GBUS_381_Final
(ch11) One of Waterfall Apparel's core values is to provide unbeatable customer service, a commitment introduced to the company by its founder more than 10 years ago. This value is expressed in the company's "True to You" campaign, which promises a no-questions-asked returns policy and an offer to stitch the customer's initials onto any item for free using a patented sewing technique, two features that are not offered by any of Waterfall's competitors. Although the campaign has resulted in a 10 percent decline in profits, Waterfall has decided to continue to pursue its founder's vision to reward customers and maintain employees' sense of purpose. Why does Waterfall's culture, exemplified by the "True to You" campaign, fail to support a competitive advantage? -It does not increase economic value creation for the firm. -It is not a rare resource. -Waterfall lacks founder imprinting. -The culture is not difficult to imitate.
It does not increase economic value creation for the firm.
(ch5) T/F: Competitive advantage goes to the firm that maximizes the difference between the cost of producing a good and the retail price that consumers pay.
false
(ch5) T/F: Generally speaking, a firm will create value if its return on invested capital (ROIC) is less than the cost of capital.
false
(ch6) T/F: A differentiator will always benefit when products have become commoditized.
false
(ch6) T/F: A value curve that zig-zags across the strategy canvas indicates a focused strategy that is likely to achieve a sustainable competitive advantage.
false
(ch6) T/F: Economies of scope refer to the reductions in unit cost achieved by producing a large volume of a product.
false
(ch6) T/F: When a firm operates at the minimum efficient scale, there is still opportunity for it to further reduce its cost per unit through economies of scale.
false
(ch5) A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is -30,000 shares, that is, 30 million shares/$100. -$200,000, that is, $2,000 × $100. -$3 billion, that is, 30 million shares × $100. -20:1, that is, $2,000/$100.
$3 billion, that is, 30 million shares × $100.
(ch6) When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale? -2,000-3,000 units -3,000-4,000 units -below 2,000 units -above 4,000 units
3,000-4,000 units
(ch12) Sorenson LLC, a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company—including the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders, who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to Sorenson's board to achieve board independence? -1 -3 -5 -7
7
(ch1) Which of the following is an example of competitive parity? -A firm manufactures higher-quality wall clocks than its competitors. -A firm provides wall clocks that its consumers value more than other wall clocks. -A firm sells wall clocks at a lower price than its competitors. -A firm produces a similar number of wall clocks at a similar cost as its competitors.
A firm produces a similar number of wall clocks at a similar cost as its competitors.
(ch3) Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates? -Cost of capital for firms will be high. -Firms will invest less in future growth. -Economic growth rate will fall. -Consumer demand will increase.
Consumer demand will increase.
(ch2) Which of the following summarizes the difference between corporate strategy and business strategy? -Corporate strategy deals with how to compete; business strategy deals with where to compete. -Corporate strategy deals with when to compete; business strategy deals with how to compete. -Corporate strategy deals with how to compete; business strategy deals with when to compete. -Corporate strategy deals with where to compete; business strategy deals with how to compete.
Corporate strategy deals with where to compete; business strategy deals with how to compete.
(ch9) Future Clothes Inc., a publicly traded company, designs and manufactures wearable technology. What approach should Future Clothes take after a long period of horizontal integration in its industry? Assume that the industry is now stable and competitors have not made any major changes in price or marketing recently. -Compete based on price in order to drive out remaining competitors and create a monopoly. -Focus on research and development as a form of non-price competition. -Encourage new competitors to enter the market to improve competition. -Prepare to resist a hostile takeover by buying back as much stock as possible.
Focus on research and development as a form of non-price competition.
(ch5) The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest? -For every $6.00 Tesva Systems puts to work, the company incurs a cost of $1.00. -For every $6.00 Tesva Systems puts to work, the company realizes sales of $1.00. -For every dollar Tesva Systems puts to work, the company realizes $6.00 in loss. -For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales.
For every dollar Tesva Systems puts to work, the company realizes $6.00 of sales.
(ch12) Gino is the CEO of a financial services firm. What action should Gino take to be sure the firm avoids moral hazards? -He should closely monitor the behavior and performance of new employees to be certain that they have the skills they claimed to have in interviews. -Gino must increase hiring and develop influential relationships with government officials so that his firm will be considered "too big to fail." -He must create a plan in which government agencies or a consortium of other financial services firms will assume any future debts of the company. -Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly.
Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly.
(ch4) How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure? -In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile. -In perfect competition, it is extremely difficult to replicate the resource bundles of a firm, whereas in the resource-based model, it is extremely easy to imitate them. -In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry. -In the resource-based model, only physical assets of a firm are considered as resources, whereas in perfect competition, a firm's capabilities and competencies are also considered as resources.
In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry.
(ch4) GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information? -BC Inc. will be less competitive than GN Corp. because of its smaller investment in tangible assets. -It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage. -Judging from the assets listed, BC Inc. has probably been in the industry a much shorter time than GN Corp. -There is no resource heterogeneity between the two firms, BC Inc. and GN Corp., as they operate in the same industry.
It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage.
(ch8) While KFC focuses on international markets, its competitor, Chick-fil-A, focuses on the domestic U.S. market. What is the reason behind this strategic difference? -KFC has more financial resources than Chick-fil-A since it is a publicly traded stock company. -Chick-fil-A has a larger customer base and number of outlets in the U.S. market than its competitor KFC. -KFC wants to follow a differentiation strategy, and Chick-fil-A wants to pursue a cost-leadership strategy. -Chick-fil-A is part of a large conglomerate, whereas KFC has more flexibility to pursue a geographic diversification strategy.
KFC has more financial resources than Chick-fil-A since it is a publicly traded stock company.
(ch4) Which of the following best exemplifies social complexity as an isolating mechanism? -Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success. -Kristin's Cosmetics failed to acquire the resources for its eyeliner at a low cost and thereby lost its competitive advantage over Monica's Makeup. -Kristin's Cosmetics had difficulty competing with Monica's Makeup because it could not access the many makeup factories in Kentucky as easily as its competitor. -Kristin's Cosmetics did not fully understand the reasons for the success of Monica's Makeup and therefore had difficulty competing with the firm.
Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success.
(ch2) Yuki is part of a sales team. He effectively coordinates his tasks with others in the team and willingly contributes to their efforts in achieving the team's objectives. Thus, Yuki is in _____ of the Level-5 leadership pyramid. -Level 5 -Level 4 -Level 3 -Level 2
Level 2
(ch11) Which of the following real-world scenarios best exemplifies formalization? -Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts -McDonald's use of standard operating procedures across the world -W. L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses -Yahoo's decision to fire its CEO after incurring huge losses
McDonald's use of standard operating procedures across the world
(ch11) Which of the following statements is true of strategy in an organization? -Strategy implementation is considered unsuccessful if it requires changes within an organization. -To implement a strategy successfully, an organization's structure must be rigid. -Strategy implementation does not affect resource allocation and power distribution within an organization. -Organizational structure must follow strategy in order for firms to achieve superior performance.
Organizational structure must follow strategy in order for firms to achieve superior performance.
(ch5) The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & development expense/Revenue, and -Accounting profitability/Revenue. -Economic value created/Revenue. -Total return to shareholders/Revenue. -Selling, general, & administrative expense/Revenue.
Selling, general, & administrative expense/Revenue.
(ch12) Angie owns and runs Archana, a private start-up company with a current value of $1.3 billion. Archana is interested in going public to fund future growth. Which action should Angie take before Archana's initial public offering? -Angie should come up with a business plan for what Archana will do once it is no longer publicly traded. -She and senior managers should write down their code of ethics. -Angie should not embark on an IPO until Archana's value is higher. -She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.
She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.
(ch1) _____ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. -Behavior modification -Strategy -Credo -Competency management
Strategy
(ch3) In which of the following situations is the power of suppliers high in an industry? -Suppliers offer products that are undifferentiated. -Suppliers can credibly threaten to backward integrate into the industry. -Suppliers depend heavily on the industry for their revenues. -Suppliers' industry is more concentrated than the industry it sells to.
Suppliers' industry is more concentrated than the industry it sells to.
(ch10) How has China been affected by its one-child-per-family policy and appreciation of its currency? -The purchasing power of its workforce has declined. -The government no longer cares about capturing more of the value added. -The standard of living within the economy has become lower. -The country's advantage in low-cost manufacturing is now reduced.
The country's advantage in low-cost manufacturing is now reduced.
(ch8) Banana Computers has decided to procure processing chips required for its laptops from external suppliers instead of manufacturing them in their own facilities. How will this decision affect the firm? -The firm will be protected against the principal-agent problem. -The firm's administrative costs will be low because of necessary bureaucracy. -The firm will have more flexibility in purchasing and comparing prices of goods and services. -The firm will have high-powered incentives, such as hourly wages and salaries.
The firm will have more flexibility in purchasing and comparing prices of goods and services.
(ch12) What are poison pills? -Shareholders use them to prevent the founder of a company from taking the company private through a leveraged buyout. -They are unspecified conditions in the contract between stakeholders in an organization. -Companies use them in a bid to perform a hostile takeover of competing firms. -They are defensive provisions that kick in should a buyer reach a certain level of share ownership.
They are defensive provisions that kick in should a buyer reach a certain level of share ownership.
(ch12) Three months ago, Darren became a board member at Runswell, a publicly traded company. Two weeks ago, the board members discovered that Runswell's CEO is facing a lawsuit from a family member who accuses the CEO of theft. Based on what you have read, to what ethical standard should Darren and the other board members hold the CEO? -They should hold her to the same ethical standards that they would expect of any Runswell employee—no more, no less. -They must hold her to the highest ethical standards because the leaders of publicly traded companies must withstand intense public scrutiny. -If the board members are able to determine that the CEO is not a "bad apple," then they should give her their full support. -The board members must wait until the lawsuit results in a settlement or a guilty verdict.
They must hold her to the highest ethical standards because the leaders of publicly traded companies must withstand intense public scrutiny.
(ch11) Tony's Tacos is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Tony's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Tony's? -Tony's has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. -Tony's has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. -Tony's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. -Tony's has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy.
Tony's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.
(ch12) How did Uber conflict with Carnegie Mellon University's National Robotics Engineering Center (NREC)? -Uber promised a large donation to NREC but then reneged on the offer when NREC would not provide Uber with researchers. -Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC. -Uber allegedly stole ideas from the NREC research team and then claimed that these ideas were generated by their own researchers. -Uber bribed NREC officials to give permission for building an extension to the NREC facility that focuses solely on Uber research.
Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC.
(ch2) Which of the following is an assumption that top-down strategic planning rests on? -We can predict the future from the past. -Time cannot be compressed at will. -Decisions made in the past do not affect our future. -Change is constant.
We can predict the future from the past.
(ch1) True Help is a nonprofit organization that works toward rehabilitating the homeless. The credo of the organization is "help us help you." For an organization like True Help, which of the following statements would make an appropriate mission? -Help us help you find a home. -One day, everyone in this nation will have a home to protect themselves. -We help the homeless gain and sustain financial independence by providing employment opportunities. -Our mission is to turn this not-for-profit organization into a for-profit organization so that the stakeholders benefit.
We help the homeless gain and sustain financial independence by providing employment opportunities.
(ch5) Rock Bottom Tiles has developed a new customer-oriented business model. Rather than maintain a network of showrooms across the country, the business will now let customers choose several styles that interest them from an online site, and will ship samples of each of the styles to the customer to test in their home free of charge. Once they have settled on a tile choice, Rock Bottom will send a representative to their home to schedule installation. The company has determined that busy middle-class customers will value the convenience of the new model, which allow them to upgrade the look of their homes without spending time browsing showrooms. The new model will be created by selling the old showrooms and shifting resources to the new online site and regional offices for sales personnel. What question remains for Rock Bottom to ask in order to put its strategy into action? -Why does the business model create value? -What activities need to be performed to create and deliver the offerings to consumers? -How are the offerings to the customers created? -Who are the main stakeholders who will be performing the activities?
What activities need to be performed to create and deliver the offerings to consumers?
(ch4) T/F: High demand for online video streaming options is one of Netflix's core competencies.
false
(ch12) Ben is a manager at Unique Accessories Inc. and is friends with the company's CEO. This privilege gives Ben the information that Unique Accessories is in the midst of talks to take over a leading rival. Ben buys stocks of Unique Accessories with the expectation that its stocks will appreciate. But the deal falls through, and the stocks of Unique Accessories depreciate in the following months. Are Ben's actions unethical? Why or why not? -Yes. It is unethical to trade stocks based on insider information, irrespective of the final outcome. -Yes. It is illegal and unethical for Ben to possess any kind of insider information. -No. Ben did not ask the CEO to disclose such information to him. -No. Ben did not make any profits from trading stocks using this information.
Yes. It is unethical to trade stocks based on insider information, irrespective of the final outcome.
(ch1) Which of the following scenarios illustrates a firm that has a sustainable competitive advantage? -Jamison Inc. generated revenue of $300,000 this financial year, which is close to the industrial revenue average of $320,000. -CR Inc. almost doubled its sales to 9,000 units this year compared to its previous year's sales of 5,000 units, though the industry average is 10,000 units. -Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years. -Peak Inc. was able to outperform its competitors with its new production system, in terms of revenue, for a brief period of four months.
Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years.
(ch12) At Agile Ltd., a cross-functional team is formed to work on a project for a new client. The team consists of Charles and four other members. At most of the team's presentations to senior management, Charles takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Charles is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Charles did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Agile Ltd. is a typical consequence of -moral hazard. -adverse selection. -shared value creation. -corporate governance.
adverse selection.
(ch9) The Palace Hotel Group purchased Orange Roof Hotels for an estimated value of $120 billion. All the hotels previously owned by Orange Roof Hotels are now managed by the Palace Hotel Group and are known as Palace hotels. What does this scenario best illustrate? -a merger -a joint venture -an acquisition -an equity alliance
an acquisition
(ch10) Screaming Eagle, a luxury motorcycle company, sells the same motorcycles and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Screaming Eagle most likely pursue? -a multidomestic strategy -a transnational strategy -a global-standardization strategy -an international strategy
an international strategy
(ch1) A firm always has a competitive disadvantage when its return on invested capital is -below the industry average. -2 percent or lower in a declining industry. -about the same as its closest competitor. -declining steadily over two or more years.
below the industry average.
(ch4) T/F: One of Rolex's tangible resources is its well-known brand name and reputation for quality timepieces.
false
(ch2) Due to political instability in the country of East Gerdon, the strategic leaders at the headquarters of Mako Manufacturing have decided to close all production facilities in the country until stability returns. Mako's managers have formulated a _____-level strategy. -business -divisional -functional -corporate
corporate
(ch2) Strategic leadership pertains to the use of power and influence by _____ to direct the activities of others when pursuing an organization's goals. -production workers -lower-level managers -external stakeholders -corporate executives
corporate executives
(ch1) Strategic commitments are actions that are -inexpensive, long-term oriented, and difficult to reverse. -inexpensive, short-term oriented, and easy to reverse. -costly, long-term oriented, and difficult to reverse. -costly, short-term oriented, and easy to reverse.
costly, long-term oriented, and difficult to reverse.
(ch5) T/F: A company's total asset base consists of its current assets plus plant, property, and equipment (PPE).
false
(ch5) 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 -consumer surplus. -total return to shareholders. -customer lifetime value. -economic value created.
economic value created.
(ch1) Organizational core values are the _____ that govern the behavior of individuals within a firm or organization. -economic measures -ethical standards and norms -political principles and policies -social beliefs and actions
ethical standards and norms
(ch1) T/F: Once a strategy has been formulated and implemented, it is important that the firm sticks to it no matter what happens.
false
(ch10) T/F: Foreign-entry modes such as acquisitions and greenfield projects are usually disadvantageous because they require a high level of capital and resource investment but allow for a low level of control.
false
(ch10) T/F: The cultural distance between Australia and the United States is relatively high because of the physical distance between the two nations.
false
(ch10) T/F: The term demand conditions refers to how high the volume of demand is for a particular product in a particular country.
false
(ch11) T/F: A planned emergence approach to strategic planning is most likely to be found in a highly centralized firm.
false
(ch11) T/F: Once a firm finds success in a given organizational structure, it should seek to reinforce and maintain that structure for the life of the firm.
false
(ch2) T/F: A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities.
false
(ch2) T/F: It is helpful to break down strategy formulation and strategy implementation into five distinct areas.
false
(ch3) T/F: A local manufacturer that wants to be a global manufacturer faces few mobility barriers because it has not yet invested in supply chains, which can become outdated and expensive.
false
(ch3) T/F: Firms within the same industry automatically belong to the same strategic group.
false
(ch3) T/F: Sleeprite Mattresses Inc. wants to become the largest and most profitable mattress supplier in a three-state area. To do this, Sleeprite should try to create the smallest possible difference between the value that its mattresses create and the expense that the company must spend to produce the mattresses.
false
(ch4) T/F: A SWOT analysis would provide a definitive answer as to whether a firm's growing footprint in overseas markets is a strength or weakness.
false
(ch4) T/F: Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.
false
(ch6) T/F: When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to out-compete rivals on both cost and product features with the goal of gaining market share at the expense of other competitors in the same industry.
false
(ch7) T/F: Innovation and strategic entrepreneurship can only occur within new businesses.
false
(ch7) T/F: Innovation that targets new markets with existing technologies is known as disruptive innovation.
false
(ch7) T/F: Network effects always lead to a virtuous cycle in which an increasing number of customers improves the quality of a product or service, thereby attracting more customers and continuing the cycle.
false
(ch7) T/F: Pipeline businesses are typically better than platform businesses at incorporating user feedback and taking advantage of network effects.
false
(ch7) T/F: Social entrepreneurs forego the pursuit of profits to achieve social and environmental goals.
false
(ch7) T/F: The best way for a firm to keep its proprietary technologies, recipes, or formulas secret is to obtain a patent.
false
(ch7) T/F: The pace of innovation has slowed in the 21st century.
false
(ch8) T/F: Firms that pursue extremely high or extremely low levels of diversification perform better than those that pursue moderate levels of diversification.
false
(ch8) T/F: Managers have exactly two choices when determining the boundaries of the firm: produce goods and services in-house ("make") or purchase them externally ("buy").
false
(ch8) T/F: Sending jobs out of the country to lower costs is known as outsourcing.
false
(ch9) T/F: Even if a merger may not increase shareholder value as planned, it is often a wise idea to champion it so that managers will have the greater opportunities of working at an expanding company.
false
(ch9) T/F: In recent years strategic alliances have declined because of increasing government regulation.
false
(ch9) T/F: Managers who are eager to forge business alliances often forget that the expected benefits of the partnership must represent only a small percentage of its monetary and time-related costs.
false
(ch9) T/F: When deciding whether to build, borrow, or buy as a means of growth, firms no longer need to consider the need for physical closeness to their resource partners.
false
(ch10) The process of closer integration and exchange between different countries and peoples worldwide is -diversification. -globalization. -standardization. -modification.
globalization.
(ch4) True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high-quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped TMC sustain its competitive advantage? -resource mobility -inexhaustible nature -intangibility of the company's resource -high costs involved in imitation
high costs involved in imitation
(ch2) As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to -where to compete. -when to compete. -how to implement business strategy. -how to enter target markets.
how to implement business strategy.
(ch2) Rachel owns a large portion of Apex Apparel's stock. However, she is not employed by the company. In this scenario, Rachel is the company's -external stakeholder. -internal stakeholder. -creditor. -customer.
internal stakeholder.
(ch10) Because keeping cost low is critical to IKEA's value innovation, it switched from a(n) -transnational strategy to a multidomestic strategy. -transnational strategy to a global-standardization strategy. -international strategy to a multidomestic strategy. -international strategy to a global-standardization strategy.
international strategy to a global-standardization strategy.
(ch10) Culinary Solutions Inc. manufactures cooking and baking equipment and has its base in the country of Vandevar. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself in the country of Balalaika, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Culinary Solutions Inc. incurs huge financial losses in Balalaika. In this scenario, Culinary Solutions Inc.'s failure to establish itself successfully in Balalaika occurs most likely because -it overestimated its need to protect its intellectual property. -it underestimated its liability of foreignness when entering the Balalaika market. -it underestimated its dwindling reputation before it enters the Balalaika market. -it overestimates the geographic and cultural distance between Vandevar and Balalaika.
it underestimated its liability of foreignness when entering the Balalaika market.
(ch12) A mortgage-loan officer persuades unsuspecting consumers to sign up for exotic mortgages, such as "option ARMs." These mortgages offer borrowers the choice to pay less than the required interest, which is then added to the principal while the interest rate can adjust upward. Because of this setup, many borrowers are unable to repay the mortgage once the interest rates go up. Which of the following phrases best describes this scenario? -legal but not ethical -ethical but not legal -legal and ethical -neither legal nor ethical
legal but not ethical
(ch9) Winter Wonder Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleds by Bob Inc. This company produced bobsleds, but its sales had slowed. The managers of Winter Wonder convinced themselves that they were able to manage the business of Sleds by Bob more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleds by Bob's bobsleds plummeted. Which of the following terms is often used to describe this scenario? -winner's curse -managerial hubris -winner's disadvantage -interdepartmental apathy
managerial hubris
(ch5) Zelda is a recent fashion graduate. She started her own apparel store with an investment of $300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Genevieve's -social cost. -break-even price. -reservation price. -opportunity cost.
opportunity cost.
(ch3) 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 -new product releases -promotional campaigns -product differentiation
price-cutting
(ch1) Jake's Taxi Service is a new entrant to the taxi industry. It has achieved success by staking out a unique position in the industry. How did Jake's Taxi Service mostly likely achieve this position? -providing long-distance cab fares at a higher rate than competitors; servicing a larger area than competitors -providing long-distance cab fares at a lower rate than competitors; servicing a smaller area than competitors -providing long-distance cab fares at a higher rate than competitors; servicing the same area as competitors -providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors
providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors
(ch8) The core competency of GoGo Motors is its fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that the growing demand for "green" vehicles has created a new market opportunity. Thus, it uses its existing technology to develop an engine that improves the fuel efficiency of recreational motorhomes. In this scenario, GoGo Motors is -leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. -redeploying and recombining existing core competencies to compete in future markets. -building new core competencies to create and compete in future markets. -building new core competencies to protect and extend current market position.
redeploying and recombining existing core competencies to compete in future markets.
(ch9) Disney became the world's leading media company to a large extent by pursuing a corporate strategy of -related-linked diversification. -cost-leadership. -unrelated diversification. -hostile takeovers.
related-linked diversification.
(ch11) InSeason Inc. started a chain of organic supermarkets that had initial success. The managers achieved a mastery of the firm's current environment, thereby filling a need in the market. However, InSeason defined and measured it success by financial metrics, with a focus on short-term performance. As a result, the firm put in place metrics and systems to accommodate and manage increasing firm size due to continued success. As a result of this tightly coupled system, InSeason developed a -resistance to change. -innovative approach. -significant value gap. -holacratic system.
resistance to change.
(ch1) A customer-oriented vision statement focuses employees to think about how best to -make a product easier to use. -increase their efficiency to benefit consumers. -improve a popular product. -solve a problem for a consumer.
solve a problem for a consumer.
(ch9) A voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services is best described as a -proprietorship. -cooperative. -strategic alliance. -leveraged buyout.
strategic alliance.
(ch2) The former CEO of Sam's Club, a division with its own profit-and-loss responsibility, Rosalind Brewer, reported to Walmart's CEO, C. Douglas McMillon, who as corporate executive oversees Walmart's entire operations. Sam's Club, therefore, is a _____ of Walmart. -corporate partner -strategic business unit -branch office -house brand manufacturer
strategic business unit
(ch4) Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's -core competency. -intangible resources. -tangible resources. -capabilities.
tangible resources.
(ch3) Which of the following external forces is a part of a firm's task environment? -the composition of the strategic group to which the firm belongs -the interest rates prevalent in the economy in which the firm operates -the inflation level in the economy in which the firm operates -the recent innovations in process technology, including lean manufacturing
the composition of the strategic group to which the firm belongs
(ch3) Due to economic regression in Freedonia, the profitability of the large corporation Happiness Products Inc. (HPI) was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would HPI find it most easy to exit? -the automobile industry, where the company has contractual obligations with suppliers -the airline business, where the company's strategic commitments are long-term -the e-commerce retail business, where investments on assets are low -the pharmaceutical business, where the company has a large number of fixed costs
the e-commerce retail business, where investments on assets are low
(ch6) A blue ocean strategy differs from a low-cost strategy in that -the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value. -the focus of a blue ocean strategy is on lowering the economic value created, whereas a cost-leader focuses on increasing the economic value created. -economies of scale are more important to a blue ocean strategy, while economies of scope are more important to a cost-leader. -a blue ocean's research and development focus is on process technologies, and a cost-leader's focus is on product technologies.
the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value.
(ch12) Which of the following could be used as an example of why a stakeholder strategy approach to business has shortcomings? -the nonsustainable debt levels incurred by sovereign governments to fund social programs -the financial crisis in Europe brought about by money lenders seeking to make quick money -the collapse of the economy in the United States brought about by --the housing crisis -the rise of GDP in countries that do not believe in Milton Friedman's philosophy
the nonsustainable debt levels incurred by sovereign governments to fund social programs
(ch4) The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment? -a reputation for fast customer service -a culture of proactive communication -patents for electronic components -the punch presses that produce parts
the punch presses that produce parts
(ch3) Kirsten, a manager, is writing an analysis of her employer's current and possible future revenues. Which of the following could she identify as an economic factor in her firm's external general environment? -the government regulations and laws in the country in which the firm exists -the stage of the business cycle that the country is in -the values and norms prevalent in the society in which the firm operates -the bargaining power of the firm's suppliers and buyers
the stage of the business cycle that the country is in
(ch6) Which of the following best describes a strategic trade-off? -the tension between innovation and keeping manufacturing costs down -the tension between maintaining both high-quality products and service -the tension between value creation and the pressure to keep costs in check -the tension between raising prices and keeping a loyal clientele
the tension between value creation and the pressure to keep costs in check
(ch10) T/F: In recent years as economic forces have changed, many governments and multinational enterprises have been more interested in negotiating bilateral trade agreements between countries rather than multinational agreements through international agencies.
true
(ch10) T/F: MacAdam Enterprises sells the same sparkplugs in more than 30 countries. MacAdam is an example that helps to support the globalization hypothesis.
true
(ch11) T/F: A change in company culture is most commonly accompanied by a change in leadership.
true
(ch11) T/F: A firm that successfully balances exploitation of current opportunities and exploration of future possibilities is considered ambidextrous.
true
(ch11) T/F: Firms with a flat structure and a low degree of specialization tend to foster innovation better than firms with a tall structure and high degree of specialization.
true
(ch3) T/F: A small coffee shop faces significant potential competition because of the low capital requirements compared with business environments such as universities and laboratories.
true
(ch5) T/F: The efficient market hypothesis suggests that the market price of a firm's stock is an objective indicator of a firm's past, current, and expected future performance.
true
(ch6) T/F: Differentiators tend to score highly on most competitive elements on a strategy canvas, while cost leaders tend to hover near the bottom of the strategy canvas.
true
(ch7) T/F: According to the crossing-the-chasm framework, the biggest chasm between customer segments is between early adopters and the mass market made up of the early majority and the late majority.
true
(ch7) T/F: For ideas and inventions to be innovative, they must first be commercialized.
true
(ch7) T/F: Process innovation typically overtakes product innovation in importance during the shakeout stage of the industry life cycle.
true
(ch8) T/F: Firms are more capable than markets at coordinating highly complex tasks, while markets are more capable of providing high-powered incentives for entrepreneurship.
true
(ch9) T/F: If two large movie-theater chains decide to merge, the result is likely a horizontal integration that creates a more favorable industry structure by decreasing competition.
true
(ch8) Decisions relating to "what stages of the industry value chain to participate in" determine a firm's -level of diversification. -geographic scope. -vertical integration. -competitive strategy.
vertical integration.
(ch8) Gold Leaf Computers sources the components for its laptops from various suppliers on the market. The firm pays $100 for processors, $35 for disk drives, $50 for screens, $10 for memory, and $40 for graphics and wireless internet cards. Gold Leaf has determined that it would cost $200 per unit to produce all of the necessary components in its in-house manufacturing facility. In this scenario, Gold Leaf should -continue to outsource production. -vertically integrate. -exit the laptop industry. -diversify its activities.
vertically integrate.
(ch6) Red Sapphire is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Red Sapphire should ideally compare its strategic position with a -watch retailer that sells pre-owned watches. -watch maker that sells high-end, premium watches. -watch maker that manufactures low-priced watches. -watch maker that follows a differentiation strategy.
watch maker that sells high-end, premium watches.
(ch8) Anita has been named CEO of a popular sports apparel company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Anita most likely to make? -whether to pursue a differentiation or cost leadership strategy -which customer segments to target -how to achieve the highest levels of customer satisfaction -what range of products the firm should offer
what range of products the firm should offer