BMGT495 Final

Companies that that try to use all four generic strategies often have the most sustainable success in their industry. True or False

False

The diffusion of a technological innovation typically follows a: a. U-shaped curve b. Inverted-U curve c. S-curve d. monotonic curve

S-curve

_____ is best described as decreases in cost per unit as output increases. a. Economies of scale b. Economies of scope c. Economies of learning d. Economies of replication

economies of scale

A ________ problem is referred to as the possibility that partners can exploit the transaction specific investment made by others in the alliance. a. adverse selection b. information asymmetry c. moral hazard d. holdup

holdup

Which of the following is an example of a firm's resources? a. routine activities such as invoicing customers that can be contracted from other firms b. assistance available from the government in the form of rules and regulations c. assets such as land and buildings owned by a firm d. liabilities such as bills payables and short-term debts

liabilities such as bills payables and short-term debts

SWOT

strengths, weaknesses, opportunities, threats

Lush Roses is a chain of premium hotels around the globe that charges higher prices for its rooms and suites when compared to the average industry standards. Yet, the hotel enjoys the largest market share in the industry. This is mainly due its highly responsive staff that has a strong commitment toward achieving a 100 percent guest satisfaction. In this scenario, which of the following is the key value driver? a. superior customer service b. low cost of input factors c. availability of complements d. economies of scale

superior customer service

Product Differentiation is likely to be used when a. there is a high willingness to pay in the market b. when the profit is based on volume of goods sold c. economies of scale

there is a high willingness to pay in the market

How can a firm achieve a competitive advantage? a. drop cost and keep revenue constant b. increase revenue and keep cost constant c. A & B d. None of the above

A & B

Which of the following statement(s) is/are true about the advantages and disadvantage of being an (innovator) first-mover firm versus being a (follower) second-mover firm? There can be multiple correct answers to this question. a. Innovators (first-movers) incur higher costs than follower (second-movers) due to the need for educating customers. b. Innovators (first-movers) have economy of scale advantage over followers (second-movers) c. Innovators face the risks of adopting the wrong industry standard due to technological uncertainties in early phase of an industry. d. Demand uncertainty is higher for (followers) second-movers than for (innovators) first-mover firms.

A & C

What are dynamic capabilities? Multiple answers may be correct to this question. a. They are a firm's ability to predict where the future is heading. b. They are a firm's ability to lobby government for favorable policy support. c. They are a a firm's ability to continuously improve its cost structure in order to achieve maximum efficiency. D. The are a firm's ability to marshal resources to adapt itself to a predicted future.

A & D

Which of these examples from our past cases and class discussions are true about diversification? (Note: the answer may be more than one). a. Target's expansion to Canada is a form of geographical diversification. b. Disney has engaged in channel diversification when acquiring ABC. c. Netflix has remained undiversified throughout its corporate history. d. Atari has diversified into mobile game market.

A & D

AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply? a. AccuroDisk and TD Storage share differentiation parity. b. TD Storage has a competitive advantage over AccuroDisk in terms of perceived value c. AccuroDisk creates a greater profit margin than TD Storage d. TD Storage is a cost-leader when compared to AccuroDisk

AccuroDisk creates a greater profit margin than TD Storage

A primary advantage of organizing economic activity within firms is the A. ability to coordinate highly complex tasks to allow for specialized division of labor. b. low administrative costs because of reduced bureaucracy. c. eradication of the principal-agent problem. d. high-powered incentive to work as salaried employees for an existing firm.

ability to coordinate highly complex tasks to allow for specialized division of labor

Both BioThink Inc. and GD Pharma Inc. have discovered similar vaccines to prevent cancer. While GD Pharma's vaccine sells at $100 per unit, BioThink sells its vaccine at $90 per unit. This price differentiation has mainly been attributed to the companies' capital decisions. While BioThink used its retained earnings to develop the vaccine, GD Pharma borrowed funds from banks to develop the vaccine. Thus, GD Pharma pays a higher interest on its capital, which makes it necessary to price its vaccine higher. Thus, the key driver for BioThink's competitive advantage is a. low-cost input factors b. superior customer service c. network externalities d. economies of scale

Low-cost input factors

Which of the following are NOT among the 5 common alternatives of mode of change to fill a resource gap or exploit an opportunity? a. internal development b. spot market exchange c. alliance d. merge and acquisition e. SPAC

SPAC

Which of the following statements accurately brings out the difference between tangible and intangible resources? a. Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same. b. Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased. c. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. d. Tangible assets are difficult to imitate, whereas intangible assets can be easily replicated

Tangible assets are difficult to imitate, whereas intangible assets can be easily replicated

When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? a. increasing competitive intensity b. accessing critical complementary assets c. procuring additional capital investments d. reducing differentiation of product and service offerings

accessing critical complementary assets

When Internet service providers offer free routers for subscriptions to their wireless Internet packs, the perceived value of the service offering increases. In this case, the value driver would be a. economies of scale b. learning-curve effects c. experience-curve effects d. availability of components

availability of components

As the inventor of hypertension medication, OneSure Pharmaceuticals (OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiry of OSP's patents, regular users did not want to switch because they were concerned about possible side effects. Which of the following benefits does this scenario best illustrate? a. first-mover advantages b. social benefits c. network externalities d. fringe benefits

first-mover advantages

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it a. loses its competitive advantage. b. gains market share from other firms. c. lowers the economic value created. d. results in diseconomies of scale.

gains market share from other firms

Which of the following is NOT an example of positive (synergistic) driver of the better-off test that increase value for combined entity? a. Shared cost economies b. Increased appeal to customers through one-stop shopping c. Bundling of complementary assets d. increase in needs for coordination

increase in needs for coordination

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on a. decreasing the existing value gap by providing luxury goods to customers. b. maintaining a less steeper learning curve as compared to its competitors. c. increasing the perceived value created for customers, which allows it to charge a premium price. d. lowering its costs compared to its competitors,' while offering adequate value for its products and services.

increasing the perceived value created for customers, which allows it to charge a premium price

A factor favoring the success of disruptive innovation is that a. incumbent firms are slow to change. b. new entrants have highly formal organizational structures and processes. c. the low end of the market is highly guarded. d. incumbent firms focus on radical innovation rather than incremental innovation.

incumbent firms are slow to change

_____ is best described as a situation in which one party is more informed than another, because of the possession of private information. a. Information governance b. Information asymmetry c. Information deregulation d. Information piracy

information asymmetry

How is a cost-leader protected from threats from powerful buyers? a. It is more able to absorb price increases through accepting lower profit margins. b. It is more able to absorb price increase through generating higher profit margins. c. It is able to create a significant difference between perceived value and current market prices. d. It is able to create a significant difference between actual value and future market prices.

it is more able to absorb price increases through accepting lower profit margins

When Toyota wanted to secure a long-term supply of lithium, it had to create a bond of trust with an Australian company, Orocobre Ltd. Orocobre wanted to establish the bond of trust before making huge investments in specialized equipment required to extract the high-quality lithium. What did Toyota do to instill this trust? A. It offered Orocobre exposure to Toyota's proprietary information. b. It made a credible commitment by taking an equity stake in Orocobre. C. It acquired Orocobre as part of its backward vertical integration plans. d. It offered Orocobre franchising opportunities to sell hybrid vehicles.

it made a credible commitment by taking an equity stake in Orocobre

Organizational routines and team-based skills that find their expression in a company's structure, routines, and culture are referred to as a. tangible resources b. physical assets c. human assets d. financial assets e. organizational assets

organizational assets

Which of the following are examples of firm's resources that are hardest for competitors to replicate? a. financial resources b. physical resources c. human capital resources d. organizational routines and organizational culture

organizational routines and organizational culture

Which of the following alternatives on the make-or-buy continuum allows for most integration? a. short-term contracting b. joint-ventures c. licensing d. parental subsidiary relationships

parental subsidiary relationships

Oviyo Inc. has been successful at differentiating itself from competitors by claiming a premium price for its digital cameras based on superior image quality and advanced technology. In this scenario, which of the following is the key value driver? a. economies of scale b. low-cost input factor c. product features d. premium prices

product features

DFS Electronics.has managed to ensure that all its products are highly durable and reliable. These efforts not only add to the products' differential appeal, but also help the company save costs during production and avoid expenses due to after-sales services. Thus, the common value and cost driver responsible for DFS Electronics strategic position as in blue ocean is the a. network effect. b. availability of complements. c. quality. d. diseconomies of scale.

quality

Value drivers contribute to a firm's competitive advantage only if a. the increase in value creation exceeds the increase in costs. b. they can shrink the firm's value gap. c. they can restrict the firm from claiming a premium price for its products d. the decrease in perceived value leads to an increase in costs.

the increase in value creation exceeds the increase in costs

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply? a. The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be non-price based. b. The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation. c. The electric car industry will move to the maturity stage, whereas the industry for MP3 players will enter the growth stage next. d. The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.

the industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation

Investments in specialized assets tend to incur high opportunity costs because the a. assets can be profitably used for multiple purposes. B. threat of one of the partners pursuing his or her self-interest is high. C. social costs associated with these assets are high. d. firms can avoid backward integration by investing in these assets.

threat of one of the partners pursuing his or her self-interest is high

In a world of continuous change, companies need to maintain competitive advantage by a. Leveraging resources b. Investing in resources c. Upgrading resources d. All of the above

All of the above

Which of the following would be good example(s) of the second key question a good strategy should answer? a. This course provides you with training of strategic analytical skills. b. Disney provides customers with high-quality family-oriented entertainment c. Walmart offers customers access to a variety of products at everyday low prices d. All of the Above

All of the above

Which of the following would not suitable examples in real world for an answer to the third key question of strategy? a. FedEx's fleet of trucks b. Netflix's capability to produce their own chows c. Faculty and staff of University of Maryland d. All of above

All of the above

Which of the following statement(s) is/are true? (Answer can be more than one). a. Corporate strategy considerations usually involve a single line of business for a firm. b. The better-off test for corporate diversification holds that the combined value of two businesses should be higher than the sum of values of the two businesses when they are not yet combined. c. Pooling businesses together to achieve economy of scale and thus reducing costs through sharing of facilities is a common source of synergy driving diversifications. d. Companies sometimes buying distribution channels in vertical integration diversification.

B, C, & D

Which of the following statement(s) is/are true? (The answer may be more than one). a. Related diversification is always better than unrelated diversification. b. One of the reasoning for diversification is for diversifying financial risks. c. United Technologies is a highly diversified firm that engages in many unrelated diversifications. d. The risks are low with diversification when it is unrelated.

B & C

Which following statement(s) is/are true about network externalities? There may be multiple correct answers to this question. a. Network externalities were only discovered in Internet-related industries. b. Facebook is an example of how a firm has built strong network externalities from a large user base who are reinforcing the value the Facebook platform. c. Network externalities were part of Porter's Five-Forces Framework d. Network externalities exist when the value of a product to an individual increases with the number of other users of the same product

B & D

Which of the following would be the first key question a good strategy should answer? a. The industries the business operates in b. The age of a business. c. The success of a business. d. The mission of a business. e. The competitors of a business.

The industries the business operates in

Use the following information to properly label companies A & B: The industry cost is $10/unit and the revenue is $25/unit. Company A: Cost $4/unit and revenue is $25/unit Company B Cost $10/unit and revenue is $40/unit a. Company A uses Cost leaderhship. Company B uses Product differentiation b. Company B uses Cost leaderhship. Company A uses Product differentiation c. Company A uses Cost leaderhship. Company B uses Cost Leadership d. Company A uses Product differentiation. Company B uses Product differentiation e. None of the above

Company A uses Cost leadership. Company B uses product differentiation

In a focused cost-leadership strategy, a firm a. caters to the segment of the market that is least cost-sensitive. b. provides high-priced products for many different segments of the mass market. c. delivers low-cost products and services to a specific, narrow part of the market. d. focuses on reducing the economic value created to drive down costs.

Delivers low-cost products and services to a specific, narrow part of the market

What is the best generic strategy for a firm at the introduction stage of industry life cycle? a. Cost-leadership strategy b. International strategy c. Focused strategy d. Differentiation strategy

Differentiation strategy

Which of the following is a feature of the growth stage of the industry life cycle? a. Consumer demand and market growth increase b. The prices of goods begin to rise c. The basis of competition moves away from process innovation d. The number of competitors decreases

consumer demand and market growth increase

How does Dollar shave club differentiates itself from its competitors by shipping razors right to the customers door. There is a sustainable competitive advantage because no other business can imitate their business model. (T or F) True False

False

True or False: A strategy is often misinterpreted as a goal

False

True or False: A strategy will focus on a single aspect or piece of the overall picture.

False

True or False: The statement: "I will get an A in this class" is a valid strategy.

False

According to Barney (1991), _____ are include all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc., controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness. Put it differently, _____ are strengths that the firm can use to conceive of and implement their strategies. a. Equity reserves b. Value proposition c. Capital gains d. Firm resources

Firm resources

In a low cost leadership model the owners would want... a. low demand, homogeneous market, high cost machienery to create barriers to enter b. high demand, homogeneous market, low fixed cost c. low demand, homogeneous market, high cost equipment to create barriers to enter d. high demand, homogeneous market, high fixed cost

High demand, homogeneous market, high fixed cost

The fourth key question that a good strategy needs to clearly answer is: a. Where does a business compete? b. When do we engage in mergers and acquisitions? c. When does a business releases a new product? d. How should a business sustain its capabilities to provide its unique set of values to customers?

How should a business sustain its capabilities to provide its unique set of values to customers?

Both Viten Electronics Inc. and JL Electronics Inc. incur a cost of $400 to manufacture a LED television. However, the economic value created by Viten Electronics is less than that created by JL Electronics. What does this indicate? a. Viten Electronics has a competitive advantage over JL Electronics. b. Both Viten Electronics and JL Electronics have achieved competitive parity. c. JL Electronics can charge a premium price on its televisions. d. Viten Electronics has created a higher value gap than JL Electronics.

JL electronics can charge a premium price on its televisions

Which one of the following is NOT an effective barrier for preventing competitors to imitate a firm's resources? a. Unique historical conditions (or often referred to as Path dependence) b. Causal ambiguity c. Knowledge controlled by a firm's human capital (employees) d. Social complexity

Knowledge controlled by a firm's human capital (employees)

PepsiCo operates in many countries and sells a wide variety of aerated drinks, other beverages, different types of chips, and Quaker Oats goods to achieve continuous growth. From this data, we can conclude that PepsiCo has been involved in a. strategic outsourcing b. lean manufacturing c. product-market diversification d. process diversification

Product-market diversification

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage. a. Embargos b. Cartel agreements c. Strategic alliances d. Corporate acquisitions

Strategic alliances

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in a. collective bargaining b. strategic trade-offs c. arbitration d. mediation

Strategic trade-offs

Gene Craft Inc. is the market leader in the pharmaceutical industry. Though most of its resources are common to those of its competitors, a few resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gene Craft Inc. is most likely to be considered a rare and costly-to-imitate resource that has contributed to its competitive advantage? a. the company's land and buildings b. the company's plant and machinery c. the company's raw material supplies d. the company's chemical patents

The company's chemical patents

Grace Apparel Inc. has decided to procure fabrics required for its garments from external suppliers instead of maintaining its own dyeing and weaving facilities. How will this decision affect the firm? a. The firm will still suffer the principal-agent problem. b. The firm's administrative costs will be higher because of added necessary bureaucracy. c. The firm will have more flexibility in purchasing and comparing prices of goods and services. d. The firm will have high-powered incentives, such as hourly wages and salaries.

The firm will have more flexibility in purchasing and comparing prices of goods and services

True or False: A good Strategy explains why a business is successful by clearly articulating what a business does and does not do.

True

True or False: The word strategy comes from the Greek word strategos, which means the art of the general.

True

Companies having resources that are valuable, rare and inimitable but lack organizational structure are at a. Unused competitive advantage b. Competitive disadvantage c. Temporary competitive advantage d. Competitive parity

Unused competitive advantage

Which framework can be used to evaluate a firm's resources (and capabilities)? a. Porter's 5 Forces b. PESTL c. CAPM d. VRIO

VRIO

_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs. a. Venture capitalism b. Bootlegging c. Vertical integration d. Crowdsourcing

Vertical integration

Which one of the following is NOT in the set of four fundamental questions that a good strategy needs to answer clearly? a. what is the goal of the business? b. where does the business compete? c. what value does the business bring? d. what resources do we utilize? e. how is value sustained?

What is the goal of the business?

Divina Pharma Inc. and MF Electronics Inc. have together invested and created a new organization, FirstHealth Inc., to focus on developing diagnostic devices. Through this new firm, both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments. However, the new organization operates independent of Divina Pharma and MF Electronics. Which of the following alternatives to integration does this scenario best illustrate? a. a joint venture b. a franchisee c. a licensing contract d. a corporate acquisition

a joint venture

First movers often have several competitive benefits including a. scale effects. b. shakeout effects. c. better opportunity to build network effects d. an increased scope effects

better opportunity to build network effects

What are the appropriate tests for evaluating corporate diversification decisions a. The better-off test b. The best-alternative test

both

The managers at AHL Chemicals Inc. decided that their firm needed to diversify because of falling sales and lower performance in one sector. How does diversifying compensate for the lackluster performance in this sector? a. by having higher performance in another sector b. by sharing their market power c. by increasing the firm's risk in another sector d. by motivating managers

by having higher performance in another sector