Bus Strategy: Ch 3 Quiz

Which of the following is not a risk associated with a global strategy?

A firm with only one manufacturing location must import its product.

________ include the ability to seize new opportunities, generate new knowledge, and reconfigure existing assets and capabilities.

Dynamic capabilities

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

False

A firm that competes on cost leadership can be vulnerable if there is a decrease in the cost of the inputs on which the advantage is based.

False

A franchise generally expires after a few years; a license is designed to last even longer.

False

A golden parachute is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target company managers will not be paid a significant severance package.

False

A multidomestic strategy is the most appropriate strategy for international operations, because it drives economies of scale as far as possible and provides a middle-of-the-road product that appeals to the smallest number of consumers in every market.

False

A primary weakness of the balanced scorecard is that it fails to complement financial indicators with operational measures of customer satisfaction, internal processes, and the organization's innovation and improvement activities.

False

A profit pool is defined as the total revenue in an industry at all points along the industry supply chain.

False

Among the disadvantages of acquisitions are the inexpensive premiums that are frequently paid to acquire a business.

False

An important implication of the balanced scorecard is that managers need to look at their job as primarily balancing stakeholder demands.

False

Attracting top talent is not a challenge for many organizations. In the current economy, knowledge workers typically have a limited number of employment opportunities.

False

Because primary activities like inbound logistics, operations, and outbound logistics are applicable only to tangible goods, value-chain analysis is not appropriate for service organizations.

False

Business level strategy addresses two related issues: what businesses should a corporation compete in and how can these businesses be managed so that they create synergy.

False

Companies have found that referrals from their own employees are not generally an effective approach to recruiting top talent.

False

Diversification initiatives must be justified by the creation of value for employees.

False

Exporting is an expensive way to enter domestic markets.

False

Firms such as Oracle, Google, and Apple will tend to have a lower ratio of market value to book value than industrial companies such as Nucor Steel.

False

If a company focuses on a small number of value-chain activities, it can be lead to a pitfall of the overall cost leadership strategy.

False

In value-chain analysis, primary activities include human resource management and procurement.

False

In value-chain analysis, research and development is a broader concept than technology development.

False

Intangible resources are not as difficult for competitors to imitate as tangible ones.

False

Management innovations such as total quality, benchmarking, and business process reengineering can lead to sustainable competitive advantage.

False

Many firms facing a turnaround situation try to fix their situation by increasing the financial investment in administrative expenses and inventories.

False

Most experts agree that Dell has a strong and sustainable competitive advantage over its rivals in the personal computer industry.

False

Offshoring takes place when a firm decides to shift an activity that they were previously performing in a foreign location to a domestic location.

False

One of the challenges with globalization is determining how to meet the needs of customers at the same income level.

False

Related diversification enables a firm to benefit from economies of scope, which are cost increases that are derived from leveraging core competencies.

False

Related diversification enables a firm to benefit from vertical relationships across different businesses in the diversified corporation by leveraging core competencies and sharing activities.

False

Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of negative change.

False

SWOT analysis has been criticized as having too broad a focus when examining the external environment and being too static for competitive situations that are actually played out over time.

False

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of using related diversification to achieve value by leverage core competencies to achieve economies of scope.

False

Social capital is based on the skills and abilities of an individual employee, not on the network of relationships within a firm.

False

Strategic management involves the recognition that both effectiveness and efficiency must be fully satisfied.

False

The Michael Porter Diamond of National Advantage is a framework that explains why countries foster successful multinational corporations based on factor endowments; demand conditions; related and nonsupporting industries; and firm strategy, structure, and rivalry.

False

The only stakeholders that matter for an organization are the shareholders.

False

The task first relationship with fellow employees, in which emotions and personal life are checked at the door, is becoming more common and essential with the current increased focus on efficiency.

False

The three generic strategies presented by Michael Porter can be shown on two dimensions: strategic target and product life cycle.

False

When leaving a job, desirable knowledge employees are most likely to find new employment on Internet career sites and go alone to work for complete strangers.

False

Within a worldwide market, the most effective strategies are purely multidomestic or purely global.

False

________ capital can be defined as the difference between the market value and book value of a firm, or a measure of its intangible assets.

Intellectual

Which of the following is not a motivation for a company to pursue international expansion?

It wishes to decrease foreign market penetration by developing products for the home market.

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy?

MNCs can successfully compete globally by aggressively pricing products and sacrificing features.

Which of the following is not a risk normally associated with Bottom of the Pyramid strategies?

New products may be perceived as exploiting the customer with substandard products.

The downsides or limitations of mergers and acquisitions include all of the following, EXCEPT:

Premiums that are rarely paid to acquire a business are expensive.

For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?

The competence must help the business lose market position relative to its competition.

If a company is using a cost leadership strategy, which of the following is not a characteristic of that strategy?

The strategy is not easily imitated.

Which of the following is a reason for merger and acquisition failures?

Top executives act in their best interests rather than those of the shareholders.

The three components of the __________ approach to corporate accounting include financial, environmental, and social performance measures.

Triple Bottom Line

A cost leadership strategy can put the firm at a competitive disadvantage, due to a declining base of cost advantage.

True

A cost leadership strategy may lead to a reduction in flexibility.

True

A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively difficult for competitors to imitate.

True

A good manager can be flexible when it comes to sticking to the original plan; to get good results the intended strategy does not have to become the realized strategy.

True

According to Michael Porter, there is a tremendous allure to mergers and acquisitions. It is the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets.

True

Acquisitions, according to research, usually result in value destruction rather than value creation.

True

Because many countries are investing in countries other than their own, each country is becoming less autonomous and more dependent.

True

Coca Cola and Caterpillar used first mover advantage in the building of their global presence.

True

Competitive advantage is affected by the rate of globalization in an industry.

True

Competitive advantage that is based solely on a focus strategy on a narrow competitive scope is not sufficient for assuring the sustainability of the strategy.

True

Despite geographic or time separation of members, electronic teams can be very effective in generating social capital.

True

Expanding the global presence of a firm automatically increases its scale of operations.

True

In 2012, Hewlett-Packard wrote off $9 billion of the $11 billion it paid for Autonomy, a software company that it purchased one year earlier. This is an example of a failed merger.

True

In technology intensive industries, the competitive advantages decrease over time.

True

In the current economy, reliance on the three traditional financial statements (income statement, balance sheet, and statement of cash flow) has decreased.

True

Intellectual property rights are not as easy to define and protect as property rights for physical assets (e.g., plant and equipment).

True

MetLife was able to dramatically expand its global footprint by acquiring Alico, a global player in the insurance business from AIG in 2010 when AIG was in financial distress. This shows that not all diversification moves erode performance.

True

One way the Internet and digital technologies are creating opportunities for firms with differentiation strategies is by improving the response to customer wishes through mass customization.

True

Since the use of e-mail can be distracting to employees, some firms limit the time that employees spend using email.

True

The Cisco acquisition of Pure Digital Technologies, the parent of the Flip video camera, failed because Cisco was unable to respond rapidly to market pressures.

True

The French automobile maker, Renault, has designed an ultra-low-cost platform in order to improve its competitive position through cost leadership.

True

The idea that organizations are not only accountable to stockholders but also to the community-at-large is known as social responsibility.

True

The prosumer concept in value-chain analysis is promising, because it has the potential to generate ideas and lower costs for firms and to create greater satisfaction for customers.

True

The textbook suggests that a new conception of capitalism redefines the purpose of the corporation as creating shared value, not just profit.

True

Trading blocs and free trade zones promote the rise of regional expansion.

True

Typically, joint ventures involve more control and risk than franchising.

True

Vision statements are less specific than strategic objectives.

True

When a hostile firm buys a large block of outstanding target company stock and the target company management feels that a tender offer is impending, they offer to buy the stock back from the hostile company at a higher price than the unfriendly company paid for it. This is known as greenmail.

True

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with the individual business units.

True

_________ ratios reflect whether or not a firm is efficiently using its resources.

Turnover

________ tend to be quite enduring and seldom change.

Vision statements

causal ambiguity

a characteristic of a firm's resources that is costly to imitate because a competitor cannot determine what the resources is and/or how it can be recreated

social complexity

a characteristic of a firm's resources that is costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers

path dependency

a characteristic of resources that is developed and/or accumulated through a unique series of events

balanced scorecard

a method of evaluating a firm's performance using performance measures from the customers', internal, innovation and learning, and financial perspectives

value-chain analysis

a strategic analysis of an organization that uses value-creating activities

financial ratio analysis

a technique for measuring the performance of a firm according to its balance sheet, income statement, and market valuation

service

actions associated with providing service to enhance or maintain the value of the product

marketing and sales

activities associated with purchases of products and services by end users and the inducements used to get them to make purchases

technology development

activities associated with the development of new knowledge that is applied to the firm's operations

human resource management

activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel

support activities

activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities; including procurement, technology development, human resource management, and general administration

Ambidexterity in a strategic context refers to the challenge for a manager to

align resources to take advantage of existing products and explore new opportunities

operations

all activities associated with transforming inputs into the final product form

In order to fully leverage the talents of the best and brightest employees, a firm should be concerned with _____________.

all of these

In industries like consulting, advertising, and tax preparation, clients tend to be very loyal to individual professionals employed by a firm, instead of the firm itself. This enhances employee _____.

bargaining power

Sales and engineering departments are a classic example of two groups whose members traditionally interact with their peers rather than across groups. This is best described as ________ in social network analysis.

closure within the departments and a structural hole between them

interrelationships

collaborative and strategic exchange relationships between value-chain activities either within or between firms; strategic exchange relationships involve exchange of resources such as information, people, technology, or money that contribute to the success of the firm

outbound logistics

collecting storing, and distributing the product or service to buyers

The resource-based view of the firm suggests that the firm's __________ are due to its endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute.

competitive advantages

Major airlines change hundreds of fares daily in response to competitor tactics, which is an example of using_________.

competitive intelligence

The management of intellectual property involves all of the following EXCEPT ______.

converting coded knowledge to tacit knowledge

Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce other non-related products. This skillset is a _______________.

core competency

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following, EXCEPT _______.

customer needs, interests, and tastes becoming increasingly similar

Which of the following is not a reason for the rise in regional expansion?

decrease in the number of trading blocs and free trade zones

Added insight and cultural sensitivity, and heterogeneity in decision-making and problem-solving are some of the arguments supporting ________ in the workplace.

diversity

Teams that complete tasks primarily through e-mail communication are called ___________.

electronic teams

Diversification initiatives include all of the following except ____________________.

employee rewards

One of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies. Which one is it?

enabling of mass customization

The four key attributes of strategic management do not include

excluding consideration of the trade-offs between efficiency and effectiveness

Engineering drawings, software code, and patents are examples of _____________.

explicit knowledge

Ratio analysis can be made more meaningful in all of the following ways EXCEPT by __________.

focusing more on long-term solvency instead of short-term solvency

general administration

general management, planning, finance, accounting, legal and government affairs, quality management,and information systems; activities that support the entire value chain and not individual activities

Multinational firms are constantly faced with the dilemma of choosing between _______ and ___________.

global adaptation, local integration

Just-in-time systems are considered part of which primary activity in the value chain?

inbound logistics

Advantages of effective social networks for career success include all of the following EXCEPT ______.

increased redundancy in knowledge sources

The Internet is lowering transaction costs for several reasons. Which is not one of those reasons?

increasing the number of transactions

In the balanced scorecard, cycle time, employee skills, and productivity are part of the ______ perspective.

innovation and learning

Among the leaders needed for an effective strategic management process are ________, who, although they have little positional power and formal authority, generate their power through the conviction and clarity of their ideas.

internal networkers

Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with no pressure for local adaptation?

international strategy

Products are unfamiliar to consumers in the ___________stage of a business life cycle.

introduction

Company competitive advantage can be eroded for all of the following reasons except one. Which is that reason?

length of time a company is in business

The form of entry strategy into international operations that offers the _______level of control for the domestic corporation would be exporting.

lowest

Corporate restructuring includes capital and asset restructuring as well as ________.

management restructuring

Research shows that which of the following is not a strategy used by firms engaged in successful turnarounds?

market expansion

What do effective vision statements include?

massive inspiration

Emphasis on process design is high during the __________ stage of the industry life cycle.

maturity

innovation and learning perspective

measures of firm performance that indicate how well firms are changing their product and service offerings to adapt to changes in the internal and external environments

customer perspective

measures of firm performance that indicate how well firms are satisfying customers' expectations

internal business perspective

measures of firm performance that indicate how well firms' internal processes, decisions, and actions are contributing to customer satisfaction

financial perspective

measures of firms' financial performance that indicate how well strategy, implementation and execution are contributing bottom-line improvement

Elements of a multidomestic strategy may facilitate the competitive advantage of _________ by decreasing shipping and transportation costs inherent in local production.

multidomestic strategy

All activities associated with transforming inputs into the final product form are known as ______ in the value chain.

operations

intangible resources

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

tangible resources

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

If a firm is able to achieve above-average returns despite strong competition, it is likely to be using __________ strategy.

overall cost leadership

If primary value chain activities involve effective management of inbound logistics and support activities include increased efforts in technology development, this is representative of which type of competitive advantage?

overall cost leadership

These kinds of companies create value through management expertise in areas such as budgeting, planning, procurement, and human resource management.

parent

The loyalty and trust that Southwest Airlines employees feel toward their firm and its cofounder, Herb Kelleher, are resources that have been built up over a long period of time. What characteristic of sustainable competitive advantage is involved?

path dependency

resource-based view of the firm

perspective that firms' competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute

Human capital does not include the ______________ of an individual.

physical attributes

Pfizer pharmaceutical patents provide what important characteristic that supports inimitability?

physical uniqueness

Companies use the tactic of ________ to give shareholders certain rights in the event of a takeover by another firm.

poison pill

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision?

political risk enhancement

Which of these is not an example of socially complex organizational phenomena?

poor reputation with customers

Microsoft has improved the ________ part of its value chain by providing formal reviews of its suppliers, which has helped to clarify expectations for them.

procurement

Divesting of businesses can accomplish many different objectives, except ________.

providing the firm with fewer resources to spend on more attractive alternatives

inbound logistics

receiving, storing, and distributing inputs of a product

In the ________ view of leadership, the leader is seen as the key force in determining the organization's success or lack thereof.

romantic

primary activities

sequential activities of the value chain that refer to the physical creation of the product or services, its sale and transfer to the buyer, and its service after sale , including inbound logistics, operations, outbound logistics, marketing and sales, and service

Management, the board of directors, and ______ are the primary participants in corporate governance.

shareholders

An individual who uses the contacts they develop to pursue their own interests and agendas that may be inconsistent with the organization objectives is one potential downside of __________.

social capital

Rivalry is intense in nations with conditions of __________ supplier bases, _________consumer demand, and __________ new entrant potential from related industries.

strong; strong; high

Competitive advantages that are unique, valuable, and difficult for rivals to copy are likely to make these advantages

sustainable

Which of the following is NOT one of the recommended criteria for strategic objectives?

sustainable

New knowledge involves the continual interaction between __________ and __________ knowledge.

tacit, explicit

organizational capabilities

the competencies and skills that a firm employs to transform inputs into outputs

The industry life cycle is important because ______________.

the emphasis on various generic strategies varies over the course of an industry life cycle

procurement

the function of purchasing inputs used in the firm's value chain, including raw materials, supplies, and other consumable items as well as assets such as machinery, laboratory equipment, office equipment, and buildings

Which of the following is NOT one of the three levers that can be applied to overcome barriers to effective collaboration?

the search lever

Initiatives to develop human capital should be directed __________ to maintain a competitive advantage in the current knowledge economy.

throughout the firm at all levels

At what level in the organization should the strategic management perspective be emphasized?

throughout the organizationvision statements, mission statements, strategic objectives

Managers use __________ for developing human capital.

training

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a __________ or __________ in order to compete in the global marketplace.

transnational strategy; global strategy

Industries in which proportionally more value is added in __________ activities, such as logistics, are more likely to benefit from a global strategy.

upstream

A profit pool can be defined as the total profits in an industry at all points along the industry _____ chain.

value

What is the hierarchy of organizational goals (from the least specific to the most specific)?

vision statements, mission statements, strategic objectives

Stakeholder symbiosis is in direct contrast with ________ thinking.

zero sum