MGMT 481 Exam 1

As a part of strategy formulation, a firms functional strategy primarily concerns questions relating to

How to implement business strategy

Steve manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Steve's reaction be?

He needs to find out if his company as well as other companies can provide the complements

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

Trying to be everything to everybody by combining different competitive strategies

Primary objective of porters five forces model is to

Understand the profit potential of industries

Talkalot corp Electronics incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario?

$450

The tenet behind the triple bottom line is that

A firm should achieve positive results along the economic social and ecological dimensions to gain a sustainable strategy

Tommy wants to open his own food truck but doesn't know anything about business. He needs help determining who his competition is, how he should craft his strategy to compete and how he'll implement his strategy to achieve a competitive advantage. He's hired you to help him get started. As a result, you know that you will probably use the

AFI strategy framework

Which of the following is an advantage of applying the economic value creation perspective to assess the firms performance?

An economic value perspective analyst not only consider historical cost but also opportunity cost

How does a farm capture its producer surplus for a good or service?

As profit per unit sold

TransNational Inc., is a large conglomerate that operates in 17 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity, or the value of potential future revenues generated by all its customers in a lifetime. Based on this guideline received from the top management team, the product leader of the home audio division has decided to adopt a cost-leadership strategy in all his 17 units. Thus, the decision made by the product leader best illustrates a ________ strategy.

Business

If you examine various barriers to entry facing firms that might wish to enter the airline industry, this would be most helpful in assessing which of the five forces in that industry

Competitive rivalry

Bill Burke is the CEO of Project Inc. a supply chain firm. Bill's company considers installing a new piece of machinery in one of his factories. Installing this new machinery will cost money; paying the technicians to install the machinery, transporting the machinery, buying the parts and so on. Bill plans on financing his operations by issuing stock (equity) and issuing bonds (debt). He needs his return on invested capital (ROIC) to exceed his ________ in order to determine if he should take on the project.

COST OF CAPITAL

In the five forces model developed by Michael Porter, _____ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

Competition

Which of the following statements about competitive advantage is true?

Competitive advantage can be assessed by measuring accounting profit shareholder value or economic value

The goal of a good strategy is focused primarily on

Creating superior value while containing cost

Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented?

Customer-oriented visions tend to have a more short-range view of changing environments.

A good strategy is a set of actions that enables a firm to achieve its own internal goals without regard to the external environment.

False

Apple developed iTunes as a complement to drive iPod sales iTunes is a cost driver of apples differential strategy

False

Managers should create two sets of core values one for employees and one for themselves

False

In a firms external environment ______ and primarily capture population characteristics related to age gender

Demographic

Which of the following functions do the general manager in strategic business units primarily perform?

Design generic business strategies based on guidelines received from corporate headquarters

Contour Inc a vendor regularly supplies capacitators to all purpose electronics for use in its products therefore contour is all purpose electronics

External Stakeholder

Apple releases new version of that iPhone with improved functions eg wireless charging every year the annual release best illustrates disruptive innovation

FALSE

Competitive advantage goes to the farm that maximizes the difference between the cost of producing a good and the retail price that consumers pay

FALSE

Generally speaking a firm will create value if its return on invested capital is less than the cost of capital

FALSE

Leslie owns a large portion of Hue Apparel's stock. However, she is not employed by the company. In this scenario, Leslie is the company's

Internal stakeholder

How does a sustainable strategy typically help a firm

It helps the firm achieve positive results along the social and ecological dimensions

Which of the following is a macro economic factor that can affect a firms strategy?

Levels of employment

Nye Studios is a large production company that controls a major portion of the movie industry's market share along with two other firms. Despite its competitiveness with the two other firms, it is influenced by their actions and often has to consider their strategic actions before acting on its own. In this scenario, Rhino Pictures Inc. is most likely functioning in a(n) _____ industry.

Oligopolistic

________ are best described as the value of the best foregone alternative use of the resources employed

Oportunity Costs

_____ are the ethical standards and norms that govern the behavior of individuals within a firm or organization

Organizational core values

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

Strategy Analysis

In which of the following situations is the power of suppliers high in an industry?

Suppliers industry is more concentrated than the industry it sells to

A video streaming service providers such as Amazon prime is a complement to a manufacturer of streaming video devices such as the Amazon fire stick

TRUE

Under the strategy as a planned emergence model, even entry-level employees can help generate strategic initiatives.

TRUE

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

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

There are several major limitations of employing the balance scorecard framework; which of the following below is not one of those limitations?

The type of marketing and Hr Functions used to employ the frame work

How are cumulative learning and experience affects of a company most likely to affect Michael porters five forces?

Threat of new entrance will be low

______ which is the return on risk capital includes stock price appreciation plus dividends received over a specific period

Total return to shareholder

A small coffee shop faces significant potential competition because of the low capital requirements compared with business environments such as universities and laboratories.

True

Between 2004 and 2008, Starbucks diversified into businesses like ice cream....; Starbucks performance in the period showed.... ??competitive parity??

True

Core values provide ethical guidelines for how individual employees will behave

True

Most consumers and investors today want the firms they do business with to look beyond just the profit motive. In fact, they want firms that behave legally and ethically while also giving back to their communities via philanthropic activities. The framework that attempts to reconcile these wants is known as

corporate social responsibility.

While creating its AFI strategy framework, Gordon's Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise?

corporate strategy

Apparel's core value statement reads we will ensure our clothing is made with the highest respect toward human rights and environmental protection. Which of the following actions exemplifies how Fuller's core values drive its strategic decision making?

demanding that textile suppliers pay livable wages and maintain safe production facilities

One of Howard Schultz's strategic initiatives after retaining the reins of Starbucks in 2008 was to shut the company's 7,000 stores for one day so baristas could relearn what makes the Starbucks brand unique. This initiative reflects a focus on which type of strategy?

differentiation

A(n) ________ is best described as the strategic option that top managers decide most closely matches the current reality and which is then executed.

dominant strategic plan

The Founder of Teach for America, Wendy Kopp, wants to make teaching an attractive option for promising young professionals. Identify the phrase that represents the vision she developed for Teach for America.

to give all children in the United States the opportunity to attain an excellent education

Which of the following is a primary feature of the five forces model?

views competition within an industry broadly to include forces such as buyers suppliers and the threat of substitutes