BUS 345 Midterm

Which of the following descriptions best exemplifies adverse selection? A) A manager cannot ascertain the contributions of individual team members in team production. B) A research scientist uses the organization's resources to conduct personal research. C) An employee spends time on social networking sites during work hours. D) An interview candidate lists his qualifications in chronological order.

A) A manager cannot ascertain the contributions of individual team members in team production.

Which of the following summarizes the difference between a firm's vision and mission? A) A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision. B) A vision states the ethical values of a firm; a mission states the monetary goals of a firm. C) A vision states how much a firm wants to earn; a mission states how these earnings will be accomplished. D) A vision states the management values of a firm; a mission states the values of the other workers.

A) A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision.

________ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it. A) Economic value created B) Break-even point C) Consumer surplus D) Cost of capital

A) Economic value created

The rules for "make or buy", in terms of vertical integration, that a firm should follow would be? A) If in-house costs to make are lower than market costs, then vertically integrate B) If market costs to make are lower than in-house costs, then vertically integrate C) If in-house costs to make are equal to market costs, then vertically integrate D) If market costs to make are equal to in-house costs, then vertically integrate

A) If in-house costs to make are lower than market costs, then vertically integrate

Using the Boston Consulting Group growth-share matrix, the managers of Xylicon International determined that their business unit devoted to personal health monitoring devices was a star. Based on this finding, which of the following strategies is likely to produce the best results? A) Increase investment in the personal health monitoring unit to encourage future growth. B) Seek to lower costs in the personal health monitoring unit to increase market share. C) Harvest as much cash flow as possible before shutting the business down. D) Immediately divest from the personal health monitoring industry.

A) Increase investment in the personal health monitoring unit to encourage future growth.

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit? A) Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry. B) Suppliers have weak bargaining power because they offer products that are not differentiated. C) Entry barriers in the industry are high, resulting in hardly any new airlines popping up. D) Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

A) Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry.

A bank, CQC, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical? A) The bank knows that the customer will be unable to pay the loan if the interest rate rises. B) The bank is not aware of the investments made by the customer. C) The bank has the financial statements of the customer, but it is not aware of each source of income. D) The bank is depending on the customer to pay back the loan before term completion.

A) The bank knows that the customer will be unable to pay the loan if the interest rate rises.

Firms that use taper integration also use ________ when they rely on outside-market firms for some of their supplies. A) backward vertical integration B) forward vertical integration C) backward horizontal integration D) forward horizontal integration

A) backward vertical integration

In a successful ________ strategy, the trade-offs between differentiation and low cost are reconciled. A) blue ocean B) focused differentiation C) liquidation D) divestment

A) blue ocean

Bargain Styles Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Bargain Styles applying? A) cost-leadership B) differentiation C) niche marketing D) product diversification

A) cost-leadership

A(n) ________ leverages new technologies to attack existing markets. A) disruptive innovation B) incremental innovation C) radical innovation D) architectural innovation

A) disruptive innovation

In the pyramid of corporate social responsibility, ________ responsibilities are the foundational building block. A) economic B) ethical C) philanthropic D) legal

A) economic

The best example of a firm's external stakeholder is a(n) A) government agency that regulates the prices of products manufactured by the firm. B) board member from a wholly-owned foreign subsidiary of the firm. C) shareholder who has invested money in the firm but is not employed by the firm. D) employee of the firm who is responsible for a contract project.

A) government agency that regulates the prices of products manufactured by the firm.

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A) VRIO framework B) SWOT analysis C) BCG matrix D) PESTEL framework

D) PESTEL framework

Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer A) higher quality for lower costs for international routes. B) higher quality for similar costs for U.S. domestic routes. C) similar quality for lower costs for international routes. D) similar quality for lower costs for U.S. domestic routes.

A) higher quality for lower costs for international routes.

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength? A) increase in a firm's customer loyalty B) growth in the size of the market in which a firm operates C) rise in the income of the demographic segment to which a firm caters D) loss of a competitor's reputation

A) increase in a firm's customer loyalty

Which of the following lists the stages of the industry life cycle in the correct order? A) introduction, growth, shakeout, maturity, and decline B) introduction, shakeout, growth, maturity, and decline C) introduction, growth, maturity, shakeout, and decline D) introduction, shakeout, maturity, growth, and decline

A) introduction, growth, shakeout, maturity, and decline

Ethics is A) not synonymous with law. B) impossible to codify into law. C) universal and cannot differ between cultures. D) the minimum acceptable standard in business practice.

A) not synonymous with law.

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C). A) strategic position B) industry effects C) advantage of the marketplace D) industry analysis

A) strategic position

Which of the following customer segments as described in the chasm framework make up the mass market? A) the early and late majority together B) the early adopters alone C) the technology enthusiasts and laggards together D) the technology enthusiasts alone

A) the early and late majority together

Organizational design is A) the process of creating, implementing, and modifying the structure of an organization. B) primarily focused on replacing a firm's competitive advantage with competitive parity. C) a process that always functions independently of strategy formulation. D) primarily focused on formulating effective strategies, not implementing them.

A) the process of creating, implementing, and modifying the structure of an organization.

Crystal Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Crystal Tech Inc. to increase its profitability by lowering its production costs. Thus, Crystal's competency in designing and manufacturing microprocessors will be considered a(n) ________ resource in the VRIO framework. A) valuable B) substitute C) imitable D) organized

A) valuable

Which of the following statements is true of accounting data? A) Accounting data focus mainly on intangible assets, rather than tangible assets. B) Accounting data are historical data and thus backward-looking. C) Accounting data do not have to be adjusted in any manner to compare companies with different capital structures. D) Accounting data consider off-balance sheet items, such as pension obligations of a firm.

B) Accounting data are historical data and thus backward-looking.

Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario? A) Silver Screen Cinemas will charge a premium price for its customers, while Digi Now will implement everyday low pricing. B) Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little. C) Digi Now will keep its customer service at an acceptable level, while Silver Screen Cinemas will provide superior customer service. D) Silver Screen Cinemas and Digi Now will use a similar approach to create value for customers by attempting to offer everything to everybody.

B) Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.

Core competencies include all the following except: A) Unique strengths B) Direct Value C) Resources D) Capabilities

B) Direct Value

Most successful strategic Leaders spend most of their time doing the following: A) Answering emails B) Face to face meetings C) Working alone D) Spend time on vacation while delegating tasks to others

B) Face to face meetings

Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats? A) It produced the highest-quality headphones. B) It created a perception that owning its products was cool. C) It emphasized marketing over core competency. D) It focused on sponsoring future athletic superstars.

B) It created a perception that owning its products was cool.

Coca-Cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. However, with the success of Gatorade, Coca-Cola developed competencies in the development and marketing of its own sports drink, Powerade. Which of the following is true of Coca-Cola? A) It is leveraging existing core competencies to improve current market position. B) It is building new core competencies to protect and extend its current market position. C) It is redeploying and recombining existing core competencies to compete in markets of the future. D) It is targeting the chasm between the early adopter and early majority market segment.

B) It is building new core competencies to protect and extend its current market position.

What must a cost-leadership strategy accomplish to be successful? A) It must increase the firm's cost above that of its competitors while offering adequate value. B) It must reduce the firm's cost below that of its competitors while offering adequate value. C) It must increase the firm's cost above that of its competitors while offering superior value. D) It must reduce the firm's cost below that of its competitors while offering superior value.

B) It must reduce the firm's cost below that of its competitors while offering adequate value.

Trung has been an employee with PureEnergy Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Trung has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far? A) Level 5 B) Level 4 C) Level 3 D) Level 2

B) Level 4

Which of the following real-world scenarios best exemplifies formalization? A) Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts B) McDonald's use of standard operating procedures across the world C) W. L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses D) Yahoo's decision to fire its CEO after incurring huge losses

B) McDonald's use of standard operating procedures across the world

Risk Capital would best be considered and defined as A) A city in one of the U.S. states B) Money that cannot be recovered C) Total shares outstanding D) Unpaid dividends

B) Money that cannot be recovered

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 have little effect on competitive advantage. B) Tangible assets can be bought on the open market by anyone with the necessary cash, 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 for competitors to imitate, whereas intangible assets can be easily replicated.

B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased.

How do strong ethical values benefit a firm? A) They lay the groundwork for a quick increase of profits and short-term success. B) They serve as the guardrails put in place to keep the company on track when pursuing its mission. C) They provide strong public relations, which can either benefit or hinder competitive advantage. D) They emphasize benefiting stakeholders by significantly increasing profit.

B) They serve as the guardrails put in place to keep the company on track when pursuing its mission.

Nate is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases. A start-up recruits Nate based on his stated credentials without verifying them. Two days into the job, Nate's team lead realizes that Nate does not know much of what he claimed to know during the interview. This scenario best exemplifies A) moral hazard. B) adverse selection. C) shared value creation. D) corporate governance.

B) adverse selection.

Which quadrant in the core competence-market matrix is the hardest to pursue? A) building new core competencies to protect and extend current market position B) building new core competencies to create and compete in markets of the future C) leveraging core competencies to improve current market position D) redeploying and recombining core competencies to compete in markets of the future

B) building new core competencies to create and compete in markets of the future

One way to foster ethical behavior in employees is to A) avoid codifying organizational culture. B) create a control system that encourages desired values. C) view clients as counter parties to transactions. D) align the vision statement of the organization with its informal culture.

B) create a control system that encourages desired values.

To support the rise of emergent strategies, an organization should A) centralize decision making and all other activities. B) empower lower-level employees to take up autonomous actions. C) limit serendipity that is in the form of random events and accidental happenstances. D) rely solely on hard data to formulate strategies.

B) empower lower-level employees to take up autonomous actions.

Cloudlink is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this best illustrate? A) subscription-based B) freemium C) pay-as-you-go D) razor-razor-blade

B) freemium

A greater cultural distance between two trading countries A) increases linguistic similarities between the two countries. B) increases the liability of foreignness. C) reduces the uncertainty of doing business. D) reduces the transaction costs associated with business.

B) increases the liability of foreignness.

There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale? A) increasing profits B) lowering costs C) reducing risk D) motivating managers

B) lowering costs

Polygon sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Polygon implementing? A) subscription-based B) razor-razor-blade C) pay-as-you-go D) direct sales

B) razor-razor-blade

Which of the following strategies does Tesla need to implement or achieve to gain a competitive advantage? A) imitate the features of the most popular SUVs on the market B) reinvest profits to build successively better electric automobiles C) sell advertising space on their cars' digital displays D) substitute less-expensive components to keep costs low

B) reinvest profits to build successively better electric automobiles

Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which One Electro Inc. lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated? A) resource value B) resource heterogeneity C) resource immobility D) resource imitation

B) resource heterogeneity

The smartphone division of the large consumer electronics company, True Electra Inc., has a significant market share in the fast-growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of True Electra will be categorized under A) question marks. B) stars. C) cash cows. D) dogs.

B) stars.

Euan manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Euan's reaction be? A) He should consult lawyers about the possibility of suing for copyright infringement. B) If the industry barriers to entry are low, he doesn't need to do anything. C) He needs to find out if his company as well as other companies can provide the complements. D) If the industry barriers to entry are high, he doesn't need to do anything.

C) He needs to find out if his company as well as other companies can provide the complements.

Which of the following scenarios exemplifies a sustainable strategy under the triple bottom line approach? A) Rather than complying with the restrictive recycling laws in the United States, Impervious Plastics outsourced its manufacturing to a country that has fewer environmental restrictions. B) Impervious Plastics developed a chemical additive that doubled the life of its plastics. The additive was currently legal, but environmental groups argued that it harmed the environment. C) Impervious Plastics reformulated its products to eliminate chemicals that were widely used in the industry but were being investigated for their potential negative effects on the environment. D) Impervious Plastics' nearest competitor increased the salaries of its production workers by 30 percent, but Impervious kept its wages the same to gain a cost advantage over its competitor.

C) Impervious Plastics reformulated its products to eliminate chemicals that were widely used in the industry but were being investigated for their potential negative effects on the environment.

What are three components in developing a Global mindset? A) Intellectual capital, financial capital, social capital B) Investment capital, psychological capital, social capital C) Intellectual capital, psychological capital, social capital D) Intellectual capital, psychological capital, sunk capital

C) Intellectual capital, psychological capital, social capital

________ describes the collectively shared values and norms of an organization's members. A) Competitive advantage B) Organizational structure C) Organizational culture D) Core competency

C) Organizational culture

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.

C) Our aim is to create superior customer value while controlling costs.

Skylark Sodas has been a market leader in the soft drink industry for several decades. However, its market research shows that consumer tastes have begun to shift to sugar-free flavored seltzer waters, a product that Skylark is capable of producing with minimal changes to its facilities and production processes. Based on your knowledge of the core competence-market matrix, which diversification strategy should Skylark pursue? A) Leverage existing core competencies to improve current market position. B) Build new core competencies to protect and extend current market position. C) Redeploy and recombine existing core competencies to compete in markets of the future. D) Build new core competencies to create and compete in markets of the future.

C) Redeploy and recombine existing core competencies to compete in markets of the future.

Good s**t just happens by random events, surprises or coincidences, which Tony Hsieh fully believes in and is part of the Zappos business model. This is called; A) Mind blowing B) Gambling C) Serendipity D) 4 leaf clover

C) Serendipity

________ is a business model in which the manufacturer sets a fixed price on a product, but the retailer is free to set it's own price. A) Agency B) Freemium C) Bundling D) Wholesale

D) Wholesale

What helps notions such as fairness, honesty, and reciprocity to be codified into law? A) The notions are synonymous with law. B) The notions differ to some degree in different cultures around the globe. C) The notions are universal norms. D) The notions are characteristics inherited by each person irrespective of the culture.

C) The notions are universal norms.

A unique position within an industry that allows a firm to provide value while controlling costs could be described by which of the following? A) The less value and more costs the better B) Decreases the likelihood of gaining a competitive advantage C) Value created less the firm costs provides economic contribution D) Value and costs will be equal

C) Value created less the firm costs provides economic contribution

The tenet behind the triple-bottom-line is that A) a firm should solely focus on increasing the economic value created to/for its customers. B) a firm's primary objective should be increasing the total returns to its shareholders. C) a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy. D) a firm's return on revenue can be broken down into three ratios: COGS/Revenue, R&D/Revenue, and SG&A/Revenue.

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

When the strong dictatorial rule in Backenstein unexpectedly collapsed due to the shocking death of the royal family in an explosion, the nation's economy experienced drastic changes. The laws became more restrictive, the country lost many locally produced resources and products, and the distribution of wealth became inequitable. The unexpected event that led to these changes can best be described as a(n) ________ event. A) extinction B) wild card C) black swan D) miracle

C) black swan

When Japanese carmakers entered the existing U.S. automobile market by first offering small fuel-efficient cars, and then leveraging their low-cost and high-quality advantages into high-end luxury segments, they were engaging in A) regressive innovation. B) radical innovation. C) disruptive innovation. D) architectural innovation.

C) disruptive innovation.

ElectraSync Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU). The desktop SBU has been experiencing a drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent. This has been attributed to the low growth in the desktop market after the arrival of tablet computers and laptops. In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under A) stars. B) question marks. C) dogs. D) cash cows.

C) dogs.

The concept of a(n) ________ attempts to capture both learning effects and process improvements at firms. A) managerial grid B) growth matrix C) experience curve D) diminishing utility curve

C) experience curve

A company scientist at a biotechnology company decides to work on his own research project, hoping to eventually start his own firm, rather than on the project he was assigned. However, the company's stockholders are unaware of this situation. This is an example of a(n) ________ in the context of a principal-agent problem. A) adverse selection B) stakeholder strategy C) moral hazard D) shared value creation

C) moral hazard

The primary goal of a firm pursuing a blue ocean strategy should be to A) create the highest perceived value in its respective industry. B) build a reputation of being the lowest-cost producer in its chosen industry. C) offer a differentiated product or service at a low cost. D) achieve a less steep learning curve.

C) offer a differentiated product or service at a low cost.

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.

C) strategic leaders adjusting a company's vision and mission based on environmental analysis.

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's A) level of diversification. B) geographic scope. C) vertical integration. D) competitive strategy.

C) vertical integration.

How does availability of complements act as a value driver? A) Complements add value to a product by offering an inferior substitute to it. B) Complements add value to a product by competing with it. C) Complements add value to a product when they imitate it. D) Complements add value to a product when they are consumed in tandem with it.

D) Complements add value to a product when they are consumed in tandem with it.

Which of the following summarizes the difference between corporate strategy and business strategy? A) Corporate strategy deals with how to compete; business strategy deals with where to compete. B) Corporate strategy deals with when to compete; business strategy deals with how to compete. C) Corporate strategy deals with how to compete; business strategy deals with when to compete. D) Corporate strategy deals with where to compete; business strategy deals with how to compete.

D) Corporate strategy deals with where to compete; business strategy deals with how to compete.

Our Blue Ocean framework follows which pattern? A) Erase, reduce, raise, create B) Eliminate, raise, reduce, create C) Eliminate, reduce, review, create D) Eliminate, reduce, raise, create

D) Eliminate, reduce, raise, create

Leaders like Steve Jobs, Howard Schultz, Oprah Winfrey and Mary Barra share a common trait similar to Jacob from the Twilight Saga due to: A) Similarity B) Transformation C) Blood transfusions D) Imprinting

D) Imprinting

Resources Based View (RBV) include all the following except: A) Organized by value B) Intangible C) Valuable D) Indirect value

D) Indirect value

________ define appropriate employee attitudes and behaviors. A) Values B) Artifacts C) Appraisals D) Norms

D) Norms

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as A) tangible resources. B) reserves. C) capital gains. D) capabilities.

D) capabilities.

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the A) consumer surplus. B) total return to shareholders. C) customer lifetime value. D) economic value created.

D) economic value created.

The four-step innovation process ends with A) idea generation. B) invention. C) idea testing. D) imitation

D) imitation

According to the value chain analysis, which of the following is a primary activity? A) research and development B) human resources management C) accounting and finance D) marketing and sales

D) marketing and sales

Esther is the CEO of a line of accessories and cosmetics, Starring Me! Inc., which has retail stores and production units in five countries. In this scenario, Starring Me! Inc. is most likely a A) nonprofit organization. B) nationalized firm. C) sole proprietorship. D) multinational enterprise.

D) multinational enterprise.

A customer-oriented vision statement focuses employees to think about how best to A) make a product easier to use. B) increase their efficiency to benefit consumers. C) improve a popular product. D) solve a problem for a consumer.

D) solve a problem for a consumer.

Bubble Buddy is a company that manufactures hot tubs. Which of the following best illustrates a product-oriented vision for Bubble Buddy? A) to make people's lives simple and easy B) to demonstrate to customers the health benefits of hot tubs C) to help people improve the value of their homes D) to be the pioneering manufacturer of hot tubs

D) to be the pioneering manufacturer of hot tubs

European aircraft maker Airbus invested $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it used this strategy? A) to take advantage of the high labor costs in the southern United States B) to take advantage of the high cost of living in the southern United States C) to take advantage of the low impact of globalization in the United States D) to take advantage of lower taxes in the southern United States

D) to take advantage of lower taxes in the southern United States