produce more-advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to the dynamic capabilities perspective, what should InVue do?
InVue should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment.
Which of the following does Twitter need to implement to increase its competitive advantage?
Increase its user base
With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as?
Industry convergence
Rachel owns GM Cube inc's stocks, but does not work for the company, Rachel is the company's
Internal stakeholder
Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats?
It created a perception that owning its products was cool.
GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information?
It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage.
Which of the following best exemplifies social complexity as an isolating mechanism?
Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success.
Strategic commitments are actions that are
Long-term oriented
Are best described as industry-specific factors that separate one strategic group from another.
Mobility barriers
Are best described as the value of the best forgone alternative use of the resources employed.
Opportunity costs
During an AFI planning session, the managers of the Fukuyama Motorcycle Corporation decided to place various stages of production in different countries in order to implement the strategy of cutting overhead costs. By doing this, what issue did the firm address?
Organizational design
Which of the following scenarios best illustrates a good stakeholder strategy?
PA Corp. distributes only 40 percent of its annual profit after taxes to shareholders, while the remaining is invested for further research, and distributed among employees and the local community.
Which of the following is an implication of high employee turnover in a company?
Results in a reduction of intangible resource stocks
Which of the following practices of a firm satisfies its ethical responsibilities?
Selling vaccines at a subsidized price in a less developed country even though this results in reduced shareholder returns
Which of the following is an element of good strategy?
Set of coherent actions to implement is guiding policy
A stand above division of a larger conglomerate with its own profits and loss responsibility.
Strategic business unit
During market testing, Sensation Cosmetics (SC) realized that the cosmetics industry was dominated by multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. SC management realized that a new entrant would require a different business model to be successful. Thus, SC started selling its products through direct marketing. In this scenario, Sensation Cosmetics accomplished substitution primarily through
Strategic equivalence
Hammer and Nails, Local Motion, DIY Palace, and Handy Paradise are all hardware stores that compete against each other through everyday low pricing and discounts on bulk purchases. All four stores cater to the needs of highly price-sensitive customers. This, together these stores form a
Strategic group
A traditional top-down strategic planning process typically begins with
Strategic leaders adjusting a company's vision and mission based on environmental analysis
A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this?
The company's organizational structure and systems will be designed to support bottom-up strategic initiatives
The "diagonal assembly system" was a production system pioneered by the automobile company Gogo. Recently, Gogo was able to sue a competitor and won the suit, thereby receiving $100 million in damages. Which of the following would most likely enable Gogo to win such a lawsuit?
The competitor infringed on Gogo's patent of the "diagonal assembly system"
Which of the following external forces is a part of a firm's task environment?
The composition of the strategic group to which the firm belongs
Which of the following methods of developing a strategy best illustrates scenario planning?
The managers at Lyon Clothing Inc. formulated a strategy that is able to handle small to medium to large increases in the prices of cotton in the future.
Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?
The overall industry profitability will increase
Kirsten, a manager, is writing an analysis of her employer's current and possible future revenues. Which of the following could she identify as an economic factor in her firm's external general environment?
The stage of the business cycle that the country is in
When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger?
The threat of substitues
When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because most of its competitors had already been in the laptop market for five years. Blue Tech Inc.'s models were inferior to the ones in the market. In this scenario, Blue Tech Inc.'s failure can be best attributed to A. causal ambiguity. B. diseconomies of scope and scale. C. time compression diseconomies. D. social complexity.
Time compression diseconomies
Which of the following is a customer-oriented vision?
To enable businesses to improve their employee communications
Molly Hue Apparels Inc. (MHA) had been outsourcing its production to less developed countries in order to reduce its cost of production. With the emergence if it's competitor, Hova Inc., MHA lost its competitive advantage. Hova had its production units in its home country that allowed the company to bring out the latest trends to the market earlier than MHA. Also, MHA frequently suffered due to political instability and lack of intellectual property laws in the outsourced countries. Thus, parts of MHA's strategies became obsolete and it had to relocate its production. What are such obsolete strategies referred to as in the planned emergence model?
Unrealized strategy
Which of the following features about a buyer indicates that the buyer has high bargaining power?
When the buyer operates in an industry where products are undifferentiated
You are a manager of Impromptu Printing, a leading print shop. Impromptu's resources include a highly experienced staff and state-of-the-art printing presses. However, your closest competition has started to cut into your market share by offering same-day turnaround on most orders. Although your staffing and equipment is not optimized for rapid production, you decide to start offering a same-day guarantee to your customers. According to the resource-based view, what is wrong with this decision?
You have failed to take into account resource immobility
Which of the following is an element of good strategy?
a set of coherent actions to implement the firm's guiding policy
Luz manages a chain of bars and restaurants in a tri-county area that has 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
A firm always has a competitive disadvantage when its return on invested capital is
below the industry average.
Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa Rica, where its main suppliers were located, would double in less than three years. This would significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans was able to maintain its profit margins in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate?
better expectations of future resource value
Value is determined by the perceived benefits a good or service provides to a
buyer.
What part of the AFI strategy framework does the question "How does the firm make money?" relate to?
competitive advantage, firm performance, and business models
Mainline Ltd. is a landline telephone manufacturer whose average return on invested capital is approximately 2 percent. Because demand for landline telephones has declined significantly, the industry average return on invested capital has been negative (-5 percent) for the last few years. In this scenario, Mainline Ltd. has a
competitive advantage.
To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to
contribute to the firm's strategic position as either low-cost leader or differentiator.
While creating its AFI strategy framework, Valdez Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?
corporate strategy
In the final step of the stakeholder impact analysis, a firm
decides a course of action to address the stakeholders' concerns.
The production head at the Omnitone Paint Company would frequently stay back after office hours and experiment with new color combinations even though this was part of the new product development team's job. As a result of these experiments, he came up with two new interior paint colors, foggy morning and mint julep. The new colors proved popular among test groups, and quickly became some of Omnitone's best-selling products. Which of the following strategies does this scenario best illustrate?
emergent strategy
In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because
entering the aircraft manufacturing industry requires huge capital investments.
Windmill Inc., a vendor, regularly supplies capacitors to Inland Electronics for use in its products. Therefore, Windmill Inc. is Inland Electronics'
external stakeholder
In the context of the resource-based model of competitive advantage, if a successful firm exhibits resource immobility it means that the
firm will have a sustained competitive advantage because of its unique resources that are difficult for others to replicate that are difficult for others to replicate.
When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?
perfect competition
Burke Furnishings is a company that manufactures and sells home furniture. It sources its materials from another country to keep costs low. An assembly line worker in one of its manufacturing centers noticed that there was increasing concern regarding the potential toxicity of the flame-resistant materials used in the furniture. In response, she compiled a list of nontoxic flame-resistant materials that the company could use. When her manager learned about this, he presented the prospect and got it approved from the top management team. This is an example of the
planned emergence approach.
Jake's Taxi Service is a new entrant to the taxi industry. It has achieved success by staking out a unique position in the industry. How did Jake's Taxi Service mostly likely achieve this position?
providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors
FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially lower than its competitors because of minimal investments in operation and administration. In this scenario, FindFor Inc. has most likely been able to provide superior value and cost control through
strategic positioning.
Online retailer NetShop had been drastically losing market share to its competitors. The management hired a reputed consulting firm to advise the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its poor customer service, including slow response times to customer inquiries and unclear return policies. These ineffective policies and procedures led to many disgruntled customers and a steady migration to more customer-friendly retailers. NetShop can best solve its problem by working on its
support activities.
The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment?
the punch presses that produce parts
Bubble Buddy is a company that manufactures hot tubs. Which of the following best illustrates a product-oriented vision for Bubble Buddy?
to be the pioneering manufacturer of hot tubs
The primary objective of Porter's five forces model is to
understand the profit potential of industries.
