MGT-4893 Mid-Term 1

Describing and understanding the strategic positioning of firms within an industry.

Strategic group analysis is primarily useful for:

they focus on specific actions that a firm must take.

Which of the following is NOT a key characteristic of strategic decisions?

Business strategy answers the question of "Where to compete?", whereas corporate strategy addresses the question of "How to compete?".

Which of the following is NOT a key difference between corporate and business strategy?

To evaluate the profitability of a particular industry

Which of the following is NOT a way that the "PEST Analysis" video suggests that you can use a PEST analysis?

Strategy ensures that decision makers will always behave in the best interest of the firm.

Which of the following is NOT one of the ways that strategy improves decision making?

Designing and operating theme parks

Which of the following is not a resource that facilitated Disney's turnaround in the 1980's?

The Five Forces can be used to provide a static snapshot of an industry, but is not useful to get a sense of how the industry structure is changing.

Which of the following statements is NOT an argument that Michael Porter makes in the "Five Forces" video?

Offer the lowest cost product(s) in the industry.

Which of the following would Michael Porter (from the "What is Strategy" video) likely consider to be a legitimate strategy?

They tend to be sufficiently small that a single firm can often establish a dominant position.

Why are firms that supply niche markets often highly profitable?

network externalities

"Winner-take-all" industries, where the leading firm accounts for the great majority of the industry's total profit, are usually the result of:

True

According to management scholar Henry Mintzberg, only 10-30% of a firm's intended strategy becomes its realized strategy.

Inimitable

According to the "VRIO Analysis Explained" video, the "I" in the VRIO framework stands for which of the following:

Establish product differentiation by measures that reward customer loyalty

Airlines' frequent flyer programs and retailer loyalty schemes are both examples of efforts to:

Building a successful strategy requires a deep understanding of the competitive environment.

As described in Chapter 1, what does the success of Lady Gaga reveal about strategy?

True

If a firm is to create profit, the first condition is that it must supply a product for which the price the customer is willing to pay exceeds the cost incurred in supplying that product.

A matter of judgment that depends upon the purpose of the analysis

In practice, drawing industry boundaries is:

False

In the world of business, competition and cooperation seldom coexist.

How much compensation did the CEO receive last year?

It's important to check strategy statements against decisions and actions to see if there is a gap between rhetoric and reality. Which of the following is NOT a question that you can ask to assess if a gap exists?

Positively, because it restricts entry to the industry.

Obtaining a license to drive a "black cab" taxi in London requires passing a rigorous test of the driver's knowledge of London's streets and buildings involving 2-4 years of study. How does this impact the profitability of the London taxi industry?

The external environment is in a state of flux

Strategy needs to take account of both the requirements of a firm's external environment as well as a firm's own resources and capabilities. Resources and capabilities (rather than requirements of the external environment) offer a better basis for long-term strategy when:

True

The ability to predict a competitor's behavior is facilitated by the tendency for the managers within an industry to share common beliefs about their industry and about the key success factors within it.

False

The greater the value of a product to its customers, the more profitable it will be to supply that product.

Permits a more rigorous framing of competitive situations and strategic decisions.

The main contribution of game theory to the field of strategic management is that it:

False

The mergers and acquisitions that have increased seller concentration in iron ore mining, chemicals, and the US airline industry were motivated by the desire to save costs, not to reduce competition in order to raise prices.

true

The resource-based approach to strategy implies that strategy is more about exploiting distinctive differences, rather than trying to imitate other companies.

False

Two major sources of superior profitability are industry attractiveness and competitive advantage; of these, industry attractiveness is more important.

Console suppliers controlled technology and distribution, which gave them more bargaining power than suppliers of video games.

Video game consoles and video games are complementary products: the availability of one increases the value of the other. In the past, the suppliers of consoles were able to capture most of the profits generated by video game systems because: