Mana ch 4 and 5

Which of the following is a risk (or potential pitfall) of cost leadership?

Cost cutting may lead to the loss of desirable features.

The example of Lexus automobiles in the text points out that a firm can strengthen its differentiation strategy by achieving integration at multiple points along the value chain. T or F

True

Managing a knowledge intensive workforce is very challenging. The best way for a firm to manage its workforce is to

balance efforts in the attraction, selection, and retention of top talent.

In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets.

be larger than

Many companies use referrals by current employees as a source for new hiring and even monetarily reward them for the following reasons:

both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters.

A narrow market focus is to a differentiation-based strategy as a

broadly-defined target market is to a cost leadership strategy.

Tacit knowledge

can be accessed only with the consent of the employees because it is in the minds of the employees.

In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in?

maturity

In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.

maturity

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?

maturity

The least effective way to retain human capital is

requiring employees to sign agreements that prevent them from working for competitors in the future.

The text discusses three areas a firm must be concerned with in order to keep their best and brightest employees from leaving. These include all of the following EXCEPT

sorting/absorbing.

In a 360-degree evaluation and feedback system, __________ rate a person's skill and performance.

superiors, direct reports, and colleagues

The growth stage of the industry life cycle is characterized by

"in-kind" competition (from the same type of product).

Which of the following is most often true of mature markets?

Advantages that cannot be duplicated by other competitors are difficult to achieve.

Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?

Differentiation

A firm striving for cost leadership will typically spend relatively more on product related R&D than on process related R&D. T or F

False

A successful differentiation strategy increases rivalry since buyers become more price-sensitive. T or F

False

A successful differentiation strategy lowers entry barriers because of customer loyalty and the firm's ability to provide uniqueness in its products and services. T or F

False

Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability. T or F

False

Firms that compete on overall cost leadership are vulnerable if all rivals share a common input or raw material that contributes a significant amount to total costs. T or F

False

If a firm has a successful differentiation strategy, it is NOT necessary to attain parity on cost. T or F

False

Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle. T or F

False

The difference between the market value and book value of a firm is its social capital. T or F

False

The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle. T or F

False

The importance of human capital has decreased in recent years. For this reason, many firms have placed greater attention on attracting, but not on developing or retaining talent. T or F

False

The more reliance a firm has on intellectual capital, the closer its book value will be to its market value. T or F

False

To generate above-average returns, a firm following an overall cost leadership position should NOT be concerned with attaining parity or proximity on the basis of differentiation relative to its peers. T or F

False

Which of the following firms would you expect to have the highest ratio of market value to book value?

Google

__________ includes creativity and problem solving ability.

Human capital

Which statement regarding competitive advantages is true?

If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.

Which of these statements regarding the industry life cycle is correct?

It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives.

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?

Overall cost leadership

Which of the following statements about the introduction stage of the market life cycle is TRUE?

Products or services offered by pioneers may be perceived as differentiated simply because they are new.

__________ can be defined as the "network of relationships that individuals have throughout the organization."

Social capital

Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position vis-à-vis Porter's five forces?

Supplier power is increased because suppliers will be able to charge higher prices for their inputs.

According to the text, for most of the twentieth century, managerial efforts were directed more toward the efficient allocation of labor and capital - the two traditional factors of production. T or F

True

An important advantage of first movers or "pioneers" in a market is that they may establish brand recognition that may later serve as an important switching cost. T or F

True

Firms such as Oracle, Google, and Genentech will tend to have a higher ratio of market value to book value than "industrial companies" such as International Paper and Nucor Steel. T or F

True

Which of the following phrases best completes this sentence: Because of the Internet, firms that use a focus strategy have new opportunities to

access niche markets in a highly specialized fashion.

The primary aim of strategic management at the business level is

achieving competitive advantage(s).

Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should

adopt effective retention strategies.

All of the following are potential pitfalls of a differentiation strategy EXCEPT:

all rivals share a common input or raw material.

All of the following are potential pitfalls of a focus strategy EXCEPT

all rivals share a common input or raw material.

Human capital includes

an individual's capabilities, knowledge, and skills.

According to the text, intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by

attracting and retaining knowledgeable workers.

A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage?

maturity

In the __________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance.

decline

The most likely time to pursue a harvest strategy is in a situation of

decline in the market life cycle.

Recently, a knowledge worker's loyalty to his or her employing firm has __________ compared to his or her loyalty to his or her profession and colleagues.

decreased

High product differentiation is generally accompanied by

decreased emphasis on competition based on price.

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following EXCEPT

deriving benefits from highly focused and high technology markets.

ABC, Incorporated desires to have the most qualified people in every position throughout its organization. This is an example of a concern for

developing human capital

In order to take advantage of investment in human capital, a firm should

establish practices that will enhance employee retention.

Which of the following is NOT one of the ways the Internet is lowering transaction costs?

evaluating employee performance

Piecemeal productivity improvements during a turnaround typically does NOT involve

expansion of a firm's product market scope.

Research shows that the following are all strategies used by firms engaged in successful turnarounds EXCEPT

global expansion.

During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly.

harvesting

Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform

higher than firms that achieve either a cost or a differentiation advantage.

The experience curve suggests that cutting prices is a good strategy

if it can induce greater demand and thereby help a firm travel down the experience curve faster.

In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low.

introduction

Changes in our economy have forced firms to be more concerned with protecting their

knowledge workers, social capital, and intellectual capital

The makeup of goods and services in the Gross Domestic Products of developed countries has changed over the last decade. More than 50% of the value of GDP of developed countries is based on

knowledge.

A differentiation strategy enables a business to address the five competitive forces by

lessening competitive rivalry by distinguishing itself.

Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies?

mass customization

Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of

mass customization.

A firm following a focus strategy

must focus on a market segment or group of segments.

One of the reasons the Internet is eroding sustainable competitive advantages is

nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.

A firm can achieve differentiation through all of the following means EXCEPT

offering lower prices to frequent customers.

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by

repeating a process until a task becomes easier.

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?

overall cost leadership

A __________ can be defined as the total profits in an industry at all points along the industry's value chain.

profit pool

A manufacturing business pursuing cost leadership will likely

rely on experience effects to raise efficiency.

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

tacit; explicit

As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently, strategic management has moved from focusing on

tangible resources to intangible resources.

All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy EXCEPT:

targeting too large a market that causes unit costs to increase.

Generally, employees are most likely to stay with an organization if

the organization's mission and values align with the employee's mission and values.

As markets mature,

there is increasing emphasis on efficiency.

Many successful firms use internal labor markets. The most important reason they do this is because

they want to keep highly mobile employees motivated and challenged.

Developing human capital is essential to maintaining a competitive advantage in today's knowledge economy. Efforts and initiatives to develop human capital should be directed

throughout the firm at all levels.

Firms must compete for top talent. When attracting and selecting employees, firms must strive to select the best fit for both the employee and the firm. In an effort to reduce wasted time and effort in interviewing too many candidates while assuring a good candidate pool, a firm should

use a pre-interview quiz or "bozo filter" (e.g., Cooper Software).