MGT 3659 Midterm

Which of the following does not represent a "razor-razor-blade" strategy? iphone and apps coffee machine and pods consoles and video games printer and toners

A

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate? perfect competition oligopoly monopoly monopolistic competition

A

According to Porter's Five Forces approach, the overall goal of applying the Five Forces analysis to an industry is to make a judgment about its overall attractiveness future volatility revenue streams market share

A

Canon was able to redesign the copying machine so that it didn't need professional service—reliability was built directly into the machine, and the user could replace parts, such as the cartridge. What Xerox had not envisioned was the possibility that the components of the copying machine could be put together in an altogether different way that was more user-friendly for the neglected customer group such as small and medium-sized businesses. This example describes architectural innovation. radical innovation. disruptive innovation. incremental innovation.

A

Food Tiger Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against Food Tiger's low prices. Thus, Food Tiger has a competitive advantage due to its economies of scale. superior customer service. learning-curve effects. time compression economies.

A

Among the following examples of businesses discussed in class, which of the following does not represent two distinct strategic groups? Aman Resort and Holiday Innect! Tesla and Fisker Karma Walmart and Whole Foods Delta and Spirit

B

First Pharma Inc. and GeoVax Inc. are two competing firms in the pharmaceutical industry. While First Pharma Inc.'s vision is "to be a preeminent drug manufacturer in the industry," GeoVax Inc.'s vision is "to make good health a reality for everyone around the world." Which of the following is an implication of these different visions? First Pharma Inc. is more likely to have a positive relationship between its vision and firm performance than GeoVax Inc. GeoVax Inc. will be more flexible than First Pharma Inc. when adapting to changing environments. GeoVax Inc.'s vision is more product-oriented than the vision of First Pharma Inc. First Pharma Inc.'s vision is more long-term and futuristic than GeoVax Inc.'s vision.

B

With regard to IT businesses' decision to pursue freemium strategy, which of the following statements is not true? Companies want to create customer switching cost. Freemium strategy is a good choice given the combination of high marginal costs and low fixed costs. Companies want to establish industry standards. Freemium strategy could resemble a razor-razor-blade strategy.

B

Due to economic regression in Jabu, the profitability of the large corporation Honey Comb Inc. was poor. An analysis of the company business showed that the company could become profi table if it divested a few strategic business units under its banner. From which of the following businesses would Honey Comb Inc. find it most easy to exit? the airline business, where the company's strategic commitments are long-term the pharmaceutical business, where the company has a large number of fixed costs the automobile industry, where the company has contractual obligations with suppliers the e-commerce retail business, where investments on assets are low

D

Which of the following features about a buyer indicates that the buyer has high bargaining power? when the buyer operates in an industry where products are undifferentiated when the buyer cannot credibly threaten to expand into the supplying industry when the buyer faces high switching costs when the buyer cannot purchase specific products from other sellers

A

Which of the following is primarily a value driver? complements experience-curve effects economies of scope cost of input factors

A

Which of the following statement most correctly discusses the threat of buyers in the airline industry? Airline industry has a high threat because of price comparison websites. Airline industry has a high threat because of cars and trains. Airline industry has a high threat because there exist only two type of aircraft. Airline industry has a high threat because the rivalry between domestic players is high.

A

In the context of industrial growth, which of the following statements is true of standards? After a standard is established in an industry, the basis of competition tends to move away from process innovations toward product innovations. As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices. Standards emerge exclusively from the bottom up through competition in the marketplace. Standards are exclusively imposed top-down by government or other standard-setting agencies such as the Institute of Electrical and Electronics Engineers.

B

Pick the industry context where learning curve effect is least relevant: heart surgeon operating patients Tesla manufacturing Tesla 3s DeBeers campaigning "Diamonds are Forever" McDonald's managing franchise chains

C

Southwest Airlines (SWA) and Alaska Airlines both compete as point-to-point airlines, but they draw upon different resource bundles. This example best illustrates which of the following assumptions regarding the resource-based view? resource allocation process resource immobility resource heterogeneity resource homogeneity

C

Which of the following best describes a strategic tradeoff? the tension between maintaining both high-quality products and service the tension between raising prices and keeping a loyal clientele the tension between innovation and keeping manufacturing costs down the tension between value creation and the pressure to keep costs in check

D

Which of the following businesses is most likely to disrupt an existing industry? GSX Techedu added advanced audio technology to its premium line of headsets so that they would take the highest-quality sound of all headsets on the market. Stark and Son's developed a self-driving technology that can autonomously drive cars across great distances. Touch Tech Inc. reconfigured the components used in its touchscreen tablets to create a new type of wearable device for use in restaurants and other service industries. Black Rock was one of the earliest companies to develop a camera module for cell phones. The first models had poor resolution, but they rapidly improved over time.

D

Which of the following statement is most correct about a company's strategy being "stuck in the middle"? Ikea is a company that is strategically stuck in the middle. It's when a company strategically sets both its price and value at a moderate level. This strategy has a higher chance of success compared to a cost strategy or a differentiation strategy. This can result from an attempt to pursue a blue ocean strategy.

D

In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility? PaluniInc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate. Purple Dreams Corp. has been able to gain a competitive advantage because of its ability to efficiently move its resources from one manufacturing unit to another. TooFirm Inc. has lost its market share because its resources are rigid, inflexible, and static. Acme Corp. has earned a good reputation among its shareholders by investing more heavily in equipment than in building up brand equity.

B

The ___________________ suggest(s) that because the external environment changes, strategic leaders must choose their current and future investments carefully over time in order to best maintain their firm's competitive advantage. law of diminishing returns dynamic capabilities perspective VRIO framework SWOT analysis framework

B

A "perfectly competitive" industry is one that has commodity product offerings. have difficulty achieving even a temporary competitive advantage. All of the answers are correct. usually exhibits low profitability.

C

The strategic objective of a first mover during the introduction stage of the industry life cycle is to lower entry barriers. pursue a harvest strategy. achieve market acceptance. survive by drawing on deep pockets.

C

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? power of supplier competitive rivalry threat of substitute products threat of new entrants

D

In the ________, firms change the underlying technology while holding cumulative output constant. incremental innovation learning curve radical innovation experience curve

D

NuLiver Corp. has recently introduced a new production method that will make the production of their medical devices more cost-effective. Which of the following will most likely be the result of this innovation? moves down the existing learning curve stabilizes the existing learning curve destabilizes a steeper learning curve jumps to a steeper learning curve

D

A successful strategy details a set of goal-directed actions that managers make to gain and sustain a competitive advantage; in order to create this strategy, managers must focus on three pillars. Which of the following below is not one of these pillars? analysis formulation execution implementation

C

Chad is the founder of a firm producing self-driving vehicles. Because the industry is so new and chaotic, Chad favors a top-down strategic planning approach in which he exerts strong control over all aspects of the business, from product development and design to manufacturing and marketing. What is wrong with this scenario? The top-down approach is expensive to maintain, leaving the company at a competitive disadvantage. The top-down approach can only be applied to specific business functions. The self-driving vehicle industry is changing too much for the top-down approach to be effective. The top-down approach leaves other employees uncertain about their roles in the company.

C

Evaluate the following statement: Strategic leaders should always try to pursue a blue ocean strategy because it is the most complex, coveted, and most desirable strategy that exists. I agree; firms should always pursue a blue ocean strategy because the benefits outweigh the cost. I agree; firms should pursue a blue ocean strategy because it's harder for competitors to replicate. I disagree; firms should only pursue this strategy if they are able to reconcile the tradeoff's of each generic strategy. I disagree; firms should never pursue a blue ocean strategy because it's much too complex.

C

Generally, as the level of ________ innovation declines, the level of ________ innovation increases. process; incremental process; product product; process product; radical

C

STRIKEBYTE Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of STRIKEBYTE Inc. will best enable it to gain and sustain a competitive advantage? the cloud computing service that it uses the headquarters building owned by the company the expertise acquired by the employees in the company the capital the company raised from its shareholders

C

Which of the following summarizes the difference between a firm's vision and mission? A vision states the management values of a fi rm; a mission states the values of the other workers. A vision states the ethical values of a fi rm; a mission states the monetary goals of a firm. A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision. A vision states how much a firm wants to earn; a mission states how these earnings will be accomplished.

C

There is a dress priced at $80 and the cost of producing the dress was $50. After trying on the dress, a consumer assesses it to be worth a maximum of $100. What is the overall economic value created by the dress? 100 30 80 50

D

What distinguishes innovation from invention? lower cost user value brand awareness commercialization

D

When does a firm fall into the large competitive chasm between early adopters and early majority? when it cannot attract technological enthusiasts to try the beta versions of its products when the early majority create herding effects for its products when it creates strong network effects during the growth stage when it fails to successfully launch a mass-market version of its product

D

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 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 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.

A

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit? Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry. Suppliers have weak bargaining power because they offer products that are not differentiated. Entry barriers in the industry are high, resulting in hardly any new airlines popping up. Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

A

The internet service provider industry in the country of Wakanda is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the internet service provider industry, the bargaining power of buyers is most likely low. threat of new entrants is most likely low. threat of substitutes is most likely high. entry barriers are most likely nonexistent.

B

Toyago Inc. is a leading educational toy company. Competitors across the globe have failed to imitate Toyago's production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Toyago Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? resource substitution resource immobility resource cost resource homogeneity

B

When a firm is able to successfully employ a blue ocean strategy, it will create a competitive advantage by winning market share with a highly differentiated product. using a first-mover advantage to be the lowest price in the market. beating rivals on product attributes while offering a better price. combining high quality and product features to provide service that customers truly value.

C

Which of the following is a disadvantage faced by first movers in an industry? They will have no access to intellectual properties such as critical patents. They cannot benefit from learning and experience curve effects like the late entrants. They will have to find distribution channels and complementary assets. They cannot benefit much from network effects.

C

It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they enter into the market in large numbers, creating a herding effect. are driven by technology concerns rather than the practicality of a new product. influence the purchase decisions of early adopters. have the highest purchasing power when compared to the other customer segments.

A

Jill is interested in the concept of strategy and decides to create her own. As a result, Jill says that her strategy is to focus on growth and marketing to achieve competitive advantage. How would you evaluate Jill's statement? Jill should reevaluate her statement because it fails to meet the principles of what a strategy should be. Jill's strategy makes sense and she should move forward with it. Jill should reevaluate her statement because it fails to mention human resources and finance. Jill's strategy reveals a clear strategic position and tradeoff, so she should proceed.

A

The production head at the All Paints and Surface Corp. would frequently stay back after office hours and experiment with new color combinations even though this was part of the new product development team's job. As a result of these experiments, he came up with two new interior paint colors, foggy morning and mint julep. The new colors proved popular among test groups, and quickly became some of Omnifone's best-selling products. Which of the following strategies does this scenario best illustrate? tactical strategy emergent strategy intended strategy unrealized strategy

B

WeComput Inc.'s competency in designing and manufacturing effi cient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled WeComput Inc. to increase its profi tability by lowering its production costs. Thus, WeComput's competency in designing and manufacturing microprocessors will be considered a(n) _____resource in the VRIO framework. organized valuable substitute imitable

B

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle? The market size for a new product or service is larger in the introduction stage when compared to the growth stage. There is more strategic variety in the growth stage when compared to the introduction stage. The number of competitors is more in the introduction stage than the growth stage. While achieving market acceptance is the strategic objective during the introduction stage, the objective in the growth stage is to pursue a harvest strategy.

B

While Sesmic Inc. operates in a monopolistically competitive industry, Energy 4 All Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true? Sesmic will have more profit potential than Energy 4 All. The threat of new entrants will be higher for Sesmic than for Energy 4 All. Sesmic will have more pricing power than Energy 4 All does. The number of buyers will be limited for both Sesmic and Energy 4 All.

B

When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because Blue Tech Inc.'s models were inferior to the third- and fourth-generation models its competitors were selling. In this scenario, Blue Tech Inc.'s failure can be best attributed to diseconomies of scope and scale. social complexity. time compression diseconomies. causal ambiguity.

C

Which of the following is a primary feature of the five forces model? It helps managers determine the changing speed of an industry or the rate of innovation. It takes into account a firm's internal resources, capabilities, and core competencies. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes. It is concerned exclusively about the intensity of rivalry among direct competitors.

C

Which of the following relationships is most likely to be subject to indirect network effects? Ebay buyers and Ebay sellers Dropbox user and Onedrive user Apple and app developers You and your facebook friends' friends

C

Which of the following scenarios best exemplifies a platform business? Jill purchases electronic parts from a variety of vendors and assembles them into inexpensive MP3 players that he sells to consumers. Tony operates a consulting firm in which businesses hire him to assess deficiencies in their organizational culture. Samantha operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy. Allison founded a bike-based transportation company that offers environmentally-friendly rides to customers within a 25-mile radius.

C