WPC 480

Which of the following statements with regard to determining firm performance is true?

External analysis will help understand the industry effects that determine a firm's performance.

Which of the following statements about competitive advantage is not true?

A firm's competitive advantage is always absolute, not relative.

Which of the following is a feature of a fragmented industry?

A fragmented industry consists of many small firms.

Aura Software Inc. has been operating in the country of New Fernsland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Aura Software Inc.?

Aura Software Inc. will have better access to highly skilled human capital at a lower cost.

is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it.

Consumer surplus

Which of the following explains how dynamic capabilities are different from the resource-based view?

Dynamic capabilities deal with applying resources over time.

Which of the following statements is true of the Level-5 leadership pyramid?

Each level of leadership builds upon the previous one in the pyramid.

Which of the following statements about the five forces in the U.S. airline industry is true?

Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?

They can demand better terms from their suppliers.

Which of the following statements is true of customer-oriented visions?

They define a business in terms of providing solutions to people's needs.

How do complements affect a primary product or service?

They increase the demand for the primary product.

Which of the following statements accurately brings out the difference between an organization's vision and mission?

Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished.

When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?

What intangible assets do we need?

Which of the following statements related to a firm's stakeholders is not true?

While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities?

While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

The tenet behind the triple bottom line is that

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

Which of the following forces are most closely related to firm effects within a pharmaceutical industry?

the strategic actions taken by managers of a firm in the industry

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ___________ emerged as a consequence of the firm's resource allocation process.

bottom-up strategy

For an asset or a capability to be included in a firm's resource stock, it should be

built through investments over time.

How has Threadless staked out a unique strategic position?

by providing customers a voice in product design

Strategic group mapping establishes that

competitive rivalry is strongest between firms that are within the same strategic group.

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?

decreasing government interference in the target market

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the

efficient-market hypothesis.

In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by

eliminating an internal weakness to mitigate an external threat.

The metaphor of a black swan best applies to

events that are considered highly unexpected and highly impactful when they do occur.

The greater the difference between value creation and cost, the

greater a firm's economic contribution.

The relative bargaining power of suppliers is most likely low when

incumbent firms face low switching costs when changing suppliers.

A firm's _____ is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy.

intended strategy

If a company has 25 million shares outstanding, and each share is traded at $400, the ______ is $10 billion.

market capitalization

However, each restaurant makes its product unique by offering a different cuisine, a different ambience, or different services like home delivery and organic ingredients. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)

monopolistically competitive structure.

According to the upper-echelons theory,

organizational outcomes reflect the values of the top management team.

A firm is likely to have a competitive advantage when it

provides services that consumers will value more than those of its rivals.

Which of the following financial ratios typically indicates a company's efficiency in extending credit, as well as collecting debts?

receivables turnover

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

research and development

A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. In this scenario, the $20,000 would most likely be referred to as the firm's

resource flow.

A consolidated industry turns into a fragmented industry when

restrictive government policies are introduced in the industry.

Product-oriented vision statements provide managers with

service goals.

Which of the following is an example of a firm's capabilities?

skills involved in training and managing a workforce

The black swan events in the past have demonstrated that

stakeholders can affect or be affected by a firm's actions.

Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period of time?

sustainable competitive advantage

Which of the following would be most likely to directly put an organization like BP at a major competitive disadvantage

the Environmental Protection Agency (EPA) banning BP from any new contracts with the U.S. government

Which of the following will most likely be considered as an automobile company's core competency?

the company's ability to make its cars more fuel efficient than most of its competitors

Which of the following companies would most likely benefit from an economic recession?

Fast Chow Inc., which specializes in selling low-cost Asian food

Which of the following questions does the values espoused by a company primarily answer?

How do we accomplish our goals?

Which of the following questions would a firm's business strategy ideally answer?

How to compete?

Which of the following is not a disadvantage of the balanced scorecard approach?

It fails to allow managers to prepare the company for future growth.

Revved Rider Inc., a motorcycle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Revved Rider Inc. from this scenario?

It has a competitive advantage over the other firms.

Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance?

It provides only limited guidance about which performance metrics to choose.

In the financial year 2014, Apple's return on revenue was 29.30 percent, and Microsoft's return on revenue was 32 percent. This implies that

Microsoft's return on revenue was higher than that of Apple.

Using the _______, managers can see how competitive advantage flows from a firm's distinct set of activities.

value chain analysis

A company's vision primarily states

what the company wants to accomplish ultimately.

Which of the following is a philanthropic responsibility of a firm?

corporate citizenship

Higher ratios of receivables turnover indicate

shorter durations of interest-free loans to customers.

Evaluating the data collected from environmental analysis, the corporate executives of F&S Pharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate?

top-down strategic planning

Which of the following statements does the upper-echelons theory support?

Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained?

GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

intellectual property.

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is

is best described as the amount that savers are paid for use of their money and the amount that borrowers pay for that use.

Interest rate

Larry has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Larry is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Larry is currently at _____ of the Level-5 leadership pyramid.

Level 4

$600 per unit, the economic value created by BrightWave Inc. is more than that of MQ Electronics Inc. In the context of this scenario, which of the following statements is true?

BrightWave has a relative cost advantage over MQ Electronics.

FL Systems Inc. and Oryxo Systems Inc. are two competing firms. FL Systems Inc. has $300,000 in tangible assets and $200,000 in intangible assets. Oryxo Systems Inc. has $150,000 in tangible assets and $347,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies?

FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage.

Quick Eats is a fast-food restaurant that has recently entered the hospitality industry. Since most of its competitors are pursuing a low-cost position and doing well, Quick Eats also wants to adopt the same strategy. Which of the following will be a likely implication of this decision?

Quick Eats will face low profit potential.

The annual net profit after taxes for RSL Corp., a multinational conglomerate, is $5.5 billion. As legal owners, which of the following stakeholder groups has the most legitimate claim on this profit?

Shareholders

The payables turnover of Tesva Automobiles Inc. is 8.2, and that of its competitor, Mova Automobiles Inc., is 18.4. What does this financial data indicate?

Tesva Automobiles will be more efficient than Mova Automobiles in generating interest-free loans from suppliers.

Why are black swan events often bad for business?

They erode the implicit trust between the corporate world and society.

n a perfectly competitive industry structure

any competitive advantage that one firm has will be short-lived.

According to the Level-5 leadership pyramid, the Level 2 manager is a(n)

contributing team member.

When Osion Inc. demands lower prices for the microprocessors, Red Think Inc. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from Red Think Inc., Osion Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, Red Think Inc., as a supplier, has exercised its bargaining power by threatening to

forward integrate.

Chat Room is an instant messaging mobile application. Initially, users were not charged. However, after a period of six months, the users had to pay for a fee to use the upgraded version of the application with advanced features. Which of the following business models does this best illustrate?

freemium

Spark Electronics Inc., One Digital Inc., and Esco Products Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from the same set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n)

industry.

Which of the following is a stakeholder attribute that managers should consider at every step in a stakeholder impact analysis?

legitimacy

An organization's ____________ describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete.

mission

Even though Easy Speak Inc. and KM Com Inc. operate in the same industry—telecommunications—each firm has a different and loyal customer base. While Easy Speak Inc. attracts young students and professionals through its efficient network coverage and pricing, KM Com Inc. attracts elderly customers solely due to its excellent customer service. Thus, both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate

resource heterogeneity

When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in

trade-offs that work against each other.

Blue Ace Autos Inc. and Ferdova Autos Inc. are two competing automobile companies. While Blue Ace Autos' Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Ferdova Autos is 54.2 percent. What do you infer from this financial data?

Blue Ace Autos is less efficient than Ferdova Autos in producing goods.

The inventory turnover of Murdock Apparels Inc. is 102.6, and that of Lyons Couture Inc., a competitor, is 15.6. What do you infer from this financial data?

Murdock Apparels has lesser capital tied up in its inventory than Lyons Couture.

describe the positive externality that one user of a product or service has on the value of that product or service for other users

Network effects

Restrictions imposed by the government, such as export quotas on certain products, are a part of the _______ environment of the PESTEL framework.

Political

is best described as the behaviors and styles of executives that influence others to achieve an organization's vision and mission.

Strategic leadership

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication?

The company will tend to be more flexible when adapting to changing environments.

Which of the following statements will effectively guide a strategist?

The principles of strategic management can be applied universally to all organizations.

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage?

The resource is costly to imitate.

Which of the following has contributed to Twitter's loss of a competitive advantage?

Twitter does not allow advertisers to target their online ads precisely enough.

In the context of the VRIO framework, a resource is said to be valuable if it

allows a firm to take advantage of an external opportunity.

A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy

analysis.

Which of the following groups is most likely to be considered a firm's internal stakeholder?

board members

The board of directors of Best Digital Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate?

corporate strategy

The sum of consumer surplus and producer surplus for a good or service equals the

economic value created.

Widgets Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Widgets Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Widgets Inc. is a(n) _____ for the appliance manufacturing company.

external stakeholder

3 Owners of coffee plantations in the country of Matterstein grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from each other. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Matterstein best illustrates a(n)___ structure.

perfectly competitive

Economic contribution is created when the

price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

Which of the following groups will not be considered a company's internal stakeholder?

suppliers

The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment?

the company's brand equity

Which of the following actions of an automobile firm will be considered as a strategic commitment?

the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing and it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to

time compression diseconomies.

As the chief executive officer (CEO) of Yahoo, Marissa Mayer declared Yahoo's vision to be "to make the world's daily habits more inspiring and entertaining." She wants to inspire Yahoo's employees and get its customers excited again. Which of the following approaches to the development of strategy does Yahoo best illustrate?

top-down strategic planning

The _____ describes the internal activities a firm engages in when transforming inputs into outputs.

value chain view

Univo Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?

$200

By selling a television at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario?

$600

Which of the following statements is true of strategy?

Actions that allow a firm to address a competitive challenge are strategy.

A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, invoicing customers.

Activities

Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of more political than economic considerations?

Airbus was created by a number of European governments through direct subsidies in order to provide a countervailing power to Boeing.

Which of the following statements is true of an oligopoly?

An oligopoly is often analyzed using game theory.

Which of the following is an advantage of accounting data?

Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.