MGMT 4390 Final Review
Factors in the general environment can have different effects depending on the industry type. Give two examples.
1. Environmental factor:- when there is a change in the environment, it affects various industries in different ways. For example, when the Covid 19 pandemic has broken through all over the world, the entertainment industry has lost its lion share of revenue, while the pharmaceutical industry gained some.2. Economic factor:- when the price of crude oil rose, the automobile industry has faced less demand from society, while it fueled the growth of electrical vehicles.
All the individuals were mentioned as examples of entrepreneurs in Chapter 2 except:
??
Which of the following is one of the four components required for creating best value supply chains?
Adaptability
Which of the following components required for creating best value supply chains can be achieved through the use of buffers?
Agility
All of the following are examples of risks that companies open themselves up to when they choose to enter into cooperative relationships except:
All of the above are potential risks
Give an example each of forward vertical integration and backward vertical integration.
An example of forward integration might be a clothing manufacturer that typically sells its clothes to retail department stores; instead, opens its own retail locations. Conversely, backward integration might involve the clothing manufacturer buying a textile company that produces the material for their clothing.
Which of the following is a factor that determines the likelihood of a firm responding to a competitive move?
Awareness
The printing press is a classical example of the concept of _____.
Bricolage
The integral part to a company's strategic plan that describes the process through which a company hopes to earn profits is the:
Business model
_____ is one of the three factors that determines the likelihood of a firm responding to a competitive move.
Capability
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.
Monster Mini Golf partnered with the rock band KISS to create a niche for itself by custom-designing a frightfully fun course that features animated KISS and monster props lurking in all 18 fairways. This is an example of the:
Concept of Bricolage
_____ refers to the potential for a company's operations in a country to struggle due to differences in language, customs, norms, and customer preferences.
Cultural Risk
According to the resource-based theory, what characteristic of strategic resources are trademarks an example of?
Difficult to Imitate
A _____ innovation is an innovation that conflicts with, and threatens to replace, traditional approaches to competing within an industry.
Disruptive
By undercutting rivals on tuition, using data analytics to identify students who are struggling, and relying on low paid adjunct instructors rather than full-time professors, Southern New Hampshire University developed what type of situation?
Disruptive
A company introduces a new product in the market. The company decides that the only way it could attract customers is to keep the price of the product lower than what its competitors charge. Which of the following disadvantage would the company face because of the strategy it proposes to follow?
Downplaying research and development can slow the company's ability to respond to changes once they are detected.
When unemployment rises, discretionary income plummets. That hurts businesses selling costly but non-essential goods. This example represents the _____ segment of PESTEL analysis.
Economic
As economies are predictable, economic risk presents executives with very few challenges.
False
Bricolage is a situation where a firm faces the same rival in more than one market.
False
Competitive aggressiveness is the tendency to avoid competitors rather than directly challenge them.
False
Entering new geographic areas is one way of pursuing market penetration.
False
Firms benefit when their domestic customers are perfectly willing to purchase inferior products.
False
High industry concentration increases the chances of bitter rivalry between an industry's competitors.
False
Horizontal diversification occurs when a firm enters an industry that lacks any important similarities with the firm's existing industry or industries.
False
Horizontal integration strategies can take a firm into very different businesses.
False
Innovations always require brand new skills thus making existing skills obsolete.
False
Internal business process measures of performance relate to customer attraction, satisfaction, and retention.
False
Patents are phrases, pictures, names, or symbols used to identify a particular organization.
False
Porter's five forces analysis is the best-known approach to portfolio planning.
False
Rivalry tends to be fierce among an industry's competitors if exit barriers in the industry are low.
False
Suppliers tend to be less powerful if there are no effective substitutes for what the supplier group provides.
False
Tangible resources are more likely to meet the criteria for strategic resources than are intangible resources.
False
The most obvious advantage of competing in international markets is nationalization.
False
The presence of a cost leader in an industry encourages new firms to enter the business.
False
Within the diamond model, demand conditions refer to the inputs that firms need in order to create goods and services.
False
A _____ advantage exists when making the initial move into a market allows a firm to establish a dominant position that other firms struggle to overcome.
First-mover
A bike manufacturing company targets college-going kids. The price of the bikes offered by this company is lower than what the other companies offer in the market. The fact that it offers low-priced bikes to college-going kids is an example of a(n):
Focused cost leadership strategy
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 mode of business
Disney has pursued _____________ by operating more than three hundred retail stores that sell merchandise based on Disney's characters and movies. This allows Disney to capture profits that would otherwise be enjoyed by another store.
Forward vertical integration
_____ can be useful for neutralizing the effect of powerful buyers.
Forward vertical integration
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
Marty's, a clothing company, has a number of outlets which are owned and managed by private individuals. These outlets are allowed to use the brand name and products of Marty's after paying a fee to the company. They also pay a part of their revenues to Marty's. Each of these outlets is a:
Franchisee
_____ involves an organization granting the right to use its brand name, products, and processes to other organizations in exchange for an upfront payment and a percentage of the other organizations' revenues.
Franchising
A _____ is an organization which grants the right to use its brand name, products, and processes to other organizations.
Franchisor
China's large population is an appealing factor to American firms. What does this mean to American firms interested in competing in new markets?
Greater access to new potential customers
Which of the following is true of licensing?
It can be an attractive option in unfamiliar or politically volatile markets.
Which of the following best describes the foothold strategy?
It involves a firm intentionally establishing a small position within a market in which it does not yet compete.
Which of the following is an advantage of cost leadership?
It makes a firm following this strategy well positioned to withstand price competition from rivals.
Which of the following is true about acquisitions?
It typically occurs when a larger company purchases a smaller one.
Companies use concentration strategies to grow within an industry. A company can use one, two, or all three as part of its effort to excel within an industry. Which of the following are concentration strategies?
Market Penetration, Market Development
Which of the following concentration strategies involves entering a new retail chain to sell an existing product?
Market development
Which of the following concentration strategies involves selling existing products in new geographic areas?
Market development
Moreau Musical Instruments Inc, a company that manufactures stringed instruments and amplifiers, features famous musicians in print and television ads to increase the sale of their products. The firm aims to gain greater market share within the musical instrument manufacturing industry. Which of the following concentration strategies is this an example of?
Market penetration
Which of the following strategies sacrifices responsiveness to local requirements within each of its markets in favor of being efficient?
Multidomestic Strategy
All of the following are examples of firms that use a best-cost strategy except:
Netflix
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
_____ is a process that helps executives assess their firms' prospects for success within each of its industries, offers suggestions about what to do within each industry, and provides ideas for how to allocate resources across the industries.
Portfolio Planning
Healthie is a health drink company that 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. Another company offers the same drinks a lower price. Customers who were once loyal to Healthie immediately switch over to the new company which is charging a lower price for the same drinks. This is an example of _____.
Price Sensitivity
An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. It wants to do so by year 2020. The company has the required technology and the required finances to come up with such a car. Therefore, the plan seems to be feasible. The fact that the plan is viable and practicable reflects the _____ dimension of a goal.
Realistic dimension
As smoking becomes less and less attractive in many countries, lighter firm Zippo has faced a 50 percent decline in sales levels. They have begun to offer lanterns, hand warmers, outdoor tools, cooking accessories, fragrances, and watches in hopes of leveraging their "rugged, durable, made in America, iconic" image. Which of the following strategies are Zippo executives using?
Related diversification
Which of the following is an example of a patent?
Richard James Slinky
An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. The fact that the company has an explicit goal reflects the _____ dimension of a goal.
Specific Dimension
Which of the following segments of PESTEL analysis is the "Moore's Law" associated with?
Technological
Which of the following requires a firm's businesses to be categorized as high or low along two dimensions: its share of the market and the growth rate of its industry?
The BCG matrix
Which of the following statements describes the "realistic" aspect of a goal?
The achievement of the goal is feasible.
Explain the concept of innovativeness.
The production and use of new and economically useful knowledge.
A fighting brand is a lower-end brand that a firm introduces to try to protect the firm's market share without damaging the firm's existing brands.
True
A firm using a transnational strategy tries to balance the desire for efficiency with the need to adjust to local preferences within various countries.
True
A strategic alliance is a cooperative arrangement between two or more organizations that does not involve the creation of a new entity.
True
Business risk refers to the potential that an operation might fail.
True
Co-location occurs when goods and services offered under different brands are located very close to each other.
True
Cultural risk refers to the potential for a company's operations in a country to struggle due to differences in language, customs, norms, and customer preferences.
True
Divestment refers to selling off part of a firm's operations.
True
Executives apply the concept of bricolage when they combine ideas from existing businesses in order to create a new business.
True
Firms using diversification strategies are those that enter entirely new industries.
True
Focusing on generic strategies allows executives to concentrate on the core elements of firms' business-level strategies.
True
Innovativeness of an organization can be gauged by considering how many patents has the firm obtained.
True
Lack of creativity and innovation undermines a firm's ability to compete overseas and makes it vulnerable to foreign entry into its home market.
True
Market development involves taking existing products and trying to sell them within new markets.
True
Offshoring involves relocating a business activity to another country.
True
The three factors that determine the likelihood of a firm responding to a competitive move are awareness, motivation, and capability.
True
When pursuing a blue ocean strategy, executives try to create and exploit untapped markets rather than competing directly with rivals. Which of the following are examples of blue ocean strategies?
True
Trademarks:
are phrases, pictures, names, or symbols used to identify a particular organization.
Strategic management is described as being part science and part ______.
art
A _____ strategy involves creating a new, untapped market rather than competing with rivals in an existing market.
blue-ocean
Hawthorne Corporation, a leading watch manufacturer based in California, had operations across various countries. When a massive flood hit California and its surrounding areas, many people lost their lives in the flood. However, this event did not affect Hawthorne Corporation substantially, as it functioned across many nations. This implies that the organization had diversified its _____ by not being completely dependent on its operations in California.
business risks
Textbook publishers can charge high prices because students enrolled in a class must purchase the specific book that the professor has selected. Used copies are sometimes a lower-cost option, but textbook publishers have cleverly worked to undermine the used textbook market by releasing new editions after very short periods of time. According to Porter what "force" do used books industry represent?
buyers
_____ is one of the five forces of Michael Porter's five forces analysis.
buyers and suppliers in an industry, substitutes, competitors
In the BCG matrix, profits from _____ should not be invested back into that category because the industries in it have bleak prospects.
cash cows
A value chain differs from a supply chain in that a value chain:
charts the path by which products and services are created and eventually sold to customers.
The term _____ refers to a blending of competition and cooperation between two firms.
co-opetition
Which of the following is one of the five forces of Michael Porter's five forces analysis?
competitive rivalry, threat of new entrants, threat of substitutes, supplier power, and buyer power.
Rivalry between competitors of an industry tends to be fierce when:
competitors are not differentiated from each other
According to the diamond model of Porter, _____ refer to the nature of domestic customers.
demand conditions
New entrants are more likely to join an industry if:
differentiation among existing competitors is low
A strategic alliance strategy differs from a joint venture in that a strategic alliance:
does not involve the formation of a new organization.
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
Michael Porter's five forces analysis is an important tool:
for analyzing how much profit potential exists in an industry.
_____ are CEOs who lack fame but possess positive reputations.
hidden gems
Describe PESTEL analysis.
is a framework or tool used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization, company, or industry. It examines the Political, Economic, Social, Technological, Environmental, and Legal factors in the external environment. A PESTEL analysis is used to identify threats and weaknesses which are used in a SWOT analysis
This approach, often created by non-profits, recruits a network of representatives who pitch their wares to customers by going door to door with the primary aim of improving society.
microfranchising
An organization's _____ describes the reasons for an organization's existence.
mission
Kramer Inc., an American snack food manufacturing corporation, exports a line of potato chips under the brand name, Chirp. The firm customizes the flavors of its potato chips according to the preferences of customers in each market. For example, in India, Chirp chips are available in pickle flavors with the tangy taste of red chili in order to cater to the needs of local residents of India. The managers at Kramer Inc. emphasize the need to adjust to local preferences within various countries, even though it increases costs. In this example, Kramer Inc. uses a _____ strategy.
multidomestic
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
Macro Pvt. Ltd. is a software development firm that provides software in accounting, customer relationship management, HR and payroll management, and enterprise resource planning. The firm is based in Virginia and has operations across different continents. The firm had a unit in Syria, where there were severe disturbances by anti-government groups. The instability in Syria made it difficult for Macro Pvt. Ltd. to run its business operations in that country. This implies that the firm was experiencing a _____ in Syria.
political risk
Firms following a(n) _____ strategy shrink one or more of their business units.
retrenchment
What is a realized strategy?
strategy that an organization actually follows
Market development involves:
taking existing products and trying to sell them within new markets.
What is an intended strategy?
the strategy that an organization hopes to execute.
Which of the following qualities of an asset makes it a strategic resource for a business?
valuable, rare, difficult to imitate, and nonsubstitutable.
Explain entrepreneurial orientation.
when executives are crafting strategies in the hopes of doing something new and exploiting opportunities that other organizations cannot exploit.
A focus strategy typically implies that a firm forgoes any attempt to develop expertise about the goods and services that it offers.
False
Transaction cost economics is a theory that centers on just one element of business activity: the cost of creating a product and moving it to the customer.
False
Trends and events of the external environment seldom affect the overall state of an organization.
False
Viewing strategy as position involves only the actions of a single firm.
False
A real estate company provides housing services to retired individuals. It basically helps individuals above the age of sixty to search for houses with peaceful surroundings. The fact that the company provides housing services to retired individuals is an example of a(n):
Focused Differentiation Strategy
A(n) _____ is a general way of positioning a firm within an industry.
Generic Strategy
Which of the following theories for explaining a firm's competitiveness centers on the extent to which firms copy each other's strategies?
Institutional Theory
Why would an executive in charge of an organization want to understand the environment surrounding that organization?
It provides opportunities and threats, and it influences the various strategic decisions that executives must make.
SWOT analysis involves comparing two internal and two external factors. What are the two external factors?
SWOT analysis include internal factors that we can control and external factors that the firm cannot control, the answer is "A", as strength and weakness is internal to the firm and Threat and opportunity is external to the firm.
Which of the following statements describes financial measures as a part of the balanced scorecard?
They relate to organizational effectiveness and profits
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 is true about transaction cost economics?
Transaction costs are necessary to explain and predict the boundaries of a firm.
A differentiation strategy also creates benefits relative to potential new entrants.
True
A few organizations wield such power and influence that they can shape some elements of the general environment.
True
A strategic resource is an asset that is valuable, rare, difficult to imitate, and nonsubstitutable.
True
An organization that wants to encourage autonomy should foster a work environment with high levels of employee satisfaction and low levels of turnover.
True
As buyers, large companies like Walmart have the power to insist on price concessions because their sales volumes are so high.
True
Most cost leaders spend little on advertising, market research, or research and development in order to be efficient.
True
PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.
True
Realized strategies are a product of a firm's intended strategy, deliberate strategy, and emergent strategy.
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
The best cost strategy is difficult to execute in part because creating unique features and communicating them generally raises a firm's costs of doing business
True
The common element in all entrepreneurs is that they do something new and can make something out of opportunities that others cannot.
True
The four main types of intellectual property are patents, trademarks, copyrights, and trade secrets.
True
The history of strategic management can be traced back several thousand years.
True
The most effective goals are those that are specific, measurable, aggressive, realistic, and time-bound.
True
The triple bottom line framework highlights areas such as social responsibility.
True
A resource is _____ to the extent that it helps a firm create strategies that capitalize on opportunities and ward off threats.
Valuable
What is the "capstone" course as recommended by The Ford Foundation?
a 'capstone' course that integrates knowledge across business fields in order to help solve complex business problems.
A firm that enjoys a dynamic capability is one that is skilled at continually updating its strategic resources.
False
A focus strategy typically implies that a firm forgoes any attempt to develop expertise about the goods and services that it offers
False
Explain Taylor's principles of scientific management.
4 Principles Develop a science for each element of work. Scientifically Select, Train, Teach, and Develop the worker. Cooperate with the Worker. Divide the Work and Responsibility
A firm following the focused cost strategy necessarily charges the lowest prices in the industry.
False
An automobile manufacturing company wants to be the first company in the world to launch a car that would require no human intervention to run on the road. It wants to do so by year 2020. The task presents a challenge to the engineering skills of the organization. The fact that the task presents a challenge to the organization reflects the _____ dimension of a goal.
Aggressive
Which of the following theories for explaining a firm's competitiveness treats executives as the masters of their domains?
Enactment
Which of the following theories for explaining a firm's competitiveness contends that organizations are very limited in their ability to adapt to the conditions around them?
Environmental determinism
Explain how strategy in ancient times can provide lessons to businesses today.
Learn from prior mistakes made in ancient times
_____ analysis is an important tool that executives can rely upon to organize factors within the general environment and identify how these factors influence industries and the firms within them.
PESTEL
Dormer is the only fine dining restaurant in a small town. The opening of a new restaurant is viewed as a threat by some of the employees at Dormer. Others see it as an opportunity for Dormer to strengthen itself by looking out for its weaknesses and ironing them out. This is an example of strategy as:
Perspective
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
A company that manufactures soaps could not sell its products despite spending a good amount on advertisements. Therefore, management decided to use the concept of direct marketing. They thought of appointing a large number of salespersons who would do door-to-door selling of the product. This is an example of a strategic:
Strategic Plan
A strategic _____ is a carefully crafted set of steps that a firm intends to follow in order to be successful.
Strategic Plan
A resource that is valuable and rare but that can be imitated might provide an edge in the short-term, but competitors can overcome such an advantage eventually.
Strategic Resource
The Hebrews leaving Egypt, the Greek soldiers inside of the Trojan Horse, and King Arthur's famous round table are all examples of:
Strategy an Ancient Times
A watch manufacturing company has priced its goods at a rate which is higher than what other companies offer. The watches made by this company do not have any stand out feature to differentiate itself from the other companies or justify its high price. This company would be considered as a _____ firm.
Stuck in the middle
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. It also has a website where customers can design their own shoes. They then can order the shoes and they will be delivered to them. This is an example of a (n) _____ strategy.
best-cost
A(n) _____ means that a firm is competing based on uniqueness rather than price and is seeking to attract a broad market.
differentiation strategy