Strategic Management Exam #2

Which of the following best illustrates forward vertical integration?

A firm that manufactures and sells car engines to major automobile companies launches its own line of cars.

Which of the following is NOT a risk (or potential pitfall) of cost leadership?

Cost leadership is difficult to imitate

Which of the following is most often true of mature markets?

Few or no competitors enjoy a significant operating advantage due to experience effects.

________ is best described as a situation in which one party possesses private information and is therefore better informed than another party.

Information asymmetry

Which of these statements regarding the industry life cycle is true?

It is important for company generic strategies, functional areas, value-creating activities, and overall objectives.

Which of the following statements about the introduction stage of the market life cycle is true?

Products offered by pioneers may be perceived as differentiated because they are new.

Which statement regarding competitive advantages is true?

With an overall cost leadership strategy, firms need to be concerned with competitive parity.

The primary aim of strategic management at the business level is

achieving and sustaining competitive advantage.

Billy is the founder and CEO of Billy's Kicks, a soccer ball retailer. He decides to purchase a synthetic rubber manufacturing firm so he can create his own soccer balls and sell them nationally in his retail stores. Billy will engage in

backward vertical integration

Which of the following most exemplifies a way in which a firm can achieve differentiation?

better customer service.

Amerie is the strategic business unit (SBU) leader in charge of manufacturing men's bow ties. While the market Amerie's firm competes in is low growth, its SBU's earnings and cash flow are both ranked high and stable. When examining Amerie's SBU through the Boston Consulting Group (BCG) growth-share matrix lens, we can conclude that her SBU would be classified as a

cash cow.

Which of the following is a reason for the possible erosion of company competitive advantage?

globalization

One aspect of using a cost leadership strategy is that the experience curve may lead to lower costs. The experience curve lowers costs by

increasing speed and decreasing mistakes as tasks become easier through repetition.

Initech developed a superior touch screen technology for tablet computers that enabled multiple users to operate the screen at the same time. The technology was leased to Accent Technologies, a consumer electronics company, for five years. Which of the following alternatives to integration does this best illustrate?

licensing

Many financial service firms, IT firms, and health-care companies are among the most active when it comes to________, which occurs when value chain activities are taken care of outside the home country of the firm.

offshore outsourcing

What is the name of the situation that can arise when strategic leaders pursue their own interests in conflict with the firm's goals?

principal-agent problem

A differentiation strategy enables a business to address the five competitive forces by

providing protection against rivalry

Since Coca-Cola focuses on selling only non-alcoholic beverages, a low degree of product diversification, we would conclude that it competes in a(n)________ market versus its main competitor PepsiCo, which sells a wide variety of products.

single product

Which of the following is an example of an internal transaction cost?

the cost of maintaining a production unit

A company that engages in strategic outsourcing reduces its level of

vertical integration.