WPC 480 Quizzes

CH 12: Sirhan is president of a medium-sized bank. What can he do to lessen the chances of employees or board members taking part in insider trading? A. Create a strict code of ethics and explain that inside traders will be fired. B. Forbid board members from having access to private information. C. Work with analysts and customer-facing employees to root out information asymmetry. D. Forbid managers and executives from having access to private information.

A. Create a strict code of ethics and explain that inside traders will be fired. The risk of opportunism on behalf of agents is worsened by information asymmetry: The agents are generally better informed than the principals. Managers, executives, and board members tend to have access to private information concerning important company developments that outsiders, especially investors, are not privy to. Often this informational advantage is based on timing—insiders are the first to learn about important developments before the information is released to the public. Although possessing insider information is not illegal and indeed is part of an executive's job, what is illegal is acting upon it through trading stocks or passing on the information to others who might do so. Insider-trading cases, therefore, provide an example of egregious exploitation of information asymmetry.

Ch 1: Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario? A. Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little. B. Silver Screen Cinemas will charge a premium price for its customers, while Digi Now will implement everyday low pricing. C. Digi Now will keep its customer service at an acceptable level, while Silver Screen Cinemas will provide superior customer service. D. Silver Screen Cinemas and Digi Now will use a similar approach to create value for customers by attempting to offer everything to everybody.

A. Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little. Although these companies are in the same industry, their customer segments will most likely overlap very little, and they will not be direct competitors. That is because each firm has chosen a distinct but different strategic position; both can win if they have a distinct and well-executed competitive strategy.

Ch. 5: ________ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it. A. Economic value created B. Cost of capital C. Consumer surplus D. Break-even point

A. Economic value created Economic value created is the difference between a buyer's willingness to pay for a product or service and the firm's total cost to produce it.

Ch. 1: Which of the following statements should ideally reflect a firm's strategy for competitive advantage? A. Our aim is to create superior customer value while controlling costs. B. We will be number one in the industry. C. Our strategy is to win at any cost. D. We want to be the market leader by replicating our competitor's strategy.

A. Our aim is to create superior customer value while controlling costs. The statement that should ideally reflect a firm's strategy for competitive advantage is "Our aim is to create superior customer value while controlling costs." Strategy is about creating superior value, while containing the cost to create it. Grandiose statements are not strategy; they provide little managerial guidance and frequently fail to address the economic fundamentals.

CH. 6: Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position? A. Starfish's customers start to consider soda a commodity. B. Starfish introduces a new biodegradable bottle that raises cost and perceived value. C. Starfish improves the recipe for its most popular soda without increasing the price. D. Starfish's product has not established an acceptable standard of quality.

A. Starfish's customers start to consider soda a commodity. The viability of a differentiation strategy is severely undermined when the focus of competition shifts to price rather than value-creating features. This can happen when differentiated products become commoditized, and an acceptable standard of quality has emerged across rival firms.

Ch. 5: ________ is best described as a measure of how effectively capital is being used by a firm to generate revenue. A. Working capital turnover B. Revenue per employee C. Risk capital D. Return on revenue

A. Working capital turnover A component of return on invested capital is working capital turnover, which is a measure of how effectively capital is being used by a firm to generate revenue.

CH 12: The name for an agreed-upon code of conduct in business, based on societal norms, is A. business ethics. B. fiduciary responsibilities. C. poison pills. D. strategic business points.

A. business ethics. Business ethics are an agreed-upon code of conduct in business, based on societal norms.

Ch 1: A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n) A. competitive advantage. B. equity leverage. C. balanced scorecard. D. power position.

A. competitive advantage. A firm that achieves superior performance relative to other competitors in the same industry or the industry average has a competitive advantage.

CH 10: Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A. exporting B. greenfield operations C. brownfield operations D. crowdsourcing

A. exporting Exporting involves producing goods in one country to sell in another. It is one of the oldest forms of internationalization. It is often used to test whether a foreign market is ready for a firm's products.

CH. 6: Nendry is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Nendry has decided to pursue a differentiation strategy. In this case, she should A. focus on adding unique features to her product that customers will value. B. concentrate on improving process technologies to achieve economies of scale. C. enforce strict budget controls at all levels of the organization. D. devote all resources to reducing the value gap.

A. focus on adding unique features to her product that customers will value. The focus of competition in a differentiation strategy tends to be on unique product features, service, and new product launches, or on marketing and promotion rather than price. A differentiator would focus research and development on product features or packaging in order to add uniqueness.

CH. 4: Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will be successful today only if its A. internal strengths change with its external environment in a dynamic fashion. B. resource advantage is not causally ambiguous or socially complex. C. resource advantage is maintained for a short period of time. D. competitive advantage is derived from static resource or market advantages.

A. internal strengths change with its external environment in a dynamic fashion.

CH. 8: A new product often has a high price when it is launched because of a A. large investment in designing a product while producing small quantities. B. large investment in designing a product while producing large quantities. C. large investment in marketing a product while producing large quantities. D. large investment in marketing a product while producing small quantities.

A. large investment in designing a product while producing small quantities. A new product often has a high price when it is launched because of a large investment in designing a product while producing small quantities.

Ch 5: Serena paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario? A. $900 B. $200 C. $1,100 D. $550

B. $200 Consumer surplus is the difference between the value a consumer attaches to a good or service (V), and what he or she pays for it (P), or (V - P), that is, $1100 - $900 = $200.

CH 12: Sorenson LLC, a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company—including the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders, who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to Sorenson's board to achieve board independence? A. 3 B. 7 C. 1 D. 5

B. 7 The stakeholders should appoint at least seven outside directors for optimal functioning of the board. As mentioned in Strategy Highlight 12.1, to achieve board independence, experts in corporate governance recommend that two-thirds of its directors be outsiders.

CH. 8: Ira can be categorized under the late majority customer segment. Which of the following behaviors is he most likely to exhibit? A. He will be confident in her ability to master any new technology. B. He will prefer to buy from well-established brands rather than unknown new ventures. C. He will buy beta versions of new products and technology. D. He will not rely on endorsements by the early majority or early adopters.

B. He will prefer to buy from well-established brands rather than unknown new ventures. Ira is most likely to buy from well-established brands rather than unknown new ventures. The late majority prefers to buy from well-established firms with a strong brand image rather than from unknown new ventures.

CH 9: Which of the following is a disadvantage of a horizontal integration corporate strategy? A. It increases the costs associated with increasing value B. It increases the potential for legal repercussions. C. It increases the threat of new entrants in an industry. D. It increases competitive intensity within an industry.

B. It increases the potential for legal repercussions. Disadvantages of horizontal integration include reduced flexibility and increased potential for legal repercussions.

Ch. 1: Upper management at Softstep Inc., a manufacturer of insoles for shoes, wants to work on improving the product lines it already has without taking on other challenges at this time. Which of the following vision statements reflects that goal? A. Softstep Inc. wants to provide the best benefits for employees in the insole industry. B. Softstep Inc. wants to be the best manufacturer of insoles in the industry. C. Softstep Inc. wants to adapt their insoles to the changing demands of consumers. D. Softstep Inc. wants to always satisfy the consumers who purchase insoles.

B. Softstep Inc. wants to be the best manufacturer of insoles in the industry. Because it of its goals, Softstep would choose a product-oriented vision statement, which focuses employees on improving existing products and services without consideration of underlying customer or employee problems to be solved.

CH 2: What is the strategic management process? A. The CEO decides who the product managers will be for a company. B. Strategic leaders design a method to formulate and implement strategy. C. Strategic leaders focus on creating a vision that reflects the company's strategy. D. The CEO defines the main problems facing a company.

B. Strategic leaders design a method to formulate and implement strategy. The strategic management process is a method put in place by strategic leaders to formulate and implement a strategy.

CH 7: Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? A. New entrants are embedded in an innovation ecosystem, while incumbent firms are not. B. Unlike incumbent firms, new entrants do not have formal organizational structures and processes. C. Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. D. Incumbent firms do not have the advantages of network effects that new entrants have.

B. Unlike incumbent firms, new entrants do not have formal organizational structures and processes. New entrants do not have formal organizational structures and processes, giving them more freedom to launch an initial breakthrough.

CH. 8: The customers entering the market in the growth stage are primarily A. late majority. B. early adopters. C. technology enthusiasts. D. laggards.

B. early adopters. The customers entering the market in the growth stage are early adopters. They make up roughly 13.5 percent of the total market potential.

CH 7: Marble Inc. is a new firm that entered the smartwatch industry during the growth stage of the industry life cycle. It managed to become one of the top-three smartwatch manufacturers during the shakeout stage due to its low-cost structure. What features should Marble emphasize in its product marketing to ensure it successfully crosses the chasm into the maturity stage? A. the company's outsider status B. ease of use C. advanced capabilities D. sleek and trendy design

B. ease of use The customer segment associated with the maturity stage of the industry life cycle is known as the late majority. Although members of the early majority are confident in their ability to master the new technology, the late majority is not. They prefer to wait until standards have emerged and are firmly entrenched, so that uncertainty is much reduced. The late majority also prefers to buy from well-established firms with a strong brand image rather than from unknown new ventures. By emphasizing the ease of use associated with Marble smartwatches, the company may attract late majority customers who are uncertain of their ability to use the new technology.

CH. 8: To be successful and to survive the shakeout stage of the industry life cycle, a firm should A. focus on product innovation rather than process innovation. B. gain economies of scale. C. charge higher prices than its competitors. D. shift from price to non-price competition.

B. gain economies of scale. Key success factors during the shakeout stage are the manufacturing and process engineering capabilities that can be used to drive costs down. Generally, the larger firms enjoying economies of scale are the ones that survived the shakeout phase as the industry consolidated and most excess capacity was removed.

CH 9: Icarus Airway's decision to acquire Midas Fuels Inc. proved to be ill-fated because the Icarus managers overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airline industry. What does this scenario best illustrate? A. knowledge race B. managerial hubris C. competitive feasibility D. unfettered free market

B. managerial hubris The scenario best illustrates managerial hubris. Managers of the acquiring company convince themselves that they are able to manage the business of the target company more effectively and, therefore, create additional shareholder value. This justification is often used for an unrelated diversification strategy.

CH 10: Planet Resource Inc. is a global internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries it serves. Planet Resource is most likely doing this to A. reduce its geographical distance from the other countries. B. reduce its cultural distance from the other countries. C. increase its economic distance from the other countries. D. increase its administrative distance from the other countries.

B. reduce its cultural distance from the other countries. Planet Resource Inc. is most likely doing this to reduce its cultural distance from the other countries. Cultural differences find their expression in language, ethnicity, religion, and social norms.

CH 9: Medequip Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Medequip? A. serial mergers B. serial acquisitions C. acquisitions D. mergers

B. serial acquisitions Serial acquisitions would best serve Medequip. Large existing firms often engage in serial acquisitions to maintain a window on the latest technology developments.

CH 2: Strategic thinking is different from strategic planning in that A. strategic thinking is regimented and confining, whereas strategic planning is more flexible. B. strategic thinking includes all types of information sources while strategic planning does not. C. strategic thinking can create an illusion of control, whereas strategic planning avoids this. D. strategic thinking relies more on hard data than strategic planning.

B. strategic thinking includes all types of information sources while strategic planning does not. Critics of top-down and scenario planning argue that strategic planning is not the same as strategic thinking. According to them, in order to be successful, a strategy should be based on an inspiring vision and not on hard data alone. They advise that managers should focus on all types of information sources, including soft sources that can generate new insights, such as personal experience or the experience of front-line employees.

CH 12: In a public stock company, senior executives, such as the CEO, face agency problems when A. the firm designs work tasks, incentives, and employments that minimize opportunism. B. they delegate authority of strategic business units to general managers. C. they decide to get involved in the day-to-day operations of a company. D. the board of directors possesses more information about the company than they do.

B. they delegate authority of strategic business units to general managers. Senior executives, such as the CEO, face agency problems when they delegate authority of strategic business units to general managers. Employees who perform the actual operational labor are agents who work on behalf of the managers. Such front-line employees often enjoy an informational advantage over management.

CH. 3: Which of the following features about a buyer indicates that the buyer has high bargaining power? A. when the buyer cannot purchase specific products from other sellers B. when the buyer operates in an industry where products are undifferentiated C. when the buyer faces high switching costs D. when the buyer cannot credibly threaten to backwardly integrate into the industry

B. when the buyer operates in an industry where products are undifferentiated The power of buyers is high when the industry's products are standardized or undifferentiated commodities.

CH. 3: Which of the following statements is true about strategic groups? A. Companies within the same strategic group are complementors to each other. B. It is not possible to have two different strategic groups within the same industry. C. Profitability varies between different strategic groups. D. Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups.

C. Profitability varies between different strategic groups. Some strategic groups tend to be more profitable than others. This difference implies that firm performance is determined not only by the industry to which the firm belongs, but also by its strategic group membership.

CH 7: Which of the following scenarios would be characteristic of an entrepreneur? A. Mary imitated a new, more efficient method of producing pottery. B. Ursula used a proven marketing method to advertise her pottery. C. Rachel implemented a new and more efficient way to produce pottery. D. Alissa scaled back the production of pottery because it wasn't cost effective.

C. Rachel implemented a new and more efficient way to produce pottery. Entrepreneurs are the agents that introduce change into the competitive system. They do this not only by figuring out how to use inventions but also by introducing new products or services, new production processes, and new forms of organization. Entrepreneurs innovate by commercializing ideas and inventions. By implementing a new and more efficient way to produce pottery, Rachel is introducing a new production process and is therefore practicing entrepreneurship.

CH 9: Which of the following statements is true of joint ventures? A. They reduce the possibilities of trust and commitment. B. They cannot entail long negotiations. C. They enable the exchange of both tacit and explicit knowledge. D. They are characterized by single reporting lines.

C. They enable the exchange of both tacit and explicit knowledge. Joint ventures involve the creation of new entities by two or more parent firms. They allow for the exchange of both tacit and explicit knowledge.

CH. 6 When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be A. learning-curve effects. B. economies of scale. C. availability of complements. D. experience-curve effects.

C. availability of complements. Complements add value to a product or service when they are consumed in tandem. Finding complements, therefore, is an important task for managers in their quest to enhance the value of their offerings.

CH 2: In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the A. general manager. B. external stakeholders. C. chief executive officer. D. functional managers.

C. chief executive officer. Top-down strategic planning is a rational, top-down process through which executives attempt to program future success. In this approach, all strategic intelligence and decision-making responsibilities are concentrated in the office of the CEO.

CH. 4: In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness? A. increased competition in the industry where the firm operates B. irregularity in the raw materials supply throughout the industry C. decline in the firm's market share D. fall in the purchasing power of the firm's customers

C. decline in the firm's market share In the context of SWOT analysis, decline in a firm's market share best exemplifies a firm's internal weakness. Strengths and weaknesses are internal to an organization, whereas opportunities and threats are external to the organization.

CH 7: 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 A. have the highest purchasing power when compared to the other customer segments B. influence the purchase decisions of early adopters. C. enter into the market in large numbers, creating a herding effect. D. are driven by technology concerns rather than the practicality of a new product.

C. enter into the market in large numbers, creating a herding effect. As the early majority section of the market makes up almost one third of the entire market potential, winning them over is critical to the commercial success of the innovation. They are on the cusp of the mass market. Bringing the early majority on board is the key to catching the growth wave of the industry life cycle.

CH 10: Which of the following modes of entering a foreign market allows for the lowest level of control? A. joint ventures B. greenfield ventures C. exporting D. acquisitions

C. exporting Exporting, licensing, and franchising are vehicles of foreign expansion that require low investments but also allow for a low level of control.

CH 2: The distribution department at Golden Grains Wheat Company has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its bags of wheat. Which of the following strategies does this scenario best illustrate? A. master strategy B. business strategy C. functional strategy D. corporate strategy

C. functional strategy The distribution department of Golden Grains has decided to implement a functional strategy. Within each strategic business unit are various business functions: accounting, finance, human resources, product development, operations, manufacturing, marketing, and customer service. Each functional manager is responsible for decisions and actions within a single functional area.

CH 10: Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of A. economies of scope. B. network effects. C. location economies. D. learning races.

C. location economies. In this example, Unilever is trying to reap the benefits of location economies, which are benefits from locating value chain activities in the world's optimal geographies for a specific activity, wherever that may be.

CH. 8: The key objective for firms during the growth phase is to A. pursue a harvest strategy. B. reduce their network effects. C. stake out a strong strategic position not easily imitated by rivals. D. invest as many resources as possible in product innovations.

C. stake out a strong strategic position not easily imitated by rivals. The key objective for firms during the growth phase is to stake out a strong strategic position not easily imitated by rivals.

CH. 4: Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's A. capabilities. B. intangible resources. C. tangible resources. D. core competency.

C. tangible resources.

CH. 3: The primary objective of Porter's five forces model is to A. reduce the gap between the value of a firm's product and its cost of production. B. understand valuable, rare, and hard-to-imitate resources. C. understand the profit potential of industries. D. break down a firm's value chain activities into primary and support.

C. understand the profit potential of industries. Michael Porter developed the highly influential five forces model to help managers understand the profit potential of different industries and how they can position their respective firms to gain and sustain competitive advantage.

CH. 3: Which of the following statements with regard to industry structures is true? A. Having a large number of competitors generally equates to higher industry profitability. B. Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power. C. They are stable over time, not dynamic. D. A consolidated industry tends to be more profitable than a fragmented one.

D. A consolidated industry tends to be more profitable than a fragmented one. Since a consolidated industry tends to be more profitable than a fragmented one, firms have a tendency to change the industry structure in their favor, making it more consolidated through (horizontal) mergers and acquisitions.

It is April 2018 and Mark is a novice investor who wants to decide between purchasing shares in EagleCorp or Myna Bird Inc. In fiscal year 2017, EagleCorp's return on invested capital (ROIC) was 15 percent, and its cost of capital was 12 percent. During the same period, Myna Bird Inc.'s ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell Mark? A. Both Myna Bird Inc. and EagleCorp are likely to create value. B. Neither Myna Bird Inc. nor EagleCorp are likely to create value. C. Myna Bird Inc. is more likely to create value while EagleCorp is more likely to destroy value. D. EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value.

D. EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value. As a rule of thumb, if a firm's ROIC is greater than its cost of capital, it generates value; if it is less than the cost of capital, the firm destroys value. Since EagleCorp's ROIC was greater than its cost of capital, the company is more likely to create value. Myna Bird Inc., on the other hand, had a cost of capital that exceeded its ROIC, and was thus more likely to destroy value. Mark would be wise to invest his money in EagleCorp.

CH 2: Understanding the Resource Allocation Process (RAP) will have large effects on shaping a firm's realized strategy. Which of the following is an example of such an allocation of resources? A. Merck's voluntary withdrawal of Vioxx from the market B. Teach For America's mission statement C. Starbucks' launch of iced drinks D. Intel's rule to "maximize margin-per-wafer-start"

D. Intel's rule to "maximize margin-per-wafer-start" By changing the tasks the resources in the firm were working on at the middle and lower levels, Intel's decision to set up guidelines for production priorities yielded an emergent strategic shift into microprocessors and out of DRAM (dynamic random-access memory) chips. Intel was able to pursue a strategic transformation due to the way it set up its resource allocation process. In a sense, Intel was using functional-level managers to drive business and corporate strategies in a bottom-up fashion.

CH. 6: What must a cost-leadership strategy accomplish to be successful? A. It must increase the firm's cost above that of its competitors while offering adequate value. B. It must reduce the firm's cost below that of its competitors while offering superior value. C. It must increase the firm's cost above that of its competitors while offering superior value. D. It must reduce the firm's cost below that of its competitors while offering adequate value.

D. It must reduce the firm's cost below that of its competitors while offering adequate value. The goal of a cost-leadership strategy is to reduce the firm's cost below that of its competitors while offering adequate value. The cost leader, as the name implies, focuses its attention and resources on reducing the cost to manufacture a product or deliver service in order to offer lower prices to its customers.

CH 12: Sanjaya was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically? A. Ignore the alleged ethics violations because there is no one standard of ethical behavior. B. Research the results of the ethics violations. If the perpetrators were fired or jailed, then the rest of the company is sound. C. Check the company's mission statement to make sure that it guarantees respect and integrity. D. Observe executives at the company, and see whether they model ethical behavior and demand it of others.

D. Observe executives at the company, and see whether they model ethical behavior and demand it of others. Some people believe that unethical behavior is limited to a few "bad apples" in organizations. However, research indicates that it is not just the few "bad apples" but entire organizations that can create a climate in which unethical, even illegal behavior is tolerated. While there clearly are some people with unethical or even criminal inclinations, in general one's ethical decision-making capacity depends very much on the organizational context. Research shows that if people work in organizations that expect and value ethical behavior, they are more likely to act ethically. The opposite is also true. Enron's stated key values included respect and integrity, and its mission statement proclaimed that all business dealings should be open and fair. Yet, the ethos at Enron was all about creating an inflated share price at any cost, and its employees observed and followed the behavior set by their leaders.

CH 9: A software firm is interested in acquiring an app development company that is small but highly profitable. The app developer also has a widely admired management structure and much lower attrition rates than are common in the industry. Which of these problems should the software firm anticipate? A. Because most acquisitions are profitable, there is little to worry about in this scenario. B. The software firm may underpay for the app developer, cheating the app developer's shareholders of profit. C. A rival software firm may imitate this approach by acquiring a similar app developer. D. The software firm may overpay for the app developer, poorly serving the software firm's shareholders.

D. The software firm may overpay for the app developer, poorly serving the software firm's shareholders. The M&A performance track record is rather mixed. Many mergers destroy shareholder value because the anticipated synergies never materialize. If value is created, it generally accrues to the shareholders of the firm that was taken over (the acquiree), because acquirers often pay a premium when buying the target company. Indeed, sometimes companies get involved in a bidding war for an acquisition; the winner may end up with the prize but may have overpaid for the acquisition—thus falling victim to the "winner's curse."

CH 10: Blush Bashful Cosmetics Inc. operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Blush Bashful most likely implement? A. a sole provider strategy B. a local-as-global strategy C. a transnational strategy D. a multidomestic strategy

D. a multidomestic strategy In this scenario, Blush Bashful Cosmetics Inc. most likely implements a multidomestic strategy. Firms pursuing a multidomestic strategy attempt to maximize local responsiveness, hoping that local consumers will perceive them to be domestic companies.

Ch. 1: Which of the following is an element of good strategy? A. an approach that underestimates the competition B. a guiding policy to address employee satisfaction C. a summary of the firm's history within its industry D. a set of coherent actions to implement the firm's guiding policy

D. a set of coherent actions to implement the firm's guiding policy A good strategy consists of a diagnosis of the competitive challenge, a guiding policy to address the competitive challenge, and a set of coherent actions to implement the firm's guiding policy.

CH 7: GoodGear is a mobile platform that matches independent fashion designers with consumers who want a personalized wardrobe. Which of the following initiatives would best allow GoodGear to fine-tune its offerings to better meet the needs of its consumers? A. studying the financial records of various fashion design companies to determine trends B. hiring an outside consultant to evaluate the offerings of GoodGear's producers C. conducting anonymous phone surveys about consumers' fashion preferences D. allowing users to provide feedback to producers on the style and fit of clothing

D. allowing users to provide feedback to producers on the style and fit of clothing Platforms benefit from community feedback. Feedback loops from consumers back to the producers allow platforms to fine-tune their offerings and to benefit from big data analytics.

CH. 4: Superlative Productions spent 10 million dollars to buy the rights to a best-selling novel. The company then prepared for production by hiring a screenwriter to adapt the novel, casting the main roles, renting cameras and other equipment, and scouting locations in southern Arizona. Which of the following pairs of resources are both intangible? A. money spent to buy rights to the novel; screenwriter's experience adapting novels B. best-selling novel; locations in southern Arizona C. money spent to buy rights to the novel; locations in southern Arizona D. best-selling novel; screenwriter's experience adapting novels

D. best-selling novel; screenwriter's experience adapting novels

CH. 3: In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because A. there is no credible threat of retaliation from the incumbents. B. entering the aircraft manufacturing industry means violating government policies. C. there is expected to be a huge return on investment within this industry. D. entering the aircraft manufacturing industry requires huge capital investments.

D. entering the aircraft manufacturing industry requires huge capital investments. There is not a significant threat of entry because entering the aircraft manufacturing industry requires huge capital investments.

CH. 4: Iceberg Storage, a leading hard drive manufacturer, recently filed for bankruptcy. While most of Iceberg's competitors were shifting away from physical data storage devices toward online cloud storage services, Iceberg invested most of its retained earnings in the effort to improve its hard drives. Once the hard-drive market drastically declined, Iceberg Storage was unable to capitalize on the new technology. Which of the following does this scenario best illustrate? A. social complexity B. causal ambiguity C. knowledge diffusion D. path dependence

D. path dependence

Ch. 5: From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the A. economic value created. B. consumer surplus. C. inventory turnover. D. return on risk capital.

D. return on risk capital. From the shareholders' perspective, the measure of competitive advantage that matters most is the return on their risk capital, which is the money they provide in return for an equity share, money that they cannot recover if the firm goes bankrupt.

CH. 6: Product features, customer service, and complements are all examples of important A. cost drivers. B. cost curves. C. value curves. D. value drivers. Product features, customer service, and complements are all examples of important value drivers.

D. value drivers. Product features, customer service, and complements are all examples of important value drivers.