475 CH 4, 475 CH 3, 475 CH 2, 475 CH 1

Anna bakes cookies for about $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: a. $5. b. $7.5. c. $10. d. $15. e. $25.

$5

Donna can make a chair for about $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: a. $50. b. $75. c. $125. d. $150. e. $225.

$75

Industry dynamism refers to: a. the gradual erosion of a company's customer base over time. b. shifts in product profitability. c. a rapidly changing industry environment. d. increasing per-unit costs. e. a company's difficulty in changing its strategies and structure.

A rapidly changing industry environment

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? a. Government regulations b. Inflation c. Manufacturing technology d. Age of the population e. Society's growing interest in exercise

Age of the population

The concept of efficiency as a building block of competitive advantage applies to: a. all products produced by a firm. b. products consumers believe to be high-quality; not low-quality. c. only those products of a firm popular among a large customer base. d. custom-made products only. e. only those products that have been redesigned.

All products produced by a firm

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

An advantage gained by spreading fixed production costs over a large production volume

Customer defection rates are: a. not directly related to unit cost. b. an indication of a company's ability to satisfy its customers. c. irrelevant as they are unlikely to impact advertising and marketing costs. d. unlikely to affect sales volumes. e. not affected by cost of products.

An indication of a company's ability to satisfy its customers

Learning effects: a. result in unit manufacturing costs increasing by a certain amount each time output is increased. b. suggest that production costs increase because of increasing labor productivity. c. are more significant when simple steps in an assembly process are performed over and over again. d. are more significant when a technologically complex task is repeated. e. lead to diseconomies of scale.

Are more significant when a technologically complex task is repeated

Just-in-time inventory systems: a. are used only by manufacturing firms. b. provide a buffer stock of inventory for a company. c. are used to reduce inventory holding costs. d. save costs by outsourcing inventory management to other companies. e. always keep extra inventory on hand for emergencies.

Are used to reduce inventory holding costs

More people seem to fear a snake bite than a dog bite, and yet statistically one is more likely to be bitten by a dog than by a snake. This is because people tend to estimate the probability of an outcome based on how easy the outcome is to imagine. This represents which of the following cognitive biases? a. Escalating commitment b. Hypothesis bias c. Availability error d. Representativeness e. Illusion of control

Availability error

Factors that make it difficult for a competitor to copy a company's distinctive competencies are known as: a. barriers to imitation. b. marketing know-how. c. technological know-how. d. support activities. e. capabilities.

Barriers to imitation

When Rollie's car wash began to lose business to rivals, Rollie read publications for car wash owners to learn the best practices in the industry. Then she implemented the best practices. Rollie is using ____ to improve her car wash. a. specialized assets b. benchmarking c. strategic commitments d. inertia e. the Icarus paradox

Benchmarking

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

Better quality leads to higher market share

When shopping for clothing such as shirts and jeans, Tyrone only buys products from Eastern Clothing Company even if there are several other companies that offer similar products at lower prices. Tyrone's preference for Eastern Clothing Company demonstrates: a. lack of demand. b. bargaining power. c. risk of entry. d. brand loyalty. e. lack of economies of scale

Brand loyalty

Resources: a. are only the tangible assets available to a company. b. can be both tangible and intangible. c. are harder for a company to copy than capabilities are. d. do not include patents, copyrights, and trademarks. e. are considered valuable only if they increase a company's costs.

Can be both tangible and intangible

A sector refers to a group of: a. government regulators. b. closely related industries. c. manufacturing plants of a company based in the same location. d. business units owned by a single firm. e. companies that manufacture similar products under different brand names.

Closely related industries

Systematic errors in the decision-making process are most often caused by: a. inadequate information. b. information overload. c. cognitive biases of decision makers. d. poor data collection procedures. e. the devil's advocacy method.

Cognitive biases of decision makers

Mike, the CEO of a retail chain, wanted to keep costs low. To set an example for others, he drove his own car and furnished his office with plain, metal desks. In this case, Mike was displaying: a. commitment. b. ego. c. astute use of power. d. devil's advocacy. e. autocratic leadership.

Commitment

An industry can be defined as a group of: a. companies offering products or services that are close substitutes for each other. b. manufacturing plants of a single company. c. different kinds of companies that are based in the same geographic location. d. companies that are different but generate similar amounts of revenues. e. brands that offer different products but are owned by a single firm.

Companies offering products or services that are close substitutes for each other

Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs. In which value chain activity do cost accountants work? a. Research and development b. Human resources c. Materials management d. Marketing and sales e. Company infrastructure

Company infrastructure

Which of the following dimensions is encompassed by a company's business model? a. Configuring resources b. Avoiding focus on acquiring new customers c. Reducing emphasis on product quality d. Maintaining high costs e. Restricting growth

Configuring resources

Which of the following trends has led to the fragmentation of many consumer markets? a. Self-managing teams b. Project management c. TQM d. Customization e. Increased response time

Customization

Roza Munoz oversees the overall operations of Maxwell Coffee House which is one of the divisions of Kraft Foods Company. Roza is also responsible for the overall performance of the business division. Which of the following is not likely to be one of Roza's responsibilities? a. Turning corporate-level strategy into action b. Defining Kraft Food's mission statement c. Deciding how to compete in the coffee industry d. Supervising functional-level managers e. Developing a business-level strategy

Defining Kraft Food's mission statement

Which of the following is not one of the principles commonly found in companies that have successfully embraced the TQM philosophy? a. Building an organizational commitment to quality b. Finding ways to measure quality c. Giving more time for supervisors to work with employees d. Training new employees e. Defining work standards only in terms of numbers or quotas

Defining work standards only in term of numbers or quotas

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

Demand is growing rapidly

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 a: a. technological force. b. demographic force. c. social force. d. political force. e. legal force.

Demographic forces

Research and development activities are concerned with: a. design of products. b. distribution of goods. c. customer services. d. analyzing financial performance. e. marketing of products.

Design of products

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

Devising plans for coping with a number of different possible future states of the world

A company's hiring strategy: a. directly affects employee productivity. b. has little effect on employee productivity. c. does not relate to profitability. d. is not part of the company's overall human resource strategy. e. upgrades an employee's skill level.

Directly affects employee productivity

____ refers to unit cost increases associated with a large scale of output. a. Economies of scale b. Learning effects c. Diseconomies of scale d. Flexible manufacturing e. Mass customization

Diseconomies of scale

Kodak possesses the leading imaging technology. This technology has allowed the company to differentiate its products from those offered by rivals. Imaging technology is Kodak's: a. distinctive competence. b. profit. c. support activity. d. value chain. e. retired product.

Distinctive competence

Feelings of personal responsibility for a project are most likely to lead to: a. prior hypothesis biases. b. escalating commitment. c. reasoning by analogy. d. representativeness. e. ivory tower planning.

Escalating commitment

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

Escalating commitment

Which of the following is not a characteristic of emotional intelligence? a. Self-awareness b. Self-regulation c. Escalating commitment d. Empathy e. Social skills

Escalating commitment

As an industry enters the shakeout stage: a. rivalry among companies declines. b. demand grows at a high rate. c. prices of products increase. d. excess productive capacity emerges. e. new entrants come into the market.

Excess productive capacity emerges

A group of firms all make tools for baking—pots, pans, measuring cups, and utensils. This group should be referred to as a market segment. a. True b. False

False

A resource is inimitable if competitors are able to copy it easily. a. True b. False

False

Although important, unfortunately, innovation plays a minor role in achieving competitive advantage. a. True b. False

False

Benchmarking is a practice in which a company's performance is compared against that of other companies in different industries. a. True b. False

False

Changes in the characteristics of a population, such as age or race, are irrelevant to the analysis of an industry's macroenvironment. a. True b. False

False

Customer focus in a function of only the lower levels of an organization. a. True b. False

False

Emergent strategies arise from within the company as a result of prior planning. a. True b. False

False

Functional strategies play only a small role in organizational success because they occur at a low level in the firm. a. True b. False

False

Internal analysis is concerned with identifying a company's opportunities and threats. a. True b. False

False

Learning effects tend to be more significant when a technologically complex task is performed only occasionally. a. True b. False

False

One of the factors that distinguish organizations in the nonprofit sector from profit-making businesses is the lack of a need for strategic management. a. True b. False

False

Production and materials-management functions need not be changed in response to unanticipated customer demands as they do not affect response time. a. True b. False

False

Quality-as-excellence and quality-as-reliability are concepts that apply to goods but not services. a. True b. False

False

Research finds that leaders who exhibit a high degree of emotional intelligence tend to be significantly less effective than those who do not. a. True b. False

False

Rules of thumb, or heuristics, always help to avoid severe and systematic errors in the decision-making process. a. True b. False

False

Sherree works at Dustcloud Manufacturing where she is part of a seven member team. Her team coordinates its own activities as well as makes its own hiring, training, work, and reward decisions. This type of team is referred to as a virtual team. a. True b. False

False

Six Sigma encompasses the activities necessary to get inputs and components to a production facility, through the production process, and out through a distribution system to the end user. a. True b. False

False

Starbucks and an independent local café are different in terms of their business techniques. They both sell coffee, and therefore belong to the same strategic group. a. True b. False

False

Strong brand loyalty and high customer switching costs are low barriers to entering an industry. a. True b. False

False

Substitute products are not a threat if a company is the market leader. a. True b. False

False

Successful innovation cannot transform the nature of industry competition. a. True b. False

False

The bottled water industry created new competitors for Coca-Cola, but it did not change the basic industry boundaries. a. True b. False

False

The concept of economies of scale suggests that unit costs continue to fall indefinitely as output volume increases. a. True b. False

False

The concepts vision and mission can be used interchangeably. a. True b. False

False

The final component of the strategic management process is crafting the organization's mission statement, which provides the framework or context within which strategies are formulated. a. True b. False

False

The mission of a company lays out some desired future state and articulates what the company would like to achieve. a. True b. False

False

The more commodity-like that an industry's product is, the lower the intensity of any price war that may develop. a. True b. False

False

The price a company charges for a good or service is typically more than the utility placed on that good or service by the customer. a. True b. False

False

The primary challenge for a company's human resource function is to find ways to lower wage and benefits costs. a. True b. False

False

The punctuated equilibrium view can be described as a freezing, but not unfreezing, process in an industry's life-cycle. a. True b. False

False

There is a negative relationship between the length of time that a customer stays with a company and profit per customer. a. True b. False

False

To determine its opportunities and threats, a firm should focus on internal processes and capabilities. a. True b. False

False

To increase shareholder value, managers must try to venture into new markets whether the results are profitable or not. a. True b. False

False

When a company has differentiated products, they have less pricing options. a. True b. False

False

When buyers are in a weak bargaining position, companies in the industry must lower their prices to increase profits. a. True b. False

False

While Information Systems have greatly improved productivity, they have had little impact on lowering costs. a. True b. False

False

The Mountain Ski Lodge spent $100,000 marketing and advertising its new ski trails and on-site spa. The money used for marketing and advertising can be referred to as: a. variable costs. b. fixed costs. c. ratio costs. d. diseconomies of scale. e. economies of scale.

Fixed costs

Research suggests that the adoption of _____ may increase efficiency and lower unit costs relative to what can be achieved by the mass production of a standardized output. a. just-in-time manufacturing b. quick technology c. flexible production technology d. stable production e. unscheduled manufacturing

Flexible production technology

Members of a strategic group: a. compete only with members of other strategic groups. b. are affected by Porter's five competitive forces in the same way and to the same degree as the members of other strategic groups. c. follow a business model that is similar to that pursued by other companies in the group. d. face no threat of product substitutes from other members. e. move easily between groups without barriers.

Follow a business model that is similar to that pursued by other companies in the group

Which of the following is not a way that companies can avoid failure? a. Benchmarking b. Continuous learning c. Developing distinctive competencies d. Exploiting luck e. Following rigid business processes

Following rigid business processes

Which of the following industry structures consists of a large number of small or medium-sized companies, none of which is in a position to determine industry price? a. Fragmented industry b. Consolidated industry c. Oligopoly d. Monopoly e. Sector

Fragmented industry

Philip oversees the processes of the research and development department of his company. He is responsible for all of the activities and tasks undertaken by the department. In the context of strategic management, Philip is most likely to be a _____. a. corporate-level general manager b. functional manager c. managing director d. CEO e. business development manager

Functional manager

Distinctive competencies shape the _____ strategies that a company can pursue. a. business-level b. functional-level c. corporate-level d. global-level e. industry-level

Functional-level

Daryl works for Delta Corp. He is involved in all of the important decision-making processes of the company and is also responsible for the overall performance of the company. In the context of strategic management, Daryl is most likely to be a _____. a. line manager b. functional manager c. general manager d. production supervisor e. project manager

General manager

In the context of strategic management of a company, _____ have profit-and-loss responsibility for a product, a business, or the company as a whole. a. line managers b. functional managers c. general managers d. government regulators e. marketing managers

General managers

The threat from potential competitors is greatest in the _____ stage of the industry life cycle. a. embryonic b. growth c. shakeout d. maturity e. decline

Growth

As an industry enters the decline stage: a. growth becomes negative. b. rivalry among established companies usually decreases. c. competitive pressures abate. d. capacity reduces. e. demand remains the same.

Growth becomes negative

When a resource is said to be organized, this means that the company: a. identified the resource as a resource. b. built a department to execute its operations using the resource. c. takes the resource for granted and assumes its value. d. has made it difficult to copy or imitate. e. has developed a method for making sure it gets the most out of its unique strengths.

Has developed a method for making sure it gets the most out of its unique strengths

The failure rate of innovative products is: a. high. b. low. c. nil. d. moderate. e. too difficult to assess.

High

Which of the following is NOT a barrier to entry? a. Economies of scale b. Brand loyalty c. Absolute cost advantages d. High customer bargaining power e. High customer switching costs

High customer bargaining power

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

Human resource

When conducting an internal analysis, strategic managers should: a. identify its internal resources and evaluate the quality of those resources. b. only count something as a resource if the company is actively managing it. c. always file for patents and trademarks on intellectual property. d. exclude any resource as a source of competitive advantage if it isn't rare. e. identify as many resources as possible, regardless of their value or rarity.

Identify its internal resources and evaluate the quality of those resources

One of the primary roles of human resources in achieving superior efficiency is: a. scheduling meetings among various value creation functions. b. adopting aggressive marketing to ride down the experience curve. c. designing products for ease of manufacture. d. using information systems to automate processes. e. implementing self-managing teams.

Implementing self-managing teams

Pay for performance based on individual accomplishment of goals tends to: a. increase per-unit costs. b. decrease employee productivity. c. increase employee output. d. have little effect on employee output. e. facilitate teamwork.

Increase employee output

A group of firms manufactures writing implements such as pens, pencils, and markers. This group should be referred to as a(n): a. substitute. b. market segment. c. service provider. d. regulator. e. industry.

Industry

_____ consists of the electronic systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries. a. Information systems b. Logistics c. Barriers to imitation d. Benchmark e. Materials management

Information systems

According to the text, one of the basic building blocks of competitive advantage is: a. quantity. b. logistics. c. variety. d. distribution. e. innovation.

Innovation

The intellectual property of an organization is a(n): a. tangible resource. b. strategic commitment. c. tangible capability. d. barrier to change. e. intangible resource.

Intangible resource

Devil's advocacy: a. involves generating a plan and a counter-plan that reflects plausible conflicting courses of action. b. is an example of ivory tower planning. c. hides the possible perils of a recommended course of action. d. involves generating a plan, and a critical analysis of that plan. e. includes downplaying the problems that could result from implementing a particular plan .

Involves generating a plan and a critical analysis of that plan

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

Is a company's ability to reconcile low cost and differentiation that were once thought incompatible

The level of industry demand: a. has little effect on competition in the industry. b. is one of the determinants of the intensity of rivalry in the industry. c. increases when customers exit a marketplace. d. does not impact the market share that established companies hold. e. decreases the rivalry among established companies, when in decline.

Is one of the determinants of the intensity of rivalry in the industry

Which of the following statements about customer focus is false? a. It should be modeled by company leaders. b. It is a central part of TQM. c. It can be facilitated by soliciting feedback from the customer. d. It requires that all employees see the customer as the focus of their activity. e. It can be achieved solely by demonstrating leadership .

It can be achieved solely by demonstrating leadership

Which of the following statements is true about competitive advantage? a. It is unaffected by the strategies taken by the company. b. It is considered to be sustained when it lasts for three months. c. It exists only when the company's profitability is greater than the ten highest grossing firms in the world. d. It exists only when the company's profitability is greater than the average profitability and profit growth of its rivals. e. It is seldom affected by the business model of the company.

It exists only when the company's profitability is greater than the average profitability and profit growth of its rivals

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

It is a methodology for choosing between competing business models

Which of the following statements is true about strategic leadership? a. It is the primary responsibility of the functional managers of an organization. b. It does not take into account the task of maximizing shareholder value. c. It is involved with making decisions regarding how to create a competitive advantage. d. It is a concept that does not apply to multidivisional companies with several business units. e. It is essentially about supervising workers at a manufacturing unit of an organization.

It is involved with making decisions regarding how to create a competitive advantage

Which of the following is true of the impact of high product quality on competitive advantage? a. It decreases the utility of the products. b. It lowers unit costs of the products. c. It adversely affects employee productivity. d. It limits the company's ability to differentiate its products. e. It increases the need for after sales services.

It lowers unit costs of the products

Which of the following statements is true about the feedback loop in the context of strategy implementation? a. It provides managers with input for the next round of strategy formulation and implementation. b. It emerges within an organization without prior planning, and in response to unforeseen circumstances. c. It cannot reveal whether or not a business model is working. d. It carries information from corporate level managers to functional level managers. e. It indicates that the strategy implementation process has ended.

It provides managers with input for the next round of strategy formulation and implementation

Which of the following best defines shareholder value? a. It refers to the returns that shareholders earn from purchasing shares in a company. b. It refers to the capital invested in a company by the shareholders. c. It refers to the efforts taken by a company to sell its shares to prospective shareholders. d. It refers to the efforts taken by a company to buy back its shares from its shareholders. e. It refers to the non-monetary benefits that a company provides to its shareholders.

It refers to the returns that shareholders earn from purchasing shares in a company

Which of the following statements is true about rivalry in the context of established companies? a. It significantly reduces the costs of established companies. b. It squeezes profits out of an industry. c. It enables companies to lower their spending on non-price-competitive strategies. d. It forces companies to reduce prices when it is less intense. e. It is unaffected by the demand conditions of an industry.

It squeezes profits out of an industry

If economies of scale are an industry's primary entry barrier, a new entrant's major concern is: a. its inability to counter brand loyalty that customers have for established companies in the industry. b. the inferior quality of its products. c. its inability to match the innovation of the established firm. d. its inability to produce in sufficient volume to match the cost advantages of established producers. e. its inability to get buyers to switch to its product.

Its inability to produce in sufficient volume to match the cost advantages of established producers

Which of the following is not a cognitive bias? a. Escalating commitment b. Reasoning by analogy c. Ivory tower thinking d. Representativeness e. Illusion of control

Ivory tower thinking

Cool Looks, Inc. is a local fashion design company that actively solicits comments from its customers about the quality of its clothing and the kind of merchandise they want it to supply. Which of the following mechanisms for focusing on the customer is Cool Looks utilizing? a. Managing materials b. Improving response time c. Demonstrating leadership d. Shaping employee attitudes e. Knowing customer needs

Knowing customer needs

Learning effects are a result of: a. automation. b. knowledge acquired by doing. c. sound product planning tactics. d. diseconomies of scale. e. outsourcing.

Knowledge acquired by doing

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

Lengthening production runs

Which of the following support activities in the value chain refers to the transmission of physical materials from procurement through production and into distribution? a. Human resources b. Information systems c. Research and Development d. Logistics e. Operations

Logistics

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

Lowers unit cost

In a typical scenario planning exercise: a. managers entirely depend on employee feedback. b. managers try to come up with alternative plans after a business model has failed. c. managers formulate plans based on 'what-if' situations about the future. d. managers do a 'postmortem' to understand what went wrong with a strategy. e. the corporate-level management sets targets for functional-level managers.

Managers formulate plans based on 'what-if" situations about the future

A baking company has different product ranges like whole-wheat pizzas for the diet-conscious and rich cookies for children and youngsters. The company is catering to different groups of customers known as: a. investors. b. entrants. c. sectors. d. market segments. e. substitutes.

Market segments

Ford Motors developed the Explorer sports utility vehicle in 1990, and it is still in the top ten best-selling sports utility vehicles in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies? a. Research and development b. Human resources c. Materials management d. Marketing and sales e. Company infrastructure

Marketing and sales

Cream Cups bakes cakes in several varieties dedicated to special occasions. It also allows its customers to personalize the cakes according to their personal preferences. This is an example of: a. learning effects. b. just-in-time inventory. c. customer defection. d. mass customization. e. diseconomies of scale.

Mass customization

Demand reaches total saturation in the ____ stage of the industry life-cycle. a. embryonic b. growth c. shakeout d. maturity e. decline

Maturity

Benchmarking can be defined as the practice of: a. monitoring activities related to the design, creation, and delivery of a product, its marketing, and its support and after-sales service. b. developing products that are new to the world or have superior attributes to existing products in the market. c. measuring the time that it takes for a good to be delivered or a service to be performed. d. measuring a company against the products, practices, and services of some of its most efficient global competitors. e. analyzing the financial position of a company and creating the income statements and the balance sheets.

Measuring a company against the products, practices and services of some of its most efficient global competitors

Which of the following is currently an embryonic industry? a. Personal computers b. Biotechnology c. Internet retailing d. Nanotechnology e. Wireless communications

Nanotechnology

Employee productivity is: a. a function of management delegation. b. one of the key determinants of a company's efficiency. c. not subject to measurement. d. typically not sustainable in the long run. e. a function that does not affect a company's profitability.

One of the key determinants of a company's efficiency

Dale's methods of fitting horseshoes save time and money for his employer at the local ranch. However, when Dale suggests that everyone use his method, his boss, Cedric, says, "No. That's not the way we've always done it around here." Cedric's resistance to change illustrates: a. organizational inertia. b. prior strategic commitments. c. barriers to mobility. d. lack of distinctive competencies. e. the Icarus paradox.

Organizational inertia

Holly owns a landscape company and is thinking about expanding her services to include outdoor water features (waterfalls, streams, ponds). If, before making this decision, she looks at the experience of similar firms that have added outdoor water features, she is employing: a. cognitive bias. b. illusion of control. c. devil's advocacy. d. outside view. e. dialectic inquiry.

Outside view

Which of the following is an important attribute for a product from a quality-as-reliability perspective? a. Styling b. Aesthetic appeal c. Wait time at the point of sale d. Features e. Performance

Performance

Good strategic leaders: a. possess a willingness to delegate and empower subordinates. b. control all facets of decision-making. c. make decisions without consulting others. d. ensure uniformity of purpose through the authoritarian exercise of power. e. are usually inconsistent in their approach.

Possess a willingness to delegate and empower subordinates

Which of the following is not a product attribute? a. Form b. Features c. Style d. Price e. Reliability

Price

Which of the following cognitive biases refers to the fact that decision makers who have strong pre-existing beliefs about the relationship between two variables tend to make decisions on the basis of these beliefs, even when presented with evidence that their beliefs are wrong? a. Prior hypothesis bias b. Reasoning by analogy c. Illusion of control d. Escalating commitment e. Representativeness

Prior hypothesis bias

Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as _____ innovations. a. process b. product c. customer d. sector e. absorptive

Product

Which of the following is not a benefit of tight cross-functional integration among research and development (R&D), production, and marketing? a. New products are designed for ease of manufacture. b. Development costs are kept in check. c. Product development projects are driven by company innovations. d. Time to market is minimized. e. Customer needs are considered in the product development process.

Product development projects are driven by company innovations

Ray, a toymaker, knits a stuffed unicorn for Belle. Which function of the value chain is illustrated in this scenario? a. Marketing b. Distribution c. Research d. Production e. Sales

Production

Between 2005 and 2011, Blue Drinks, a multinational beverage corporation, increased its return on investment from $5 million to $25 million. The company was able to do this by expanding its product line to include a wider variety of flavors. The $20 million increase in its return on investment between 2005 and 2011 can be referred to as which of the following? a. Shareholder value b. Dividend payment c. Profit growth d. Profitability turnover e. Risk capital

Profit growth

Which of these principal factors helps increase shareholder value? a. profitability. b. risk factors. c. low brand awareness. d. government regulations. e. high production costs.

Profitability

A company's competitive advantage will not endure for long when that competitive advantage can be: a. quickly or easily duplicated by other companies. b. protected by patents. c. protected by significant barriers to imitation. d. shared with other companies in the industry. e. shielded by copyrights.

Quickly or easily duplicated by other companies

Based on the VRIO framework, a resource can be considered a source of competitive advantage if it is: a. shared by most companies in an industry. b. rare, valuable, difficult to imitate and organized or managed by the company. c. the foundation of a company's strategy. d. kept as a trade secret rather than as a patent. e. increases the cost of producing the product and therefore the price charged to customers.

Rare, valuable, difficult to imitate and organized or managed by the company

Which of the following is the first step in the five-step chain reaction, as articulated by Deming, with regard to the philosophy underlying TQM ? a. Improvement in productivity b. Increase in a company's profitability c. Higher market share due to superior quality of products d. Reduction of costs due to improved quality e. Creation of more jobs

Reduction of costs due to improved quality

The marketing strategy that a company adopts: a. has little impact on the company's efficiency and cost structure. b. aims at attaining superior efficiency of the company's operations. c. should not take into account the impact the strategy has on the company's cost structure. d. aims at automating much of the work in the production process. e. refers to the position that the company takes with regard to a product's pricing and distribution.

Refers to the position that the company takes with regard to a product's pricing and distribution

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

Require members to coordinate their own activities and make decisions

Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs? a. Research and development b. Marketing and sales c. Logistics d. Production e. Service and support

Research and development

One of the most widely used measures of financial performance in an internal analysis is: a. return on invested capital. b. net profit margin. c. share value. d. net sales. e. productivity.

Return on invested capital

The ratio of net profit to invested capital is known as: a. return on invested capital. b. return on sales. c. capital turnover. d. cost of goods sold. e. sales, general, and administrative expenses.

Return on invested capital

_____ refers to the investment that shareholders make in a company that cannot be recovered if the company fails and goes bankrupt. a. Profitability b. Shareholder value c. Debt d. Risk capital e. Dividend payments

Risk capital

Rebecca, a manager, was very annoyed after noticing several negligent errors in a critical report. However, while talking to the subordinate who created the report, Rebecca was calm and composed; she did not act impulsively and lose her temper. Which of the following aspects of emotional intelligence is illustrated in this scenario? a. Self-awareness b. Self-regulation c. Motivation d. Empathy e. Social skills

Self-regulation

Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs? a. Research and development b. Marketing and sales c. Service and support d. Production e. Human resources

Service and support

Philip Morris capitalized on the growing health consciousness trend when it acquired Miller Brewing Company, and then redefined competition in the beer industry with its introduction of low-calorie beer (Miller Lite). This health trend represents a _____force. a. social b. political c. legal d. technological e. demographic

Social

Many beverage manufacturers are noticing that sales for packaged water and fruit-based beverages is increasing compared to carbonated drinks because customers are increasingly becoming health conscious. This change in customer preferences can be attributed to which of the following factors of the macroenvironment? a. Economic forces b. Demographic forces c. Technological forces d. Political forces e. Social forces

Social forces

Quality can best be thought of as: a. a competency in investigating and identifying needs of customers. b. the attributes that customers perceive as superior in a product. c. product development projects driven by customer needs. d. the quantity of inputs that it takes to produce a given output. e. unit cost reductions associated with a large scale of output.

The attributes that customers perceive as superior in a product

A company, at its inception, states that its goal is "to provide the best customer service possible." Which of the following best describes this objective? a. The company's emergent strategy b. The company's corporate structure c. The company's HR strategy d. The company's mission statement e. The company's damage control plan

The company's mission statement

Which of the following reports includes the cost of goods sold? a. The balance sheet b. The financial position statement c. The cash budget d. The income statement e. The overhead expense statement

The income statement

An impact that the changing industry boundaries have had is that: a. owners of companies can now define boundaries. b. there is an increase in the number of competitors for companies. c. technological changes do not affect companies anymore. d. the pattern of customer needs does not affect companies anymore. e. the number of product substitutes available for customers has reduced.

There is an increase in the number of competitors for companies

A SWOT analysis is implemented to fine-tune strategies. a. True b. False

True

A strategy can be defined as a set of related actions that managers take to increase their company's performance. a. True b. False

True

Close integration between research and development (R&D), production and marketing can help a company avoid innovation failures. a. True b. False

True

Companies facing greater exit barriers find it harder to reduce capacity, and face a greater threat of severe price competition. a. True b. False

True

Diseconomies of scale are the unit cost increases associated with a large scale of output. a. True b. False

True

Distinctive competencies shape the functional-level strategies that a company can pursue. a. True b. False

True

IBM's investment in mainframe computers, that proved disadvantageous when the market shifted to smaller personal computers, is an example of a prior strategic commitment. a. True b. False

True

If a company's profitability is higher than the industry average, it has a competitive advantage. a. True b. False

True

Intense rivalry lowers prices and raises costs. a. True b. False

True

One of the defining characteristics of the mature stage of the industry life-cycle is that growth is low or zero. a. True b. False

True

Poor positioning strategy arises when a company introduces a potentially attractive new product but sales fail to materialize in the marketplace. a. True b. False

True

ROIC is a measure of how efficiently and effectively managers use the capital at their disposal to produce profitability. a. True b. False

True

Rapid growth in demand enables companies to expand their revenues and profits without taking market share away from competitors. a. True b. False

True

Six Sigma is a quality and efficiency program derived from the concept of Total Quality Management, and was widely used in Japan before acceptance in the U.S. a. True b. False

True

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

True

Strong brand loyalty leads to more sales and the ability to charge higher prices. a. True b. False

True

The "sigma" in the Six Sigma name refers to the Greek letter meaning standard deviation from the mean. a. True b. False

True

The CEO is a company's principal general manager. a. True b. False

True

The building blocks of competitive advantage are efficiency, quality, innovation and customer responsiveness. a. True b. False

True

The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis. a. True b. False

True

The feedback loop in the model of the strategic management process indicates that the process is ongoing; it never ends. a. True b. False

True

The great virtue of scenario planning is that managers must think outside of the box to anticipate what they might do in different situations. a. True b. False

True

The importance of reliability in building competitive advantage has increased dramatically over the past several decades. a. True b. False

True

The profit growth of a company can be measured by the increase in net profit over time. a. True b. False

True

The risk of entry by potential competitors is a function of the height of the barriers to entry. a. True b. False

True

The values of a company state how managers and employees should conduct themselves. a. True b. False

True

Threats arise when conditions in the external environment endanger the integrity and profitability of a company's business. a. True b. False

True

Through efficient logistics at Grasshopper Grocers, the stock in the stores is automatically replenished when the company receives an alert from customers that their stock is low. Management at Grasshopper Grocers uses a justin- time inventory system. a. True b. False

True

Together with an analysis of the company's external environment, internal analysis gives managers the information they need to choose the business model and strategies that will enable their company to attain a sustained competitive advantage. a. True b. False

True

Well-constructed goals provide a means by which the performance of managers can be evaluated. a. True b. False

True

An important first step in the process of formulating a company's mission is to answer the question: a. What is our budget for advertising? b. What are the government regulations that are most likely to impact our business? c. What is our business? d. How do we persuade shareholders to provide risk capital? e. How many employees should we hire?

What is our business?

Competitive advantage is based on: a. distinctive competencies. b. the Icarus paradox. c. higher cost structure. d. prior strategic commitments. e. barriers to change in a company.

distinctive competencies

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

A series of activities that transform inputs into products that customers value

A video game console manufacturer hired scientists and engineers to work on ways to improve the video cards used in their game systems. The main aim of the manufacturer was to enhance the utility of the products, as perceived by the customers, above that of its rivals. This company aims to: a. achieve superior innovation. b. maintain a low cost position. c. increase response time. d. achieve a greater division of labor. e. minimize the time to market.

Achieve superior innovation

Edward Wrapp's ideas about the astuteness of power suggest that successful strategic managers: a. act as members of a coalition or as its democratic leaders rather than as dictators. b. usually have little control over resources that are important to the organization. c. maintain tight control over as many decisions as possible by demanding complete obedience. d. publicly commit themselves to bold strategic agendas whether or not they are rational. e. recognize the futility of pursuing planned strategies.

Act as members of a coalition or as its democratic leaders rather than as dictators

Strategy formulation refers to the: a. task of executing corporate- and business-level plans. b. process by which strategies are put into action. c. design of organizational structures and control systems. d. implementation of emergent strategies. e. analyzing an organization's external and internal environment and then the process of selecting an appropriate strategy.

Analyzing an organization's external and internal environment and then the process of selecting an appropriate strategy

A company's competitive advantage is more durable when: a. barriers to imitation are low and there are few capable competitors. b. barriers to imitation are high and there are many capable competitors. c. barriers to imitation are high and the industry is stable. d. the industry is stable and there are many capable competitors. e. the industry is stable and barriers to imitation are low.

Barriers to imitation are high and the industry is stable

Which of the following is the organization's principal general manager? a. Line manager b. Marketing division head c. CFO d. CEO e. Sales manager

CEO

A consolidated industry structure: a. consists of a large number of small companies. b. can be seen in agriculture, dry cleaning, health clubs, and real estate brokerage. c. consists of few companies that are in a position to determine industry price. d. provides no scope for oligopoly to exist. e. is characterized by low-entry barriers and commodity-type products.

Consists of few companies that are in a position to determine industry price

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

Crafting the organization's mission statement

Innovation refers to the act of: a. seeking patent protection for new products. b. creating new products and processes. c. measuring time taken for a service to be provided. d. measuring the output produced by an employee. e. identifying and satisfying the needs of a customer.

Creating new products and processes

Which of the following best describes product innovation? a. Transforming a quantity of inputs into a given output b. Identifying and satisfying a customer's needs c. Creating products that have superior attributes than existing products. d. Developing a new process that focuses on quantity rather than quality. e. Measuring the quantity of outputs produced per employee

Creating products that have superior attributes than existing products

Which of the following is the final result of the five-step chain reaction on which the philosophy of the TQM is based? a. Better use of time and materials b. Increase in profitability c. Creation of more jobs d. Higher market share e. Improvement in productivity

Creation of more jobs

Which of the following is NOT one of the factors in the economic forces of the macroenvironment? a. Interest rates b. Inflation c. Cultural changes d. Currency exchange rates e. Economic growth rate

Cultural changes

Market segments are groups of: a. customers within a market that can be different from each other on the basis of their distinct attributes and specific demands. b. companies within a market that produce similar goods or services which are close substitutes of each other. c. companies that follow a similar business model and cater to the needs of similar customers. d. closely related industries. e. large companies that are in a position to determine industry price.

Customers within a market that can be different from each other on the basis of their distinct attributes and specific demands

A company's mission: a. describes the marketing strategies the company intends to use to sell its products. b. outlines the manner in which employees and managers should conduct themselves. c. defines the manner in which strategies will be developed and goals achieved. d. describes what the company does. e. describes the benefits offered to the shareholders.

Describes what the company does

One of the primary roles of research and development in achieving superior efficiency is: a. facilitating cooperation among functions. b. limiting customer defection rates by building brand loyalty. c. designing products for ease of manufacture. d. instituting training programs to build skills. e. implementing pay for performance.

Designing products for ease of manufacture

Research and development (R&D) can help a company improve quality by: a. designing products that are easy to manufacture. b. pursuing economies of scale. c. developing strategies on how to market products. d. upgrading employee skill levels. e. creating teams whose members coordinate their own activities.

Designing products that are easy to manufacture

A component of strategy implementation is: a. designing the best organization structure, culture, and control systems to put a strategy into action. b. providing the number and kind of periodic reports that must be submitted by functional-level managers. c. defining the goals and objectives of the organizations. d. answering the question, "What is our business?" e. eliminating the feedback loop.

Designing the best organization structure, culture and control systems to put a strategy into action

Ralph is a well-liked manager at Aries Inc. He eloquently communicates the goals of the organization and has been successful in making the organization's vision part of its culture. Which of the following characteristics of good strategic leaders can be observed in Ralph? a. Authoritarian leadership b. Devil's advocacy c. Eloquence d. Inconsistency e. Empathy

Eloquence

In the late 1800s, when the automobile was first manufactured, the automobile industry would have been considered a(n): a. mature industry. b. stakeout industry. c. embryonic industry. d. growth industry. e. declining industry.

Embryonic industry

Beta Corp., a gaming software company, recently launched a new game. The target audience identified by the company was the age group of 12-18 years. The advertising and marketing strategies were designed exclusively to target this age group. However, sales data revealed individuals who belong to the age bracket 18-25 years were the ones who actually bought the game. The managers at Beta Corp. decided to redesign their marketing strategies to position the game as something that people of all ages would enjoy. The company's decision to modify its product positioning demonstrates: a. downsizing strategy. b. emergent strategy. c. deliberate strategy. d. concurrency control

Emergent strategy

Common exit barriers include: a. minimal investment in assets like specific machines. b. emotional attachments to an industry. c. low fixed costs associated with leaving an industry. d. the lack of bankruptcy regulations. e. economic independence of a company

Emotional attachments to an industry

Karen, a manager at Libra Inc, had noticed that her subordinates were experiencing a lot of stress. After conducting a meeting with her subordinates, Karen realized that they were extremely overworked and intimidated by close deadlines. Determined to reduce their stress, she introduced a new process that eliminated time-consuming activities and gave them more flexibility for work timelines. This action taken by Karen demonstrates which of the following aspects of emotional intelligence? a. Availability error b. Self-awareness c. Self-regulation d. Motivation e. Empathy

Empathy

Brand loyalty can be created by: a. minimal advertising. b. not using patents to protect products. c. cutting the costs for research and development. d. emphasizing high product quality. e. minimizing after-sales service

Emphasizing high product quality

Which of the following statements is true about government regulations in the context of entry barriers of an industry? a. Government deregulation in an industry results in significant reduction in competition. b. Government regulation is not a major entry barrier for any industries. c. Falling entry barriers due to government deregulation results in higher competition and lower industry profit rates. d. The threat of new entrants reduces when the government deregulates an industry. e. 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.

Lucy is an entrepreneur who is interested in opening her own bakery. She is concerned with obtaining money for equipment for the bakery such as ovens, pots and pans, and display cabinets. Lucy is trying to obtain intangible resources for her business. a. True b. False

False

Suppliers are most powerful when the products that they sell have many substitutes. a. True b. False

False

Mobility barriers: a. allow industries to change their strategy and compete in that strategic group. b. inhibit the movement of companies between strategic groups in an industry. c. inhibit companies from shifting between suppliers for the raw materials. d. are factors that operate outside of an industry. e. exclude the barriers to entry into a group and the barriers to exit from a company's existing group.

Inhibit the movement of companies between strategic groups in an industry

The experience curve concept: a. helps a company realize both learning effects and diseconomies of scale. b. suggests that unit manufacturing costs increase by a certain amount each time output is increased. c. is very important in industries that mass-produce a standardized output. d. suggests that achieving low costs allows a firm to charge a premium price. e. is least likely to bottom out as long as the company does not stop production.

Is very important in industries that mass-produce a standardized output

When credit card companies such as Visa and Mastercard allow an individual to put one of their own photos on their account credit card, they are utilizing: a. mass customization. b. a flexible manufacturing system. c. quality as reliability mantra. d. supply-chain management. e. a just-in-time inventory system.

Mass customization

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

Net profit

The competitive structure of an industry refers to the: a. number of market segments in the industry. b. number and size distribution of companies in the industry. c. number of consumers in the industry. d. number of manufacturing plants in the industry. e. number of products produced in the industry.

Number and size distribution of companies in the industry

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? a. Macroeconomic b. Demographic c. Political and legal d. Social e. Global

Political and legal

In spite of definite customer demand, new products often fail due to: a. faster cycle time. b. low customer defection rate. c. poor commercialization. d. increased response time. e. scramble to gain first-mover advantage.

Poor commercialization

Within a diversified company, the responsibilities of corporate-level strategic managers include: a. supervising production at the manufacturing units of the company. b. compiling sales reports, company costs, employee productivity and calculating the employee turnover rate. c. responding to employee complaints on a daily basis. d. providing leadership for the entire organization and allocating resources among its different business areas. e. maintaining records of transactions with suppliers.

Providing leadership for the entire organization and allocating resources among its different business areas

Which primary activity in the value chain is concerned with the design of products and production processes? a. Research and development b. Marketing and sales c. Materials management d. Production e. Company infrastructure

Research and development

If a product is to be properly commercialized, there must be integration between: a. research and development and marketing. b. R&D and materials management. c. marketing and materials management. d. finance and marketing. e. marketing and after-sales support.

Research and development and marketing

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

Competitive advantage typically leads to: a. a defective business model. b. average profitability within an industry. c. superior profitability. d. the Icarus paradox. e. barriers to changes in the organization.

Superior profitability

_____ 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. a. Overhead costs b. Incremental costs c. Marginal costs d. Opportunity costs e. Switching costs

Switching costs

An industry's buyers have high bargaining power when: a. they purchase in small quantities. b. switching costs are low. c. it is economically impossible for them to purchase an input from several companies at once. d. the supply industry depends upon buyers for a very small percentage of its total orders. e. the industry is a monopoly.

Switching costs are low

The experience curve refers to the: a. learning by doing technique. b. company's overall experience in a particular industry. c. systematic lowering of the cost structure and unit cost reductions. d. diseconomies of scale caused by inexperienced workers. e. increases in unit costs experienced over time.

Systematic lowering of the cost structure and unit cost reductions

The Internet is an example of a: a. technological force. b. social force. c. macroeconomic force. d. demographic force. e. global force.

Technological forces

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

Technological knowhow

Self-managing work teams: a. increase per-unit costs of manufactured items. b. perform all workplace tasks except the making of hiring decisions. c. increase the cycle time of manufacturing items. d. require team members to learn only one task and specialize in that alone. e. tend to increase productivity and product quality.

Tend to increase productivity and product quality

Managers should not become complacent about efficiency-based cost advantages because: a. both learning effects and economics of scale go on forever. b. the experience curve is likely to bottom out at some point. c. cost advantages gained from experience effects are not affected by the development of new technologies. d. unit costs keep reducing as output increases. e. the experience curve steadily rises after a certain threshold is reached indicating an increase in unit costs.

The experience curve is likely to bottom out at some point

The bargaining power of an industry's suppliers is greater when: a. the supply industry is fragmented. b. switching costs are minimal for companies because of little difference among products offered by different suppliers. c. the industry buys in large quantities. d. the product that suppliers sell has many substitutes and is not vital to the companies. e. the industry is not an important customer to the suppliers.

The industry is not an important customer to the suppliers

With regard to customer defection, which of the following statements is incorrect? a. Defection rates are determined by customer loyalty. b. The longer a company holds on to a customer, the greater is the volume of customer-generated unit sales. c. Lowering customer defection rates creates a higher cost structure. d. The longer a company retains a customer the higher the average unit cost of each sale. e. There is a positive relationship between the length of time that a customer stays with the company and profit per customer.

The longer a company retains a customer the higher the average unit cost of each sale

Which of the following is NOT a determinant of the extent of rivalry among established companies? a. Industry competitive structure b. Demand conditions c. The cost structure of firms in an industry d. Exit barriers e. The power of buyers

The power of buyers

Porter's Five Forces model did not recognize one force, which is: a. the power of complement providers. b. the risk of entry by potential competitors. c. the intensity of rivalry among established companies within an industry. d. the bargaining power of suppliers. e. the threat of substitutes.

The power of complement providers

Efficiency is: a. defined as the time it takes to produce a product. b. the quantity of inputs required to produce an output. c. independent of customers' perception of a product's value. d. measured by looking at a product's price. e. lower when the output is high-quality.

The quantity of inputs required to produce an output

The simplest measure of efficiency is: a. the amount of money the company has to work with in the short term. b. the ratio of revenues divided by invested capital. c. the net profit expressed as a percentage of sales. d. the total costs of producing products. e. the quantity of inputs that it takes to produce a given output.

The quantity of inputs that it takes to produce a given output

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

The time taken for a good to be delivered or a service to be performed

Which of the following statements is true about functional-level managers? a. They oversee the operation of an entire company or division. b. Their sphere of responsibility is generally confined to one organizational activity. c. Their activities and roles have no importance in realizing the strategic goals of an organization. d. They provide a link between the people who oversee the strategic development of a firm and those who own the firm. e. They occupy the apex of decision-making within an organization.

Their sphere of responsibility is generally confined to one organizational activity

Suppliers in an industry are most powerful when: a. there are few substitutes for the products that they sell. b. switching costs are low. c. companies in the industry threaten to enter the suppliers' industry. d. their profitability is significantly affected by the purchases of companies in a particular industry. e. they refrain from entering their customers' industry because of lack of resources.

There are few substitutes for the products that they sell

Which of the following statements is true about emergent strategies? a. They are essentially the strategies that arise from the feedback loops. b. They are also influenced by the kind of culture that the organization's structure and control systems foster. c. They are the strategies that require the least amount of evaluation and strategic thinking from the managers. d. They cannot be combined with the intended strategies of an organization. e. They are the product of formal top-down planning mechanisms.

They are also influenced by the kind of culture that the organization's structure and control systems foster

Which of the following is not a characteristic of well-constructed goals? a. They provide a means by which the performance of managers can be evaluated. b. They are lengthy and wordy. c. They specify a time period. d. They are challenging but realistic. e. They address critical issues.

They are lengthy and wordy

Which of the following is not true regarding a company's distinctive competencies? a. They represent the unique strengths of the company. b. They refer to company strengths that competitors cannot easily match or imitate. c. They form the bedrock of a company's strategy. d. They can be based in any of the value creation functions of the company. e. They are shared by many firms in an industry.

They are shared by many firms in an industry

Which of the following statements is true about nonprofit organizations? a. They compete with each other for resources. b. Their ultimate aim is to maximize shareholder value in order to attract risk capital. c. Their managers do not need to develop careful strategies, because making a profit is not the organization's goal. d. They do not have to worry about exceeding budgets. e. They seldom set any performance goals like profit-making organizations do.

They compete with each other for resources

Which of the following statements is true about complementors? a. Their impact on industries was first recognized by Porter's five forces model. b. They have little importance in high-technology industries. c. They have the power to impact the sales of the industry to which they supply complement products. d. They tend to increase the sales of the industry they are supplying complements to by producing fewer lowquality complement products. e. They cannot gain enough power to extract profits from the industry to which they supply complement products.

They have the power to impact the sales of the industry to which they supply complement products

Which of the following is true of growth industries? a. They typically have high barriers to entry. b. They tend to be characterized by weak rivalry. c. They are characterized by low demands. d. They increase prices because customers are more aware of the industry's product. e. They inhibit the development of distribution channels.

They tend to be characterized by weak rivalry

Which of the following statements is true about potential competitors in an industry? a. They threaten the profitability of established companies. b. They are usually encouraged by established companies. c. They find it easier to enter an industry when the entry barriers are high. d. They find it easier to enter an industry when established companies have economies of scale. e. They usually have an absolute cost advantage over established companies.

They threaten the profitability of established companies

In growth industries: a. the intensity of rivalry is very high. b. technological expertise is the most important entry barrier. c. threat from potential competitors is typically highest. d. distribution channels are poorly developed. e. buyers are not familiar with the industry's products.

Threat from potential competitors is typically highest

A benefit of long-time customer loyalty is the free advertising that customers provide for a company through referrals. a. True b. False

True

A business model is managers' conception of how the set of strategies their company pursues should mesh together into a congruent whole, thus enabling the company to gain a competitive advantage and achieve superior profitability and profit growth. a. True b. False

True

A company's closest competitors are those in its strategic group. a. True b. False

True

A company's profitability depends on the value customers place on the company's products and a company's ability to reduce its production costs. a. True b. False

True

A firm obtains competitive advantage when its strategy results in superior performance compared to its competitors. a. True b. False

True

A technological change, such as the rise of the Internet, can represent either an opportunity or a threat. a. True b. False

True

A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers. a. True b. False

True

A vital source of information about the causes of poor quality is the firm's own employees. a. True b. False

True

Absorptive capacity refers to the ability of an enterprise to identify, value, assimilate, and use new knowledge. a. True b. False

True

All else being equal, if a company moves down the experience curve faster than its rivals, it should realize a lower cost structure. a. True b. False

True

At Adam's bicycle repair shop, the primary value chain activity of production occurs each time a customer's bicycle is repaired. a. True b. False

True

At the heart of any company's business model is the combination of congruent strategies aimed at creating distinctive competencies that differentiate its products and result in a lower cost structure. a. True b. False

True

Companies operating in high-technology industries are dependent on complementary products for their mutual success. a. True b. False

True

Cost reductions gained through mass-producing a standardized output are a source of scale economies. a. True b. False

True

Deregulation of the mortgage industry is an example of how political and legal forces can impact an industry. a. True b. False

True

Distinctive competencies are firm-specific strengths that allow a company to differentiate its products and achieve substantially lower costs than its rivals. a. True b. False

True

Emergent strategies are the unplanned responses to unforeseen circumstances. a. True b. False

True

Employee productivity is a common measure of efficiency. a. True b. False

True

Flexible production technologies allow a company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output a. True b. False

True

General managers bear responsibility for the overall performance of the company or for one of its major selfcontained subunits or divisions. a. True b. False

True

Government deregulation of telephone service lowered the barriers to entry and lowered industry profit rates. a. True b. False

True

Growing demand tends to reduce rivalry because all companies can sell more without taking market share away from each other. a. True b. False

True

Imitating a company's capabilities tends to be more difficult than imitating its basic and advanced factors of production. a. True b. False

True

In Porter's competitive forces framework, the stronger the five forces, the ability of established companies to raise prices and earn greater profits becomes more limited. a. True b. False

True

In practice, the strategies of most organizations are probably a combination of the intended and emergent strategies. a. True b. False

True

In the fashion industry, the time required to take a new product from design inception to placement in a retail store is known as customer response time. a. True b. False

True

Intellectual property protections, including patents, trademarks and copyrights, typically provide a barrier to imitation. a. True b. False

True

Interest rates have an impact on the sale of automobiles, appliances, and capital equipment. This represents a macroeconomic force. a. True b. False

True

Market segments are distinct groups of customers within a market that can be distinguished from each other based on their individual attributes and specific demands. a. True b. False

True

Mass customization describes the ability of companies to use flexible manufacturing technology to reconcile the two goals of low cost and differentiation through product customization. a. True b. False

True

Mintzberg maintains that emergent strategies are often successful and may be more appropriate than intended strategies. a. True b. False

True

Nene works in a factory where she picks crab meat from crabs. She is paid per day based upon the number of pounds of crab meat that she picks. Nene's daily number of pounds of crab meat can be referred to as her productivity. a. True b. False

True

No matter how complex the task is, learning effects typically die out after a limited period of time. a. True b. False

True

Opportunities arise when a company can take advantage of conditions in its environment to formulate and implement strategies that allow it to become more profitable. a. True b. False

True

Poor commercialization occurs when there is definite customer demand for a new product, but the product is not well adapted to customer needs because of factors such as poor design and poor quality. a. True b. False

True

Product attributes that collectively define product excellence include the form, features, performance, durability, and styling of the product. a. True b. False

True

Resources can be considered valuable if they enable a company to create a strong demand for its products or if it reduces the costs of producing its products. a. True b. False

True

The VRIO model is designed to help companies assess the quality of their resources and identify sources of competitive advantage. a. True b. False

True

The ability of established competitors to imitate the competitive advantage of a rival is limited by factors such as existing strategic commitments and low absorptive capacity. a. True b. False

True

The more a resource is firm-specific and difficult to imitate, the more likely a company holding that resource is said to have a distinctive competency. a. True b. False

True

The more utility a company creates for its customers, the more flexibility it has in determining prices. a. True b. False

True

The most successful firms are those that constantly learn and adjust their distinctive competencies. a. True b. False

True

The planning model suggests that a company's strategies are the result of a plan from a highly structured process orchestrated by top management. a. True b. False

True

The primary activities of the value chain include the design, creation, and delivery of the product, the product's marketing, and its support and after-sales service. a. True b. False

True

When Amber first started working at a car manufacturing plant assembling car doors, she was slower at the task than her co-workers. As time passed, her speed at assembling the doors increased and she even taught others how to perform the task more quickly. As a result of increased employee productivity, this particular plant experienced cost savings. These cost savings can be attributed to learning effects. a. True b. False

True

When the value of the dollar is low compared to the value of other currencies, products made in the United States are relatively inexpensive and products made overseas are relatively expensive. a. True b. False

True

Scenario planning is a technique for coping with the problem of: a. uncertainty. b. planning equilibrium. c. bottom-up planning. d. strategic fit. e. cognitive bias.

Uncertainty

Economies of scale are: a. unit cost increases associated with learning effects. b. unit cost reductions due to inferior quality of products. c. realized when output is reduced to a minimum. d. realized when the selling price is equal to the cost price of the products. e. unit cost reductions associated with a large-scale output.

Unit cost reductions associated with a large-scale output

Which of the following is a tactical step for getting down the experience curve ahead of competitors? a. Premium pricing to create an image of uniqueness in consumers' minds b. Pursuing a distinctive competence in focused marketing c. Constructing a manufacturing plant of less than minimum efficient scale d. Using aggressive pricing and promotions to expand sales volume as rapidly as possible e. Making the assembly of the product as complex as possible because this results in greater learning effects

Using aggressive pricing and promotions to expand sales volume as rapidly as possible

Jeffrey Pfeffer believes that a manager's power comes from his or her: a. ability to prioritize the well-being of the company over personal well-being. b. ability to be emphatic and understanding of the feelings and emotions of subordinates. c. control over important organizational resources. d. ability to cut overhead costs. e. personal rapport with the senior management.

control over important organizational resources