BA 7080 Midterm

The prediction that hypercompetition makes competitive advantage temporary: A. Is refuted by empirical research shows that the answer is No. B. Has not been answered by empirical research. C. Cannot be answered by empirical research because competitive advantage cannot be measured. D. Is confirmed by empirical research shows that the answer is Yes.

B. Has not been answered by empirical research.

Hierarchy is a feature of: A. Most companies before the digital era B. Most complex systems C. Authority-based organizations only D. All human societies

B. Most complex systems

Strategic goals should be: A. Consistent B. Long Term C. All of the above D. Simple

C. All of the above

As the competitors in an industry become more diverse in terms of their goals, cost structures, and strategies, it is likely that: A. Their incentives to collude on price increase B. Mergers, acquisitions and alliances among them will increase C. They will compete more fiercely on price D. Their products will become increasingly differentiated

C. They will compete more fiercely on price

For most business enterprises a market is: A. A sociological concept that is defined mainly by convention and institutions B. Geographical concept defined by the location of customers and competitors C. An abstract concept—from the point of view of competition it is a continuum from a firm's closest competitor towards more distant competitors D. All the above

D. All the above

The difference between a resource and a capability is: A. A resource is a productive asset; a capability refers to what the firm can do B. A capability is a type of resource C. A resources tend to be immobile assets; capabilities are dynamic D. A resource is a weak source of competitive advantage whereas a capability is a strong one

A. A resource is a productive asset; a capability refers to what the firm can do

To identify a firm's resources and capabilities, it is useful: A. None of the above B. All of the above C. To first identify the key success factors within the firm's industry then identify the resources and capabilities needed to satisfy these success factors. D. Identify the firm's value chain, then identify the main resources and capabilities at each stage of the value chain.

A. None of the above

For both individuals and businesses, successful strategies are characterized by: A. Unrelenting commitment to ambitious goals B. Clear goals, understanding their competitive environment, awareness of internal strengths and weaknesses, and effective implementation C. Meticulous planning D. Possessing superior abilities and resources that are then deployed to build competitive advantage

B. Clear goals, understanding their competitive environment, awareness of internal strengths and weaknesses, and effective implementation

To exploit its tangible assets more effectively requires that a firm: A. Economizes on these assets by changing its depreciation policy B. Economizes on underutilized assets and redeploys assets into more profitable uses C. Expands sales in order to ensure they are fully deployed D. Leases assets rather than owning them in order to boost return on capital employed

B. Economizes on underutilized assets and redeploys assets into more profitable uses

The extent to which an organization's strategy is determined by decentralized emergence rather than by centralized design depends mainly upon: A. How the organization is structured B. How turbulent and unpredictable is the external environment of the organization C. The commitment of the organization to experimentation. D. Whether the organization has a formalized process of strategic planning

B. How turbulent and unpredictable is the external environment of the organization

Roles and directives, mutual adjustment, and routines are: A. Mechanisms for overcoming goal misalignment among organizational members B. Mechanisms for achieving coordination among organizational members C. Means for people to build a hierarchy within the firm D. Means for controlling employees in an organization

B. Mechanisms for achieving coordination among organizational members

Economies of scale are a barrier to entry because: A. New entrants are uncertain about their future costs which discourages then from making investments B. New entrants face high unit costs either because they enter at sub-optimal scale, or they make a large-scale entry that initially operates with substantial excess capacity C. New entrants face a risk of retaliation from the incumbents whose large scale of operation allows them to flood the market D. New entrants are positioned at the top of their learning curve

B. New entrants face high unit costs either because they enter at sub-optimal scale, or they make a large-scale entry that initially operates with substantial excess capacity

The primary mechanisms through which companies translate strategic plans into action are: A. CEO leadership B. Operating plans and capital expenditure budgets C. Statements of vision and mission D. Resolutions by the board of directors

B. Operating plans and capital expenditure budgets

When a company has weaknesses relative to competitors among strategically important resources and capabilities, the appropriate strategic response is to: A. Invest heavy in order to upgrade weaknesses. B. Outsource those activities where third parties can offer superior capabilities while positioning the business to reduce vulnerable to remaining weaknesses. C. Employ management consultants to seek a solution. D. Diversify in order to find new areas of business where these resources and capabilities are unimportant to competitive advantage.

B. Outsource those activities where third parties can offer superior capabilities while positioning the business to reduce vulnerable to remaining weaknesses.

Schumpeter's process of "creative destruction" challenges Porter's five forces of competition framework by: A. Recognizing the cooperation is as important in business as competition B. Proposing that competitive behavior determines industry structure rather than the other way round C. Introducing concepts of renewal and rebirth into the analysis of industrial change D. Viewing competition is essential for the renewal of mature and declining industries

B. Proposing that competitive behavior determines industry structure rather than the other way round

The resource-based view of firm implies that: A. The resources of the firm are the foundation for its capabilities B. Resources and capabilities are the principal basis for firm strategy and the primary source of profitability C. The boundaries of the firm are determined by the firm's resources rather than by transaction costs D. Ricardian rents are a more important source of firm profitability than monopoly rents Schumpeter

B. Resources and capabilities are the principal basis for firm strategy and the primary source of profitability

In 1990, C.K. Prahalad and Gary Hamel introduced the concept of "core competence." Their argument was that: A. Competence was more important than capability as a basis for sustainable competitive advantage B. Strategy should be focused on both exploiting and developing firms' core competences C. Competitive advantage rather than industry attractiveness was the primary source of superior profitability D. Management should build strategy on competences rather than resources

B. Strategy should be focused on both exploiting and developing firms' core competences

The difference between substitute and complementary products may be summarized as follows: A. Complementary relationships increase the profitability of all firms engaged in supplying them; substitute relationships reduce the profitability of all firms supplying them. B. Substitutes reduce the value of a product, whereas complements increase value. C. Complements reduce the value of a product, whereas substitutes increase value. D. Substitutes cannot be used together, whereas complements must be used in combination.

B. Substitutes reduce the value of a product, whereas complements increase value.

To attempt to predict competitive behaviors, Porter suggests a four-step framework, where analysts must identify: A. The competitor's current strategy, its future strategy, its assumptions, and its vulnerabilities B. The competitor's current strategy, its objectives, its assumptions about the industry and itself, and its available resources and capabilities C. The competitor's available resources and competencies, its objectives, then its competitive advantage, and finally its performance D. The competitor's assumptions about the industry, its available resources and competencies, its objectives, and its competitive advantage

B. The competitor's current strategy, its objectives, its assumptions about the industry and itself, and its available resources and capabilities

Strategy needs to take account of both the requirements of the firm's external environment and the firm's own resources and capabilities. Resources and capabilities rather than requirements of the external environment offer a stronger basis for strategy formulation when: A. When the firm is a multinational corporation B. The external environment is in a state of flux. C. The firm is engaged in the exploitation of natural resources such as petroleum or metal. D. When the firm is supplying producer goods rather than consumer goods.

B. The external environment is in a state of flux.

The major determinant of the organizational culture of most companies is: A. The impact of the company's local environment B. The personality and beliefs of the founder C. The cultural change initiatives promoted by top management D. The personal traits of employees

B. The personality and beliefs of the founder

Key success factors are: A. The generic strategy that is most closely aligned with customer preferences B. The sources of competitive advantage within an industry C. Factors that allow rivals to undermine a firm's competitive advantage D. The forces of competition that are most influential in determining industry profitability

B. The sources of competitive advantage within an industry

The two questions of "where" and "how" to compete define: A. a firm's values and culture B. a firm's vision and mission C. a firm's corporate and business strategies D. a firm's strategic management process

C. a firm's corporate and business strategies

In doubles tennis, the main mechanism through which the players coordinate their actions is: A. Rules and directives B. Shared values C. Organizational routines D. Mutual adjustment

D. Mutual adjustment

The producer of a complementary product can maximize its relative bargaining power by means of: A. Commoditizing the market for the complementary good. B. Adopting a cost cutting strategy to provide its product at the lowest possible cost and so exploit economies of scale. C. Restricting complementors' access to the market. D. Adopting a differentiation strategy that allows it to sell at a premium price.

A. Commoditizing the market for the complementary good.

The primary distinction between corporate strategy and business strategy is: A. Corporate strategy is concerned with where the firm competes; business strategy with how it competes B. Corporate strategy is concerned with the long-term performance of the firm; business strategy with resource deployment. C. Corporate strategy is concerned with establishing competitive advantage; business strategy with strategy implementation in individual businesses D. Corporate strategy is the responsibility of the CEO; business strategy is formulated by the heads of business units

A. Corporate strategy is concerned with where the firm competes; business strategy with how it competes

The firm's ability to appropriate the rents generated by its organizational capabilities: A. Depends upon the extent to those capabilities are embedded in team-based process that are heavily dependent upon corporate systems B. Is greater for firms in high technology than in low technology industries C. Is weakened if a firm uses independent contractors instead of full-time employees D. Is guaranteed by the fact that firms have full ownership of their capabilities

A. Depends upon the extent to those capabilities are embedded in team-based process that are heavily dependent upon corporate systems

Strategic group analysis is primarily useful for: A. Describing and understanding the strategic positioning of firms within an industry B. Identifying "blue ocean" opportunities C. Identifying the strategies that are most conducive ot profitability within an industry D. Identifying which strategic niches in an industry are least saturated and therefore have the greatest profit potential

A. Describing and understanding the strategic positioning of firms within an industry

Firms supplying niche markets are often highly profitable because: A. They tend to be sufficiently small that a single firm can often establish a dominant position B. They tend to be disregarded by major corporations C. They tend to supply specialty products for high income consumers D. They tend to have high entry barriers

A. They tend to be sufficiently small that a single firm can often establish a dominant position

Which of the following does not contribute to buyers' bargaining power? A. Low switching costs for buyers B. A high level of differentiation among the products that buyers purchase C. The size of buyers relative to that of sellers D. The ability of buyers to backward integrate

B. A high level of differentiation among the products that buyers purchase

The main strategic lesson to be drawn from the Biblical story of David and Goliath is: A. Conventional strategies don't work for newcomers. B. Adapt strategy to your relative strengths. C. The Israelis usually win D. The importance of first-mover advantage.

B. Adapt strategy to your relative strengths.

In a market where Firm A and Firm B are leading suppliers, if Firm A initiates a price cut, the likelihood that Firm B responds with an identical price cut will be greater: A. If Firm B's medium term goal is to maximize profit. B. If Firm B's medium term goal is to maximize market share. C. If Firm B is a private rather than a public (listed) company. D. If the market is growing.

B. If Firm B's medium term goal is to maximize market share.

The relationship between commitment and strategic options may be beast described as: A. Commitments increase the value of real options B. Making commitments inevitably involve giving up options C. The two reside in different realms of analysis: commitments can be analyzed using game theory; real options can be analyzed using financial theory D. By committing to a set of options, a firm can reconcile two sources of value: value from deterring competitors and value from real options

B. Making commitments inevitably involve giving up options

An industry's current profitability: A. Is largely set by the profitability of the biggest company within that industry B. On its own tends to be a poor predictor of future profitability C. Is the result of many different factors interacting in unpredictable ways D. Is an excellent predictor of its future profitability since changes in industries' profitability occur slowly

B. On its own tends to be a poor predictor of future profitability

The key implication of "hypercompetition" in business is that: A. "If it ain't broke, don't fix it" is an obsolete piece of advice. B. The concept of Schumpeterian competition needs to be updated to realities of the 21st century. C. Competitive advantage is temporary. D. Technological change will continue to accelerate.

C. Competitive advantage is temporary.

For most organizations, geographical location should be regarded as: A. An organizational characteristic, not a resource B. A formerly important resource which is becoming increasingly irrelevant in a digital world C. A source of competitive advantage only its gives the organization access to an industry ecosystem such as Silicon Valley for IT firms and New York for advertising firms D. A key resource whose characteristics need to be given careful attention when formulating strategy

D. A key resource whose characteristics need to be given careful attention when formulating strategy

Strategic fit refers to: A. The need for a firm's strategy to fit the needs of all its stakeholders, not just shareholders B. The need for a firm's strategy to be consistent with its vision, mission, and culture C. The need for a firm's strategy to be unique D. The consistency of a firm's strategy with its external and internal environments

D. The consistency of a firm's strategy with its external and internal environments

The principal similarity between business and military strategy is that: A. The nature of leadership is much the same whether in a military or business context B. They are both concerned with tactical maneuvers that can establish positions of advantage C. They share the same objective: to annihilate rivals D. They share common concepts and principles

D. They share common concepts and principles

The pioneers of the multidivisional structure were: A. DuPont and General Motors B. Sears Roebuck and General Electric C. Standard Oil and Shell D. Ford and General Motors

A. DuPont and General Motors

Segmentation is a process through which: A. Product characteristics are matched with customer preferences B. One can assess the strengths and weaknesses of any firm in its market C. Industries are divided into groups of similar products D. Industries are divided into specific markets

D. Industries are divided into specific markets

Identifying key success factors within an industry requires answers to the following questions: A. What is a firm's unique selling proposition? B. What are the main sources of a company's cost efficiency? C. What do customers want and what should the firm do to survive competition? D. Which of the five forces of competition most threaten a firm's survival and how could the firm deal with them?

C. What do customers want and what should the firm do to survive competition?

The relationship between design and emergence in strategy making is best described as: A. A tension between the forces of centralization and decentralization B. An example of the agency problem in which the interests of salaried managers displace the interests of owners C. A process in which intended strategy is adapted as it is implemented D. An interactive process between strategic planners and line managers

C. A process in which intended strategy is adapted as it is implemented

The principal value of game theory to the field of strategic management is in: A. Generating more accurate predictions from competitive situations B. Extending the analysis of competitive behavior to the realms of politics, diplomacy, and social behavior C. Permitting a more rigorous framing of competitive situations and strategic decisions D. Extending the theory of competition behavior to embrace cooperation

C. Permitting a more rigorous framing of competitive situations and strategic decisions

Legal requirements that banks, providers of wireless telecommunication services, and taxis must obtain a government issued license before going into business impact the profitability of their respective industries: A. Negatively because governments charge high fees for such licenses B. Positively if such licenses can be sold on a secondary market C. Positively because they restrict entry to the industry D. Negatively because such licensing is usually accompanied by regulation of prices

C. Positively because they restrict entry to the industry

For hierarchical organizations to be adaptable requires: A. Adequate resources B. Separation between centralized strategic decisions and decentralized operating decisions C. Some degree of decomposability D. Shared values

C. Some degree of decomposability

Parallel pricing—the tendency for companies in an industry to move prices more or less simultaneously—is typically an indicator of: A. Healthy price competition B. Lack of product differentiation C. The desire of oligopolists to avoid price competition D. The sensitivity of the firms in an industry to the unpopularity of price increases

C. The desire of oligopolists to avoid price competition

In strategic management, the expression "blue oceans" refers to: A. The ability to cut costs through moving production to offshore locations B. Radical innovation C. The potential offered by uncontested market space D. A key theme in the US Navy's strategic planning process

C. The potential offered by uncontested market space

The ways in which labor is divided into distinct tasks, and coordination is achieved among these tasks A. The allocation of an organization's resources to divisions and departments B. The ways in which tasks are divided among divisions and managerial coordination achieved from the highest level of the organization C. The ways in which labor is divided into distinct tasks, and coordination is achieved among these tasks D. The way in which coordination and cooperation between productive tasks is organized

C. The ways in which labor is divided into distinct tasks, and coordination is achieved among these tasks

The main reason that most entrepreneurial start-up companies adopt a formalized process of strategic planning processes at some stage of their development is: A. To limit the power of founders B. To enable decisions to become focused more on long term development C. To facilitate coordination and control as a company grows in size and complexity D. To allow quantitative analysis to be applied to strategic decision

C. To facilitate coordination and control as a company grows in size and complexity

Strategy improves decision-making by: A. Reducing the number of choices being considered B. Integrating and pooling the knowledge of different members of the organization C. Facilitating the use of analytic tools D. All of these

D. All of these

Empirical research shows that proportion of inter-firm differences in profitability that industry factors explain is: A. More than 75%. B. The question is unanswerable because "industry" is a meaningless concept. C. About half. D. Less than 25%.

D. Less than 25%.

There are two primary sources of profit (or "economic rent"): A. Competitive advantage and disequilibrium rents. B. Market power and competitive advantage. C. Cost advantage and differentiation advantage. D. Market power and superior resources.

D. Market power and superior resources.

Resources lack transferability between firms when: A. They are subject to time compression diseconomies B. They are difficult to replicate C. Market transactions are impeded by imperfect information D. They are embodied in fixed capital

C. Market transactions are impeded by imperfect information

The creation of business enterprises where a head office managed geographically-separate operational units was facilitated by: A. The development of management as a practical science B. The introduction of limited liability C. Improvements in transportation and communication—especially the railroad and telegraph D. The development of the multidivisional corporation

C. Improvements in transportation and communication—especially the railroad and telegraph

The main difference between corporate level strategy and business level strategy is: A. Corporate strategy defines the scope of a firm's activities, while business strategy focuses on how to beat the competition in specific product markets B. Corporate strategy comprises the overall strategic plan, while business strategy focuses on implementing that strategy in each product market C. Corporate strategy defines a firm's overall structure, while business strategy describes its actions D. Corporate level strategy is concerned with long term goals, while business level strategy focuses on short term competitiveness

A. Corporate strategy defines the scope of a firm's activities, while business strategy focuses on how to beat the competition in specific product markets

Joseph Schumpeter perceived competition among companies as: A. A process of creative destruction B. A process of punctuated equilibrium in which periods of stability were interspersed by bouts of intense competition C. A process of oligopolistic rivalry D. Corresponding closely to economists' model of perfect competition where profits are competed away

A. A process of creative destruction

In most large companies strategic planning is: A. A process that combines top-down initiatives and directives and bottom-up proposals B. A formalized ritual that has little to do with real strategy formulation C. Primarily a top-down process D. Primarily a process of managed emergence

A. A process that combines top-down initiatives and directives and bottom-up proposals

Competitive intelligence, the systematic collection and analysis of information about rival firms, is: A. An important component of a firm's environmental scanning and strategic analysis. B. Likely to distract firms from their efforts to establish positions of competitive advantage based upon their distinctive strengths. C. A practice which, though legal in most countries, is unethical. D. A useful activity because it can help firms imitate the strategies of their more successful competitors.

A. An important component of a firm's environmental scanning and strategic analysis.

One implication of the resource-based perspective is that: A. By aligning their strategies to their resources and capabilities, firms emphasize their differences rather than their similarities B. Firms tend to adopt similar or close strategies C. Firms focus on building a stronger portfolio of capabilities than their rivals D. Firms focus on reducing their vulnerability by correcting their weaknesses

A. By aligning their strategies to their resources and capabilities, firms emphasize their differences rather than their similarities

Organic organizational forms are preferable to mechanistic organizational forms: A. For firms in dynamic, uncertain environments B. For large, diversified firms C. In countries with well-educated workforce D. For firms supplying consumer goods

A. For firms in dynamic, uncertain environments

Industries where a decline in demand is most likely to cause industry-wide losses tend to have the following characteristics: A. High exit barriers, lack of product differentiation, and a high ratio of fixed to variable costs B. High exit barriers, lack of product differentiation, and powerful buyers C. High concentration, lack of product differentiation and scale economies D. Powerful buyers and suppliers and high exit barriers

A. High exit barriers, lack of product differentiation, and a high ratio of fixed to variable costs

A well-established brand can be a source of sustainable competitive advantage because: A. It tends to be durable, loses value when transferred between firms, and is costly to replicate. B. Brands can be protected by the law relating to trademarks. C. A brand protects a firm form competition from low-cost new entrants. D. Consumers will always pay a premium for a recognized brand.

A. It tends to be durable, loses value when transferred between firms, and is costly to replicate.

An important role of shared values within an organization is to: A. Support cooperation and goal alignment among organizational members. B. Increase employee productivity C. Resolve stakeholder conflict D. Economize on the need for financial incentives.

A. Support cooperation and goal alignment among organizational members.

While the Porter five forces framework is built upon the structure-conduct-performance model of industrial economics, Schumpeter's view of competition as creative destruction builds upon: A. The Austrian School view of competition as a dynamic. B. The Chicago School of economic thought. C. Oligopoly theory. D. Game theory.

A. The Austrian School view of competition as a dynamic.

A fundamental task of organization is to manage: A. The division of labor into separate tasks and their subsequent integration B. The division of labor into separate tasks C. The problem of agency D. Cooperation and coordination

A. The division of labor into separate tasks and their subsequent integration

The primary purpose of strategy is: A. To achieve success B. To be a responsible corporate citizen C. To create value for all stakeholders D. To maximize shareholder value

A. To achieve success

If administering deterrence is costly or unpleasant for the threatening party, then: A. It reinforces the power of the threatening party B. It will always lack effectiveness C. It may lack credibility D. It will need to be supported by appropriate signaling

C. It may lack credibility

Signaling refers to: A. Deception through misinformation B. Any deliberate action that is intended to influence other players' perceptions or behavior C. Internal communications that divert strategic orientations and obtain the buy-in of the organization's key stakeholders D. Communications that announce your strategic intentions or plans to rivals

B. Any deliberate action that is intended to influence other players' perceptions or behavior

Firm's with outstanding capabilities are typically those which: A. Have developed their organizational routines over the longest periods of time. B. Are able to integrate their resources most effectively. C. Possess the best resources. D. Have the most effective leaders.

B. Are able to integrate their resources most effectively.

A key limitation of Porter's five forces model of competition is that: A. Industries are more complexity than can be reduced to five competitive forces B. Competitors' strategies may shape industry structure, rather than structure shaping competition C. The different levels of industry analysis that the five forces model can be applied to D. It looks only at single industries not at relationships between industries

B. Competitors' strategies may shape industry structure, rather than structure shaping competition

The main problem of SWOT as a framework for strategy analysis is that: A. It has now been superseded by more sophisticated analytical frameworks B. Distinguishing opportunities from threats and strengths from weaknesses is often difficult C. It is so widely used that it no longer has any novelty D. It is focused on strategy formulation and fails to take account of strategy implementation

B. Distinguishing opportunities from threats and strengths from weaknesses is often difficult

The successful careers of both Queen Elizabeth II and Lady Gaga may be attributed to the fact that both: A. Have built a loyal fan base based on astute use of the media B. Have a consistency of direction based on clear goals C. Have a knack for being in the right place at the right time D. Have used dressing up as a means of attracting attention and establishing identity.

B. Have a consistency of direction based on clear goals

The core of a firm's business environment is comprised by: A. Its relationships with all stakeholders B. Its relationships with customers, competitors and suppliers C. Its technological environment D. The socioeconomic system within which the firm must exist

B. Its relationships with customers, competitors and suppliers

A major reason why many companies have the high valuation ratios (ratio of stock market value compared to their balance sheet asset value) is: A. Stock market doubts over the valuation of financial assets by companies and their auditors. B. The undervaluation of intangible resources on companies' balance sheets. C. The rise of intellectual property valuation as a result of recent patent litigation. D. Stock market irrationality which results in some companies becoming overvalued.

B. The undervaluation of intangible resources on companies' balance sheets.

The profits earned by firms in an industry, are determined by: A. The overall state of the economy and the intensity of competition within the industry B. The value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers and their buyers C. The extent to which the industry is protected by barriers to entry D. How much customers value the products supplied by the industry

B. The value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers and their buyers

Intangible resources tend to be more valuable than tangible resources because: A. They are easier to acquire B. They are more likely to provide sustainable competitive advantage C. They are cheaper to acquire D. All of the above

B. They are more likely to provide sustainable competitive advantage

The distinguishing attributes of core competences is that: A. They provide a basis for building new technological processes and offer a valuable product or service to a firm's customers B. They provide a basis for entering new markets and make a disproportionate contribution to the customer value C. They allow top managers to understand the human resources of their firm and to define and implement a technological strategy D. They are found primarily in Japanese companies such as Honda, Canon, and Sony

B. They provide a basis for entering new markets and make a disproportionate contribution to the customer value

If an industry earns a return on capital in excess of its cost of capital: A. Workers will push for higher pay and benefits causing the level of profitability to fall B. Firms within the industry will over-invest causing the return on capital to fall C. It will attract the attention of potential entrants and, unless protected by high barriers to entry, the return on capital will fall D. It will soon attracts the attention of competition authorities

C. It will attract the attention of potential entrants and, unless protected by high barriers to entry, the return on capital will fall

Competitive intelligence aims to: A. Explore how rivals' behavior could be positively influenced in the firm's interest, and signal the firm's strategic initiatives B. Collect information about rivals in other countries and, especially, to forecast their attacks against the focal firm's domestic market C. Forecast competitors' behavior, predict their reactions, and explore how their behavior may be influenced D. Forecast competitors' future financial performance and analyze responses to their previous strategic initiatives

C. Forecast competitors' behavior, predict their reactions, and explore how their behavior may be influenced

The division of responsibility between corporate and business strategy is consistent with the following principle: A. The hierarchical nature of authority within organizations B. Corporate level strategy is the domain of the parent company; functional managers are responsible for business strategies C. Corporate level strategy is the domain of headquarters executives; divisional managers are responsible for business strategies D. Delegation is the key to reconciling responsiveness and adaptability with overall integration

C. Corporate level strategy is the domain of headquarters executives; divisional managers are responsible for business strategies

If an organization possesses strengths in a resource or capability that bears little relationship to the industry's key success factors it should: A. Seek to sell that resource r capability to another organization B. Adopt a niche strategy. C. Seek an innovative approach to making that resource or capability strategically relevant D. Regard that resource or capability as strategically irrelevant.

C. Seek an innovative approach to making that resource or capability strategically relevant

The tendency for societies to revert to subsistence economies when the fabric of civilization breaks down is because: A. The modern economy requires money which requires a stable national government B. Uncertainty reinforces the role of the family and family-based production C. Specialization and the division of labor require an exchange economy which depends upon mutual trust and the rule of law D. Shops cannot operate when there is a risk of looting

C. Specialization and the division of labor require an exchange economy which depends upon mutual trust and the rule of law

When the environment becomes more turbulent and unpredictable: A. Strategy becomes less important than intuition B. External consultants need to play a greater role in strategy making C. Strategy becomes an increasingly important as a source of direction D. Strategy becomes an impossible exercise

C. Strategy becomes an increasingly important as a source of direction

In the military field, we generally make the following distinction between strategy and tactics: A. Tactics form the overall plan whereas strategy is concerned with the maneuvers to win battles B. Tactics comprise the overall plan whereas strategy focuses on specific actions C. Tactics relate to specific actions whereas strategy relates to the overall plan D. Tactics encompass specific political actions within the firm whereas strategy is the overall plan for deploying resources to establish a favorable position

C. Tactics relate to specific actions whereas strategy relates to the overall plan

Economic value is created when: A. The price that the customer is willing to pay for a product exceeds the costs of the material inputs used to produce the product B. The value of a product to consumers exceeds the price they paid for it C. The price that the customer is willing to pay for a product exceeds the cost of supplying it D. The surplus of value is distributed between customers and producers in the industry by the forces of competition

C. The price that the customer is willing to pay for a product exceeds the cost of supplying it

Bargaining power rests, ultimately, on: A. Tradition B. The respective effectiveness and cohesion of top management teams C. The relative costs that each party would incur from walking away from the deal D. The negotiating skills of the buyer versus the seller

C. The relative costs that each party would incur from walking away from the deal

The most useful approach to forecasting industry profitability in the future is: A. To use an industry's probability at similar stages of the business cycle in the past as an indicator of future profitability B. To estimate the industry's revenues and costs in future years C. To understand how the industry's structure has determined competitive intensity and profitability in the past, then to use information on an industry's changing structure to predict how profitability is likely to change in the future D. To extrapolate the trend of industry profitability into the future

C. To understand how the industry's structure has determined competitive intensity and profitability in the past, then to use information on an industry's changing structure to predict how profitability is likely to change in the future

The main reason for the transition from corporate planning to strategic management during the latter half of the 1970s was: A. Disappointing outcomes of corporate diversification. B. The increasing costs of corporate planning departments. C. Growing disillusionment with central planning D. A more turbulent business environment that became increasingly difficult to predict

D. A more turbulent business environment that became increasingly difficult to predict

A conceptualization the firm as an "activity system" is a means of depicting: A. The extent to which a management is motivated to implement a firm's strategy B. The extent to which a firm's resources and capabilities are aligned with its strategic goals C. The extent to which a firm's strategic goals are aligned with its industry environment D. Consistency among a firm's activities

D. Consistency among a firm's activities

Initiatives to improve an industry's profitability through changing its structure are: A. Always risky because they attract the attention of antitrust authorities B. Feasible in any industry that is subject to ruinous price competition C. Only feasible for the dominant player within an industry D. More difficult in fragmented industries than in concentrated industries

D. More difficult in fragmented industries than in concentrated industries

The epithet "Great strategy; lousy implementation" is typically wrong because: A. None of the above B. All of the above C. Strategies are typically formulated in the course of their implementation (i.e. they are "emergent") D. Strategies whose formulation does not take account of their potential for implementation are not great strategies

D. Strategies whose formulation does not take account of their potential for implementation are not great strategies

Video game consoles and video games are complementary products: the availability of one increases the value of the other. In the past the suppliers of consoles were able to appropriate most of the profits generated by video game systems because: A. Video game consoles cost more to develop than video games. B. The consoles were more powerful determinant of the consumer experience than the games. C. The console makers—Nintendo, Sony and Microsoft—had bigger revenues and greater market capitalization than the suppliers of video games. D. The console suppliers controlled technology and distribution giving them more bargaining power than the suppliers of video games.

D. The console suppliers controlled technology and distribution giving them more bargaining power than the suppliers of video games.

The basic premise of industry analysis is that: A. Perfect competition and monopoly are the basic models, most industries lie between these two extremes B. Technology and consumer demand are the basic forces that shape industry structure C. Industry profitability depends upon the interaction among competing firms D. The level of profitability within an industry is determined by the systematic influence of the industry structure which determines the intensity of competition in the industry

D. The level of profitability within an industry is determined by the systematic influence of the industry structure which determines the intensity of competition in the industry

The "agency problem" refers to: A. The tendency for the CEOs of public corporations to receive excessive compensation B. The misalignment of goals between the shareholders and managers of a company C. The inability the owners of a company to control the managers they appoint to run the company D. The misalignment of goals between a principal and his/her agent

D. The misalignment of goals between a principal and his/her agent

Military strategy and business strategy differ in that: A. There is no concept like tactics in business B. None - there is no conceptual difference C. Military strategy can only be learned through field experience; business strategy can be developed through analytical frameworks D. The objective of military strategy is to defeat the enemy; business strategy seeks coexistence rather than annihilation

D. The objective of military strategy is to defeat the enemy; business strategy seeks coexistence rather than annihilation

A bank is establishing a fixed income trading department. It is considering whether to hire a team of star traders or to invest a similar sum of money in developing a proprietary, automated trading system. The most valid reason for investing in the automated trading system in preference ot hiring star traders is: A. Star traders are difficult to manage and can easily become "rogue traders". B. It's difficult to motivate traders once they have earned their first few million. C. Advanced software is better than human intuition at identifying mispricing in financial markets. D. The proprietary trading system is likely to generate better returns since star traders are in a powerful position to negotiate pay packages which appropriate the major part of the profit they create.

D. The proprietary trading system is likely to generate better returns since star traders are in a powerful position to negotiate pay packages which appropriate the major part of the profit they create.

The success of the multidivisional structure as an organizational form was because: A. Line-and-staff structures allowed companies to serve to a broader geographical area B. Divisions were forced to compete with one another for corporate resources C. It permitted decision making ot be decentralized D. The separation of strategic from operational decision allowed corporate management to exercise more effective strategic and financial control

D. The separation of strategic from operational decision allowed corporate management to exercise more effective strategic and financial control

It is important for in incoming CEO to be intimately familiar with the culture of the organization he/she is joining because: A. The fact that "Culture eats strategy for lunch" means that managing culture is a more important task for a CEO than managing strategy B. Culture is a vital lever that the CEO can manipulate C. A critical task for a new CEO is to adapt the organization's culture to the strategy that the CEO wishes to pursue D. Top management initiatives that conflict with the culture of the organization are likely to fail

D. Top management initiatives that conflict with the culture of the organization are likely to fail

In most large companies the strategic planning cycle begins with: A. Business units developing business plans B. The financial requirements set by investors and the stock market C. Guidelines developed by the board of directors D. Top management setting strategic priorities

D. Top management setting strategic priorities

Given the range of external influences that impact a firm, understanding the external environment requires managers to: A. Use all existing sources and techniques to gather and analyze information B. Devote a large proportion of their time to this task C. Monitor competitors closely D. Use a framework or a system that allows them to organize relevant information and rank the importance of different factors

D. Use a framework or a system that allows them to organize relevant information and rank the importance of different factors