CBA469 Chapter 1-4

Which of the following statements about strategy is true?

- Grandiose statements of desire on their own, are not strategy - Strategy is as much about deciding what not to do, as it is about deciding what to do - Strategy is about creating superior value, while containing the cost to create it

Which of the following is NOT a stakeholder attribute that managers consider during stakeholder impact analysis?

A Stakeholder's Liquidity

Which of the following statements is true of corporate strategy?

A corporate strategy must be able to create synergies across business units that are quite different.

Which of the following statements is true of the social responsibilities of a business?

A firm's ethical responsibilities go beyond its legal responsibilities.

For a strategist, which of the following is NOT an implication of effective strategic management?

A firm's performance is determined by a set of independent factors, which includes firm and industry effects

Which of the following best qualifies as a firm's internal stakeholder?

A manager taking care of the firm's operations in a foreign market

The _____ is a model that links strategy analysis, strategy formulation, and strategy implementation, which together help managers plan and implement a strategy that can improve performance and result in competitive advantage

AFI strategy framework

The management of Five Square Corp. wants to reduce the separation between ownership (by shareholders) and control of the firm (by professional managers). Which of the following practices would best help the company do this?

Allowing employees to purchase the stock of the company at a discounted rate

A firm's stakeholder strategy primarily allows the firm to:

Analyze and manage how various external and internal stakeholders interact to jointly create and trade value

When the strong dictatorial rule in Canria unexpectedly collapsed due to the shocking mass murder of the royal family, 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.

Black Swan

________________ are incidents that describe highly improbable but high impact events

Black Swan Events

Which of the following statements accurately describes corporate social responsibility (CSR)?

CSR provides a conceptual model that more completely describes a society's expectations.

_____ describes a situation in which the cause and effect of a phenomenon are not readily apparent.

Causal ambiguity

According to the upper-echelons theory, the organizational outcomes of a company primarily reflect the values of the _____.

Ceo of Company

In a large company, who is most responsible for devising the corporate strategy?

Ceo of Company

IF SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies

Comparing the return to the return on invested capital obtained by other firms in the industry

New Communications Inc. is a newspaper publishing company whose average return on invested capital is approximately 5 percent. Because newspaper publishing is a declining industry, the industry average has been negative (-5 percent) for the last few years. In this scenario, New Communications Inc. has a _____.

Competitive Advantage

Exis Inc. and Stelma Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Exis Inc. and Stelma Inc. most likely have:

Competitive Parity with each other

Under performance relative to other firms in the same industry or the industry average results in a(n) ___________ for a firm

Competitive disadvantage

_____ are best described as unique strengths, embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost.

Core competencies

_____ is best described as a framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time.

Corporate Social Responsibility

Which of the following is an example of a firm's external stakeholder?

Customers

When a firm adopts a differentiation strategy to attain competitive advantage, it focuses on:

Delivering unique features to its customers

True Cinemas Inc. and Digi Future Inc. are two companies that own and run movie theaters in malls and other commercial areas. While True Cinemas Inc. pursues a cost-leadership strategy, Digi Future Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario?

Digi Future and True Cinemas will not be direct competitors to each other and their customer segments will overlap very little.

Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones bears a straight resemblance to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.?

Direct imitation

Industry effects describe the underlying _________ structure of the industry

Economic

In the pyramid of corporate social responsibility, _____ are the foundational building block.

Economic responsibilities

The amount of xylene that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment, and considered a legal offense. Consequently, DM Paints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures xylene-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is DM Paints Corp. primarily compromising in this scenario?

Economic responsibilities toward its shareholders

The board at Unicore Systems Corp. has decided to allocate 20 percent of the company's shares to its workforce, at a discounted price. Apart from being a valued investment, the plan will allow the employees to take personal responsibility for the firm's performance. Which of the following employee incentive schemes does this best illustrate?

Employee stock ownership plan

Cocoa Noir Inc., a company that manufactures chocolates, incurs higher costs because of its refusal to import cocoa beans from countries where child labor is prevalent. This reflects Cocoa Noir's _____ responsibility.

Ethical

the interaction between a firm and its diverse internal and external stakeholders is best described as a(n):

Exchange Relationship

Pure Food Inc., a multinational company, relies on its media partner Radio Ex to regularly advertise its offers, sales, and new products. Radio Ex is invested in this relationship because it generates most of its revenue from advertising Pure Food's products. In this scenario, Radio Ex is Pure Food Inc.'s _____.

External Stakeholder

State-level government agencies that check whether firms are meeting statutory safety measures in their production units are considered to be the firms' ____________

External Stakeholder

Sun Inc., a vendor, regularly supplies pallets to Octangle Corp. for its shipping business. Therefore, Sun Inc. is Octangle Corp's _______________

External Stakeholder

_____ are primarily responsible for decisions and actions within their respective departments like finance, human resources, marketing, and production in a strategic business unit.

Functional managers

Stakeholder impact analysis primarily helps a firm:

Gain a competitive advantage while acting as a good corporate citizen

A firm's economic responsibilities are primarily directed toward:

Gaining and sustaining competitive advantage

The best example of a firm's external stakeholder is a(n)

Government agency that regulates the prices of products manufactured by the firm

After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to:

Identify stakeholders' interests and claims

Which of the following is step 3 in the five-step process of stakeholder impact analysis?

Identifying the opportunities and threats the stakeholders present

The Chief Executive Officer (CEO) of PepsiCo, Indra Nooyi, subscribes to a triple-bottom-line approach to competitive advantage—considering not only economic, but also social and environmental performance. Based on this, which of the following is a mission of PepsiCo?

Including healthy choices in its lineup

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength?

Increase in a firm's customer loyalty

Rachel owns a large portion of GM Cube Inc.'s stocks. However, she is not employed by the company. In this scenario, Rachel is the company's _____.

Internal Stakeholders

The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?

It has a competitive advantage in the industry

Which of the following factors most effectively contributed to the success of JetBlue Airlines in comparison to other airlines like Delta, United, or American

Its Point-to-point business model

True West Airlines Inc. follows a cost-leadership strategy. Which of the following firms will most likely be its direct competitor?

Jet King Airlines Inc., which follows a low-cost strategy

The minimum wage in the country of New Morland is $8 an hour. Odion, a restaurant in the New Morland's capital city, pays its servers $8 per hour. However, the management of the restaurant feels that this amount is excessive for workers whose only job is to clear tables. By continuing to adhere to the rules set by the government of New Morland, which of the following responsibilities is Odion satisfying?

Legal Responsibilities

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. This has ensured that all firms in the country pay their employees at least $8,000 per year, which has brought about a higher standard of living for the people of Filvia. Which of the following factors in a firm's general environment does this mandate best indicate?

Legal factors

The society and shareholders mandatorily require a firm to perform its _____.

Legal responsibilities

In Galvania Republic, the federal government owns and manages all the nuclear power plants. This is because the business would not be profitable if there was more than one supplier in the nuclear power industry. Which of the following industry competitive structures does the scenario best illustrate?

Natural Monopoly

3T Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all 3T users are free. When a person switches to a 3T network, his or her entire network of family and friends is likely to switch to the same network to avail the benefit of free calls and messages. In addition, an existing user who gets a new user to register with 3T Inc. is given a free wireless connection. This has helped to keep competition away from 3T. In this scenario, which of the following factors is acting as an entry barrier for 3T Inc.?

Network Effects

Which of the following statements about strategy is NOT true?

Operational Effectiveness and competitive benchmarking should be treated as strategy

which of the following statements should ideally reflect a firm's strategy for competitive advantage

Our aim is to create superior customer value while controlling costs

Which of the following scenarios best illustrates a good stakeholder strategy?

PA Corp. distributes only 70 percent of its annual profit after tax to shareholders, while the remaining is distributed among employees and the local community, and invested for further research

Which of the following is typically an economic responsibility of a firm?

Paying adequate returns to the firm's stockholders on the capital invested by them

The Chief Executive Officer (CEO) of PepsiCo, Indra Nooyi, subscribes to a triple-bottom-line approach to competitive advantage—considering not only economic, but also social and environmental performance. Identify the phrase that represents the vision of PepsiCo as described by Ms. Nooyi.

Performance with a Purpose

Which of the following responsibilities results from a society's mere expectations of a business and not because the society and the shareholders mandatorily require the business to demonstrate it?

Philanthropic responsibilities

Which of the following is NOT an example of a software company's external stakeholder?

Project Managers

Maroon Inc. is a leading international apparel company. Competitors across the globe have failed to imitate Maroon Inc.'s production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Maroon Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate?

Resource immobility

Which of following practices of a firm satisfies its ethical responsibilities?

Selling vaccines at a subsidized price in a less developed country even though this results in reduced shareholder returns

A core tenet of stakeholder strategy is that a:

Single-minded focus on shareholders alone exposes a firm to undue ricks that can threaten the very survival of the enterprise

If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally:

Stake out a unique position within the industry

RedSteel Corp. has been able to gain and sustain a competitive advantage due to its strong relationship with its employees, customers, suppliers, and local communities. The company believes in lifetime employment and ensures that its employees grow along with the company. Investors are more than satisfied with the returns on their investments. Also, 3 percent of the company's profit is spent on community development. With initiatives like these, customers feel privileged to associate themselves with RedSteel products. This scenario best illustrates the implementation of a _____.

Stakeholder Strategy

FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially low due to minimal investment in operation and administration. In this scenario, FindFor Inc. has most likely been able to provide superior value and cost control through _____.

Strategic positioning

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environment

Strategy Analysis

In ____________, a firm frames a guiding policy to address the competitive challenge

Strategy Formulation

Through ___________, a firm puts its guiding policy into practice by employing a set of coherent actions

Strategy Implementation

According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified?

Strategy analysis

Which of the following stages in the AFI strategy framework involves designing a business, corporate, and global strategy?

Strategy formulation

Which of the following tasks in the AFI strategy framework involves putting the formulated strategy into practice through organizational structure, culture, and controls?

Strategy implementation

Which of the following groups is considered to be the primary stakeholder for public-stock companies?

Suppliers of capital

Cadia Foods Inc. was the first company to start selling energy drinks in its country—a product that gained popularity among diverse groups. Soon, other companies started to sell their own brands of energy drinks, thereby giving Cadia Foods ample competition. In response, Cadia Foods decided to limit its variety of energy drinks to only two. However, it ensured that these two flavors were free of calories and low in cost. With this innovation, Cadia Foods Inc. consistently outperformed its competitors for ten years. In this scenario, Cadia Foods Inc. has maintained a _____ through its innovative strategy.

Sustainable Competitive Advantage

TakeFlight Airways is a new entrant to the airline industry. While most of its competitors are pursuing a cost-leadership strategy, TakeFlight Airways has decided to execute a differentiation strategy. Which of the following is the most likely implication of this decision?

TakeFlight Airways will create value for customers by delivering unique features

In the United States, which of the following was born out of dissatisfaction with the capitalist system in 2011

The Occupy Movement

Which of the following forces tends to be more important in determining a firm's performance?

The actions of managers within the firm

which of the following forces is most closely related to industry effects within the automobile industry

The barriers to entry and exit within the industry

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 rare 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 resource that is best contributing to its competitive advantage?

The company's chemical patents

Which of the following methods of developing a strategy best illustrates scenario planning?

The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future.

Which of the following strategies best illustrates a functional strategy?

The production manager at the apparel division of Style Culture Co. has decided that the department will hire contract workers for three months to meet the temporary demand.

Which of the following statements is NOT true about the five forces in Porter's competitive analysis model?

The stronger the five forces in an industry, the greater the industry's profit potential

Which of the following forces is most closely related to industry effects within the automobile industry?

The types of products and the services offered within the industry

Which of the following statements accurately describes firm effects?

They attribute firm performance to the actions managers take within a chosen industry

Which of the following factors is most likely to lead to a loss of competitive advantage for Nike?

Too many public relations disasters combined with severe shortcomings of some of Nike's heroes

_____ is best described as a rational process in which executives at a company's headquarters take primary responsibility to program future success of the company they lead.

Top-down strategic planning

Which of the following scenarios illustrates a firm that has a sustainable competitive advantage

TrueLink Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

Trying to be everything to everybody by combining different competitive strategies

In a firm, a strategist's job should be to:

Understand the complex web of exchange relationships among different stakeholders

Which of the following does NOT accurately explain why institutional investors are much more potent stakeholders than individual investors?

While institutional investors are external stakeholders of a firm, individual investors are internal stakeholders.

Which of the following statements about a firm's stakeholders is true?

Within stakeholder groups there can be significant variation in the power a stakeholder may exert on a firm.

Shortly after the small island of Balamia experienced multiple unexpected high-intensity earthquakes that caused massive destruction, many banks and insurance companies filed for bankruptcy. This left the economy of the country in a poor state. The natural calamity in Balamia best exemplifies _____.

a black swan event

The U.S. government legitimized claims by thousands of businesses and individuals in the aftermath of the BP oil spill in the Gulf of Mexico, causing the claims to become of great urgency to BP. This best represents the process of _____.

addressing stakeholder concerns

Institutional investors have more sway in public companies than individual investors because of the size of their _____.

assets under management (AUM)

The regional head for First Electronics Inc. in New Dalvia has decided to sell the company's products directly through company-owned stores because the distribution system in the market is primitive. In six other markets, however, the company will continue to operate through a franchise system. Thus, this decision made by the regional head at New Dalvia will be considered as a _____.

business strategy

In an industry, the threat of entry is high when:

capital requirements are low.

To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to:

contribute to the firm's strategic position as either low-cost leader or differentiator.

Dandelions Max is a consumer electronics company. It has acquired an edge over its competitors through its ability to provide breakthrough technology at the lowest price in the market. This advantage of Dandelions Max best exemplifies a _____.

core competency

Within corporate social responsibility, _____ essentially reflects the notion of a business voluntarily giving back to society.

corporate citizenship

In the final step of the stakeholder impact analysis, a firm:

decides a course of action to address the stakeholders' concerns.

When applying the five forces model, the first step should ideally be:

defining the relevant industry

Paying taxes to local government authorities from the annual revenues generated by a firm represents the firm's _____.

economic responsibilities

To support the rise of emergent strategies, an organization should:

empower lower-level employees to take up autonomous actions.

In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because:

entering the aircraft manufacturing industry requires huge capital investments.

In the AFI strategy framework, strategy analysis primarily involves:

evaluating the effects of internal resources and core competencies on a firm's potential to gain and sustain a competitive advantage.

Managers use the AFI strategy framework primarily to:

explain and predict differences in firm performance.

A strategic group will typically include:

firms within the same industry

A firm will fail to create a sustained competitive advantage when the:

fit between its internal strengths and the external environment is static.

Stakeholder strategy is an integrative approach to managing a diverse set of stakeholders effectively in order to _____.

gain and sustained competitive advantage

The first step in stakeholder impact analysis involves:

identifying the stakeholders that currently have, or potentially can have, a material effect on a company

Due to several black swan events in the past, the:

implicit trust relationship between the corporate world and society at large has deteriorated

Strategy

is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors

Strategic Management

is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for the competitive advantage

If a resource is common:

it will result in perfect competition.

The past black swan events in the United States demonstrate that:

managerial actions can affect the economic well-being of large numbers of people around the globe

The society and the shareholders just expect, and not mandatorily require a firm to:

pay its workers more than the minimum living wages.

Competitive rivalry based solely on _____ is destructive to firms as it transfers most of the value created in the industry to the customers.

price-cutting

a firm is said to gain a competitive advantage when it can:

provide products similar to its competitors, but at lower prices

In stakeholder impact analysis, identifying the opportunities and threats presented by stakeholders is immediately followed by:

recognizing the economic, legal, ethical, and philanthropic responsibilities of the firm to its stakeholders.

The resource-based view of a firm assumes that the:

resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another.

Derek, a retired CEO, invests capital in a start-up company that creates mobile applications. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Derek is the start-up company's _____.

stakeholder

During market testing, Elixir Cosmetics (EC) realized that the cosmetics industry was dominated with multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. A new entrant like EC would require a different business model to be successful. Thus, EC started selling its products through direct marketing. In this scenario, Elixir Cosmetics accomplished substitution primarily through _____.

strategic equivalence

Home Cart, Home Essentials, Good Store, and Price King are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases. All the four stores cater to the needs of highly price-sensitive customers. Thus, together Home Cart, Home Essentials, Good Store, and Price King form a _____.

strategic group

Unplanned strategic initiatives taken by the _____ within an organization will be referred to as an emergent strategy.

team leads of project teams in the organization

Pink Couture Inc. and Pink Blush Inc. are two companies in the apparel industry. While Pink Couture Inc. focuses on providing unique product features and superior customer service, Pink Blush Inc. focuses on low prices and minimal customer service. Both companies have been able to gain a competitive advantage. This is most likely because:

the companies have pursed distinct strategic positions

Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking?

the firms would eventually have no resources to invest in product and process improvements

The telecom industry in the country of Andalus 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:

threat of new entrants is most likely low

During strategy implementation, managers primarily focus on deciding the:

type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice.