Exam Review

Strategy as _____ refers to how executives interpret the competitive landscape around them.

Perspective

A strategic _____ is a carefully crafted set of steps that a firm intends to follow in order to be successful.

Plan

A company that manufactures cars aims to sell them to customers in the premium market segment. This is an example of strategy as:

Position

_____ is one of the four Ps of the marketing mix.

Price

A bakery generally makes a sale of $4,000 every month. But during Christmas time it made a sale of $6,000. That is, it registered a 50% increase in its sales during Christmas. During the same time, other bakeries registered sales in excess of $10,000. The fact that other bakeries registered sales in excess of $10,000 can be used a yardstick to measure the performance of this particular bakery. This is referred to as the performance _____.

Referent

A performance _____ is a benchmark used to make sense of an organization's standing along a performance measure.

Referent

Suppliers tend to be less powerful if there are no effective substitutes for what the supplier group provides.

False

The demands of strategic management are simple enough to be handled alone by the chief executive officer.

False

The distinctive competency theory offers a complete framework for analyzing organizations.

False

The marketing mix concept was proposed by circus impresario P.T. Barnum.

False

The presence of a cost leader in an industry encourages new firms to enter the business.

False

The purpose of Porter's five forces analysis is to identify the factors that affect the profit potential of an industry.

False

Viable substitutes are available in all industries.

False

A company manufacturing hockey sticks makes an annual assessment of its resources in terms of raw materials, technical expertise, and technological knowhow. It assesses the type of competition that it faces in the sports goods market and also looks out for opportunities that would allow it to expand its business. This is an example of a(n):

SWOT Analysis

_____ refers to how well a company is doing reaching its vision, mission, and goals.

Organizational performance

Strategy as _____ focuses on the extent to which a firm's actions over time are consistent.

Pattern

The triple bottom line emphasizes the three main tenets:

People, planet, and profits

The strategic management process begins with an understanding of strategy and _________.

Performance

Which of the following statements about the SWOT analysis is accurate?

SWOT analysis is a brainstorming technique for generating creative ideas.

Which of the following statements describes the "time-bound" aspect of a goal?

The goal is achieved through the creation of deadlines.

Which of the following is also known as the four Ps of marketing and provides important insights into how to convince customers to purchase a firm's goods and services?

The marketing mix

Which of the following statements describes learning and growth measures as a part of the balanced scorecard?

They focus on innovation and proceed with an understanding that strategies change over time.

Which of the following statements describes internal business process measures as a part of the balanced scorecard?

They relate to organizational efficiency.

Which of the following theories for explaining a firm's competitiveness centers on just one element of business activity: whether it is cheaper for a firm to make or to buy the products that it needs?

Transaction cost economics

A few organizations wield such power and influence that they can shape some elements of the general environment.

True

A firm may not match every characteristic that its generic strategy entails.

True

A resource is valuable to the extent that it helps a firm create strategies that capitalize on opportunities and ward off threats.

True

An organization is more effective to the extent that its vision and its mission target employee's effort in the same direction.

True

Attitudes toward obesity constitute a social factor in the PESTEL framework.

True

Excess of aggressiveness can undermine an organization's success.

True

First moves that build on strategic resources, such as patented technology, are difficult for rivals to imitate and thus are likely to succeed.

True

Organizations need support from their key stakeholders, such as employees, owners, suppliers, and customers, in order to prosper.

True

Resources refer to what an organization owns, capabilities refer to what the organization can do.

True

Some large organizations promote autonomy by empowering a division to make its own decisions, set its own objectives, and manage its own budgets.

True

Strategic ploys can be especially beneficial when facing much stronger opponents.

True

The environment provides resources that an organization needs in order to create goods and services.

True

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

True

The most effective goals are those that are specific, measurable, aggressive, realistic, and time-bound.

True

The study of strategic management involves knowing how and when to apply creative thinking.

True

The term co-opetition refers to a blending of competition and cooperation between two firms.

True

The unique features provided by firms following a focused differentiation strategy are often very specialized.

True

Thinking and behaving entrepreneurially can help a person's career.

True

Those organizations that are successful in their innovation efforts tend to enjoy stronger performance than those that do not.

True

The key question examined by strategic management is:

Why do some companies outperform other companies?

A firm is said to be _____ if it does not offer features that are unique enough to convince customers to buy its offerings and its prices are too high to effectively compete on based on price.

stuck in the middle

Learning and growth measures of performance relate to organizational efficiency.

False

Which of the following is accurate regarding a best-cost strategy? Advertising cost can make it prohibitive. Companies that manage to implement an effective best-cost strategy are often very successful. Product development cost can make it prohibitive. It is difficult to execute. All of the above is correct

All above is correct

Which of the following is a factor that determines the likelihood of a firm responding to a competitive move?

Awareness

Which of the following is NOT a generic business level strategy?

Best Cost Leadership

Which of the following constitutes a disadvantage of the differentiation strategy?

Competitors are able to imitate the features well enough that they are no longer unique.

A health drink company is known for launching drinks with flavors which are different from what are offered in the market. It regularly indulges in experimentation to come up with new and exotically flavored drinks. It also charges higher than the other health drink companies. What disadvantage would the company face because of the strategy it follows?

Competitors may be able to imitate the features well enough that they are no longer unique.

_____ provide exclusive rights to the creators of original artistic works such as books, movies, songs, and screenplays.

Copyrights

In the case of focus differentiation, a company lacks the ability to charge high prices.

False

Which of the following qualities of an asset makes it a strategic resource for a business?

Difficult to imitate

Which of the following are created when the costs of offering goods and services decreases as a firm is able to sell more items?

Economies of scale

Roomz, a mid-range hotel, used to provide only food and accommodation facilities. It soon realized that most of its customers are foreign tourists who constantly ask for directions and advice on places to visit. The hotel then decided to start a travel desk which would help tourists select and visit places of historical and cultural significance. This is an example of a(n) _____ strategy.

Emergent

Which of the following applies to intangible resources?

Examples are employee skills as well as company culture and reputation.

Which of the following is true about a firm following the concept of bricolage?

Executives apply the concept of bricolage when they combine ideas from existing businesses in order to create a new business.

A firm following the focused cost strategy necessarily charges the lowest prices in the industry.

False

A firm's business-level strategy should involve trying to serve the varied needs of every different segment of customers in an industry.

False

Bitter rivalry between an industry's competitors is especially detrimental to the competing firms if their competition is based on unique features of their products or services.

False

Buyers are less powerful when they face little or no switching costs in changing vendors.

False

Enactment and environmental determinism offer similar views on why some firms succeed and others fail.

False

Firms that are able to offer both low prices and unique features that customers find desirable are said to be stuck in the middle.

False

Forward vertical integration involves a buyer entering the industry that it purchases goods or services from.

False

Which of the following is true about co-opetition?

Firms engaged in co-opetition can be described as "frienemies" - part friends and part enemies.

Fresh Mornings, a breakfast chain, is known for its old-style potatoes, ham, and egg sandwiches. A rival introduces a new breakfast concept with exotic fruits and sandwiches customers can make themselves that conflicts with the industry's current competitive practices. The owners of Fresh Mornings realize that they may lose some customers to this new concept. But instead of competing by offering the new breakfast concept that the rival has introduced, they decide to stick to and to market their old-style potatoes, ham, and egg sandwiches, which they are famous for. Which of the following responses are they following?

Focusing on traditional modes of business.

A(n) _____ fee refers to the upfront fee paid by an organization which gets the right to use another organization's brand name, products, and processes.

Franchise

An organization which gets the right to use another organization's brand name, products, and processes is referred to as a _____.

Franchisee

Jeff wants to open a new coffee shop in his town where there are already two other coffee shops. In order to attract more customers, James decides to charge a lower price for each cup of coffee than what his competitors charge. This is an example of a(n) _____ strategy.

Generic

Which of the following statements holds true for the book The World is Flat: A Brief History of the Twenty-First Century?

It argued that many of the advantages that firms in developed countries like the United States, Japan, and Great Britain take for granted are disappearing.

Which of the following constitutes an advantage of the differentiation strategy?

It creates an ability to obtain premium prices from customers.

Which of the following is true about transaction cost economics?

It is a theory that centers on whether it is cheaper for a firm to make or to buy the products that it needs.

Which of the following statements describes the term "competitive aggressiveness" as a dimension of entrepreneurial orientation?

It refers to the tendency to intensely and directly challenge competitors.

Which of the following statements holds true for the book Strategy and Structure: Chapters in the History of the Industrial Enterprise?

It stressed how strategy and organizational structure need to be consistent with each other in order to ensure strong firm performance

A bakery generally makes a sale of $4,000 every month. But during Christmas time it made a sale of $6,000. That is, it registered an increase in its sales. The sales factor is a performance _____ to judge organizational performance.

Measure

Which of the following is NOT a component of a SWOT analysis?

Talent

Which of the following statements describes the "realistic" aspect of a goal?

The achievement of the goal is feasible.

Transaction cost theory helps executives decide whether to pursue a _____ integration strategy or not.

backward

Concentrated industries differ from fragmented industries in that in concentrated industries:

businesses tend to keep their competition rather polite.

Auto malls that contain several different car dealerships are found in many areas. This is an example of _____.

co-location

New entrants are more likely to join an industry if:

differentiation among existing competitors is low.

PESTEL reflects the names of the six segments of the general environment: political, _____, environmental, and legal.

economic, social, technological

Apple has been able to reshape its environment by introducing products such as the iPhone and the iPad that transcend the traditional boundaries between the cell phone, digital camera, music player, and computer businesses. This is an example of _____ for explaining a firm's competitiveness.

enactment

A sneaker manufacturing company targets teenagers. It sells the sneakers to these teenagers at a price which is lower than what is offered in the market. The fact that it offers low-priced sneakers to teenagers is an example of a(n):

focused cost leadership strategy.

Breadmakers, Inc. produces and supplies fresh sandwich breads to various sandwich businesses. Breadmakers has recently decided to open its own stores for selling sandwiches to consumers. This is an example of:

forward vertical integration.

Exom and Royshe are two oil and natural gas exploration and production companies. They created a new entity, CalEner, for oil exploration in California. The two parent companies remained separate. CalEner is an example of a _____.

joint venture

A charitable organization provides education to poor children. It aims at providing education to every child who cannot afford to pay for his or her own education. This is an example of the _____ of the organization.

mission

Cigarette makers R.J. Reynolds (RJR) and Philip Morris square off not only in the United States but in many countries around the world. This is an example of:

multipoint competition.

Kellogg's and General Mills compete fiercely for the breakfast cereal market not only in the United States but in many countries around the world. This is an example of:

multipoint competition.

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

new entrants struggle to match incumbents' prices.

Quattro is a pizza shop that delivers pizzas without any extra charge. It also refunds the entire amount of the order when the pizza was not delivered within 30 minutes from the order placement. After two years it stopped this policy, but it still delivers pizzas without any extra charge. The fact that it stopped the policy of refunds in case of a delay of more than 30 minutes is an example of a _____ strategy.

non-realized

Co-location differs from co-opetition in that co-location:

occurs when goods and services offered by two or more organizations under different brands are stationed very close to each other.

A supermarket purchases its vegetables from local farmers. It also ensures that it purchases the vegetables from farmers located closest to the supermarket so that the distance covered in transport is minimal. This reduces pollution. The supermarket also earns good profits. The fact that the supermarket tries to make a reasonable contribution to lessening pollution reflects the _____ aspect of the triple bottom line framework.

planet

Farmers rely heavily on cheap labor provided by illegal immigrants. A tightening of the immigration policy would reduce their profit margins and potentially increase the prices of agricultural products. For these farmers, this aspect of illegal immigration represents the _____ segment of PESTEL analysis.

political

Tangible resources are resources that can be readily seen, touched, and _______.

quantified

In January 2011, Merck and PAREXEL International Corporation announced a cooperative arrangement for collaboration on biotechnology efforts known as biosimilars. This arrangement did not involve creation of a new entity. Such cooperative arrangements are examples of _____.

strategic alliances

A hotel chain offers rooms which are priced higher than what other hotels in the same category offer. The services provided by the hotel are similar in quality when compared to the other firms. This situation makes it impossible for the hotel chain to compete either on the basis of price or on the basis of standout features. This hotel chain is a _____ organization.

stuck in the middle

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

the good or service is of limited importance to the quality or price of the buyer's offerings.

Suppliers are more likely to be powerful relative to the firms to which they sell their goods and services if:

the suppliers' industry is dominated by a few companies.