midterm review MGMT 4513
A primary objective of corporate governance is to: a. determine and control the direction of an organization, but not the performance of an organization. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. c. lobby legislators to pass laws that are aligned with the organization's interests. d. resolve conflicts among corporate employees.
B
Because the Internet lowers barriers to entry in most industries, it a. decreases the threat of new entrants b. increases the threat of new entrants c. makes it easier to build customer loyalty d. increases supplier power
B
Which of the following is NOT an assumption of the Industrial Organization, or I/O, model? a. Organizational decision makers are rational and committed to acting in the firm's best interests. b. Resources to implement strategies are not highly mobile across firms. c. The external environment is assumed to impose pressures and constraints that determine the strategies that result in superior performance. d. Firms in given industries, or given industry segments, are assumed to control similar strategically relevant resources.
B
Which is considered a force in the "Five Forces" model? a. Increased deregulation b. the threat of government intervention c. rivalry among competing firms d. recent technology innovation
C
Which of the following is NOT an entry barrier to an industry? a. expected competitor retaliation b. economies of scale c. customer product loyalty d. bargaining power of suppliers
D
Organizational goals and objectives should be vague in order to allow changes in strategy a. true b. false
False
There are three major types of generic strategies
There are three major types of generic strategies
Industries characterized by high economies of scale typically attract fewer new entrants. a. true b. false
True
d
When the costs of supplies increase in an industry, the low-cost leader a. may continue competing with rivals on the basis of product features. b. will lose customers as a result of price increases. c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins. d. may be the only firm able to pay the higher prices and continue to earn average or above- average returns.
A "cash cow," referred to in the Boston Consulting Group Portfolio management technique refers to a business that has a. low market growth and relatively high market share b. relatively low market share and low market growth c. relatively low market share and high market growth d. high market growth and relatively high market share.
a
A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statements is most likely to be true? a. The cost of the marble will be expensive because of the bargaining power of the supplier b. The cost of the marble will be moderate because of the bargaining power of the buyer c. The cost of the marble will be moderate because of the economies of scale d. The cost of the marble will be expensive because of the high strategic stakes involved.
a
A cost leadership strategy provides goods or services with features that are: a. acceptable to customers. b. unique to the customer. c. highly valued by the customer. d. able to meet unique needs of the customer
a
A cost leadership strategy targets the industry's ____ customers. a. most typical b. poorest c. least educated d. most frugal
a
A firm has achieved ____ when it successfully formulates and implements a value-creating strategy. a. strategic competitiveness b. a temporary competitive advantage c. substantial returns d. legal and ethical core values
a
A firm's mission a. is a statement of a firm's business in which it intends to compete and the customers which it intends to serve. b. is an internally-focused affirmation of the organization's financial, social, and ethical goals. c. is mainly intended to emotionally inspire employees and other stakeholders. d. is developed by a firm before the firm develops its vision.
a
A narrow market focus is to a differentiation-based strategy as a a. broadly-defined target market is to a cost leadership strategy b. growth market is to a differentiation-based strategy. c. growth market is to a cost-based strategy d. technological innovation is to a cost-based strategy
a
According to the five factors model, an attractive industry would have all of the following characteristics EXCEPT: a. low barriers to entry. b. suppliers with low bargaining power. c. a moderate degree of rivalry among competitors. d. few good product substitutes.
a
An anitakeover tactic in which existing shareholders have the options to buy additional shares of stock at a discount to the current market price is called ______ a. greenmail b. a poison pill c. a golden parachute d. scorched earth
a
An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage in a specific product market is a definition of: a. business strategy. b. core competencies. c. sustained competitive advantage. d. strategic mission.
a
Business-level strategies are concerned specifically with: a. creating differences between the firm's position and its rivals. b. selecting the industries in which the firm will compete. c. how functional areas will be organized within the firm. d. how a business with multiple physical locations will operate one of those locations.
a
Business-level strategies are concerned specifically with: a. creating differences between the firm's position and its rivals. b. the industries in which the firm will compete. c. how functional areas will be organized within the firm. d. how a business with multiple physical locations will operate one of those locations.
a
Capabilities that other firms cannot develop easily are classified as a. costly to imitate. b. rare. c. valuable. d. nonsubstitutable.
a
Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies. a. business-level b. corporate-level c. acquisition d. international
a
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? a. overall cost leadership b. Differentiation c. Differentiation focus d. Cost leadership focus
a
Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT a. lack of scientific transference. b. social complexity. c. unique historical conditions. d. causal ambiguity.
a
Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT: a. scientific transference. b. social complexity c. historical conditions d. causal ambiguity
a
Intangible assets include: a. the firm's reputation. b. a firm's borrowing capacity. c. depreciated capital assets. d. manufacturing facilities.
a
Internal analysis enables a firm to determine what the firm a. can do. b. should do. c. will do. d. might do.
a
Investors in a company judge the adequacy of the returns on their investment in relation to: a. the returns on other investments of similar risk.. b. the stock market's overall performance. c. the initial size of the investment. d. the prime interest rate.
a
It may be advantageous to vertically integrate when a. lower transaction costs and improved coordination are vital and achievable through vertical integration b. the minimum efficient scales of two corporations are different c. flexibility is reduced, providing a more stationary position in the competitive environment. d. various segregated specializations will be combined.
a
Strategic mission: a. is a statement of a firm's unique purpose and scope of operations. b. is an internally-focused affirmation of the organization's societal and ethical goals. c. does not limit the firm by specifying the industry in which the firm intends to compete. d. is developed by a firm before the firm develops its strategic intent.
a
Suppose that you are an analyst reviewing the Coors business in 1977. Which of the following would you identify as a bigger risk to Coors' performance? a. dependence on insufficient total production capacity by all players in the west region. b. lack of an international strategy c. too low advertising budget d. high costs of good sold e. none of these
a
The __________ environment is composed of elements in the broader society that can influence an industry and the firms within it. a. general b. competitor c. sociocultural d. industry
a
The chief disadvantage of being a first mover is the a. high degree of risk. b. high level of competition in the new marketplace. c. inability to earn above-average returns unless the production process is very efficient. d. difficulty of obtaining new customers.
a
The economic environment refers to: a. the nature and direction of the economy in which a firm competes or may compete. b. the economic outlook of the world provided by the World Bank. c. an analysis of how the environmental movement and world economy interact. d. an analysis of how new environmental regulations will affect our economy.
a
The goal of the organization's ____ is to capture the hearts and minds of employees, challenge them, and evoke their emotions and dreams. a. vision b. mission c. culture d. strategy
a
The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders because it cannot satisfy them all. The ________ is the most critical criterion in prioritizing stakeholders. a. power of each stakeholder b. urgency of satisfying each stakeholder c. importance of each stakeholder to the firm d. influence of each stakeholder
a
The most intense rivalry results from a. numerous equally balanced competitors, slow industry growth, high fixed or storage costs. b. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs. c. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers. d. a high level of differentiation.
a
The three dimensions of a firm's relationships with customers include all the following EXCEPT a. exclusiveness. b. affiliation. c. richness. d. reach.
a
To be a core competency, a capability must satisfy all of the following criteria EXCEPT: a. be technologically innovative. b. be hard for competing firms to duplicate. c. be without good substitutes. d. be valuable to customers.
a
Vertical integration is attractive when a. transaction costs are higher than internal administrative costs b. internal administrative costs are higher than transaction costs c. transaction costs and internal administrative costs are equal d. search costs are higher than monitoring costs.
a
When a product's unique attributes provide value to customers, the firm is implementing a. a differentiation strategy. b. a cost leadership strategy. c. an integrated cost leadership/differentiation strategy. d. a single-product strategy.
a
Which of the following is a true statement about capabilities? a. Capabilities emerge over time through complex interactions of tangible and intangible resources. b. Valuable capabilities are based almost entirely on tangible resources. c. Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated. d. The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources.
a
Which statement regarding competitive advantages is true? a. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer b. With an overall cost leadership strategy, firms need not be concerned with parity on differentiation. c. In the long run, a business with one or more competitive advantages is probably destined to earn normal profits d. Attaining multiple types of competitive advantage is a recipe for failure.
a
____ is/are the source of a firm's ____, which is/are the source of the firm's ____. a. Resources, capabilities, core competencies b. Capabilities, resources, core competencies c. Capabilities, resources, above average returns d. Core competencies, resources, competitive advantage
a
A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of: a. social complexity b. path dependency c. physical uniqueness d. casual ambiguity
b
A firm successfully implementing a differentiation strategy would expect: a. customers to be sensitive to price increases. b. to charge premium prices. c. customers to perceive the product as standard. d. to automatically have high levels of power over suppliers.
b
A manufacturing business pursuing cost leadership will likely a. focus on a narrow market segment b. rely on experience effects to raise efficiency c. use advertising to build brand image d. put heavy emphasis on product engineering
b
All competitive advantages do not accrue to large sized firms. A major advantage of smaller firms is that they a. are more likely to have organizational slack. b. can launch competitive actions more quickly. c. have more loyal and diverse workforces. d. can wait for larger firms to make mistakes in introducing innovative products.
b
All of the following are assumptions of the industrial organization (I/O) model EXCEPT a. Organizational decision makers are rational and committed to acting in the firm's best interests. b. Resources to implement strategies are firm-specific and attached to firms over the long-term. c. The external environment is assumed to impose pressures and constraints that determine the strategies that result in above-average returns. d. Firms in given industries, or given industry segments, are assumed to control similar strategically relevant resources.
b
All of the following are potential pitfalls of a focus strategy except a. erosion of cost advantages within the narrow segment b. all rivals share a common input or raw materials c. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation d. focusers can become too focused to satisfy buyer needs
b
All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy except: a. firms that fail to attain both strategies may end up with neither and become "stuck-in-the middle." b. targeting too large a market that causes unit costs to increase c. underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain d. miscalculating sources of revenue and profit pools in the firm's industry
b
Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in a. the selection of industries in which the firm will compete. b. specific product markets. c. primary value chain activities. d. particular geographic locations.
b
Buyers are powerful when: a. there is not a threat of backward integration. b. they are not a significant purchaser of the supplier's output. c. there are no switching costs. d. the buyers' industry is fragmented.
b
Coors' annual report for 1985 states that: "Rarely in Adolph Coors Company's 113-year history has there been a year with as many success stories as 1985." Which of the following facts would not support that statement? a. In a year when domestic beer consumption was flat, Coors' beer volume jumped by 13%. b. The price of the stock at the end of 1985 was $21.25. c. Volume in 1985 hit a record of 14.7 million barrels for Coors' beer. d. Revenues from core product sales topped 1 billion dollars.
b
Firm size and executive compensation are: a. negatively related b. positively related c. not related to each other d. not issues that affect the implementation of a firm's strategy
b
Firms that achieve competitive parity can expect to: a. earn below-average returns. b. earn average returns. c. earn above-average returns. d. initially earn above-average returns, declining to average returns.
b
Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot understand why ABC has a competitive advantage over it. The source of ABC's success is a. impregnable. b. causally ambiguous. c. rationally obscure. d. elusive.
b
High product differentiation is generally accompanied by: a. higher market share b. decreased emphasis on competition based on price c. higher profit margins and lower costs d. significant economies of scale
b
Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading. a. if the overall strategy of the firm is the same b. in periods of recession or economic boom c. if the firm shows constant growth d. if the firm's stock is publicly traded
b
In contrast to managers, shareholders may prefer that free cash flows be: a. invested in tax free municipal bonds b. returned to them corporate debt c. used to reduce corporate debt d. re-invested in additional corporate assets
b
On the whole there are more competitive responses to a. strategic actions than to tactical actions. b. tactical actions than to strategic actions. c. buyer pressures than to supplier pressures. d. the demands of the top management team than to industry structural pressures.
b
One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by a. hiring more experienced personnel b. repeating a process until a task becomes easier c. spreading out a given expense or investment over a greater volume d. competing in an industry a long time
b
Tangible resources include: a. assets that are people dependent such as know-how. b. assets that can be seen and quantified. c. organizational culture. d. a firm's reputation.
b
The effectiveness of any of the generic business-level strategies is contingent upon a. customer needs and competitors' strategies. b. the match between the opportunities and threats in its external market and the strengths and weaknesses of its internal environment. c. the trends in the general consumer base and the robustness of the global and industry economy. d. the firm's competitive scope and its competitive advantage.
b
The highest amount a firm can charge for its products is most directly affected by a. expected retaliation from competitors. b. the cost of substitute products. c. variable costs of production. d. customers' high switching costs
b
The risks of a cost leadership strategy include: a. becoming "stuck in the middle." b. production and distribution processes becoming obsolete c. the ability of competing firms to provide similar features in a product. d. customers deciding the product isn't worth what the firm must charge for it.
b
Upper limits on the prices a firm can charge are impacted by: a. expected retaliation from competitors b. the cost of substitute products c. variable costs of production d. customers' high switching costs
b
Which of the following describes the most typical order of entry into foreign markets? a. Franchising, licensing, exporting, joint venture, and wholly owned subsidiary b. Exporting, licensing, franchising, joint venture, and wholly owned subsidiary c. Licensing, exporting, franchising, joint venture, and wholly owned subsidiary d. Exporting, franchising, licensing, joint venture, and wholly owned subsidiary
b
Which of the following is NOT an assumption of the resource-based model? a. Each firm is a unique collection of resources and capabilities. b. All firms possess the same strategically relevant resources. c. Resources are not highly mobile across firms. d. Firms acquire different resources and capabilities over time.
b
Which of the following statements about strategic groups is false? a. two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same. b. strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups c. strategic groups help chart the future directions of firms' strategies. d. strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole
b
Which of the following would be most difficult to assess? a. the liquidity position of a firm b. the legitimacy and reputation of a firm c. market share growth d. the efficiency with which a firm utilizes its assets.
b
. Although firm infrastructure is often viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following except: a. negotiating and maintaining ongoing relations with regulatory bodies b. effective information systems contributing significantly to a firm's overall cost leadership strategy c. marketing expertise increasing a firm's revenues and enabling it to enter new markets. d. top management providing a key role in collaborating with important customers
c
A company pursuing a differentiation or focused differentiation strategy would a. have highly efficient systems linking suppliers' products with the firm's production processes. b. use economies of scale. c. have strong capabilities in basic research. d. make investments in easy-to-use manufacturing technologies.
c
A company using a narrow scope in its business strategy is: a. following a cost leadership business strategy. b. focusing on a broad array of geographic markets. c. limiting the group of product segments served. d. likely to earn only average returns.
c
A domestic corporation considering expanding into international markets for the first time will typically a. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to those at home b. consider licensing or franchising its operations c. consider implementing a low risk/low control strategy such as exporting d. form a joint venture with a reputable foreign producer.
c
A firm can achieve differentiation through all of the following means except a. improving brand image b. better customer service c. offering lower prices to frequent customers d. adding additional product features
c
A major department store chain has a strict policy of banning photographs of its sales floor or back room operations. It also does not allow academics to include it in research studies for publication in research journals. In fact, some of its own top managers refer to the store policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are: a. causally ambiguous. b. unobservable. c. imitable. d. valuable.
c
A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain a, no competitive advantage b. competitive parity c. a temporary competitive advantage d. a sustainable competitive advantage
c
A sustained or sustainable competitive advantage requires that: a. the value creating strategy be in a formulation stage. b. competitors be simultaneously implementing the strategy. c. other companies not be able to duplicate the strategy. d. average returns be earned by the company.
c
All of the following are assumptions of the resource-based model EXCEPT a. Each firm is a unique collection of resources and capabilities. b. The industry's structural characteristics have little impact on a firm's performance over time. c. Capabilities are highly mobile across firms. d. Differences in resources and capabilities are the basis of competitive advantage.
c
All of the following are forces that create high rivalry within an industry EXCEPT a. numerous or equally balanced competitors. b. high fixed costs. c. fast industry growth. d. high storage costs.
c
All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix except: a. every business cannot be accurately measured and compared on the two dimension b. it views each business as a stand-alone entity and ignores the potential for synergies across businesses. c. it takes a dynamic view of competition which can lead to overly complex analyses. d. while easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic prescriptions.
c
All of the following are resources of an organization EXCEPT a. an hourly production employee's ability to catch subtle quality defects in products. b. oil drilling rights in a promising region. c. weak competitors in the industry. d. a charity's endowment of $400 million.
c
An important implication of the "balanced scored" approach is that: a. managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss. b. the key emphasis on customer satisfaction and financial goals are only a means to that end. c. managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously. d. gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction
c
Buyers are powerful when: a. there is not a threat of backward integration. b. they are not a significant purchaser of the supplier's output. c. there are no switching costs. d. the buyers' industry is fragmented.
c
Compared to tangible resources, intangible resources are a. of less strategic value to the firm. b. not the focus of strategic analysis. c. a more potent source of competitive advantage. d. more likely to be reflected on the firm's balance sheet.
c
Compared to tangible resources, intangible resources are: a. of less strategic value to the firm. b. not the focus of strategic analysis. c. a more potent source of competitive advantage. d. more likely to be reflected on the firm's balance sheet.
c
Competitive dynamics refers to the a. circumstances where competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity. b. set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position. c. total set of actions and responses taken by all firms competing within a market. d. ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.
c
Does Coors expand more money on advertising per barrel sold than its competitors in 1977? a. No, it does not need to because everyone sees it as a superior product b. Yes, because it needs to keep competition outside of it's region. c. No, it does not need to because there is not enough offer in the region to cover demand at competitive price. d. Yes, as shown by it's reputation
c
Firms with few competitive resources are more likely a. to not respond to competitive actions. b. respond quickly to competitive actions. c. delay responding to competitive actions. d. respond to strategic actions, but not to tactical actions.
c
Firms would be most likely to face intense rivalry with competitors when they a. are in a high growth industry with low fixed costs b. are in a protected market c. have high fixed costs, in a slow growth industry with high exit barriers d. have low exit barriers for easy transition to another industry.
c
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? a. introduction b. growth c. maturity d. decline
c
Increasingly larger number of women entering the work force since the early 1970s is an example of a. demographic changes b. political and legal environmental changes c. sociocultural changes d. technological developments
c
New entrants to an industry are more likely when (i.e., entry barriers are low when...) a. it is difficult to gain access to distribution channels. b. economies of scale in the industry are high. c. product differentiation in the industry is low. d. capital requirements in the industry are high.
c
Product differentiation by incumbents act as an entry barrier because a. new entrants cannot differentiate their products b. incumbents will take legal action if new entrants do not differentiate their products c. new entrants will have to spend heavily to overcome existing customer loyalties d. it helps a firm to derive greater economies of scale
c
Product differentiation refers to the: a. ability of the buyers of a product to negotiate a lower price. b. response of incumbent firms to new entrants. c. belief by customers that a product is unique. d. fact that as more of a product is produced the cheaper it becomes per unit.
c
Suppliers are powerful when: a. satisfactory substitutes are available. b. they sell a commodity product. c. they offer a credible threat of forward integration. d. they are in a highly fragmented industry.
c
The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because: a. customers will seek out the lowest cost product. b. customers of non-differentiated products are sensitive to price increases. c. customers are loyal to brands that are differentiated in meaningful ways. d. the differentiation strategy benefits from rivalry.
c
The downsides or limitations of mergers and acquisitions include all of the following except: a. expensive premiums that are frequently paid to acquire a business b. difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations c. it is a slow means to enter new markets and acquire skills and competences. d. there can be many cultural issues that can doom an otherwise promising acquisition.
c
The environmental segments that comprise the general environment typically will NOT include a. demographic factors. b. sociocultural factors. c. substitute products or services. d. technological factors.
c
The environmental segments that comprise the general environment typically will NOT include: a. demographic factors. b. sociocultural factors. c. substitute products or services. d. technological factors.
c
The separation between a firm's owners and managers creates a(n) _____ relationship. a. governance b. control c. agency d. dominant
c
What is Coor's obvious focus during the period of the case? a. marketing b. sales c. manufacturing d. logistics
c
What is the job of a Chief Learning Officer? a. implementing employee training and development programs b. educating customers about the firm's products c. developing an environment in which knowledge is widespread among employees d. establishing programs to promote education in the community
c
Which of the following firms would likely pose the least competitive threat? a. A firm in the same industry and in the same strategic group b. A firm that produces substitute goods to your product c. A competitor to your product where a high switching cost exists d. A firm in the same industry and in the nearest strategic group looking to join your group
c
Which of the following is an opportunity for an entrepreneur who wishes to open a business doing therapeutic massage in his small community? a. the average age of the population in his community is high b. the level of unemployment in his community is high c. a chiropractor and two independent physical therapists located in his community d. the average income level of the population in his community is low
c
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? a. By increasing a firm's margins, it avoids the need for a low cost position b. It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives c. Supplier power is increased because suppliers will be able to charge higher prices for their inputs d. Firms will enjoy higher customer loyalty, thus experiencing less threat from substitutes than its competitors.
c
Which of the following is most often true of mature markets? a. some competitors enjoy a significant operating b. The market supports premium pricing, which attracts additional competitors c. Advantages that cannot be duplicated by other competitors are difficult to achieve. d. The magnitude of pricing differences and product differentiation is larger than in the growth stage.
c
Which of the following would be an example of a strategic action? a. a "two movies for the price of one" campaign by Blockbuster Video b. use of product coupons by a local grocer c. entry into the European market by Home Depot d. fare increases by Southwest Airlines
c
Which of these statements regarding the market life cycle is correct? a. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device b. Trends suggested by the market life cycle model are generally not reversible or repeatable. c. It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives d. It points out the need to maintain a differentiation advantage and low cost advantage simultaneously
c
Why did Coor's expand nationally? a. because successful beer firms are national competitors b. because it wanted to expand its market c. because it had to expand to keep it's inappropriately big plant operating at high cacpacity once there was additional offer from other competitors to cover previous excess demand in its core market. d. because it could learn from the preferences of customers in other
c
__________ innovations help incumbents in an industry earn higher margins by selling better products to their best customers. a. Disruptive innovations b. Tactical innovations c. sustaining innovations d. competitive innovations
c
A differentiation strategy can be effective in controlling the power of substitutes in an industry because a. customers have low switching costs. b. substitute products are lower quality. c. a differentiating firm can always lower prices. d. customers develop brand loyalty.
d
A differentiation strategy provides products that customers perceive as having: a. acceptable features. b. features of little value relative to the value provided by the low-cost leader's product. c. features for which the customer will pay a low price. d. features that are non-standardized for which they are willing to pay a premium.
d
Above-average returns are: a. higher profits than the firm earned last year. b. higher profits than the industry average over the last 10 years. c. profits in excess of what an investor expects to earn from a historical pattern of performance of the firm. d. profits in excess of what an investor expects to earn from other investments with a similar level of risk.
d
An analysis of the economic segment of the external environment would include all of the following EXCEPT a. interest rates. b. international trade. c. the strength of the U.S. dollar. d. the move toward a contingent workforce
d
An external analysis enables a firm to determine what the firm a. can do. b. should do. c. will do. d. might do.
d
An industry is defined as: a. A group of firms producing the same item b. firms producing items that sell through the same distribution channels c. firms that have the same seven digit standard industrial code d. a group of firms producing products that are close substitutes
d
An industry is defined as: a. a group of firms producing the same item. b. firms producing items that sell through the same distribution channels. c. firms that have the same seven digit standard industrial code. d. a group of firms producing products that are close substitutes.
d
As defined in the text, resources: a. are concrete sources of value. b. are easily identified. c. have two categories: generic and unique. d. are the source of the firm's capabilities.
d
Competitors are more likely to respond to competitive actions that are taken by a. differentiators. b. larger companies. c. first movers. d. market leaders.
d
Coors' position as the most profitable brewer (per barrel) in 1977, was based primarily on its differentiation and mystique. a. True. It was able to sell most of its capacity with far less advertising than the second best competitor (Anheuser-Busch) and its lower advertising expenditures accounted for most of its differential income. b. False. The second best player had much higher (3 times as high) SG&As that accounted for the difference c. True. It had only one product (a premium beer because it was fermentated) and therefore, it was able to charge more per barrel on average, which accounted for the difference in revenues. d. False. It really competed based on cost leadership; it charged lower prices but with much cheaper production costs e. True. Even people beyond the distribution area wanted to get Coors' beer at any price
d
Customer needs are related to the: a. characteristics that can be used to subdivide a large market into segments. b. set of values exhibited by a group of customers. c. use of core competencies to implement a strategy. d. benefits and features of a good or service that customers want to purchase.
d
Does Coors expend more money on advertising per barrel sold than its competitors in 1985? a. No, it does not need to because everyone continues to see it as a superior product b. Yes, because it needs to keep competitors outside of it's region. c. No, it does not need to because there is not enough offer in the region to cover demand at a competitive price d. Yes, because it needs to sell it's beer in new regions where it has very little volume and therefore it's advertising is more inefficient
d
Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT: a. bonuses b. long-term incentives such as stock options c. salary d. penalties for inadequate firm performance
d
Exit barriers arise from a. specialized assets with no alternative use b. governmental and social pressures c. strategic interrelations with other business units within the same company d. all of these.
d
Firms following a global strategy strive to offer ________products and services as well as locate manufacturing, R&D, and marketing activities in _________locations. a. a wide variety of; several b. a wide variety of, few c. standardized, several d. standardized; few
d
If you believed in a pure five forces model of above-average returns, which of the following things is LEAST important? a. industry analysis b. competitor analysis c. analysis of general environment d. analysis of resources, capabilities, and core competencies e. all are equally important.
d
In contrast to the industrial organization model, in a resource-based model, which of the following factors would be considered a key to organizational success? a. unique market niche. b. weak competition. c. economies of scale. d. loyal employees.
d
In evaluating its customers, which of the following is NOT a relevant question? a. How will core competencies meet the customer's needs? b. Who is the customer? c. What are the customers' needs? d. How will our top management team interact with the customer?
d
In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are a. rare. b. causally ambiguous. c. socially complex. d. valuable.
d
In the resource-based model, which of the following factors would be considered a key to organizational success? a. unique market niche b. weak competition c. economies of scale d. skilled employees
d
Multimarket competition occurs when firms a. sell different products to the same customer. b. have a high level of awareness of their competitors' strategic intent. c. simultaneously enter into an attack strategy. d. compete against each other in several geographic or product markets.
d
Ninety percent of Wm. Wrigley Company's total revenue comes from chewing gum. This is an example of a. market commonality. b. standard-cycle markets. c. economies of scale. d. market dependence.
d
Switching costs refer to the: a. cost to a producer to exchange equipment in a facility when new technologies emerge. b. cost of changing the firm's strategic group. c. one-time costs suppliers incur when selling to a different customer. d. one-time costs customers incur when buying from a different supplier
d
Switching costs refer to the: a. cost to a producer to exchange equipment in a facility when new technologies emerge. b. cost of changing the firm's strategic group. c. one-time costs suppliers incur when selling to a different customer. d. one-time costs customers incur when buying from a different supplier.
d
The bargaining power of suppliers is enhanced under the following market condition a. no threat of forward integration b. low differentiation of the suppliers' products c. greater availability of substitute products d. dominance by a few suppliers
d
The hierarchy of organization goals is in this order (least specific to most specific) a. vision statements, strategic objectives, mission statements b. mission statements, strategic objectives, vision statements c. vision statements, mission statements, strategic objectives d. mission statements, vision statements, strategic objectives
d
The most likely time to pursue a harvest strategy is in a situation of a. high growth b. strong competitive advantage c. mergers and acquisitions d. decline in the market life cycle
d
The resource-based model of the firm argues that a. all resources have the potential to be the basis of sustained competitive advantage. b. all capabilities can be a source of sustainable competitive advantage. c. the key to competitive success is the structure of the industry in which the firm competes. d. resources and capabilities that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
d
The resource-based model of the firm argues that: a. all resources have the potential to be the basis of sustained competitive advantage. b. resources are not a source of potential competitive advantage. c. the key to competitive success is the structure of the industry in which the firm competes. d. resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.
d
The strategic management process is a. a set of activities that will assure a temporary advantage and average returns for the firm. b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment. c. a process directed by top-management with input from other stakeholders that seeks to achieve above-average returns for investors through effective use of the organization's resources. d. the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.
d
The strategic management process is: a. a set of activities that is guaranteed to prevent organizational failure. b. a process concerned with a firm's resources, capabilities, and competencies, but not the conditions in its external environment. c. a set of activities that to date have not been used successfully in the not-for-profit sector. d. a dynamic process involving the full set of commitments, decisions, and actions related to the firm
d
The typical risks of a differentiation strategy do NOT include which of the following? a. Customers may find the price differential between the low-cost product and the differentiated product too large. b. Customers' experience with other products may narrow customers' perception of the value of a product's differentiated features. c. Counterfeit goods are widely available and acceptable to customers. d. Suppliers of raw materials erode the firm's profit margin with price increases.
d
Was Coors successful from 1977 to 1985? Why? a. Yes, it operated with more efficiency than most other firms in the industry. b. No, it did not have good penetration in some regions (i.e. New England and north central). c. Yes, in 1985, it hit record high sales for its whole history. d. No, its per barrel net income had deteriorated dramatically against that of other industry players. e. None of these.
d
When a resource or capability is valuable, rare, costly to imitate, and nonsubstitutable firms may obtain: a. a temporary competitive advantage. b. a complex competitive advantage. c. competitive parity. d. a sustainable competitive advantage.
d
When implementing a focus strategy, the firm seeks: a. to be the lowest cost producer in an industry. b. to offer products with unique features for which customers will pay a premium. c. to avoid being stuck in the middle. d. to serve the specialized needs of a market segment.
d
When the costs of supplies increase in an industry, the low-cost leader a. may continue competing with rivals on the basis of product features. b. will lose customers as a result of price increases. c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins. d. may be the only firm able to pay the higher prices and continue to earn average or above- average returns.
d
When the costs of supplies increase in an industry, the low-cost leader may: a. continue competing with rivals on the basis of product features. b. lose customers as a result of price increases. c. make it difficult for new entrants to the industry to achieve above-average returns. d. be the only firm able to pay the higher prices and continue to earn average or above- average returns.
d
Which of the following is NOT a disadvantage of licensing? a. little control over the marketing of the products b. licensees may develop a competitive product after the license expires c. decreased potential returns d. the high costs of establishing manufacturing facilities
d
Which of the following is NOT an entry barrier to an industry? a. expected competitor retaliation b. economies of scale c. customer product loyalty d. bargaining power of supplier
d
Which of the following is NOT an entry barrier to an industry? a. expected competitor retaliation b. economies of scale c. customer product loyalty d. bargaining power of suppliers
d
Which of the following is not an advantage of Just-In-Time inventory systems? a. reduced raw material storage costs b. minimized idle production facilities and workers c. reduced work-in-process inventories d. reduced dependence on suppliers
d
Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? a. Firms that compete in industries in which consumer preferences vary substantially in each country b. Firms in industries that are expanding very rapidly. c. Firms in industries that have value added by sales and marketing departments d. Firms in industries that have much value added in research and design or manufacturing.
d
A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate a. true b. false
false
A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle of the road product appealing to the largest number of consumers in every market. a. true b. false
false
A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence. a. True b. false
false
As a rule, shareholders prefer more diversification than do managers. a. True b. False
false
Executive compensation, ownership concentration, and the matrix organizational structure are all examples of governance mechanisms. Question 2 options: a. True b. False
false
Firms that are successful in creating competitive advantages that are sustainable for a period of time do not have to be concerned about profits being retained (or "appropriated') by employees or managers. a. True b. False
false
Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party. .a. true b. false
false
Portfolio management should be considered as the primary basis for formulating corporate-level strategies. a. True b. False
false
Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources. a. True b. False
false
Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy. a. True b. False
false
Some excellent examples of mission statements are: "to be the happiest place on earth" (Disney) and "restoring patients to full life" (Medtronic) a. True b. False
false
Strategy maps help employees to see how their jobs are related to the overall objectives of the organization, but they do not help in understanding how an organization can convert its assets into tangible outcomes. (page 104) a. True b. False
false
Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers. a. True b. False
false
T or F? Competitive dynamics indicates that firms and their strategic actions are independent
false
T or F? Extensive market commonality guarantees intense competition in an industry
false
T or F? First movers can gain a sustained competitive advantage when they reduce their costs through reverse engineering.
false
T or F? Wal-Mart has recently moved to Alsatia, Missouri. Several local small retailers have decided that choosing not to respond to Wal-Mart's competitive actions is a viable long-term option, because although the companies have high market commonality they have little resource similarity. These small retailers are correct in their decision
false
The decline stage of the industry life cycle stage is inevitably followed by death. a. true b. false
false
The finance and R&D functions are emphasized in the differentiation strategy's functional structure. a. True b. False
false
The functional structure is most appropriate for larger firms implementing a strategy that includes high levels of diversification. a. True b. False
false
The market life cycle should be used as a short-run forecasting device because it provides a conceptual framework for understanding what changes typically occur. a. True b. False
false
To generate above average returns, a firm following an overall cost leadership position should be concerned with attaining parity or proximity on the basis of differentiation relative to its peers. a. true b. false
false
Corporate governance involves oversight in areas where owners, managers, and members of boards of directors may have conflicts of interest. a. true b. false
true
Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy a. true b. false
true
Creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders. a. True b. False
true
Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value chain analysis? a. true b. false
true
Internal competition for corporate resources is effective for companies with an unrelated diversification strategy, but dysfunctional for companies with a related strategy a. True b. False
true
Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations. a. true b. false
true
Stock options attempt to align managers' and owners' interests by tying managerial pay and firm performance together a. True b. False
true
T or F? A competitive action is a strategic or tactical action taken by a firm to gain or defend a competitive advantage
true
T or F? A firm using a differentiation strategy can charge a premium price.
true
T or F? Firms operating in the same market, offering similar products and targeting similar customers are competitors.
true
T or F? Intensified rivalry within an industry results in decreased average profitability for the firms within it
true
T or F? Product quality is a universal theme and is a necessary, but not a sufficient, condition for competitive success.
true
T or F? The probability of a competitive response to a competitive action is based partly on the reputation of the competitor
true
T or F? Two firms that have similar resources, but do not share markets would not be direct and mutually acknowledged competitors.
true
The primary role of the board of directors is to monitor and control top-level executives to protect owners' interests. a. True b. false
true
The separation between owners and managers creates the potential for owners and managers to have conflicting interests. Question 3 options: a. True b. False
true
To properly execute strategic controls in firms using related diversification, the executives must have a deep understanding of each unit's business-level. a. True b. false
true