ba453 practice quesetions

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Weaknesses threat Alternative

"Defensive" alternatives, eliminate or minimize a weakness in order to minimize the effect of a threat

Strength Opportunity Alternative

"Offensive" alternatives, utilize a strength to address an opportunity

According to the text, which event played a role in the innovator CNN losing its leadership position in the 24-hour cable news industry? A. The downturn in the economy impacting media firms B. "Second movers" using incremental innovation to continuously improve their offering C. Not investing enough resources into R&D and satellite technology D. Becoming too diversified and losing strategic focus

"Second movers" using incremental innovation to continuously improve their offering

Tesla- Rivalry

-several multi national companies with comparable resources. -barriers to exit HIGH

Better Expectations of Future.

1. Better Expectations of Future Values (Buy resources at low cost)- Highway expansion

SWOT alternatives

1. Strength-Opportunity: 2. Weaknesses-Threat: 3. Strength-Threat: 4. Weakness-Opportunity

A company is considered to be a single-business firm when at least _________ percent of revenues are generated by the dominant business. A. 50 B. 95 C. 80 D. 99

How is a firm's task environment different from its general environment? A. Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment. B. Managers have no direct effect over external factors in the task environment; they have some influence over external forces in the general environment. C. Managers have no direct effect over external factors in the task environment; they have influence over all external forces in the general environment. D. Managers have influence over all external factors in the task environment; they have no direct effect over external forces in the general environment.

The final step in industry analysis is to A. draw a strategic-group map. B. identify the underlying drivers of the five forces. C. identify the key players in each of the five forces. D. define the relevant industry.

The production department at Coral Cements that is a subsidiary of the large conglomerate Five East Corp. has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its cement bags. Which of the following strategies does this scenario best illustrate? A. functional strategy B. corporate strategy C. master strategy D. business strategy

Which of the following factors most effectively contributed to the success of Threadless in comparison to other companies with T-shirt designs, including American Eagle, Old Navy, and Urban Outfitters? a. reliance on crowdsourcing b. point-to-point business model c. hub and spoke system d. shorter distances

Which of the following would be considered a weak stakeholder strategy? A. putting shareholder interests above the interests of other stakeholders B. addressing the concerns of all stakeholders, including employees C. always using fair and ethical practices to satisfy stakeholders D. ensuring that the primary stakeholders achieve their objectives

The soft drink industry has been one of the most profitable industries for years. There are two key competitors, Coke and Pepsi, who compete on product innovation and lifestyle advertising. Additionally, barriers to entry are high and supplier power is weak. Michael Porter calls this industry: A. A positive-sum industry B. A "five star" industry C. A shining star industry D. A complementary industry

A "five-star" industry

The U.S. airline industry has intense rivalry, primarily undifferentiated products, low entry barriers, and low switching costs. Furthermore, suppliers of aircraft engines to the industry have strong bargaining power. It is no surprise that this industry has been one of the least profitable for years. Michael Porter calls this industry what? A. A zero-sum industry B. A "zero star" industry C. A declining star industry D. A competitively dynamic industry

A "zero-star" industry

Which of the following is NOT a strategic advantage of backward integration? A. Better access to end users B. Ability to secure critical supplies C. Ability to produce higher-quality products D. The potential to reduce costs

A Better access to end users

What pitfall does the use of strategic activity systems highlight when a competitor is considering imitating a rival firm?

A compounding effect, reducing the probability of successfully copying each interconnected system activity

What pitfall does the use of strategic activity systems highlight when a competitor is considering imitating a rival firm? A. Copyright infringement against copying the firm's processes B. A compounding effect, reducing the probability of successfully copying each interconnected system activity C. Path dependence of the core activities of the firm D. Loss of competitive advantage due to reduction of VRIO

A compounding effect, reducing the probability of successfully copying each interconnected system activity

Failure to achieve competitive advantage is an indication of: A. Using the incorrect measurement tools. B. A poor economy. C. A failure in strategy. D. Being in the wrong strategic group.

A failure in strategy.

Dynamic Capabilities

A firm can modify its resource base to gain and sustain a competitive advantage - Advantage is gained from reconfiguring a firms resource base -Honda core competency in gas powered engine -Tesla competency in batteries would gain advantage Dynamic capabilities are an intangible resource • Resource stocks and flows are a useful view

All of the following are true concerning the importance of dynamic capabilities to a firm EXCEPT: A. A firm is unable to create rare resources unless it is dynamic. B. The firm must be able to change its resource base and activity systems when the external environment changes. C. The firm must be able to modify, upgrade, and reconfigure its resources as needed. D. Possessing dynamic resource capabilities helps the firm sustain competitive advantage(s) over time.

A firm is unable to create rare resources unless it is dynamic

What is NOT true concerning the importance of dynamic capabilities to a firm?

A firm is unable to create rare resources unless it is dynamic

Measuring profitability on a relative rather than absolute basis is important because of all of the following EXCEPT: A. It indicates how much profit a firm earns per dollar of revenue instead of overall profit. B. It helps to compare firms of different sizes. C. Relative profitability is a better reflection of competitive advantage than is absolute profitability. D. A firm that has the greatest overall profit will sustain competitive advantage(s).

A firm that has the greatest overall profit will sustain competitive advantage(s)

Information asymmetries occur when: A. Certain departments within the firm keep information from other departments. B. There are gaps in technological skills between employees of a firm. C. A firm transacts in the market with a seller who has better information about the product or service. D. All of these.

A firm transacts in the market with a seller who has better information about the product or service.

Intangible assets add great value to a firm because: A. A firm's reputation and brand equity are accumulated quickly and can be leveraged easily. B. A firm's culture, knowledge, and intellectual property take time to develop and are generally difficult to imitate. C. Tangible assets require a high degree of capital; intangible assets do not. D. All of these.

A firm's culture, knowledge, and intellectual property take time to develop and are generally difficult to imitate.

Intangible assets add great value to a firm because?

A firm's culture, knowledge, and intellectual property take time to develop and are generally difficult to imitate.

All of the following are tangible resources EXCEPT: A. Production equipment. B. Distribution centers. C. A firm's reputation. D. A firm's headquarters building.

A firm's reputation

An example of a non-tangible resource?

A firm's reputation

In 2010, Levi Strauss & Co introduced a new line of jeans called Levi's Curve ID. Levi's launched this product based on research that found that 80 percent of women fall into three distinct body shapes. Customers can now go to Levi's website and use a product configurator in order to determine their "Curve ID" and purchase jeans most appropriate for their body type. Levi's is using what tool to improve their strategic position? A. A product differentiation strategy with complements as a value driver. B. A product differentiation strategy with customization as a value driver. C. A focused cost leadership with economies of scale as a cost driver. D. A focused cost leadership with economies of learning as a cost driver.

A product differentiation strategy with customization as a value driver.

Competitive advantage is best assessed by using: A. Accounting data. B. Value creation. C. A relative benchmark. D. The firm's stock price.

A relative benchmark

Which of the following frameworks is most effective at demonstrating the difficulty of imitating a firm with 25 interconnected activities?

A strategic activity system

Which of the following frameworks is most effective at demonstrating the difficulty of imitating a firm with 25 interconnected activities? A. A strategic activity system B. The VRIO framework C. Value chain analysis D. SWOT analysis

A strategic activity system

When a firm is conceptualized as a network of socially complex, interconnected activities, it is referred to as being: A. A value-oriented system. B. A strategic activity system. C. An adaptive organization. D. A firm with high resource utilization.

A strategic activity system.

When a firm is conceptualized as a network of socially complex, interconnected activities, it is referred to as being?

A strategic activity system.

What is a standalone division of a larger conglomerate, with its own profit-and-loss responsibility?

A strategic business unit

Which of the following is NOT a main industry group in the SCP model? A. Monopolistic competition B. An oligopoly C. Perfect competition D. A strategic group

A strategic group

All of the following statements are TRUE about strategy EXCEPT: A. There is no single best strategy; only strategies that are better than that of rivals. B. A strategy that has provided competitive advantages in the past will most likely do so in the future. C. Strategy must integrate and align each business unit. D. Performance metrics that measure effectiveness must aggregate upward and reflect overall company performance.

A strategy that has provided competitive advantages in the past will most likely do so in the future.

learning structure

A structure in which employees continually acquire and share new knowledge and apply that knowledge (johnson and johnson)

The U.S. cell-phone industry uses a combination of the razor-razor-blade model with which other model when it offers a two-year contract in exchange for a heavily subsidized new phone?

A subscription-based model

John Connelly went to the grocery store to buy some butter. As he was looking at the butter offerings, he noticed that Pam cooking spray was advertised as $1.00 less for the same amount of product. John purchased the spray. The spray is considered to be a what? A. A complement B. A mobility product C. A replacement D. A substitute

A substitute

The United Auto Workers (UAW) union is which of the five forces in the automotive industry? A. A supplier B. A buyer C. A complement D. A substitute

A supplier

Which of the following acquisitions would be considered the LEAST related? A. A baking company purchasing a sugar company B. A chain of hotels acquiring a golf course C. A toy manufacturer acquiring a coffee company D. A steelmaker acquiring a kitchen utensils company

A toy manufacturer acquiring a coffee company

All of the following are considered an external stakeholder within a firm except which of the following?

A. Alliance partners B. Governments C. Employees D. Creditors Employees are an internal, NOT an external, stakeholder.

A generic business strategy is more likely to help a cost-leadership firm achieve competitive advantage when it does which one of the following? A. Allows a firm to perform similar activities differently than its rivals with resulting lower costs B. Allows a firm to perform different activities than its rivals with greater value creation C. Allows a firm to perform similar activities than its rivals with greater costs or lower value creation D. Helps a firm create as large a gap as possible between the differential value created and the cost required

A. Allows a firm to perform similar activities differently than its rivals with resulting lower costs

The objective of Porter's five forces model is to:

A. Assess firm profitability. B. Assess the potential for profits within an industry. C. Emphasize the intensity of rivalry within an industry. D. Analyze the economic conditions of the industry. Applying the five forces analysis to an industry helps to determine competitive intensity and attractiveness of an industry, which reflects profit potential.

Which of the following is NOT a major consideration of barriers to entry?

A. Capital requirements B. Brand identity C. Positive growth rate D. Economies of scale Positive growth rates in an industry attract entrants, so it is not an entry barrier.

Exit barriers are obstacles that determine how easily a firm can leave the industry. When exit barriers are high, what happens to industry attractiveness?

A. It decreases. B. It increases. C. It becomes a complement. D. It has no impact. High exit barriers cause firms to stay in the industry longer than they may want to and increases rivalry, thereby reducing potential profits.

Strategy is primarily about ____________.

A. Maximizing firm profits B. Deriving operation effectiveness C. Creating superior value D. Competitive benchmarking A strategy must create superior value to drive competitive advantage for the firm.

6. Which of the main industry groups in the SCP model is described as having a few large firms, differentiated products, and high entry barriers?

A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition An oligopoly has a few large firms, differentiated products, and high entry barriers.

Competitive intensity will increase when all of the following happen EXCEPT:

A. Proprietary technology is a core capability. B. Rivals are similar in size and capability. C. Buyers switching costs are low. D. Exit barriers are high. Proprietary technology protects firms from rivalry.

An ideal competitive environment from a profit-making standpoint is when:

A. Rivalry is moderate, and high entry barriers and good substitutes do not exist. B. Rivalry is high, entry barriers are low, and there are many substitutes. C. Rivalry is high, buyers and sellers have strong bargaining power, and entry barriers are low. D. Rivalry is moderate, entry and exit barriers are low, and there are many substitutes. Profitability is weakened when barriers to exit and entry are low, buyers and sellers have strong bargaining power, and there exist many substitutes.

Suppliers are powerful when which of the following happens?

A. Satisfactory substitutes are available. B. They sell a commodity. C. They offer a credible threat of forward integration. D. They are part of a highly fragmented industry. A credible threat of forward integration increases supplier power.

Which of the following is NOT one of Porter's five forces?

A. Substitutes B. Suppliers C. Complements D. Buyers Complements is added as a sixth force for industry attractiveness, but Porter's model does not include it.

Currently, lean manufacturing is ______ but_____ resource, which leads to competitive parity

A. Valuable, rare B. Common, Tangible C. Valuable, common D. Rare, tangible Valuable , Common

Under the five forces model, a risk to a firm with a differentiation strategy is: A. When the focus of competition switches to price rather than features and new acceptable levels of quality have emerged due to innovation. B. When the focus of competition switches to price rather than features and the substitute products are considered below acceptable levels of quality. C. When the focus of competition switches to features rather than price, the substitute products are considered below acceptable levels of quality. D. When the focus of competition switches to features rather than price and new acceptable levels of quality have emerged due to innovation.

A. When the focus of competition switches to price rather than features and new acceptable levels of quality have emerged due to innovation.

Any unplanned strategic initiative undertaken by mid-level employees of their own volition is a(n) ________________.

A. dominant strategic plan B. developing strategy C. emergent strategy D. contingent strategy Emergent strategy starts at the middle- and lower-levels of an organization.

The resource based view is in sharp contrast to which model of industry competition

A. perfect comp B.Monopoly. C. Oligopoly D. Monopolestic Competition Perfect Competition

A firm's six PESTEL environmental forces include ______________.

A. political, trade secrets, legal, and technological B. product, environmental, political, and technological C. political, economic, legal, and technological D. environmental, product, ecological, and technological The six PESTEL forces are political, economic, sociocultural, technological, ecological, and legal.

A firm can use its knowledge of the five forces to strengthen its competitive position through ___________.

A. product differentiation B. leveraging complements C. backward integrating to reduce supplier power D. All of these Firms that are able to differentiate a product have a degree of pricing power, complements add value to a product and backward integrating removes supplier power.

Generally, perfectly competitive industries such as paper and steel (commodities) are deemed to be ________ in profits to more differentiated industries like pharmaceuticals and cosmetics.

A. superior B. inferior C. similar D. indeterminate Perfectly competitive industries are inferior in profit-making ability because their capacity to differentiate a product offering is limited and consumers base their purchasing decisions solely on price.

Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.

A. sustainable competitive advantage B. increased power distance C. diseconomies of scope D. competitive disadvantage If a firm underperforms relative to its rivals or the industry average, it has a competitive disadvantage.

There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the basic cost drivers is: A. Access to unique features that turn commodities into differentiated products. B. Access to lower-cost input factors including raw materials and labor. C. Creating personalized customer service in order to minimize price-sensitivity. D. Shifting to small-scale production processes in order to create customized products.

Access to lower-cost input factors including raw materials and labor.

_____________ such as paying salaries and setting up a shop floor are internal transaction costs. A. Administrative costs B. Process costs C. Explicit costs D. Market costs

Administrative costs

Understanding the shareholder's view of value creation under the balanced scorecard leads a firm to: A. Focus on value chain activities. B. Select which product markets to be in. C. Decide how many shares of stock it should sell. D. Adopt a more future-oriented perspective.

Adopt a more future-oriented perspective.

Performance metrics used to assess the effectiveness of a firm's strategy should be: A. Aggregated and viewed from an overall company perspective. B. Aggregated and viewed from a functional-level perspective. C. Focused on quantitative, not qualitative, measurements. D. Broken down by specific parts of the company.

Aggregated and viewed from an overall company perspective.

When a firm is fully vertically integrated: A. All activities are conducted within the boundaries of the firm. B. It is a single-business organization. C. It is a conglomerate. D. It is still reliant on certain suppliers along the industry value chain.

All activities are conducted within the boundaries of the firm.

A firm can use its knowledge of the five forces to strengthen its competitive position through ___________. A. product differentiation B. leveraging complements C. backward integrating to reduce supplier power D. All of these

All of these

As noted in Strategy Highlight 3.1, UBS is a Swiss banking institution that provided tax savings to U.S. clients until the U.S. government took action against UBS. Which of the following is true? A. Political factors can remove a firm's competitive advantage(s). B. Barriers to entry can be created through political factors. C. Political factors can influence a firm's ability to differentiate its product. D. All of these.

All of these

Ecological concerns such as sustainability can: A. Be a useful tool for differentiation. B. Generate goodwill in the marketplace. C. Foster firm innovation. D. All of these.

All of these

Hyundai's reputation for quality is an asset that: A. Will not be reflected in Hyundai's accounting information. B. Will be reflected in Hyundai's market valuation. C. Will be important to Hyundai's competitive advantage D. All of these.

All of these

The competitive threat of potential entry is NOT strong when _____________. A. there will be expected competitive retaliation B. there are sizable economies of scale C. there are strong brand preferences and customers are loyal D. All of these

All of these

The factors that are important to focus on when mapping strategic groups include: A. Identifying the top competitive factors in your market, such as expenditures on research and development, pricing, distribution channels, and customers. B. Choosing two key dimensions from these factors for the horizontal and vertical axes, plotting your rivals along these axes, and looking for differences among the competition. C. Analyzing the firms that are closest to your organization on the map, because they will give your firm the strongest rivalry. D. All of these.

All of these

The triple bottom line is important to competitive advantage because: A. Social and ecological implications are important to firm performance. B. Achieving the triple bottom line can lead to sustained competitive advantage(s). C. These dimensions are important to stakeholders. D. All of these

All of these

The worldwide car industry has had few new entrants in the past couple of decades due to very large entry barriers. How is BYD getting around these barriers? A. In electric vehicles, the design is simpler than gas engines. B. BYD started as a battery company and has strengths there. C. BYD started by selling in emerging markets before developed ones. D. All of these.

All of these

Which of the following is a question that managers must ask concerning internal firm factors when conducting a SWOT analysis?

All of these

Which of the following is a question that managers must ask concerning internal firm factors when conducting a SWOT analysis? A. How can we use our resource base and core competencies to take advantage of an opportunity? B. What additional resources and capabilities are needed to take advantage of external opportunities? C. What resources and capabilities do we need to mitigate external threats? D. All of these.

All of these

Which of the following is true when it comes to a firm's capabilities? A. They are the organizational and managerial skills within a firm. B. They are found in the firm's structure, routines, and processes. C. They are used to deploy a firm's resources to orchestrate core competencies. D. All of these.

All of these

_______________ assesses whether a good business opportunity exists or not. A. A structure-conduct-performance (SCP) analysis B. A five forces industry environmental analysis C. A PESTEL model analysis D. All of these

All of these

Macro-environmental PESTEL analysis considers the effects of forces on ________. A. a single firm B. industry leaders C. an entire industry D. a strategic group

An entire industry

The type of industry most likely to engage in non-price competition is ___________. A. a perfectly competitive industry B. an oligopolistic industry C. all industries engage in non-price competition D. only strategic groups engage in non-price competition

An oligopolistic industry

Which of the following is NOT an example of a firm benefiting from economies of scope? A. Kleenex Corporation using paper products for both its facial tissue and paper towel businesses B. Anheuser-Busch spreading its fixed costs over millions of gallons of beer produced each year C. Amazon leveraging its core competencies in IT systems into a wide range of online services, from retailing to cloud computing D. Honda using flexible manufacturing systems for quick and low-cost switching from one product to another

Anheuser-Busch spreading its fixed costs over millions of gallons of beer produced each year

"Stakeholders" under the stakeholder theory are: A. Only concerned with return on risk. B. Governmental bodies who oversee industry regulations. C. Interested in maximizing profit. D. Anyone who makes contributions to a firm and expects inducement in return.

Anyone who makes contributions to a firm and expects inducement in return.

Recessions are often viewed as a period of defensive position for firms. However, shrewd managers initiate strategic successes during downturns. What is an example of this provided in the text? A. GM's foray into electric vehicles in California B. Apple's increased R&D spending that lead to the launch of iPod C. Intel's movement into European markets D. UBS

Apple's increased R&D spending that lead to the launch of iPod

The objective of Porter's five forces model is to: A. Assess firm profitability. B. Assess the potential for profits within an industry. C. Emphasize the intensity of rivalry within an industry. D. Analyze the economic conditions of the industry.

Asses the potential for profits within an industry

Under the resource-based view of competitive advantage, firm resources such as intellectual knowledge and plant equipment are: A. Assets that are key to superior firm performance. B. Assets that may aid a firm but are not as important as the firm's strategic group. C. Needed in order to achieve economies of scale. D. Less important to competitive advantage than are resource immobility. Under the resource-based view of competitive advantage, firm resources are the key to superior firm performance.

Assets that are key to superior firm performance.

Under the resource-based view of competitive advantage, firm resources such as intellectual knowledge and plant equipment are?

Assets that are key to superior firm performance.

Stakeholder power and influence will vary by industry. In the ________, one of the most powerful external stakeholders has historically been unions.

Automotive industry

Avon has been able to raise the perceived value of its products while lowering production costs. It has also been able to create more value in relationship to its costs over rivals Revlon and L'Oreal. It can be said that: A. Avon has successfully moved from a differentiation to a cost-leadership strategy. B. Avon has a competitive advantage because it has the features customers value most in the cosmetics industry. C. Avon has successfully achieved an integration strategy and has a competitive advantage because it has higher value creation. D. Avon is the low cost leader of the cosmetics industry with their "sell at home" sales approach.

Avon has successfully achieved an integration strategy and has a competitive advantage because it has higher value creation.

A core tenet of stakeholder strategy is that A. firm should isolate its internal stakeholders from its external stakeholders. B. single-minded focus on shareholders alone exposes a firm to undue risks that can threaten the very survival of the enterprise. C. multifaceted exchange relationship with internal and external stakeholders can lead to a firm's competitive disadvantage. D. firm should work toward competitive parity rather than gaining and sustaining a competitive advantage.

According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified? A. strategy control B. strategy analysis C. strategy formulation D. strategy implementation

Buyers are highly price sensitive when A. their purchase represents a small fraction of their procurement budget. B. they earn low profits or are strapped for cash. C. the quality of their products and services are highly affected by the quality of the inputs. D. the industry's products are highly characterized with non-price competition.

Free Winds, Inc. is a company that manufactures a variety of generators that run on wind power. The company wants to ensure that wind technology replaces all forms of exhaustible energy sources in the near future. Which of the following statements will make an accurate vision for Free Winds? A. We make products that run on wind energy. B. All nations around the globe should have access to a sustainable energy source. C. The company aims to make working fun and pleasurable for its employees. D. We provide energy-efficient sources and services by investing in research and innovation.

The primary objective of Porter's five forces model is to A. replace a firm's competitive advantage with competitive parity. B. understand the profit potential of different industries. C. reduce the gap between the value of a firm's product and its cost of production. D. break down a firm's value chain activities into primary and support.

The telecom industry in the country of New Taria is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the telecom industry, the A. threat of substitutes is most likely high. B. threat of new entrants is most likely low. C. bargaining power of buyers is most likely high. D. entry barriers are most likely nonexistent.

When is the rivalry among existing competitors in an industry likely to be more intense? A. when the industry growth rate is high B. when firms make strategic commitments to compete in an industry C. when firms engage in non-price competition as opposed to price-cutting D. when the industry has low exit barriers

Which of the following best illustrates a strategic business unit (SBU)? A. The human resource department of a large company that is responsible for hiring employees for all its divisional branches B. The consumer electronics division of a large company that also manufactures automobiles, apparel, and processed food C. The product development team at the headquarters of a fast-food chain D. The market segment which can be categorized between the income levels $10,000 and $25,000

Which of the following is NOT a strategic advantage of forward integration? A. Better access to end users B. Ability to secure critical supplies C. More control of after-sales service D. Better planning and response to changes in demand

B Ability to secure critical supplies

A drawback for a firm engaging in a short-term contract is: A. It usually takes at least a year for processes between organizations to get in sync. B. The supplying firm has no incentive to make additional transaction-specific investments to increase performance or quality. C. There is no competitive bidding process with short-term contracts. D. Short-term contracts offer less planning opportunity than individual market transactions.

B The supplying firm has no incentive to make additional transaction-specific investments to increase performance or quality.

Relative to the five-forces model, a low-cost strategy is beneficial when: A. Competition is based on product features, suppliers may increase costs, and buyers have bargaining power. B. Competition is based on product features, suppliers have very limited power, and buyers have bargaining power. C. Price competition is vigorous, suppliers may increase costs, and buyers have bargaining power. D. Price competition is vigorous, suppliers have very limited power, and buyers have bargaining power.

B. Competition is based on product features, suppliers have very limited power, and buyers have bargaining power.

Which of the following is NOT a benefit about the background of BYD that may help it be successful in overcoming barriers to enter the electric vehicle market? A. BYD has a large and successful home market. B. BYD is the only car company focused on electric cars. C. BYD is accustomed to selling competitive products to multinational firms. D. BYD started as a battery firm and has key insights to this technology.

BYD is the only car company focused on electric cars

3M requires that 30 percent of revenues come from new-product introductions. It also measures how much external learning and collaboration the firm is engaging in. 3M is clearly implementing a(n) ____________ approach to assessing competitive advantage. A. Triple bottom line B. Balanced scorecard C. Accounting profitability D. Shareholder value creation

Balanced scorecard

Organizational learning, innovation, and financial performance are all ____________ performance metrics. A. Balanced scorecard B. Accounting profitability C. Value scorecard D. Triple profit

Balanced scorecard

The three traditional approaches that are considered fairly one-dimensional when measuring competitive advantage include all of the following EXCEPT: A. Economic value creation B. Shareholder value creation C. Accounting profitability D. Balanced scorecard

Balanced scorecard

When firms that provide key raw materials to an industry can frequently negotiate for higher prices, the: A. Bargaining power of buyers is high. B. Bargaining power of suppliers is high. C. Barriers to entry are low. D. Bargaining power of suppliers is low.

Bargaining power of suppliers is high.

When a firm is able to successfully employ an integration strategy, it will create a competitive advantage by: A. Combining high quality and product features to provide service that customers truly value. B. Using a first-mover advantage to be the lowest price in the market. C. Winning market share with a highly differentiated product. D. Beating rivals on product attributes while offering a better price.

Beating rivals on product attributes while offering a better price.

An upscale jeweler ordered several thousand ounces of gold a few years ago when gold was priced at $650 an ounce. As of 2011, gold was averaging about $1,700 an ounce. This jeweler will be able to protect his competitive advantage, at least temporarily, due to which condition?

Better expectations of future resource value

A firm's _________ captures the historical costs of a firm's assets. A. Market value B. Value created C. Book value D. Economic value

Book value

During the growth phase of an industry life cycle, demand is strong and: A. Both inefficient and efficient firms thrive. B. A firm should "harvest" its products. C. Only a cost leadership strategy should be pursued. D. Market demand starts to decrease.

Both inefficient and efficient firms thrive.

The idea of firms creating significant business opportunities for some 4 billion people on the planet who live in poverty is called ______________.

Bottom of the pyramid

Resource Heterogenity

Bundles of resources and capabilities differ across firms South west airlines, Alaska airlines have different resources SWA- higher employee productivity, Informal organization, pilots help load luggage

Within the resource-based model, what is the meaning of the term "resource heterogeneity"?

Bundles of resources and capabilities differ across firms.

Within the resource-based model, what is the meaning of the term "resource heterogeneity"? A. Bundles of resources and capabilities are fundamentally the same across firms within the same industry. B. Bundles of resources and capabilities differ across firms. C. Resources don't move easily from firm to firm. D. Resources move easily from firm to firm.

Bundles of resources and capabilities differ across firms.

According to the text, which part of the organization seeks superior performance by asking the question "how to compete"?

Business level strategy

When pursuing a cost-leadership strategy, a business must remember that: A. Buyers will be reluctant to pay for a product unless the quality is acceptable. B. Buyers will be reluctant to pay for a product unless the quality is superior. C. Buyers will be reluctant to pay for the product unless it is customized. D. Product quality is more important in a broad market than in a narrow one.

Buyers will be reluctant to pay for a product unless the quality is acceptable.

When pursuing a differentiation strategy, a firm must remember that: A. Buyers will be willing to pay for value that is not perceived. B. Buyers will be reluctant to pay for value that is not perceived. C. Perceived value is not as important as the price of the product. D. Perceived value is more important in a broad market than in a narrow one.

Buyers will be reluctant to pay for value that is not perceived.

A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this? A. The employees will be isolated from the process of setting the company's vision and mission. B. The lower-level employees will be restricted to the tasks involved in strategic implementation. C. The company's organizational structure and systems will be designed to support bottom-up strategic initiatives. D. The top management will create a strategy that is based on hard data alone, rather than an inspiring vision.

A traditional top-down strategic planning process typically begins with A. employees at the operational level identifying problems within an organization. B. functional managers formulating functional strategies for their respective departments. C. strategic leaders adjusting a company's vision and mission based on environmental analysis. D. employees who have close contact with customers taking autonomous actions.

What is the strategic management process? A. The CEO decides who the product managers will be for a company. B. The CEO defines the main problems facing a company. C. Strategic leaders design a method to formulate and implement strategy. D. Strategic leaders focus on creating a vision that reflects the company's strategy.

Which of the following statements should ideally reflect a firm's strategy for competitive advantage? a. Our strategy is to win at any cost b. We will be number one in the industry c. Our aim is to create superior customer value while controlling costs d. We want to be the market leader by replicating our competitor's strategy

Firms use related diversification strategies in order to: A. Horizontally integrate the firm's operations and processes. B. Increase revenue from the dominant business of the firm. C. Benefit from economies of scale and scope. D. Improve the chances of being acquired by a similar firm.

C Benefit from economies of scale and scope

One way to overcome the principal-agent problem is to: A. Flatten the organization. B. Micromanage the management team. C. Make managers owners through stock options. D. Increase the scope of management's responsibilities.

C Make managers owners through stock options.

The more "constrained" the relatedness of diversification: A. The fewer the linkages between the businesses owned by the firm. B. The wider the variation in the portfolio of businesses owned by the firm. C. The more links there are among the businesses owned by the organization. D. The higher the proportion of total organizational revenue is derived from the dominant business.

C The more links there are among the businesses owned by the organization.

Matrix Project Structure

COMBINES FUNCTIONAL AND DIVISIONAL APPROACHES TO EMPHASIZE PROJECT OR PROGRAM TEAMS, big projects function as mini companies

BRIC countries have more than 40% of the world's population and occupy more than a quarter of the world's landmass. Which of these countries is not a part of BRIC?

Canada

All of the following are intangible resources EXCEPT: A. Capital. B. Dynamic capabilities. C. Patents. D. Social complexities.

Capital

If a firm's resources and capabilities are costly to imitate because imitating firms do not understand the relationship between the resources and capabilities controlled by the firm, this firm's competitive advantage is protected from imitation by _________________.

Casual ambiguity

It is difficult to pinpoint the underlying cause of Apple's phenomenal success. Gaining a deep understanding of exactly why Apple has done so well is difficult because of which situation?

Casual ambiguity

It is difficult to pinpoint the underlying cause of Apple's phenomenal success. Gaining a deep understanding of exactly why Apple has done so well is difficult because of which situation? A. Competitive dependence B. Causal ambiguity C. Strategic luck D. The substitutability of Apple's competencies

Casual ambiguity

When a firm has a greater positive difference between cost and value than its rivals, it can achieve competitive advantage by: A. Raising the price and maintaining market share and volumes. B. Increasing production costs while lowering prices. C. Charging the same or even lower prices and selling more goods or services. D. Minimizing the difference between value and cost and lowering prices.

Charging the same or even lower prices and selling more goods or services.

JCPenney and Neiman Marcus these firms have different business strategies. They both accomplish this by providing value to their customers while controlling costs. This is known as __________.

Co-opetition

Microsoft, Google, and Facebook are three powerful companies in the emerging field of Web 2.0. How these firms choose to compete with each other and what business models they use to bring in revenues will, at least to some degree, shape the structure of this industry. The partnership in "social search" discussed between Facebook and Microsoft is an example of what?

Co-opetition

When competitors cooperate with one another to achieve strategic objectives, this is called?

Co-opetition

The process of __________ turns an invention into an innovation. A. Integration B. Commercialization C. Diversification D. Exploitation

Commercialization

Analyzing accounting profitability is important to managers because: A. This data reflects how much profit the firm will make in the future. B. How the customer views the firm is reflected in accounting data. C. This information tells management how much to invest in intangibles. D. Comparing "hard numbers" against rivals provides competitive insight.

Comparing "hard numbers" against rivals provides competitive insight.

Firm competitive performance can be best judged by: A. Internal performance metrics of the firm. B. Past performance of the firm. C. Comparisons to rivals and the industry. D. External performance metrics of the firm.

Comparisons to rivals and the industry.

Intangible Resrources

Competitive advantage, organizational assets that are difficult to identify and account for and are typically embedded in unique routines and practices, including human resources, innovation resources and reputation resources. Tesla- mangagerial/ entry talent (Elon), org culture, name recognition, brand reputation,

If some stakeholder groups are able to extract significant value, the firm's competitive advantage may not be realized when compared to its rivals. This situation can place the firm in a ________________.

Competitive disadvantage

BYD is an example of a new firm entering the global auto industry. With more firms vying for a U.S. market that is not growing very fast, what will happen? A. The rivalry will be about the same. B. The intensity of the incumbent firms will decrease. C. Competitive intensity is sure to rise. D. The incumbents will keep dominant market shares.

Competitive intensity is sure to rise

When a firm possesses resources and capabilities that are valuable but not rare, it has a?

Competitive parity

Strategic group mapping tells us that: A. competitive pressures in an industry are similar among all strategic groups B. competitive pressures in an industry favor some strategic groups while threatening others C. that product features and prices are irrelevant to a strategic group D. rivals inside a strategic group serve different customers

Competitive pressures in an industry favor some strategic groups while threatening others

All of the following are external stakeholders except which of the following?

Competitors

Co-opetition seems to be on the increase. Which of the following would be a good definition of co- opetition?

Competitors cooperating with one another to achieve strategic objectives

A ____________ is a product or service that can help raise demand in an industry by indirectly enhancing performance or decreasing prices. A. core competency B. substitute C. complement D. component

Complement

What is the sixth force of industry attractiveness? A. Substitutes B. Economic growth rates C. Complements D. Technological innovation

Complements

Which of the following is NOT one of Porter's five forces? A. Substitutes B. Suppliers C. Complements D. Buyers

Complements

The basic way that the balanced scorecard provides competitive insight to managers is through the use of: A. Employee feedback. B. Concise reports that track and measure chosen metrics. C. Balance sheets and income statements. D. Stakeholder surveys.

Concise reports that track and measure chosen metrics.

Under the Transaction Cost Economics framework, when it would cost the firm more to pursue an activity in-house than obtaining that activity in the external market, the firm should: A. Consider horizontally integrating instead. B. Perform the activity in-house anyway in order to gain core competencies. C. Consider options such as short-term contracts or strategic alliances. D. Divest that particular business.

Consider options such as short-term contracts or strategic alliances.

_____________ are additional costs that are attached to the related-diversification strategy because of managing the number, size, and types of businesses that are linked to one another. A. Opportunity costs B. Specified costs C. Coordination costs D. Sunk costs

Coordination costs

A tool that helps managers evaluate how the firm's core competencies can support certain diversification strategies is the: A. Core competence-market matrix. B. Diversification matrix. C. Acquisition matrix. D. Competency leverage matrix.

Core competence-market matrix.

Amazon is known for superior IT systems and customer service. UPS provides superior supply chain management services at low cost. Both Amazon and UPS have leveraged their _______________, which has led to competitive advantages for both firms.

Core competencies

The general lesson from the Chapter 4 opening case on Circuit City is the importance of ______________ to a firm when it is attempting to gain and sustain competitive advantages.

Core competencies

Unique strengths that are embedded deep within a firm that allow it to differentiate itself and create higher value for customers is a ____________.

Core competency

Unique strengths that are embedded deep within a firm that allow it to differentiate itself and create higher value for customers is a ____________. A. Competitive advantage B. Core competency C. Resource competency D. Value chain

Core competency

Strategy formulation and implementation affect the organization at every level. What is the top level of strategy within an organization?

Corporate

The Boston Consulting Group (BCG) matrix is a tool that helps with: A. Analyzing mergers and acquisitions. B. Quality improvement. C. Corporate portfolio planning and restructuring. D. Cost reduction initiatives.

Corporate portfolio planning and restructuring.

IBM's CEO Sam Palmisano has moved the firm more into global IT services and out of its traditional hardware focus. What level of strategic decisions do these moves represent?

Corporate strategy

From an economic value creation perspective, competitive advantage is achieved by the firm that does which of the following? A. Creates and captures more economic value than its rivals. B. Ensures that the value captured is evenly divided between producer and consumer. C. Concentrates on tangible assets available as opposed to intangible assets. D. Formulates strategy based primarily on the balanced-scorecard approach.

Creates and captures more economic value than its rivals.

Strategy Highlight 4.2 discusses how IBM was able to rebound because CEO Lou Gerstner refocused the company on satisfying market needs through IT services as opposed to mainframe and mini-computers. This strategic highlight shows that IBM's current success is partially based on: A. Creating a new strategic fit for IBM through the utilization of static capabilities. B. Utilizing the resources of the mainframe hardware business. C. Creating a new strategic fit for IBM through the utilization of dynamic capabilities. D. The power of its brand equity.

Creating a new strategic fit for IBM through the utilization of dynamic capabilities.

Strategy is primarily about ____________.

Creating superior value

Executives determine the scope of the firm in order to enhance the firm's ability to gain and sustain competitive advantage. In that attempt, they formulate and execute corporate-level strategy by using all of the following dimensions EXCEPT: A. Vertical integration. B. Cultural integration. C. Horizontal integration. D. Global scope.

Cultural integration.

Measuring how a customer views a firm under the balanced-scorecard framework is important because: A. Customer perspective is directly linked to firm revenues and profits. B. The customer viewpoint tells a firm much needed information about rivals. C. Surveying customers makes them feel important to the firm. D. It is a good indicator of future stock price.

Customer perspective is directly linked to firm revenues and profits.

_________ and __________ are two of the value drivers that managers can utilize when trying to improve a firm's differentiation strategic position. A. Co-opetition; complements B. Learning-curve effects; co-opetition C. Customer service; complements D. Economies of scale; co-opetition

Customer service; complements

All of the following are considered an internal stakeholder within a firm except for which of the following?

Customers

Corporate executives at LikeReal, Inc. decide to compete in the remote model airplane industry by making the largest model planes available. By doing this, they completed part of their A. implementation strategy. B. corporate strategy. C. functional strategy. D. business strategy.

Due to political instability in the country of United Mapa, the strategic leaders at the headquarters of FT Supplies Inc. have decided to divest the company's business from the foreign market in United Mapa. This decision would be applicable to all the business units of FT Supplies Inc. operating in United Mapa. Thus, this is a A. business strategy. B. divisional strategy. C. functional strategy. D. corporate strategy.

In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry? A. if the company is able to put up a credible threat of retaliation B. if the capital requirements in the industry are high C. if the customer switching costs in the industry are high D. if the industry has recently become deregulated

To implement specific business strategies, general managers of strategic business units rely on a day-to-day basis on A. external stakeholders. B. corporate executives. C. strategic leaders. D. functional managers.

Which of the following is an implication of low interest rates? A. Cost of capital for firms will be high. B. Firms will invest less in future growth. C. Economic growth rate will fall. D. Consumer demand will increase.

Under the five forces model, a differentiation strategy works best when: A. The firm has intangible resources, supplier cost increases can be passed on to the customer, and equivalent substitutes are readily available. B. The firm has tangible resources, supplier cost increases can be passed on to the customer, and equivalent substitutes are readily available. C. The firm has tangible resources, supplier cost increases can be passed on to the customer, and the differentiation appeal creates customer loyalty. D. The firm has intangible resources, supplier cost increases can be passed on to the customer, and the differentiation appeal creates customer loyalty.

D. The firm has intangible resources, supplier cost increases can be passed on to the customer, and the differentiation appeal creates customer loyalty.

From an accounting profitability perspective, competitive advantage is achieved by the firm that does which of the following? A. Projects the highest book value for the upcoming year. B. Delivers the most positive profitability metrics. C. Has the highest value of intangible assets. D. Has the highest value of off-balance sheet items.

Delivers the most positive profitability metrics.

If the firm is not organized to capture the value from its resources, it will not profit from the investment in the resources. In the 1980s, Xerox's Palo Alto Research Center (PARC) developed many of the foundations for the ____________ industry. Yet these valuable and rare innovations were commercialized by other firms.

Desktop computing

The profit potential for strategic groups within an industry is __________ between groups. A. undetermined B. different C. similar D. none of these

Different

Strategic activity systems that are socially complex are: A. Tangible resources. B. Difficult to imitate. C. Challenging to leverage. D. Customer-oriented.

Difficult to imitate

Strategic activity systems that are socially complex are?

Difficult to imitate

Which of the following is not an example of the razor-razor-blade business model?

Digital cameras

People who grew up with the Internet and need no help in adapting to new technologies have been called digital natives. Those who have not grown up with such technologies but are adapting to them are called what?

Digital immigrants

When a firm enjoys a competitive advantage, it attracts a significant amount of attention and its products or services can be at risk due to: A. Social complexity. B. Value erosion. C. Causal ambiguity. D. Direct imitation or substitution.

Direct imitation or substitution

When a firm enjoys a competitive advantage, it attracts a significant amount of attention and its products or services can be at risk due to?

Direct imitation or substitution

British conglomerate EMI developed and launched the invention of the CAT scanner. This paved the way for follow-up innovations like nuclear magnetic resonance imaging (MRI). Despite its initial success, EMI lost out quickly in the marketplace to GE Medical Systems, which was able to reverse-engineer EMI's scanner. This is an example of what resource attribute?

Direct substitution with an engineering work-around

achieving economies of scale is an important cost driver for certain low-cost leaders. However, there is a saying that "sometimes bigger is worse" because at some point costs increase as output increases. This is referred to as: A. External economies B. Diseconomies of scale C. Economic inefficiencies D. Integration diseconomies

Diseconomies of scale

When a firm that follows the unrelated diversification strategy allocates capital from internal sources, it can create value by doing all of the following EXCEPT: A. Using more efficient budgeting processes than the external market. B. Discovering privately which business units provide the highest return to invested capital. C. Disregarding its debt rating and investing large amounts of capital in projected growth areas. D. Accessing capital at a lower cost.

Disregarding its debt rating and investing large amounts of capital in projected growth areas.

One of the consequences of the five forces analysis is that a firm must ask itself what? A. Is the company in a strategic group? B. Does the company strategy match the competitive landscape? C. Is the company in an oligopoly or monopolistic competition? D. Is the company engaged in co-opetition?

Does the company strategy match the competitive landscape?

Intangible Resource Stocks

Dynamic Capabilites, New Product Development, Engineering Expertise, Innovation Capibility, Reputation for quality, reationships

____________ refer(s) to a firm's ability to reconfigure resources and create external market changes.

Dynamic capabilities

____________ refer(s) to a firm's ability to reconfigure resources and create external market changes. A. Dynamic equilibrium B. Dynamic capabilities C. Dynamic complexity D. Dynamic programming

Dynamic capabilities

The group of customers referred to as the ___________ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage. A. Laggards B. Experimenters C. Early majority D. Innovators

Early Majority

Experience curves attempt to capture both _______________ and learning effects. A. Customization B. Economies of scale C. Economies of scope D. Competitive position

Economies of scale

The ______________ is the idea that the market price of a firm's stock includes all publicly available information about a firm's performance. A. Efficient-market hypothesis B. Normalized market hypothesis C. Rational-market hypothesis D. Shareholder knowledge hypothesis

Efficient-market hypothesis

All of the following are considered an external stakeholder within a firm except which of the following?

Employees

Stakeholder power and influence will vary by industry. In investment banking, skilled human capital is important. This means one of the key stakeholders for firms in this industry will be ________.

Employees

Which of the following strategies do firms typically employ as competitive intensity increases and the market matures? A. Turning to radical innovation in order to introduce a new product B. Employing manufacturing and process engineering capabilities to drive costs down C. Charging high prices in order to capture as much revenue as possible D. Adding additional features to the offering to increase perceived value

Employing manufacturing and process engineering capabilities to drive costs down

When crafting strategy under an economic value context, the goal is to achieve all of the following EXCEPT: A. Capturing as much economic value as possible. B. Making sure that the relationship between value, cost, and price results in a positive economic contribution. C. Creating more economic value than rivals. D. Ensuring that the value captured is equally distributed between producer and consumer.

Ensuring that the value captured is equally distributed between producer and consumer.

Tesla Ecological

Environmental concerns increasing, carbon emissions

All of the following are aspects of sociocultural factors influencing industry attractiveness EXCEPT: A. The growth rate of the population B. The age distribution of the population C. Environmental protection laws D. Lifestyle changes

Environmental protection laws

Learning curves were first used by aircraft manufacturers in the 1930s. Companies found a predictable relationship between increasing production output and cost per unit. What does it mean for a firm to have an 80% learning curve? A. Every time the cumulative output increases by 80%, the cost per unit will decrease by 20%. B. Every time the cumulative output is doubled, the cost per unit will decline by 80%. C. Every time the cumulative output goes up 20%, the cost per unit will decline by 80%. D. Every time the cumulative output is doubled, the cost per unit will decline by 20%.

Every time the cumulative output is doubled, the cost per unit will decline by 20%.

To sustain competitive advantage, strategic activity systems need to: A. Increase the firm's activities. B. Decrease the firm's activities. C. Increase firm productivity. D. Evolve over time.

Evolve over time

To sustain competitive advantage, strategic activity systems need to?

Evolve over time

Competitive rivalry will get weaker when all of the following happen EXCEPT: A. Demand is growing. B. Exit barriers are low. C. Products are differentiated. D. One firm's actions will have little direct impact on a rival.

Exit barriers are low

Tesla- Threat of New Entrants

Expensive because of capital requirements, proprietary technology, High scale economy= LOW threat of new entrentants.

Organized to Capture

Exploit competitive potential- structure- coordinating systems Nintendo Wii-- Yess

Total return to shareholders includes stock price appreciation and is an __________ measurement that reflects how the market views a firm's competitive position. A. Internal B. External C. Intangible D. Integrated

External

In order for a firm's strategy to be effective, it must match all of the following EXCEPT: A. Resource strengths and weaknesses. B. Market opportunities. C. External threats. D. External value chain systems.

External value chain systems.

In today's economic activity, carbon-based energy sources come with certain costs for business and consumers, some of which include, but are not limited to, CO2 emissions, air pollution, and global warming. These costs are described as ____________.

Externalities

True or false: In most cases, mergers and acquisitions create competitive advantage.

False

Determining firm performance is a complex interaction of firm effects and industry effects, with other factors also considered. Based on historical analysis, what do we know about firm and industry effects?

Firm effects have more impact on performance than industry effects.

Non-economic factors such as _________ and ________ are often the rewards of adopting the triple-bottom-line framework. A. Access to raw materials; supplier relationships B. Firm reputation; goodwill C. Product imitation; substitution D. Diversification; localization

Firm reputation; goodwill

Which of the following is NOT true about the decline stage of an industry life cycle? A. Inefficient firms exit the industry. B. "Laggards" are the last consumer segment to enter the market. C. Firms that consolidate and buy their rivals are typically at a disadvantage. D. There is generally excess industry capacity.

Firms that consolidate and buy their rivals are typically at a disadvantage.

Creating resources that meet the VRIO criteria are strategically important to a firm because:

Firms that possess these types of resources may be able to experience a sustained competitive advantage.

Creating resources that meet the VRIO criteria are strategically important to a firm because: A. These resources can be easily deployed throughout the firm. B. Firms that possess these types of resources may be able to experience a temporary competitive advantage. C. It creates the heterogeneity essential for competitive parity. D. Firms that possess these types of resources may be able to experience a sustained competitive advantage.

Firms that possess these types of resources may be able to experience a sustained competitive advantage.

The fact that both Rolex and Timex have a competitive advantage selling wristwatches is an indication that: A. Following a different generic business strategy within the same industry can lead to a competitive advantage for more than one organization. B. Following the same generic business strategy can allow for two firms competing in the same industry to have a competitive advantage at the same time. C. In order to evaluate whether Rolex has a sustained competitive advantage it is useful to compare it to Timex from a cost perspective. D. In order to evaluate whether Timex has a sustained competitive advantage, it is useful to compare it to Rolex from a differentiation perspective.

Following a different generic business strategy within the same industry can lead to a competitive advantage for more than one organization.

A successful strategy details a set of goal-directed actions that managers intend to take to improve or maintain overall firm performance. To build this strategy, managers focus on three broad management tasks. Which of the following is NOT one of these management tasks

Forecast technology

Who has the responsibility for implementing business strategy within a single area?

Functional managers

The division director of marketing of a major consulting firm is most often making decisions at which level of strategy?

Functional strategy

One firm has announced a major initiative in the health care field called healthymagination. This initiative is geared to draw on existing expertise in other business units to find new emerging opportunities in health care. What firm has launched this initiative?

General Electric (GE)

Industry structures are not stable over time. The U.S. banking industry has seen major consolidation in recent years. We would expect the result of this dynamic change to be what? A. Generally lower industry profits. B. It will have no effect on profitability. C. Further erosion in business. D. Generally higher industry profits.

Generally higher industry profits

As noted in Chapter 5, Microsoft is many times larger than Google and records higher net income, return on assets, and return on equity in absolute terms when it comes to accounting profitability. However, when looking at normalized stock returns, Google has outperformed both Microsoft and the NASDAQ-100 index by a wide margin over the 2005-2010 time period. Suppose you were a manager for Microsoft. Evaluating this information would tell you that: A. Microsoft has a sustained competitive advantage from a shareholder value creation framework. B. Google has a sustained competitive advantage from a shareholder value creation framework. C. Both Microsoft and Google have sustained competitive advantages from a shareholder value creation framework. D. Google has a competitive disadvantage from a shareholder value creation framework.

Google has a sustained competitive advantage from a shareholder value creation framework.

In 1996, GM, Toyota, and Honda introduced electric vehicles into the California market. This was in response to a regulation passed by the state in 1990 requiring some percentage of zero-emissions vehicles from auto companies be sold in the state. When the regulation was rescinded in the late 1990s, all three firms pulled their electric vehicles out of the market. GM terminated its electric vehicle program, whereas Toyota and Honda used it to introduce hybrid cars only a few years later. Which of the following is NOT a valid conclusion to draw from this series of events? A. Government regulations are always bad for U.S. businesses. B. Government regulations can influence business strategies. C. GM made a strategic error by closing its electric-vehicle program. D. Toyota and Honda used the regulation as a catalyst for new lines of cars.

Government regulations are always bad for U.S. businesses

Tesla Political:

Government subsidies, low emission cars, tax incentives, TARP

Tesla- Socio Culture

Grow plant for fuel

Gillette invented a "razor-razor-blade" model of business, whereby the razor handle is provided at a low cost and the replacement razor blades are sold relatively expensively. Which of the following is another example of this business model?

HP laser printers

Macroeconomic factors such as the unemployment rate and economic contraction: A. Minimize stock price volatility. B. Are irrelevant to shareholder value creation. C. Have a direct bearing on a firm's stock price. D. Help shareholders evaluate whether a firm's strategy is working.

Have a direct bearing on a firm's stock price.

Which of the following would NOT explain why managers track interest rates? A. High interest rates make the cost of capital cheaper for a firm. B. High interest rates could delay a firm's expansion. C. Low interest rates make it easier for a firm to borrow money. D. Low interest rates increase market demand and economic growth.

High interest rates make the cost of capital cheaper for a firm

The difference in managerial theories can have a large impact on the success or failure of businesses. In the automobile industry, what effect has the difference in assumptions between U.S. and Japanese manufacturers had on the market?

Higher gas prices in Japan drove the market toward more fuel-efficient products sooner than in the U.S.

The triple bottom line and the balanced scorecard are ____________ frameworks that help a firm evaluate whether its strategy is working. A. Short-term B. Transitory C. Holistic D. Narrow

Holistic

After an industry has established a dominant design and the industry is in the growth stage, the basis of competition turns to: A. "Price skimming" the market. B. Reducing processes and procedures. C. How to better produce a product or deliver a service. D. How to diversify the firm.

How to better produce a product or deliver a service.

The General Manager of a strategic business unit (SBU) would be mostly concerned with questions of ____________.

How to compete

Under the value chain perspective, managers evaluate a firm's system of activities in order to: A. Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities. B. Determine how much value the firm has in the minds of shareholders. C. Ensure that support activities add direct value to the firm. D. Strategize whether it would be a competitive strength to integrate backward or forward.

Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities.

Under the value chain perspective, managers evaluate a firm's system of activities in order to?

Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities.

The factors that are important when mapping strategic groups

Identify the top competitive factors- expenditures on R and D, pricing, distribution channel Choosing two key dimensions analyze the firms that are closest to your organization

When evaluating the sustainability of a competitive advantage, which of the following is NOT true?

If managed effectively, existing core competencies can sustain a competitive advantage indefinitely.

When evaluating the sustainability of a competitive advantage, which of the following is NOT true? A. The advantage will not be sustainable if there are substitutes for the firm's core competence. B. If managed effectively, existing core competencies can sustain a competitive advantage indefinitely. C. Path dependence and social complexity increase the time that the advantage is sustainable. D. When expectations of future resource value turn out to be accurate and can be repeated, then a sustained competitive advantage is realized.

If managed effectively, existing core competencies can sustain a competitive advantage indefinitely.

The balanced scorecard is a tool for strategy _________, not ___________. A. Formulation; implementation B. Implementation; formulation C. Analysis; sustainability D. Formulation; sustainability

Implementation; formulation

As noted in Chapter 5, BMW anticipated the need to recycle its automobile parts due to potential industry regulation. It redesigned its manufacturing processes to include quick disassembly and reuse of car components. In addition, BMW sells the used parts in the after-sales market. This is an example of how the triple-bottom-line framework: A. Adds more layers of bureaucracy to a firm. B. Streamlines processes of the firm. C. Shortens product life cycles. D. Improves a firm's social and ecological responsibility.

Improves a firm's social and ecological responsibility.

Value drivers are tools that help managers: A. Increase perceived value and decrease costs. B. Improve value chain activities and increase costs. C. Achieve a low-cost position and maintain perceived value. D. Achieve cost parity and maintain perceived value.

Increase perceived value and decrease costs.

Under the balanced-scorecard framework, the question "How do we create value?" is relevant to all of the following EXCEPT: A. Increasing the value added to a product along the supply chain. B. Challenging managers to come up with new strategic objectives. C. Focusing on future competitiveness. D. Improving innovation and organizational learning.

Increasing the value added to a product along the supply chain.

The textbook divides the impacts explaining superior firm performance into three categories: Industries Effects, Firm Effects, and Other Effects. Which is the smallest of the effect

Industry Effects

A process whereby formerly unrelated industries begin to satisfy the same customer need is often brought on by technological advances. What is this process called? A. Strategic grouping B. Competitive advantage C. Industry convergence D. Complementor analysis

Industry convergence

Generally, perfectly competitive industries such as paper and steel (commodities) are deemed to be ________ in profits to more differentiated industries like pharmaceuticals and cosmetics. A. superior B. inferior C. similar D. indeterminate

Inferior

Political maneuvering by managers to influence resource and capital allocation can result in firm inefficiencies in a related-diversified firm. These costs are called: A. Fixed costs. B. Influence costs. C. Sunk costs. D. Opportunity costs.

Influence costs.

Competitive advantage occurs when there is a high utilization of which type of assets?

Intangible

Competitive advantage occurs when there is a high utilization of which type of assets? A. Tangible B.Intangible C. Heterogeneous D. Homogeneous

Intangible

As of 2010, ______________ have become more important than tangible assets when it comes to a firm's stock market valuation and competitive advantage. A. Business-level strategic initiatives B. Off-balance sheet obligations C. Intangible assets D. Accounting data projections

Intangible assets

Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets.

Google's fixed assets, including its headquarters ("The Googleplex") and server farms, are valued at $5 billion, while the Google brand is valued at over $100 billion. Apple's physical attributes are valued at $2 billion, while its brand is valued at over $63 billion. What can be derived from this? A. Physical attributes are not effective resources in the quest for competitive advantage. B. Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets. C. There is a high degree of resource mobility in this strategic group. D. Google will have a sustained competitive advantage over Apple.

Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets.

When viewed from a balanced-scorecard approach, a strategic objective for a firm is to: A. Balance the firm's investment portfolio in order to minimize risk. B. Take incremental strategic actions to protect the firm from retaliation. C. Integrate internal and external performance data to assess and strengthen the firm's current position. D. Integrate internal departments and processes and flatten the organization.

Integrate internal and external performance data to assess and strengthen the firm's current position.

it can be said that the Tata Group is pursuing a(n) _____________ strategy at the corporate level when it comes to automobiles. A. Undiversified B. Unrelated C. Integration D. Linked integrative

Integration

Interface is a leader in sustainable and innovative carpeting, as evidenced by its Cool Carpet product, the world's first carbon-neutral floor covering. Its product is unique and has appealing customer attributes. If Interface raw material costs increased by 12% this year, what would be the likely outcome? A. Interface would lower profit margins to absorb this cost increase B. The company would launch an all-out effort to reduce other costs by 12%. C. Interface would pass a major portion of this increase along as a price increase to its customers. D. Interface would seek to find other materials with lower costs, even if it meant losing the carbon-neutral label on the product.

Interface would pass a major portion of this increase along as a price increase to its customers.

A SWOT analysis allows managers to evaluate a firm's current situation and future prospects by simultaneously considering _________ and __________ factors.

Internal; external

A SWOT analysis allows managers to evaluate a firm's current situation and future prospects by simultaneously considering _________ and __________ factors. A. Internal; external B. Intrinsic; extrinsic C. Present; future D. Core competency; dynamic capability

Internal; external

Microsoft, Nintendo, and Epic are in the video gaming industry. Microsoft and Nintendo produce and sell video game consoles and games. Epic is a video game publisher. When Sony creates a strategic map, it will place Nintendo as a(n): A. Intra-group rival and expect a more intense rivalry from Nintendo than from Epic. B. Inter-group rival and expect a more intense rivalry from Nintendo than from Epic. C. Intra-group rival and expect less rivalry from Nintendo than from Epic. D. Complementor to the video gaming industry.

Intra-group rival and expect a more intense rivalry from Nintendo than from Epic.

Inflows

Investments in resources

Primary activities in the firm level value chain are: A. The activities most likely to be substituted by competitors. B. The core competencies of an organization. C. Involved in a product's physical creation, its distribution, and its service after the sale. D. The activities most crucial to implementing the firm's business strategy.

Involved in a product's physical creation, its distribution, and its service after the sale

Primary activities in the firm level value chain are?

Involved in a product's physical creation, its distribution, and its service after the sale

A firm's pricing power: A. Is stronger in perfect competition than in monopolistic competition. B. Is stronger in monopolistic competition than in perfect competition. C. Is weaker in a monopoly than in an oligopoly. D. Is stronger in perfect competition than in a monopoly.

Is stronger in monopolistic competition than in perfect competition.

Under the accounting profitability framework to competitive advantage, comparing return on revenue (ROR) between companies is important because: A. It adjusts for size differences and provides a relative comparison. B. It reflects the firm's stock price. C. It includes the value of the firm's intangible asset base. D. All of these.

It adjusts for size differences and provides a relative comparison.

Threadless is an online apparel store. Its business model is quite different from most other apparel stores. Threadless leverages Web 2.0 capabilities by using crowdsourcing. How does this benefit Threadless in their T-shirt design process?

It both lowers the cost and ensures the popularity of selected designs.

Exit barriers are obstacles that determine how easily a firm can leave the industry. When exit barriers are high, what happens to industry attractiveness? A. It decreases. B. It increases. C. It becomes a complement. D. It has no impact.

It decreases

Which of the following is TRUE concerning the balanced scorecard? A. It is useful when formulating strategy, not when implementing it. B. It does not provide any insight on how to correct a problem once a firm deviates from its goals. C. It is superior to the triple bottom line when it comes to a holistic approach to competitive advantage(s). D. It monitors and reports how balanced a firm's investment portfolio is.

It does not provide any insight on how to correct a problem once a firm deviates from its goals.

Firms use a balanced scorecard for all of the following reasons EXCEPT: A. It links strategic vision to all responsible parties. B. It helps design and plan business processes. C. It encourages the firm to improve its ecological position. D. It aids in organizational learning.

It encourages the firm to improve its ecological position.

Innovation is important when pursuing an integration strategy because: A. It helps a firm resolve existing trade-offs between price and quality. B. Without innovation a firm can get "stuck in the middle." C. Innovation is the most important component regardless of strategy. D. It is the only way that a firm can improve its value chain activities.

It helps a firm resolve existing trade-offs between price and quality.

When a buyer has a credible threat of backward integration, what happens to their power in the industry? A. It decreases. B. It increases. C. It converges. D. It has no impact.

It increases

When a supplier has a credible threat of forward integration, what happens to their power in the industry? A. It decreases. B. It has no impact. C. It converges. D. It increases.

It increases

Which of the following are true of alliance management capability?

It involves partner selection and alliance formation. A firm may need to employ it with several different alliances.

Which of the following does not support the book's definition of strategy?

It is about raising prices while containing costs.

Which of the following is not an aspect of the book's definition of strategy?

It is profit-seeking.

If Smith Pharmaceuticals has a 15% return on invested capital (RoIC), what do you need to know to determine if it has a competitive advantage?

It must be compared to the RoIC of the competitors and industry.

A business model is the translation of strategy into action, which details the firm's competitive tactics and initiatives. Another way to say this is __________

It's how the firm intends to make money

Intel and Apple are innovators who entered the market during the introduction stage of an industry life cycle. All of the following are characteristics of this stage EXCEPT: A. Differentiation is the basis of competition. B. Network effects increase the value of the offering. C. Keeping costs low is the main objective. D. Achieving market acceptance is critical.

Keeping costs low is the main objective.

Toyota lost its competitive advantage when lean manufacturing became an industry standard as other firms learned about and utilized this manufacturing process. These firms learned about lean manufacturing due to?

Knowledge diffusion

Suppose several senior managers recently left Google and went to work at rival Microsoft. What part of the "stocks and flows" of resources does this represent for Google?

Leakage

Suppose several senior managers recently left Google and went to work at rival Microsoft. What part of the "stocks and flows" of resources does this represent for Google? A. Leakage B. Resource stocks C. Dynamic capabilities D. Inflow of resources

Leakage

Outflows

Leakage, Forgetting

Court decisions and regulations such as CARB zero-emissions are elements of which macro environmental force? A. Political factors B. Economic factors C. Sociocultural factors D. Legal factors

Legal factors

Internal Analysis

Links to superior Performances Resources and Capabilites= Core Competencies

There are two generic strategic positions that require managers to make trade-offs between, in order to achieve success at an integration strategy. They are: A. Service-oriented and low cost. B. Product-oriented and high cost. C. High cost and commodity. D. Low cost and differentiation.

Low cost and differentiation.

The __________ environment affects a firm's industry environment. A. macro B. stakeholder C. internal D. supplier

Macro

Grameen Telecom and the Nano car introduced by Tata are examples of what new business model?

Making a small revenue but across a large base of the world's poorest

When the CEO of Whole Foods, John Mackey, had to make decisions about the company's cost structure and value position he was: A. Making strategic trade-offs. B. Conducting a strategic group map evaluation. C. Trying to improve the firm's economies of scope. D. Leveraging the low-cost position of the company.

Making strategic trade-offs.

As discussed in Chapter 5, the chemical manufacturer FMC Corporation overcame short-term thinking and underperforming business units by adopting a balanced-scorecard approach. All of the following are true about FMC's successful implementation of a balanced scorecard EXCEPT: A. Managers could focus on new-product introductions. B. Managers were able to formulate new strategies. C. Managers could focus on core competencies within each division D. Managers were able to align different perspectives to create a more overall focus.

Managers were able to formulate new strategies.

One way that a firm can create a sustainable competitive advantage is by: A. Managing value chain activities better than its rivals. B. Cutting value chain support activities. C. Reducing strategic activity systems relative to competitors. D. Keeping activity systems static.

Managing value chain activities better than its rivals.

One way that a firm can create a sustainable competitive advantage is by?

Managing value chain activities better than its rivals.

Generic business-level strategies that a firm can adopt include all of the following EXCEPT: A. Focused cost-leadership strategy. B. Focused differentiation strategy. C. Market differentiation strategy. D. Broad cost-leadership strategy.

Market differentiation strategy.

A firm's stock market valuation is based on historical accounting data and ___________. A. Off-balance sheet obligations B. Balance sheet obligations C. Market expectations for the future D. Managerial expectations for the future

Market expectations for the future

When viewed from an economic value creation perspective, the major strategic objective for a firm is to: A. Distribute the value created to the consumer. B. Maximize the economic value created. C. Improve the qualitative attributes of the product/service. D. Decrease the producer surplus.

Maximize the economic value created.

Which of the main industry groups in the SCP model is described as having many firms, some pricing power, and differentiated products? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition

Monopolistic competition

Competitive rivalry among firms in the same strategic group is generally: A. More intense than competition between strategic groups. B. Less intense than competition between strategic groups. C. Similar in intensity than competition between strategic groups. D. Fairly dependent on what industry the strategic group is in.

More intense than competition between strategic groups.

Health care became the largest industry in the U.S. when it grew to 16% of the total economic activity. Projections are that the sector will grow to 20% of the economy by 2019. As compelling as the size and growth of the industry, what other reason does the text provide for businesses to expand into this arena?

Much of the wealth in the U.S. is in the aging baby-boomer population.

A ____________ is created when the government believes the product or service would not be supplied by the market under free market conditions. A. monopolistic competition B. regulated monopoly C. near monopoly D. natural monopoly

Natural monopoly

Georgia Power and Philadelphia Gas Works are two examples of firms in what type of industry structure? A. monopolistic competition B. regulated monopoly C. natural monopoly D. oligopoly

Natural monopoly

As natural monopolies are shrinking due to global governmental privatizations, another competitive landscape is emerging. Firms like Intel that have 80 percent market share in some markets would be called what? A. Competitive monopoly B. Regulated monopoly C. Near monopoly D. Natural monopoly

Near monopoly

One of the key aspects of the Threadless business strategy is the use of ____________.

Network effects

Web 2.0 relies on the idea that the value of a product or service increases as more people use it. This concept is called what?

Network effects

Under the core competence-market matrix, the most difficult diversification strategy is combining __________ with ________, because core competencies must be built. However, this creates the potential for "mega opportunities" and significant future growth opportunities for a firm that achieves this. A. New core competencies; existing markets B. Existing core competencies; existing markets C. New core competencies; new markets D. Existing core competencies; new markets

New core competencies; new markets

In recent years, China has invested a tremendous amount of money on increasing its infrastructure with high-speed rails, state-of-the-art airports, and modern roads. China also has the largest number of Internet users of any country in the world. How will this combination of infrastructure and technology likely impact China over the next few years?

New innovations will diffuse more quickly throughout China than in the past.

If Sony and Microsoft develop the same customer knowledge base and create gaming products that provide the same customer appeal as Nintendo, then: A. Sony and Microsoft will have a VRIO resource. B. Nintendo will have a resource that is valuable but no longer rare. C. Nintendo will still have a VRIO resource. D. Nintendo will have a resource that is rare but no longer valuable.

Nintendo will have a resource that is valuable but no longer rare

If Sony and Microsoft develop the same customer knowledge base and create gaming products that provide the same customer appeal as Nintendo, then?

Nintendo will have a resource that is valuable but no longer rare

Under the triple-bottom-line framework, being proactive with __________ dimensions makes good business sense. A. Economic B. Non-economic C. Technological D. Operational

Non-economic

When there is pressure to innovate, advertising is key and improved service is important for competition, competitors are engaging in ______________ and prices will ________. A. price competition; be higher B. perfect competition; be higher C. non-price competition; be higher D. perfect competition: be lower

Non-price competition; be higher

Competition by offering unique product or service features rather than competing on price is called what? A. Monopolistic competition B. Differentiated competition C. Non-price competition D. High-intensity competition

Non-price competiton

Under the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage because its resources were: A. Valuable but out of date. B. Not costly to imitate. C. Too cheap. D. Non-substitutable.

Not costly to imitate

Under the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage because its resources were?

Not costly to imitate

One of the drawbacks to the accounting profitability approach to measuring competitive advantage is that it does not consider: A. Tangible assets such as land. B. Off-balance sheet items such as pension obligations. C. Profit earned per dollar. D. How the company performed in the past.

Off-balance sheet items such as pension obligations.

When one firm makes a credible commitment to another firm, it is doing all of the following EXCEPT: A. Creating trust between the firms. B. Making a long-term strategic decision. C. Offering a promise that it will perform in the future. D. Sharing the risk and costs.

Offering a promise that it will perform in the future.

All of the following are tools typically used to achieve cost-leadership EXCEPT: A. Controlling the cost of inputs. B. Leveraging economies of scale. C. Offering products that have superior value. D. Learning by doing.

Offering products that have superior value.

If a rival makes a strategic move in a(n) _________ industry, the dominant firm is most likely to respond with its own initiative to counter (or coordinate) the effects of the first firm. A. monopolistic competitive B. oligopolistic C. monopolistic D. perfectly competitive

Oligopolistic

Which of the main industry groups in the SCP model is described as having a few large firms, differentiated products, and high entry barriers? A. Monopolistic competition B. Oligopoly C. Monopoly D. Perfect competition

Oligopoly

An industry with three firms and a differentiated product is most likely a(n) ________, while an industry with three thousand firms and a differentiated product is most likely a(n) ________ industry. A. perfect competition; oligopolistic B. monopoly; perfectly competitive C. oligopoly; monopolistic competitive D. oligopoly; perfectly competitive

Oligopoly; monopolistic competitive

When it comes to strategic positioning and generic business strategies, which of the following is TRUE: A. All of the business strategies are equally difficult to adopt. B. Only a few exceptional firms are able to balance the value-cost strategic trade-offs and adopt an integration strategy successfully. C. Once a firm has established itself with a strategy, it should stick with what it knows. D. Strategic positioning is not as critical to competitive advantage as is the firm's resources and economic environment.

Only a few exceptional firms are able to balance the value-cost strategic trade-offs and adopt an integration strategy successfully.

A(n) ______________ is the value lost due to choosing to use resources for one alternative over another. A. Opportunity cost B. Alternative loss C. Resource loss D. Opportunity loss

Opportunity cost

Agriculture is generally considered a perfect competition industry with largely commodity products. However, there is an aspect of the industry that can be classified as monopolistic competition with differentiated products and price premiums. Which part of the industry is it? A. Genetically modified wheat B. Corn for biodiesel C. Organic milk D. Fresh water salmon

Organic milk

Which of the following is NOT a risk of vertical integration ("make")? A. Less exposure to market competition leads to higher costs. B. Organizational complexity increases with integration. C. Organizational planning often improves when a firm integrates. D. Less contact with the external market diminishes learning and experience effects.

Organizational planning often improves when a firm integrates.

Which of the following is NOT a condition that can help a firm sustain its competitive advantage?

Past decisions constrain the current dynamic capabilities

Which of the following is NOT a condition that can help a firm sustain its competitive advantage? A. When managers have consistently better expectations about the future value of resources. B. The resource advantage can only be imitated after a long period of time. C. Past decisions constrain the current dynamic capabilities. D. The source of the competitive advantage is causally ambiguous.

Past decisions constrain the current dynamic capabilities

Barriers to Imitation- Competitive Advantage

Path Dependence, Social Complexity Casual Ambiguity Better expectations of future

Both Honda and Sony took many decades to build their core competencies, and these competencies are based primarily by decisions made in the past. This process is called: A. Path dependence. B. Dependence complexity. C. Causal dependence. D. Path immobility.

Path dependence

Both Honda and Sony took many decades to build their core competencies, and these competencies are based primarily by decisions made in the past. This process is called?

Path dependence

The fact that the U.S. still uses a system of measurement from the 1820s instead of the metric system, and is at a disadvantage in certain cross-border transactions and negotiations, demonstrates that: A. Mistakes made early on have a negligible effect on final outcomes. B. Path dependence has limited influence on final outcomes. C. Time cannot be compressed at will. D. Path dependence can affect the ability to remain competitive.

Path dependence can affect the ability to remain competitive

Tesla Econ

Pension and Health care, Liabilities

The resource-based view is in sharp contrast to which model of industry competition (from Chapter 3).

Perfect competition

The resource-based view is in sharp contrast to which model of industry competition (from Chapter 3). A. Perfect competition B. Monopoly C. Oligopoly D. Monopolistic competition

Perfect competition

The four best strategic choices available to management during the decline stage of an industry include all of the following EXCEPT: A. Exit the industry. B. Consolidate by buying rivals. C. Persist by increasing investments in the product. D. Harvest by reducing investments and maximizing cash flow.

Persist by increasing investments in the product.

Many Internet entrepreneurs have learned that it is difficult to beat the forces of perfect competition. In perfect competition, there are many small stores with largely commodity products and low entry barriers. Which industry has got caught up in the Internet bubble and has tried to join with online models, most of whom closed after a couple of years? A. Pet supply stores B. Book sellers C. Wine stores D. Express mail industry

Pet supply stores

Given current trends, several industries promise significant potential for value creation and thus career opportunities. Which of the following is not one of them described by the text?

Petroleum

A firm's six PESTEL environmental forces include ______________. A. political, trade secrets, legal, and technological B. product, environmental, political, and technological C. political, economic, legal, and technological D. environmental, product, ecological, and technological

Political, economic, legal, and technological

Strategic __________ is staking out a unique and valuable spot that allows the firm to meet customer demands.

Positioning

Which of the following is NOT a major consideration of barriers to entry? A. Capital requirements B. Brand identity C. Positive growth rate D. Economies of scale

Positive growth rate

Six Sigma, lean manufacturing are examples of _____ that deliver new ways to prouduce

Process innovations

PepsiCo sells a wide variety of beverages and food products in 190 countries. It is clearly engaging in ______________ to achieve continuous growth. A. Product diversification B. Geographic diversification C. Product-market diversification D. Multimarket diversification

Product-market diversification

Which of the following activities would be considered a primary activity in a firm's value chain?

Production

Which of the following activities would be considered a primary activity in a firm's value chain? A. Research and development B. Human resources C. Finance D. Production

Production

Competitive intensity will increase when all of the following happen EXCEPT: A. Proprietary technology is a core capability. B. Rivals are similar in size and capability. C. Buyers switching costs are low. D. Exit barriers are high.

Proprietary technology is a core capability

The idea to let consumers work for you and form a hybrid between producers and consumers is called ___________.

Prosumers

When only a few firms can perform a capability in the same unique way, this capability is considered to be: A. Valuable. B. Costly to imitate. C. Rare. D. Non-substitutable.

Rare

When only a few firms can perform a capability in the same unique way, this capability is considered to be?

Rare

A firm's superior performance in the marketplace affords it the luxury of _____________.

Reinvesting retained earnings back into the firm's capabilities and resources

A firm's superior performance in the marketplace affords it the luxury of _____________. A. A majority of market share B. A higher value on the PESTEL scale C. Reinvesting retained earnings back into the firm's capabilities and resources D. Consolidation of core competencies

Reinvesting retained earnings back into the firm's capabilities and resources

Research indicates that when it comes to the diversification-performance relationship: A. Single-business strategies tend to be the highest performing. B. The less related the businesses are, the higher the performance of each. C. Related-constrained and related-linked strategies are associated with higher firm performance. D. No specific level of diversification outperforms another.

Related-constrained and related-linked strategies are associated with higher firm performance.

Which of the following corporate diversification strategies most closely describes Disney? A. Single-business B. Related-constrained C. Related-linked D. Unrelated diversification

Related-linked

A core competency which is capital-intensive but critical for a firm creating and launching a new innovation is: A. Process improvement. B. Research and Development (R&D). C. Supply-chain management. D. Customer relation management.

Research and Development (R&D).

When a successful firm exhibits resource immobility, _____________________.

Resource differences between the firm and a rival are hard to replicate

When a successful firm exhibits resource immobility, _____________________. A. It has difficulty redeploying resources to respond to strategic needs B. Resource differences between the firm and a rival are hard to replicate C. The likelihood of competitive advantage is lessened D. Resource differences between the firm and a rival are easy to replicate

Resource differences between the firm and a rival are hard to replicate

The assumption under the resource-based model that firm resources and capabilities differ across firms and that this leads to performance differences is referred to as _______?

Resource heterogeneity

The assumption under the resource-based model that firm resources and capabilities differ across firms and that this leads to performance differences is referred to as ____________________. A. Resource homogeneity B. Resource mobility C. Resource valuability D. Resource heterogeneity

Resource heterogeneity

_________ implies that for a given business activity, some firms may be more skilled than others in accomplishing it.

Resource heterogeneity

_________ implies that for a given business activity, some firms may be more skilled than others in accomplishing it. A. Resource homogeneity B. Resource mobility C. Resource heterogeneity D. Resource immobility

Resource heterogeneity

This statement regarding the resource-based view is accurate?

Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind.

Which of the following statements regarding the resource-based view is accurate? A. Resources and capabilities are very similar across firms within the same industry. B. Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind. C. Resource immobility dictates that resources are difficult to redeploy within the firm. D. Resource heterogeneity is in reference to tangible assets.

Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind.

One of the assumptions under the resource-based model made about Southwest Airlines is that SWA has been able to sustain a competitive advantage because its resources and capabilities are difficult to imitate and do not easily leave the firm. What is this assumption called?

Resource immobility

Intangible firm resources such as brand equity and corporate culture can be analyzed by what method?

Resource stocks and resource flows

Intangible firm resources such as brand equity and corporate culture can be analyzed by what method? A. Benchmarking B. resource stocks and resource flows C. Activities and incremental outputs D. A PESTEL analysis

Resource stocks and resource flows

Assets that a firm can draw on that are both tangible and intangible are ___ .

Resources

Assets that a firm can draw on that are both tangible and intangible are __________. A. Resources B. Capabilities C. Dependent D. Immobile

Resources

Resource immobility

Resources tend to be "sticky" and dont move easily South west airlines sustained advantage -several decades superior performance, Competitors have unsuccesfullly imitated SWA model

Core competencies are built through the interplay of several firm attributes. These attributes include a firm's: A. Resources, capabilities, and activities. B. Size, age, and demographics. C. Investments, industry, and political climate. D. All of these.

Resources, capabilities, and activities

Core competencies are built through the interplay of several firm attributes. These attributes include a firm's?

Resources, capabilities, and activities

When a firm combines __________ and ___________, it builds core competencies.

Resources; capabilities

When a firm combines __________ and ___________, it builds core competencies. A. Resources; capabilities B. Activities; processes C. Capabilities; skills D. Knowledge; information

Resources; capabilities

Shareholders are most concerned with _____________ when it comes to measuring a firm's competitive advantage. A. Value creation B. Global expansion C. Return on risk capital D. Market share

Return on risk capital

An ideal competitive environment from a profit-making standpoint is when: A. Rivalry is moderate, and high entry barriers and good substitutes do not exist. B. Rivalry is high, entry barriers are low, and there are many substitutes. C. Rivalry is high, buyers and sellers have strong bargaining power, and entry barriers are low. D. Rivalry is moderate, entry and exit barriers are low, and there are many substitutes.

Rivalry is moderate, and high entry barriers and good substitutes do not exist

A risk to a firm that believes its resources are costly to imitate is that: A. Rivals may employ substitution and work around the original design. B. Due to the dynamic nature of competition, all resources eventually get imitated. C. A firm's products or services are shielded behind social complexity. D. Resources that are costly to imitate are based on causal ambiguity.

Rivals may employ substitution and work around the original design.

A risk to a firm that believes its resources are costly to imitate is that?

Rivals may employ substitution and work around the original design.

Which framework most easily allows for the combination of both internal and external factors in the analysis of a firm's competitive advantage?

SWOT analysis

Which framework most easily allows for the combination of both internal and external factors in the analysis of a firm's competitive advantage? A. A strategic activity system B. The VRIO framework C. SWOT analysis D. PESTEL analysis

SWOT analysis

When crafting strategy under a shareholder value creation context, the goal is to achieve all of the following EXCEPT: A. Provide the highest return to shareholders relative to the competition. B. Minimize shareholder risk relative to the competition. C. Sell more stock than the competition. D. Deliver the greatest stock price appreciation relative to the competition.

Sell more stock than the competition.

Which of the following is a major decision that was generated from a change in corporate strategy?

Selling IBM's personal computer business to the Chinese firm Lenovo

Weakness Opportunity alternative

Shore up a weakness to enable the organization to take advantage of an opportunity

If a firm wishes to bridge the gap between being fully integrated ("make") and transacting in the marketplace ("buy"), it can enter into a(n) ______________, which is a contractual arrangement to obtain inputs for a time period of generally a year or less. A. Short-term contract B. Joint venture C. Equity alliance D. Licensing agreement

Short-term contract

Individuals or groups that can affect or be affected by the actions of a firm are called _________.

Stakeholders

Under the shareholder value creation framework, ______________ makes it difficult to evaluate firm performance, particularly in the short term. A. Internal volatility B. Stock market volatility C. Value chain volatility D. Supplier volatility

Stock market volatility

Under the balanced-scorecard framework, management concentrates on all of the following areas when it comes to improving how customers view the firm EXCEPT: A. Service. B. Quality. C. Stock price. D. Cost.

Stock price.

Chapter 4 details actions that Vanguard took after 1997 to add customer segmentation as a new core activity because it was unable to provide quality service to targeted customer segments at the lowest possible cost. By changing its ________________, Vanguard was able to adapt to changing market conditions and sustain its competitive advantage in the investment industry.

Strategic activity system

____________ allow a firm to enter into a voluntary arrangement with another firm with the intent of sharing knowledge and resources to develop processes, products, or services together. A. Strategic alliances B. Short-term contracts C. Fully integrated contracts D. Networked contracts

Strategic alliances

Amazon compensated for their lack of valuable and rare resources by implementing a new distribution system to reduce operating costs. This is referred to as?

Strategic equivalence

________ reveals which companies are in the strongest or weakest position relative to your company. A. Scenario group mapping B. Strategic group mapping C. Situational group mapping D. Statistical group mapping

Strategic group mapping

Combining the dimensions of a firm's __________ and __________ tells us which generic business strategy the firm will pursue. A. Economies of scope; economies of scale B. Five forces; economies of scope C. Scope of competition; core capabilities D. Strategic position; scope of competition

Strategic position; scope of competition

Which of the following SWOT factors are generated from internal resources, capabilities, and competencies?

Strengths and weaknesses

Which of the following SWOT factors are generated from internal resources, capabilities, and competencies? A. Opportunities and weaknesses B. Strength and threats C. Opportunities and threats D. Strengths and weaknesses

Strengths and weaknesses

The text provides an example of stakeholder power in the investment banking industry. In 2007, the net income of the top five U.S. investment banks was roughly $10 billion. This sounds pretty good until you find out that in this same year the salary and bonuses paid to their employees was FOUR times that amount ($40B). This is an example of what?

Strong internal stakeholders capturing the value that would otherwise go to others (such as stockholders).

Mr. Smith was looking to buy a car but decided to buy a motorcycle instead. The motorcycle is a _______ and comes from outside the original industry. A. complement B. substitute C. convergence D. complementor

Substitute

Which of the following would NOT indicate that sellers are a strong competitive force? A. Substitutes exist for their components. B. They can supply the component for a cheaper cost than industry makers can produce it. C. The buyers of their component are not important customers. D. The component that they supply affects buyer product quality.

Substitutes exist for their components

Managers wishing to diversify the firm must remember that: A. A single-business diversification strategy generally works best. B. Forward integration is more successful than is backward integration. C. Successful diversification must be aligned with and strengthen a firm's business strategy. D. It is competitively advantageous to shrink the size and scope of most firms.

Successful diversification must be aligned with and strengthen a firm's business strategy.

Value Chain: Primary and Support Activities

Support activities- general admin, HR, tech, Procurement Primary Activities- inbound logistics, operations, outbound logistics, marketing and sales, service

If Microsoft continues to outsell all other rivals in the smartphone industry for the next five years, it will have achieved a: A. Parity advantage. B. Sustained competitive advantage. C. Competitive parity. D. Competitive disadvantage.

Sustained competitive advantage

Spreading fixed costs over larger output, employing specialized systems and equipment, and ________________ are three primary ways that achieving economies of scale can help a business. A. Increasing capital investments in input factors B. Producing two or more outputs using common resources C. Taking advantage of certain physical properties D. Spreading marginal costs over smaller units

Taking advantage of certain physical properties

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are: A. Intangible. B. Tangible. C. Indefinable. D. Unobserved.

Tangible

Which of the following is NOT a criterion for a strategically important resource?

Tangible

Which of the following is NOT a criterion for a strategically important resource? A. Difficult to imitate B. Not everyone has it C. Valuable D. Tangible

Tangible

The two alternatives to vertical integration that provide similar benefits while reducing the risks to the firm are _________ and ____________. A. Incremental integration; horizontal integration B. Taper integration; strategic outsourcing C. Horizontal integration; outsourcing D. In-house supplying; intermediate integration

Taper integration; strategic outsourcing

The innovations in process efficiencies such as Six Sigma, the Internet, and biotechnology are all elements of which macro environmental force? A. Political factors B. Sociocultural factors C. Technological factors D. Economic factors

Technological factors

Equity alliances are forms of strategic alliances that do all of the following EXCEPT: A. Signal greater commitment to the partnership. B. Allow one partner to take partial ownership of the other partner's company. C. Encourage specialized investments for future performance. D. Temporarily allow one partner to use the other's trademark and business processes.

Temporarily allow one partner to use the other's trademark and business processes.

When a firm has resources and capabilities that are valuable and rare only, it has?

Temporary competitive advantage.

Under the shareholder value creation approach to measuring competitive advantage, profitability and stock price increases indicate: A. That investors are ignoring macroeconomic factors. B. That the firm is most likely at competitive parity with its rivals. C. That investors will get a poor return on their risk capital. D. That a firm is utilizing effective strategies.

That a firm is utilizing effective strategies.

Core Competencies

That which contributes to customer value, is different and is extendable

Which of the following is NOT an example of an industry standard or dominant design? A. Blu-ray media storage B. Barcode scanners C. Wintel operating systems D. The Dvorak (DSK) keyboard

The Dvorak (DSK) keyboard

The fact that in its 2010 annual report, Microsoft outperformed the S&P but underperformed in the NASDAQ over the previous five years indicates all of the following EXCEPT: A. Benchmarks are important to consider in competitive advantage. B. Competitive advantage is defined in relative terms. C. The NASDAQ is not a good indicator of competitive advantage. D. Competitive advantage can be difficult to assess.

The NASDAQ is not a good indicator of competitive advantage.

How does Web 2.0 help improve Google's search engine results?

The PageRank algorithm relies on feedback from prior search results.

SWOT matrix

The SWOT matrix utilizes the SWOT analysis to develop strategic alternatives for the firm Look for combinations of internal and external factors that might lead to an alternative Alternatives are evaluated in the following step

In Strategy Highlight 3.1, why was the U.S. government putting pressure on UBS, the venerable Swiss bank? A. The U.S. government was investigating UBS for restraint of trade. B. The U.S. government wanted information on potential tax evaders. C. The U.S. government thought UBS had vital information about the 2009 financial meltdown. D. The U.S. government wanted information about UBS corporate tax payments globally.

The U.S. government wanted information on potential tax evaders.

Which framework can managers use to determine whether firm resources and capabilities are internal strengths or weaknesses?

The VRIO framework

Which framework can managers use to determine whether firm resources and capabilities are internal strengths or weaknesses? A. The VRIO framework B. The PESTEL analysis C. The five forces model D. Support activities

The VRIO framework

A key feature of an oligopoly is that the firms are interdependent, which allows them to be good examples in game theory. What does it mean when firms are interdependent? A. The actions of one competitor influences the behavior of the others. B. The competitors take actions according to their own situation. C. The competitive landscape is brutal and will likely have low profits. D. There will be a dominant solution available in the market.

The actions of one competitor influences the behavior of the others

An assessment tool that takes a multidimensional approach to evaluating a firm's competitive position by utilizing specific questions and performance metrics is: A. The comprehensive scorecard B. The shareholder scorecard C. The balanced scorecard D. The strategic scorecard

The balanced scorecard

When a firm assesses its performance by asking questions such as "How do our customers view us?" and "What core competencies do we need?", it is using which tool? A. The strategy map B. The triple bottom line C. The balanced scorecard D. A PESTEL analysis

The balanced scorecard

A strategy is a manager's theory of how to compete; however, the theory is useless if it is NOT put into action. What is the translation of strategy that details the firm's competitive tactics and initiatives?

The business model

In order for a firm to formulate an effective business-level strategy, it is important to remember that competitive advantage is determined by: A. The characteristics of the industry in which a firm competes. B. The characteristics of the firm itself. C. The characteristics of both the industry and the firm. D. The absolute positioning of the firm.

The characteristics of both the industry and the firm.

A small-scale appliance manufacturer has been producing goods for a private label company for 25 years. This manufacturer has no brand image, a small production facility, and scarce capital resources. The company has made several strategic attempts to increase market share and create a nationally branded appliance market presence. So far, it has been unsuccessful. Why is this most likely so? A. The appliance industry is not an attractive industry when it comes to existing firms. B. The company is limited by inter-group mobility barriers based on economies of scale and brand loyalty. C. The five forces analysis reflects that the appliance industry is very attractive. D. All of these.

The company is limited by inter-group mobility barriers based on economies of scale and brand loyalty.

Under the economic value creation framework, value can be viewed as: A. How much the product improves along the value chain. B. The firm's book value of the product line. C. The consumer's maximum willingness to pay. D. How important the product is to the firm's overall strategy.

The consumer's maximum willingness to pay.

A company that uses a cost-leadership strategy achieves a competitive advantage as long as: A. The economic value that is created is less than that of the competition. B. The economic value that the firm creates is equal to that of the competition. C. The economic value that the firm creates is greater than that of the competition. D. The economic value that is created is dependent on strategic parity.

The economic value that the firm creates is greater than that of the competition.

A company that uses a differentiation strategy achieves a competitive advantage as long as: A. The economic value that the firm creates is equal to that of the competition. B. The economic value that the firm creates is greater than that of the competition. C. The economic value that is created is less than that of the competition. D. The economic value that is created is dependent on strategic parity.

The economic value that the firm creates is greater than that of the competition.

If a manager is listing out resources that can be used to drive competitive advantage, which one of the following would NOT be on the list?

The economy

If a manager is listing out resources that can be used to drive competitive advantage, which one of the following would NOT be on the list? A. The buildings B. The economy C. The equipment D. The intellectual property

The economy

Business opportunities in the clean-tech economy have much potential. Production of solar panels in China has brought the prices down by 50%, while many countries are providing incentives to invest in the field. However, in strategy we must always look at both opportunities and threats. Which of the following is NOT a threat to the growth of the clean-tech economy?

The energy sector is rapidly growing worldwide.

Vertical integration involves all of the following EXCEPT: A. The level of ownership by a firm of production or service inputs. B. The level of ownership by a firm of the channels for the distribution of outputs. C. The expansion by the firm into different product lines and markets. D. Being more efficient internally than the external market.

The expansion by the firm into different product lines and markets.

Although there are "first-mover advantages" when it comes to bringing a new innovation to the market, there are also disadvantages. Which of the following is NOT one of these disadvantages? A. The firm builds a reputation as an innovator. B. Potential customers must be educated about the product. C. Distribution channels must be found. D. Complementary assets need to be located.

The firm builds a reputation as an innovator.

Each of the following are important reasons to understand the strategic implications of an industry life cycle EXCEPT: A. Each stage attracts different customer groups with unique needs. B. The firm should copy the industry leader in each distinct stage. C. Different competencies are required in each stage that must be created if not existent. D. The firm needs to know when changes in demand require changes in strategy.

The firm should copy the industry leader in each distinct stage.

When a firm is able to achieve higher economic value creation than its competition through differentiation, the competitive advantage is reflected by: A. The firm's ability to move into a new strategic group. B. The firm's ability to charge higher prices. C. The firm's ability to charge lower prices. D. The firm's ability to leverage complements.

The firm's ability to charge higher prices.

The term "strategy" has grown in usage in a variety of fields today. Which of the following is the best use of the term for this course?

The firm's efforts to gain and sustain competitive advantage

Which of the following is the most salient problem with GE losing its AAA bond rating? A. It hurt their reputation B. The higher cost of money C. It dragged GE into the financial crisis. D. It had no major impact

The higher cost of money

The five-forces-plus-complements model is useful in understanding industry profit potential, but it is only a snapshot in time. Managers must also consider ___________. A. the cost structure B. the industry dynamics C. the competitive landscape D. the strategic group

The industry dynamics

According to the SCP model, what is the relationship between firms and their industries? A. The firm's structure determines the industry conduct and is not related to firm performance. B. The firm's conduct shapes the industry structure and leads to firm performance. C. The industry structure determines firm conduct and these combine to determine firm performance. D. None of these.

The industry structure determines firm conduct and these combine to determine firm performance

An integration strategy differs from a low-cost strategy in that: A. The intent of an integration strategy is not to be the absolute lowest-cost provider because of the added costs of increased value in its products/service. B. A successful integration strategy requires that the business be the lowest-cost provider in order to drive higher value creation than the competition. C. Economy of scale is more important to an integrator, while economy of scope is more important to a low-cost strategy. D. An integration strategy requires first that the business be stuck in the middle, while a low-cost strategy avoids this condition.

The intent of an integration strategy is not to be the absolute lowest-cost provider because of the added costs of increased value in its products/service.

Using either the accounting profitability or shareholder value creation approach to determine whether Microsoft or Google have competitive advantage(s) is complicated by the fact that: A. The key to their performance is based on intangible assets. B. The technology sector is difficult to evaluate. C. One-dimensional approaches reveal the best information. D. They have no tangible assets.

The key to their performance is based on intangible assets.

The level of entry barriers is only relevant to potential competitors because: A. Firms that are established in an industry have already overcome the barriers to entry. B. The existence of high entry barriers has little impact on overall industry profitability. C. Competitive markets are dynamic, so established firms expect that there will always be new entrants. D. The level of entry barriers is relevant to both existing and potential firms due to the competitive consequences for both.

The level of entry barriers is relevant to both existing and potential firms due to the competitive consequences for both.

According to Strategy Highlight 4.3, Microsoft's eventual industry dominance is largely credited to: A. The lucky break that Bill Gates got when starting Microsoft, which was leveraged into a highly effective strategy. B. Microsoft's financial resources and market position during the time of market entry. C. The attractiveness of the computing industry. D. The ability of Microsoft to continuously innovate, which is a rare resource in the computing industry.

The lucky break that Bill Gates got when starting Microsoft, which was leveraged into a highly effective strategy.

According to Strategy Highlight 4.3, Microsoft's eventual industry dominance is largely credited to?

The lucky break that Bill Gates got when starting Microsoft, which was leveraged into a highly effective strategy.

Applying the five forces model to the airline and soft drink industries demonstrates all EXCEPT which of the following? A. The soft drink industry has fairly low forces. B. The airline industry has a high level of forces. C. The profit level should be higher in the soft drink industry than the airline industry. D. The macro environmental forces are similar between the airline and soft drink industries.

The macro environmental forces are similar between the airline and soft drink industries

Business managers test their theories in the marketplace. An accurate set of assumptions will yield enhanced strategic decisions. When the Apple Newton product failed in 1993, what feedback did Apple (and its alert competitors) collect from the experience?

The price and bulkiness were not right for the PDA market then.

Value creation is important to competitive advantage because: A. The product or service that is valued the highest by the firm will deliver competitive advantage(s). B. The product or service that is valued the highest by the customer can charge the highest price. C. The company with the highest future value will have highest profits. D. The company with the highest present value will sustain competitive advantage(s).

The product or service that is valued the highest by the customer can charge the highest price.

When the collective strength of the five forces works against an industry: A. Individual firms should compete on price. B. Individual firms should move from one strategic group to another. C. The profit potential is weak. D. There is a high degree of profit potential.

The profit potential is weak.

A drawback to evaluating competitive advantage under the shareholder valuation perspective is: A. The effectiveness of a firm's strategy cannot be reflected in its stock price. B. It is not as effective as the accounting profitability approach to measuring competitive advantage. C. The psychological mood of investors does not necessarily reflect how effective a firm's strategy actually is. D. It is the only "one-dimensional" framework that does not compare the firm to its rivals.

The psychological mood of investors does not necessarily reflect how effective a firm's strategy actually is.

While the favorable demographics of the U.S. and most developed economies would seem to provide significant business opportunities in health care, managers must balance this with the risk from what?

The reimbursement rates for specific procedures will likely go down.

A large textile manufacturer located in South Carolina had to exit the industry because it could no longer compete with firms from overseas. The company laid off hundreds of employees, its suppliers started to struggle, and several local establishments closed their doors. It can be said that the local economy in South Carolina was experiencing what? A. The retaliation effects of abandonment B. The ripple effects through the supply chain C. The destructive role of complements D. Dynamic industry consequences

The ripple effects through the supply chain

The never-ending cycle of analysis, formulation, implementation, and feedback is called what?

The strategic management process

"What is our social impact?" is a question most relevant to: A. The balanced scorecard. B. The triple bottom line. C. Value creation. D. Shareholder value.

The triple bottom line.

The effectiveness of the balanced scorecard is contingent upon all of the following EXCEPT: A. The type of technology used. B. The skills of the managers using it. C. The metrics chosen. D. Asking the right questions.

The type of technology used.

From an economic value created perspective, the volume of a firm's goods or services sold is generally driven by the relationship between ___________ and __________. A. The value created for customers; the price of the good or service B. How value is created; how customers view the firm C. The firm's core competencies; how shareholders view the firm D. The unemployment rate; shareholder value

The value created for customers; the price of the good or service

A drawback to evaluating competitive advantage under the balanced-scorecard perspective is: A. There is little guidance for management as to which metrics to use. B. The balanced scorecard concentrates too much on financial performance. C. It pays little attention to how customers view the company's products. D. The focus is on internal performance as opposed to external performance.

There is little guidance for management as to which metrics to use.

Long-term contracts such as licensing and franchising offer an advantage over short-term contracts because: A. They cost less. B. The competitive bidding process is extended. C. There is more incentive for transaction-specific investments. D. Licensing transfers ownership; short-term contracts do not.

There is more incentive for transaction-specific investments.

One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that: A. They have both broad and narrow economies of scope. B. They are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently. C. They are able to take advantage of market size and spread investment losses over many locations. D. They have been able to protect themselves from the threat of buyer power by increasing input prices.

They are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently.

Functional managers have the ability to come up with strategic initiatives that may influence the direction of the company. The reason for this is?

They are closer to products, services, and customers.

Firm resources such as intellectual property and brand equity are important to a firm because: A. Having such resources allows for a firm to achieve competitive parity. B. Once created, maintaining such resources takes little managerial effort. C. They are intangible, costly to imitate, and can lead to sustained competitive advantage(s). D. They are tangible and have a high degree of resource mobility.

They are intangible, costly to imitate, and can lead to sustained competitive advantages.

Firm resources such as intellectual property and brand equity are important to a firm because?

They are intangible, costly to imitate, and can lead to sustained competitive advantages.

All of the following are true about conglomerates EXCEPT: A. They follow the unrelated diversification strategy. B. They are able to overcome institutional weaknesses such as a lack of capital markets in emerging economies. C. Less than 70 percent of their revenues come from a single business. D. They are likely acquisition targets for large single-business firms.

They are likely acquisition targets for large single-business firms.

Which of the following would NOT indicate that buyers are a strong competitive force? A. They can integrate backward. B. They can purchase from several sellers. C. They are reliant on the industry's product. D. They buy in large quantities.

They are reliant on the industry's product

Google and Microsoft have approached the market using quite different business models. Over time, they have engaged in multi-point competition. Which of the following best describes this competition today?

They compete for market share in several different product categories.

Core competencies are important to a firm because of all of the following EXCEPT: A. They help to create competitive advantage(s). B. They need to be continuously nourished or they will lose their competitive ability. C. They need to be benchmarked from a firm with the competitive advantage. D. They are derived from resources and capabilities that must be effectively bundled together.

They need to be benchmarked from a firm with the competitive advantage

Core competencies are important to a firm because?

They need to be benchmarked from a firm with the competitive advantage

Suppliers are powerful when which of the following happens? A. Satisfactory substitutes are available. B. They sell a commodity. C. They offer a credible threat of forward integration. D. They are part of a highly fragmented industry.

They offer a credible threat of forward integration

What is BYD using to avoid entry barriers upon entering the automotive industry? A. They purchased a major automotive company. B. They reduced the switching costs of moving to electric vehicles. C. They used proprietary battery technology for use in electric vehicles. D. They have an established brand in China.

They used proprietary battery technology for use in electric vehicles

Creating prosumers is the idea of allowing consumers to work for you, which forms a hybrid between consumer and producer. Which of the following companies exploits prosumers in their business model?

Threadless

Given its size and industry influence, Walmart would be a powerful buyer. Which of the following is NOT an indication of Walmart's strength as a buyer? A. Three suppliers merge together to gain economy of scale. B. Suppliers locate very near Walmart's corporate headquarters. C. Walmart switches from Rubbermaid to another vendor for containers. D. Walmart decides to start manufacturing its own clothes to sell.

Three suppliers merge together to gain economy of scale.

All of the following are reasons why a firm seeks to diversify EXCEPT: A. Shareholder pressure for continuous growth. B. To expand the international markets of the firm. C. To determine how to compete in current markets. D. To leverage core competencies.

To determine how to compete in current markets

The return on risk capital that includes stock price appreciation plus dividends received over a specific period is: A. Total return on assets. B. Normalized returns. C. Total return to shareholders. D. Capitalized returns.

Total return to shareholders.

Strategy Highlight 5.1 discusses how Interface, Inc. has a strategic intent to become the world's first fully sustainable company. This is an example of which of the following? A. Triple bottom line B. Shareholder value C. Intangible resources D. Competitive force analysis

Triple bottom line

The ___________ is related to the stakeholder theory in that it attempts to fulfill obligations to constituencies, including employees, customers, suppliers, and communities. A. Triple bottom line B. Shareholder bottom line C. Balanced bottom line D. Integrative bottom line

Triple bottom line

When a firm attempts to improve its economic, social, and ecological performance, it is taking a(n) ___________ approach to assessing competitive advantage. A. Economic value creation B. Triple-bottom-line C. Balanced scorecard D. Stakeholder valuation

Triple-bottom-line

OXO differentiates kitchen utensils by using a patent-protected, ergonomically designed rubber grip. By adding unique product features, OXO can: A. Turn differentiated products into standardized products with price parity. B. Turn differentiated products into standardized products with price disadvantages. C. Turn commodity products into differentiated products with price disadvantages. D. Turn commodity products into differentiated products with premium pricing.

Turn commodity products into differentiated products with premium pricing.

BM is headquartered in Armonk, New York, but more than 70% of its employees work for the company outside of the U.S. What is given as a major reason for this in the text?

Two-thirds of its revenue and most of its growth are occurring outside the U.S.

Companies that pursue related diversification often receive a diversification premium, leading to a stock price valuation that is higher than the sum of their individual business units. This premium indicates that investors: A. Are hedging their bets that at least a few of the related businesses will experience high performance. B. Believe that firms with related diversification strategies are more likely to be restructured in the future. C. Are experiencing the bandwagon effect when it comes to investment choices. D. Understand that firms with related diversification strategies are more likely to improve their performance than other diversified firms.

Understand that firms with related diversification strategies are more likely to improve their performance than other diversified firms.

Strength Threat alternative

Utilize a strength to minimize the effect of a threat

Strategy Highlight 4.1 points out that Nintendo became the market leader of game consoles and was able to gain market leadership over Sony and Microsoft based on its knowledge of the casual gamer. This deep understanding, derived over many years, has enabled Nintendo to develop games that respond to customer preferences. Nintendo's knowledge of its customer is currently a(n): A. VRIO resource B. Valuable but common resource C. Easily substitutable resource D. Core competency that has provided competitive parity

VRIO resource

As noted in the Chapter 4 opening case, Circuit City lost its market leadership in part because it laid off some of its most experienced and loyal salespeople. It can be said that Circuit City lost a resource that was?

Valuable and rare

Tesla Motors Resources and Capabilites

Valuable, Rare, Costly to imitate, organized to capture value?

Currently, lean manufacturing is a __________ but ____________ resource, which leads to competitive parity.

Valuable, common

Currently, lean manufacturing is a __________ but ____________ resource, which leads to competitive parity. A. Valuable; rare B. Common; tangible C. Valuable; common D. Rare; tangible

Valuable, common

Resources and capabilities that generate a temporary competitive advantage are?

Valuable, rare, and costly to imitate

One of the strategic goals of management is to develop a resource base that is primarily: A. Flexible, responsive, and efficient B. Variable, rare, costly to initiate, and orderly C. Valuable, rare, costly to imitate, and organized to capture value D. Unique and difficult to imitate

Valuable, rare, costly to imitate, and organized to capture value

One of the strategic goals of management is to develop a resource base that is primarily?

Valuable, rare, costly to imitate, and organized to capture value

One of the strategic goals of management is to develop a

Valuable, rare, costly to imitate, and orgazined to capture

VRIO framework Valuable

Valuable- attactive feautures, lower costs(higher profits), Honda- design and build engines.

__________ is measured by a product's performance characteristics and its attributes for which customers are willing to pay. A. Competitive advantage B. Profit potential C. Contribution D. Value

Value

The purpose of a firm's ____________ is to add additional value through primary and support activities that competitors cannot easily replicate.

Value chain

The purpose of a firm's ____________ is to add additional value through primary and support activities that competitors cannot easily replicate. A. VRIO network B. Resource network C. Value chain D. Strategic chain

Value chain

Microsoft and Intel are complements to each other. Their alternating advances over time have created a ________. A. virtuous cycle B. virtual circle C. circle of complements D. mobility barrier

Virtuous cycle

The increasing interactivity and collective intelligence available on the Internet is called what?

Web 2.0

Non-price competition such as today's rivalry between Coca-Cola and Pepsi refers to: A. When one firm cuts prices to gain market share, the competition will do the same. B. When a firm is driving costs down in order to gain competitive advantages through lower prices. C. When a firm has no pricing power that leads to a competitive disadvantage. D. When a firm is offering unique products and services as opposed to competing on price.

When a firm is offering unique products and services as opposed to competing on price.

Under the five forces model, a risk to a business with a cost-leadership strategy is: A. Competition switches from customer service to pricing. B. When technological innovations open up cost reductions for substitutes or competitors. C. New entrants are all start-up firms with low volumes. D. Suppliers request a 2% price increase across the industry.

When technological innovations open up cost reductions for substitutes or competitors.

A firm's strategic position reflects: A. Whether it is competing on differentiation or cost. B. Whether it is competing within a targeted strategic group or not. C. Whether is has a competitive advantage or not. D. Whether it has first-mover advantages or not.

Whether it is competing on differentiation or cost.

All of the following are decisions that managers must make when formulating corporate strategy EXCEPT: A. What stages of the industry value chain to participate in. B. What range of products and services should be offered. C. Where globally the company should compete. D. Whether the company should compete through differentiation or cost leadership.

Whether the company should compete through differentiation or cost leadership.

According to Michael Porter, when it comes to a firm's value chain activities and the essence of strategy, a firm should ask itself: A. Which activities should be done? And more importantly, what should not be done? B. Where can costs be minimized to reflect the greatest profitability? C. What tangible assets can be acquired to increase competitive advantage? D. What are the best practices of the closest competitor and can they be easily adapted by the firm?

Which activities should be done? And more importantly, what should not be done?

According to Michael Porter, when it comes to a firm's value chain activities and the essence of strategy, a firm should ask itself?

Which activities should be done? And more importantly, what should not be done?

The ups and downs within industries and corporations suggest that competitive advantage __________.

Will likely be transitory

The vast majority of today's economic activity around the globe is powered by carbon-based sources of energy. Which of the following is not considered a carbon-based source of energy?

Wind

Each stage of the vertical value chain typically represents: A. A distinct industry. B. A type of product. C. The distinct process being applied. D. The type of material being used.

a distinct industry

When a business drives costs down as its cumulative output increases, it is referred to as: A. A learning curve. B. An output curve. C. A demand curve. D. A distribution curve

a learning curve

Capabilities

ability to deploy, leverage, integrate or manage resources- typically in a process

primary activities

add value directly in transforming inputs and outputs- service- inbound, outbound logistics, marketing

A firm's strategic position is: A. Determined by its business-level strategy. B. Created through strategic trade-offs. C. An attempt to create a large gap between value creation and costs. D. All of these.

all of these

Essentially, a successful integration strategy: A. Gives customers more perceived value while exceeding their price expectation. B. Allows a firm to make strategic trade-offs effectively. C. Enables a firm to increase value creation while keeping costs in check. D. All of these.

all of these

Higher product value tends to go along with which of the following items? A. Higher prices B. A higher willingness to pay C. Higher costs D. All of these

all of these

Human-asset specificity is the form of an asset that a firm invests in to create the human capital with knowledge about the specific routines and procedures needed to support a firm's vertical integration strategy. These routines and procedures bring competitive value to the firm because: A. They organize the firm's work processes. B. They are not transferable to a different employer. C. They are not easily imitated. D. All of these.

all of these

What is one of the challenges of measuring competitive advantage using the economic value creation approach? A. The value placed on a product or service by the consumer changes according to income and preferences. B. It is difficult to measure the economic value created for all products and services across the organization. C. It is challenging to determine the value of a product or service from a customer's perspective. D. All of these.

all of these

Dynamic Capabilities

an organizations capacity to purposefully create, extend or modify resources

Transaction costs: A. Help determine the scope of the firm. B. Are all costs associated with an economic exchange. C. Are both internal and external. D. Are all of these.

are all of these

Today, many companies use PeopleSoft and EDS to manage their human resources. By doing this, these firms: A. Are engaging in strategic outsourcing. B. Are reducing their level of vertical integration. C. Are leveraging their competencies. D. Are doing all of these.

are doing all of these

Buy Us is a big box retailer who is in direct competition with Walmart and Target. Buy Us initially tried to respond to Walmart by cutting its prices and reducing costs. Walmart has greater buying power and a more efficient supply chain, therefore Buy Us was not able to compete on costs. The company then tried to differentiate itself by signing a celebrity to create an in-house line of clothing. However, Target has a celebrity clothing line that has a more differentiated appeal. The economic value created by Buy Us is currently less than Target and Walmart. It can be said that: A. Buy Us is successful in creating an integration strategy positioned between Walmart and Target. B. Buy Us is "stuck in the middle" and has a competitive disadvantage. C. Buy Us is still creating an integration strategy positioned between Walmart and Target and is on the right track. It should continue this business strategy. D. Buy Us is "stuck in the middle" and has a competitive advantage.

buy Us is "stuck in the middle" and has a competitive disadvantage.

When a new product, process, or idea is introduced into the market, it has been: A. Extracted. B. Commercialized. C. Invented. D. Executed.

commericalized

When pursuing an integration strategy, managers use levers to help them simultaneously increase perceived value and lower costs. Which of the following is NOT one of these levers? A. Quality B. Complements C. Economies of scope D. Structure, culture, and routines

complements

Economic value can be viewed as the amount of the total value created that is captured and distributed between ________ and ________. A. Stakeholder; shareholder B. Consumer; producer C. Employees; consumer D. Producer; supplier

consumer; producer

Innovation used as a sustained competitive weapon must be: A. Radical and low cost. B. Architectural and high cost. C. Short-term and efficient. D. Continuous and commercialized.

continuous and commercialized

When the focus of competition is on differentiation, a firm tends to use all of these levers EXCEPT: A. New product launches. B. Cost input factors. C. Marketing and promotion. D. Unique product features.

cost input factors

When it comes to pursuing an integration strategy, managers manipulate both _____ and ________ drivers. A. Cost; value B. Cost; core capability C. Value; core capability D. Market; economic

cost;value

Which of the following is not an example of a software company's external stakeholder? a. creditors b. customers c. alliance customers d. project managers

Centralization

decision authority is located near the top of the organization

On average, mergers and acquisitions ______ shareholder value.

destroy

When a firm offers products with unique features and higher value for customers than that of the competition, it is implementing a: A. Product-broad strategy. B. Differentiation strategy. C. Cost-leadership strategy. D. Product-focused strategy.

differentiation strategy

Management of a firm must decide what range of products and services the firm should offer. This determines the firm's horizontal integration, or: A. Consolidation. B. Diversification. C. Categorization. D. Implementation.

diversification

The type of customers vital to a firm introducing a new innovation are the _________, who are willing to pay higher prices and like to tinker with new products. A. Late adopters B. Early adopters C. Early laggards D. Late majority

early adopters

____________ is created when a customer is willing to pay more for a good or service than it costs the firm to produce it. A. Economic value B. Product value C. Consumer value D. Economic advantage

economic value

When costs per unit fall as output increases, _________________ occur. A. Economies of scope B. Diseconomies of scale C. Economies of efficiency D. Economies of scale

economies of scale

When it is cheaper for a firm to produce two or more outputs or services together rather than separately through using the same resources and technology, then _________ occur. A. Economies of scope B. Transaction economies C. Economies of scale D. Output economies

economies of scope

functional

efficient from people with common skills, in depth specialization, poor communication across functional groups, limited view of organizational goals

Which of the following is likely not a reason Disney was eager to enter its initial strategic alliance with Pixar?

enter new markets

team structure

entire organization made up of work teams (Google)

all of the following are tangible resources except

equipment, centers, reputation, building

A partnership in which at least one partner takes partial ownership in the other is a(n) ______.

equity alliance

Resources

firm specific bundles of tangible or intangible assets that are built up over time

___________ and ____________ are the two focused generic business strategies. A. Focused differentiation; focused low-cost B. Integration; focused low-cost C. Integration; focused differentiation D. Cost leadership; differentiation

focused differentiation; focused low-cost

Tesla - Power of suppliers

forward integration, immediate switching costs, more suppliers than car makers

If a firm wants to have more ownership of the activities closer to product inputs or design, then it should: A. Backward vertically integrate. B. Forward vertically integrate. C. Forward horizontally integrate. D. Use a single-business diversification strategy

forward vertically integrate.

If a firm wishes to bridge the gap between being fully integrated ("make") and transacting in the marketplace ("buy"), it can enter into a(n) _________ agreement which grants the right to an individual or group to use the firm's trademark and business processes to sell goods and services that carry the firm's brand name. A. Licensing B. Franchising C. Contracting D. Equity partnership

franchising

If a firm wishes to expand beyond a single market and grow through being active in several different countries, it is pursuing the _______________ diversification strategy. A. Geographic B. Global C. Multi-country D. Market expansion

geographic

IBM still offers typewriters even though it does not invest much in future innovations of its typewriter line. Instead, it has chosen a _________ strategy to maximize cash flow from the remaining demand for typewriters. A. Harvest B. Divest C. Exit D. Consolidate

harvest

All of the following are questions that managers answer when selecting a business-level strategy EXCEPT: A. Who will we serve? B. How many product markets will we be in? C. What customer needs and desires will we satisfy? D. Why do we want to satisfy these needs?

how many product markets will we be in?

Support activies

indirectly add values

When management modifies strategic objectives based on which stage an industry is in they are responding to a(n): A. Industry life cycle. B. Growth life cycle. C. Economic life cycle. D. Entrepreneurial life cycle.

industry life cycle

A(n) _____________ is where the transformation of raw materials into finished goods and services occurs along distinct vertical stages. A. Production value chain B. Process value chain C. Industry value chain D. Business value chain

industry value chain

Assets such as innovation and quality are ________ assets that contribute to growth potential but are typically not included in a firm's book value. A. Intangible B. Off-balance sheet C. Tangible D. Historical

intangible

Dow Corning is owned jointly by Dow Chemical and Corning. Dow and Corning have entered into a __________, which is a special form of strategic alliance whereby two or more partners create and jointly own a new organization. A. Conglomerate venture B. Diversified venture C. Joint venture D. Joint contract

joint venture

__________ is a form of long-term contracting that is generally used in the manufacturing sector and which enables a firm to commercialize intellectual property like patents. A. Licensing B. Franchising C. Contracting D. An equity partnership

licensing

Power of Buyers

low switching costs, price sensitive, infrequent, some forward integration by car makers, few car makers, moderate/strong

When competing on the basis of low-cost leadership, a primary objective is to: A. Lower manufacturing costs. B. Lower production costs. C. Lower supplier costs. D. Lower overall costs.

lower overall costs

During the later part of the growth stage, many firms turn to ____________ to bring more customers into the market. A. Lower prices B. Diversification C. Imitation D. Radical innovation

lower prices

During the _______ stage of an industry life cycle, market demand is at a minimum and competitive intensity increases. A. Introduction B. Innovative C. Maturity D. Disruptive

maturity

When a firm successfully commercializes a new product or service, it is able to extract temporary ______________ but must continue to innovate to sustain competitive advantage(s). A. Monopoly profits B. Industry acknowledgements C. Lower costs of capital D. Competitive parity

monopoly profits

Competitive rivals among firms in the same strategic group is generaly

more intense than competition between groups

After the Internet was introduced, its value increased exponentially as the number of users increased. This is the positive effect of a(n): A. Adopter force. B. Network effect. C. User effect. D. Internet force.

network effect

A disruptive innovation leverages _______ technologies, while architectural innovations are based on ________ technologies. A. Existing; new B. Essential; drastic C. New; existing D. Drastic; essential

new; existing

differentiation

occurs through division of labor and technical specialization

Rare factor

only a few firms possess Toyota- lean manufacturing- temporary competitive advantage

Tangible Resources

organizational assets that are relatively easy to identify, including physical assets, financial resources, organizational resources, and technological resources Tesla- financial sources

The Resource-Based View of the firm and its strategy differs from Porters

outside in perspective (Porter), Inside-out Perspective (RBV)

Each of the following are a distinct phase in an industry life cycle EXCEPT: A. Growth B. Introduction C. Plateau D. Maturity

plateau

When an employee of a firm follows his or her own interests such as pursuing managerial perks when performing activities on behalf of the owner of the firm, a(n) _______________ problem occurs. A. Delegation excess B. Principal-agent C. Authority-excess D. Agent efficiency

principal-agent

Six Sigma, lean manufacturing, and genetic engineering are examples of ___________ that deliver new ways to produce or deliver existing products or services. A. Procedural changes B. Process innovations C. Entrenched standards D. Trial innovations

process innovations

When a firm is active in several different product markets, it is pursuing a(n) ____________ diversification strategy. A. Market B. Process C. Multipoint D. Product

product

Generally, as the level of ________ innovation declines, the level of innovation increases.

product, process

Generally, as the level of _________ innovation declines, the level of _________ innovation increases. A. Product; process B. Process; procedural C. Incremental; drastic D. Efficient; inefficient

product; process

Industry structures are not stable over time. The U.S banking industry has seen major consolidation in recent years. we would expect the result of this dynamic change to be what?

profits increase

Tesla Tech

progress in fuel cell technology, infranstructure, Smart grid.

The commercialization of new ideas and inventions often does all of the following EXCEPT: A. Creates value for society. B. Protects older industries. C. Disrupts an industry. D. Creates employment opportunities.

protects older industries

Tesla- Threat of substitutes

public transport, walking, biking, weak to moderate threat

Economies of scope often occur when a firm is using the ______________ diversification strategy because the firm is able to pool resources and leverage competencies. A. Single-business B. Related C. Dominant business D. Unrelated

When a firm uses many links (common resources and competencies) among its businesses, it is engaging in a(n) _________ diversification strategy. A. Related-constrained B. Dominant business C. Linked business D. Single-business

related-constrained

An alternative perspective to the transaction cost economics framework concerning the make-or-buy decision is the _____________ view of the firm, which focuses the firm less on transaction costs and more on its capabilities and knowledge and what it does well. A. Achievement-based B. Resource-based C. Entrepreneurial-based D. Competitive-based

resource based

Return on invested capital, return on equity, return on revenue, and _____________ are the profitability metrics that are commonly used by a firm in the quest for competitive advantage. A. Return on surplus B. Return on assets C. Return on value D. Return on production

return on assets

Tesla Legal

saftey standards

When management decides whether to pursue a broad market position or a narrow market position, they are defining the: A. Economies of scale. B. Economies of scope. C. Scope of competition. D. Scope of core capabilities.

scope of competition

A disadvantage to a firm when transacting in the market rather than owning its own production and distribution activities involves the costs associated with searching for and selecting suppliers. These types of costs are referred to as: A. Search costs. B. Investigative costs. C. Resource costs. D. Exploratory costs.

search costs

All of the following are forms of strategic alliances EXCEPT: A. Long-term contracts. B. Equity alliances. C. Joint ventures. D. Short-term outsourcing.

short-term outsourcing

__________ assets are assets like special equipment that are required to be co-located and used by a firm, such as mineral extraction equipment and bauxite mines. A. Site specificity B. Channel specificity C. Process specificity D. Firm specificity

site specifically

When a firm vertically integrates along the industry supply chain and invests in specific assets in order to support its activities, it has invested in: A. Fixed assets. B. Firm assets. C. Specialized assets. D. Required assets.

specialized assets

A(n) ____________ is the dominant design established during the growth stage of an industry life cycle once the market comes to agreement about the prevailing set of engineering features and design choices. A. Compliment B. Trial design C. Prototype D. Standard

standard

Which of the following is NOT one of the three critical factors used to evaluate economic value creation and competitive advantage? A. Value B. Price C. Stock price D. Cost

stock price

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments? a. strategy analysis b. strategy implementation c. strategy formulation d. strategy control

strategy analysis

All of the following are fundamental elements of an industry value chain EXCEPT: A. Raw materials. B. Support activities. C. Marketing and sales. D. Final assembly of goods.

support activities

Which of the following is NOT an important aspect of innovation? A. Useful B. Novel C. Implemented D. Tangible

tangible

One of the risks of pursuing an integration strategy is: A. That a firm could lose sight of its mission. B. That this strategy is easy for rivals to imitate. C. That the firm may get "stuck in the middle." D. That it is ineffective when competing on a global scale.

that the firm may get "stuck in the middle"

Decentralization

the degree to which lower-level employees provide input or actually make decisions

As noted in Strategy Highlight 7.1, _______________ has created part of the growth of the Apple iPhone due to the apps that are available to users. These apps increase the value of the iPhone and thus more people want to own an iPhone with apps. A. Ignoring the role of complements B. Apple's low-cost strategy C. The leveraging of network effects D. The targeting of "laggards"

the leveraging of network effects

span of control

the optimal number of subordinates a manager supervises or should supervise

Advantages to organizing economic activity within the firm ("make") include all of the following EXCEPT: A. The coordination of highly complex tasks B. The principal-agent problem. C. Creating an internal community of knowledge. D. The ability to make command-and-control decisions.

the principal-agent problem

Corporate strategy is concerned with determining the boundaries of the firm among geographic, vertical, and product/service dimensions. This is referred to as: A. Economic scope. B. The scope of the firm. C. Multidimensional mapping. D. Boundary spanning.

the scope of the firm

Applying the ______________ framework helps managers make economic decisions namely; what activities to pursue within the firm and which to obtain from the external market. A. Transformational analysis B. Economic investment analysis C. Appropriation economics D. Transaction cost economics

transaction cost economics

The costs associated with searching for economic agents with whom the firm contracts, negotiates, and enforces contracts with are: A. Transaction costs. B. Fixed costs. C. Procedural costs. D. Implicit costs.

transaction costs

The costs associated with the "make or buy" question when determining the scope of the firm are: A. Investment costs. B. Transaction costs. C. Diversification costs. D. Scale costs.

transaction costs

Costly to imitate

unable to develop or buy at a reasonable price Apple- yes Crocs- No

When a firm like GE has few if any linkages among its businesses, it is pursuing a(n) ________ diversification strategy. A. Slightly-related B. Comprehensive C. Broad-based D. Unrelated

unrelated

___________ firms are often unable to achieve additional value creation. A. Unrelated diversified B. Related-constrained C. Related-linked D. All diversified

unrelated diversified

The two primary competitive levers that managers can use in order to answer the question of how to compete are: A. Cost and core competencies. B. Value and cost. C. Value and core competencies. D. Cost and revenues.

value and cost

A low-cost leader optimizes all of its ___________ in order to achieve a low-cost position. A. Five forces activities B. Strategic group activities C. Value chain activities D. Economic chain activities

value chain activities

The ___________ is the difference between value creation and cost. A. Profit gap B. Net profit C. Value gap D. Revenue gap

value gap

_____ drivers are as important to a differentiation strategy as ________ drivers are to a cost-leadership strategy. A. Scope; quality B. Quality; learning C. Value; cost D. Learning; experience

value; cost

Industry value chains consist of all of the processes that transform raw materials into finished goods and services. These value chains are also called: A. Horizontal value chains. B. Vertical value chains. C. Circular value chains. D. Flattened value chains.

vertical value chains

27. (p. 204) When it would cost the firm less to pursue an activity in-house than obtaining that activity from a supplier in the external market, then the firm should: A. Enter into a joint venture. B. Execute a short-term contract. C. Vertically integrate. D. Strategically outsource.

vertically integrate

Which of the following questions is the most relevant for corporate-level strategy? A. How to compete? B. When to compete? C. Where to compete? D. Why to compete?

where to compete

When it comes to a firms value chain activitites and the essence of strategy, a firm should ask itself

which activities should be done, and not to do.

Casual Ambiguity

• Cause of success or failure are not apparent • Why has Apple had such a string of successful products? • Role of Steve Jobs' vision? • Unique talents of the Apple design team? • Timing of product introductions?

Path Dependence

• Current alternatives are limited by past decisions • U.S. is the ONLY industrial nation not on the metric system • Honda's core competency in gas engines took decade

SWOT Analysis

• Internal Strengths and Weaknesses • From VRIO framework • External Opportunities and Threats • From PESTEL or competitive forces analysis Leverage internal strengths, to exploit external opportunities

Social Complexity

• Two or more systems interact creating many possibilities • A group of 3 people has 3 relationships • A group of 5 people has 12 relationship

organizational design

process of constructing and adjusting an organization's structure to achieve its goals

staff authority

support and assist managers with informational burdens

What is the main goal of corporate venture capital investments?

to create real options in terms of gaining access to new technologies

Which are the three main reasons firms make acquisitions?

to gain access to new distribution channels and markets to preempt rivals to gain access to a new capability or competency

Why does Facebook acquire startups?

to preempt rivals

How do mergers and acquisitions differ?

A merger describes the joining of two independent companies, while an acquisition describes the purchase or takeover of a firm.

Duke basketball winning by two points over Butler in the 2010 NCAA championship game is an example of what?

A temporary competitive advantage

What is a major problem for between 30% and 70% of all strategic alliances?

At least one partner in the alliance considers the venture to be a failure.

organic organization

Cross-functional teams, Cross-hierarchical teams, Free flow of information, Wide spans of control, Decentralization, Low formalization

The Oakland A's used new metrics to assess player potential. This gave them an ability to do what?

Field low-cost teams that were still competitive

Which of the following is NOT a major component of the overarching integrative management field of strategic management?

Financial investment strategy

How do foreign governments typically influence a firm's use of strategic alliances to enter new markets?

Governments may require that foreign firms have a local joint venture partner in order to conduct business within the country's borders.

How does Lyft benefit from its strategic alliances with GM and Waymo?

It allows Lyft to more effectively compete against Uber.

Which of the following is true of tacit knowledge?

It can only be acquired through actively participating in the process

In what way does the strategic alliance between GM and Lyft allow GM to hedge against uncertainty?

It gives GM access to the market of the future, in which traditional private car ownership no longer exists.

How does horizontal integration affect Porter's Five Forces for the surviving firms?

It reduces rivalry among existing firms. It reduces the threat of entry.

What might Microsoft have used their 1998 purchase of LinkExchange to build a competitive advantage in?

Online search and advertising

flexible work arrangements

Telecommuting, Compressed Workweeks, Flextime, Job Sharing, Contingent workforce

Google's initial competitive advantage over AltaVista and Yahoo was what?

The PageRank algorithm

Which statements about joint ventures are true?

They are the least common of the three types of strategic alliances. They involve the sharing of both explicit and tacit knowledge.

What is a true statement about strategic alliances?

They have a high failure rate.

It appears that Google has a sustained competitive advantage because _________.

They have outperformed rivals consistently over time

What are some advantages of strategic alliances?

They might give companies a competitive advantage. They help firms achieve goals faster than they would alone.

Which of the following statements about equity alliances is true?

They require larger investments than non-equity alliances.

Microsoft is partnering with Yahoo for what major purpose?

To build market share for its Bing search engine

True or false: A horizontal integration strategy leads to industry consolidation.

True

True or false: Because the size of organizations is typically positively correlated with prestige, power, and pay, principal-agent problems might be a reason to pursue M&As.

True

True or false: Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.

True

Microsoft is building up its share of the search engine market by partnering with which firm?

Yahoo

organizational chart

a graphic representation of formal authority and division of labor relationships

Vasily is a manager at a large snack foods company. Vasily believes his company would benefit from being larger and thinks the shareholders would support such growth. The company is doing relatively well but needs to focus on stabilizing profits and expenditures. Vasily pushes for an acquisition anyway. The reason for this acquisition is ______.

a principal-agent problem

What three of the following are the primary benefits of horizontal integration?

a reduction in competitive intensity lower costs increased differentiation

What allows firms to manage both strategic alliances and mergers and acquisitions?

a relational capability

organizational structure

a system of tasks, reporting relationships, and communicated linkages

Disney appears to have made acquisitions mainly in pursuit of

access to new markets and distribution channels and access to a new capability or competency are both correct.

Which of the following terms refers to when one firm purchases or takes over another firm?

acquisition

Strategists can grow their firms by growing organically through internal development or externally through alliances and ______.

acquisitions

At which level of the corporation should strategic alliances and mergers and acquisitions be managed?

at the corporate level

line authority

authority that entitles a manager to direct the work of an employee

Disney's current relationships with Pixar, Marvel Entertainment, and Maker Studios represent the implementation of which corporate strategy?

backward vertical integration

Disney's decision to launch two new streaming services is an example of which type of corporate diversification strategy?

build new core competencies to create and compete in markets of the future

A conceptual model that helps strategists choose between seeking internal development, entering into an alliance, or acquiring new resources, capabilities, and competencies is called the "______ framework."

build-borrow-or-buy

A firm might want to use a strategic alliance to ______.

change the industry structure

How willing the firms in an alliance are to share necessary resources and make sacrifices in the name of long-term rewards is referred to as partner ______.

commitment

integration

cooperation among specialists to achieve a common goal

When an established firm makes an equity investment in an entrepreneurial venture it is known as a(n) ______ investment.

corporate venture capital

Internal Collaboration

cross functional teams, communities of practice, ad hoc committee (address specific issues)

What are the three mechanisms that alliances can be governed by?

equity alliances joint ventures non-equity alliances

Boundaryless Structure

everyone shares ideas to determine the best course for the organization, people are responsible for their own work, flexible time, virtual work (tech startups)

An advantage of using a non-equity alliance to govern a strategic alliance is its ______.

flexibility and ease of initiation

Departmentalization

functional, geographical, product, process, customer

One reason why a firm might enter into a strategic alliance is to _____.

hedge against uncertainty

Horizontal integration can ______.

help a firm improve its strategic position in an industry

mechanistic organization

high specialization, rigid departmentalization, clear chain of command, narrow spans of control, centralization, high formalization

When two competitors merge, leading to industry consolidation, they are engaging in ______.

horizontal integration

Formulization

how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures

Which of the following are benefits of a horizontal integration?

increased differentiation reduced competition

What is an important aspect of alliance success?

inter-organizational trust

Which of the following are the three choices in the build-borrow-or-buy framework?

internal development acquisition of new resources strategic alliances

A standalone organization that two or more parent companies create and own together is a ___.

joint venture

The three mechanisms to govern alliances are non-equity alliances, equity alliances, and ______.

joint venture

Which of the following forms of agreement do non-equity alliances typically take?

licensing supply distribution

Gaining new capabilities or competencies is one of the three main reasons companies ______.

make acquisitions

geogrpahical

more effective in each region, duplication of functions, isolation

process

more efficient flow of work activities, can only be used with certain product types

customer

needs met by specialist, duplication of functions, limited view of goals

The most common type of alliance is a(n) ______.

non-equity alliance

External Collaboration

open innovation and strategic partnerships

What are three options used by executives to drive firm growth?

organic growth acquisitions alliances

What are the two necessary conditions for successful alliance formation?

partner commitment partner compatibility

Although the three tasks of alliance management capability often occur at the same time, in general what is the first phase of alliance management?

partner selection and alliance formation

What are the phases of alliance management?

partner selection and alliance formation alliance design and governance post-formation alliance management

A firm with alliance management capability is able to effectively manage which of the following tasks?

post-formation alliance management partner selection and alliance formation alliance design and governance

When a company makes incremental investments as part of a larger investment and takes the time to analyze the information gained following each incremental investment, the company is taking a ______.

real-options perspective

Which approach to strategic decision making takes a larger investment decision and divides it into multiple smaller decisions that happen over time?

real-options perspective

Sources of COSTS in a horizontal integration strategy are ______.

reduced flexibility integration failure

product

specialise in certain products/services, managers are experts, close to customers, limited view of organizational goals

In order for an alliance to qualify as ______, it must have the potential to alter a company's competitive advantage.

strategic

Which type of knowledge cannot be codified and can only be gained through active participation in the task?

tacit knowledge

The partners in non-equity alliances can have weak ties because such alliances are often ______ in nature, which can cause lack of trust and commitment.

temporary

chain of command

the order of authority within a facility, line and staff authority

Horizontal integration can reduce ______.

the threat of entry

Why might a firm create a joint venture when entering a new geographic market?

to adhere to local law to access local contacts to access local expertise

Which of the following are reasons why firms enter into strategic alliances?

to strengthen their competitive position to enter new markets to learn new capabilities

If an alliance between two firms succeeds, it is likely that the firms in the alliance _____.

trust each other

Six key elements in organizational design

work specialization, departmentalization, chain of command, span of control, centralization and decentralization, formalization

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