BA 405 Exam #2

Response time as it relates to improving customer responsiveness is: a. the speed at which a company responds to customers' needs and demands. b. how quickly messages are relayed throughout different functional roles in the company. c. the speed of production and how quickly the company can manufacture a product. d. the amount of time it takes to bring a new product to market.

a. the speed at which a company responds to customers' needs and demands. Response time can be expressed as delivery of a product or the speed at which a service is provided.

A property management group is interested in diversifying its company to operate properties for low-income housing, but they are nervous about the impact on the brand of high-end apartment developments where they have been operating. What strategy should the property management group use to diversify but keep control of both divisions? a. Unrelated diversification b. Related diversification c. Internal new venture d. Joint venture

b. Related diversification

A non-profit relief organization decides to take lessons from the world of business to improve its delivery of emergency supplies to those in need. What strategy could it use as a value innovation that makes it possible to deliver greater value to the communities it serves? a. The relief group could employ a marketing campaign to increase disaster preparedness and awareness. b. The relief group could utilize information systems to track and manage relief supply inventories and strategically locate them closest to the areas most likely to be hit by a natural disaster. c. The relief group could utilize its donated relief supplies to provide support for only the homeless in its communities. d. The relief group could specialize in delivering relief supplies only for storm victims, those affected by floods, tornados and hurricanes.

b. The relief group could utilize information systems to track and manage relief supply inventories and strategically locate them closest to the areas most likely to be hit by a natural disaster.

Companies provide customers with new products that are connected or related to their existing products to satisfy customers' needs for a complete package of related products. This is called product bundling. What is the goal of product bundling? a. To charge customers premium prices for a premium set of products or services b. To offer customers lower prices for a premium set of products or services. c. To charge customers premium prices for a set of products or services that minimally satisfies their needs. d. To increase profitability by offering a wider set of products without a specialized focus.

b. To offer customers lower prices for a premium set of products or services.

Which of these companies developed a business concept that included value innovation allowing it to compete in a blue ocean: a. Target evolves into the Expect More. Pay Less. brand promise in 1994 with the goal of making designer goods more affordable. b. Uber, founded in 2009, introduced peer-to-peer ride sharing for the first time, redefining the taxi and limousine service industry. c. Shell announces plans to expand its capabilities in natural gas drilling by unlocking shale gas in Pennsylvania in 2014. d. In 2010, Reebok introduces Zig footwear technology, an innovation to the soles of athletic shoes to make them more flexible and lightweight.

b. Uber, founded in 2009, introduced peer-to-peer ride sharing for the first time, redefining the taxi and limousine service industry.

A company can lower costs through functional-level strategy and organization by: a. customizing the product offering to market to different market segments. b. achieving economies of scale, using information systems to automate business processes and adopting lean production technologies. c. concentrating on designing products that have more functions and features and higher performance. d. maintaining existing processes and structures.

b. achieving economies of scale, using information systems to automate business processes and adopting lean production technologies.

In related diversification, managers seek to establish a business unit in a(n) ____ industry that is related to a company's _____ business units by some form of commonality between their value chain functions. a. existing; new b. new; existing c. declining; embryonic d. mature; declining

b. new; existing

A blue ocean strategy is when a company: a. pursues a globalization strategy by opening new facilities and sales offices abroad. b. outperforms rivals through higher sales volume, either through a low cost or a differentiation strategy. c. redefines the product offering through value innovation to create a new market space. d. chooses both a differentiation and a low-cost strategy for its business-level strategy.

c. redefines the product offering through value innovation to create a new market space. These companies can achieve a sustained competitive advantage because rivals have difficulty responding in a timely manner.

By transferring distinctive competencies from one business unit to another, a company is more likely to have commonalities that lead to: a. unrelated diversification. b. single-unit diversification. c. related diversification. d. multi-business diversification.

c. related diversification.

The process of reorganizing and divesting business units and exiting industries to refocus upon a company's core business and rebuild its distinctive competencies is called: a. bidding strategy. b. acquisition. c. restructuring. d. joint venture.

c. restructuring.

Economies of scale provide unit cost reductions, improving efficiency, and can come from multiple sources, including: a. learning effects gained over time. b. customer defection rates. c. spreading fixed costs over large production volume. d. supply chain management and streamlining.

c. spreading fixed costs over large production volume.

The president of a software firm has chosen to implement a differentiation strategy, offering his product in a Software as a Service (SaaS) platform with a monthly subscription in the cloud. Most of his competitors are selling their products as a one-time purchase on a disc in a retail store. Which of these functional-level strategies will be critical to his plan? a. Discounting the product to gain large volumes quickly to achieve economies of scale. b. Implement supply chain coordination for IT infrastructure components for the company's data warehouse. c. Collaborate with a distribution network of retail stores to ensure just-in-time inventory management of the product. d. A 24/7 technical support hotline with a team that is knowledgeable about the product and business goals of the company's customers.

d. A 24/7 technical support hotline with a team that is knowledgeable about the product and business goals of the company's customers.

A restaurant company has conducted an internal review of its resources and distinctive competencies. It concluded that customers perceive the company's dessert menu to be more delicious and of greater value than that of the competitors. The company should consider which business-level strategy? a. Positioning strategy b. Low cost strategy c. Production strategy d. Differentiation strategy

d. Differentiation strategy

A computer retailer recently established a new computer repair shop separate from its retail stores after recognizing that it had hired many team members capable of diagnosing and repairing computer and IT problems. The computer retailer and its managers have developed this new business through: a. economies of scope. b. commonalities. c. leveraging its competencies. d. transferring its competencies.

d. transferring its competencies.

Which of the following can be considered a strategy for increasing efficiency? a. Self-managing teams b. Reducing new product launch failures c. Researching customer needs d. Using information systems to monitor defect rates

Self-managing teams This is a functional-level strategy performed by the Human Resource team.

To pursue a diversification strategy, managers must have the ability to: a. introduce innovative and disruptive products to the market. b. outsell all of its competition. c. recognize profitable opportunities to enter new industries. d. discover technological advancements to create new products

c. recognize profitable opportunities to enter new industries.

Which is of these is one of the four steps in evaluating a potential acquisition? a. Bidding strategy b. Corporate culture c. Financial position d. Management capabilities

a. Bidding strategy

A small HR consulting business is looking to grow. The leadership team made up of people with training and more than 20 years of experience each in organizational development and training is deciding if it will pursue a low cost strategy or a differentiation strategy. The team feels that they bring together a unique group of experts to deliver solutions to a mid-sized companies. Which strategy do you recommend the consulting company pursue to market their services? a. Focused differentiation strategy b. Low cost strategy c. Blue Ocean strategy d. Focused low cost strategy

a. Focused differentiation strategy

A chemical company that produces fertilizer for farms is partnering with an eco-friendly products group to brand an animal-friendly line of fertilizer that doesn't harm livestock, wild animals or pets if they ingest it by accident. Both companies will share the costs and risks associated with creating the business. What method are they using to enter the new industry? a. Joint venture b. Acquisition c. Internal new venture d. External new venture

a. Joint venture

Companies utilizing a focused differentiation strategy: a. can sell at higher volumes and greater profitability than companies that appeal to a broader market. b. may need to increase its product offering to achieve a competitive advantage. c. have achieved a low cost position that can make profit at lower price points. d. are able to absorb cost increases from their suppliers without passing those costs along to their customers in terms or higher prices.

a. can sell at higher volumes and greater profitability than companies that appeal to a broader market

A functional-level strategy is designed to: a. define a company's overall competitive theme and the way it positions itself to the marketplace to gain a competitive advantage. b. improve the efficiency and effectiveness of one or more value creation activities of the company. c. serve many market segments with different strategies for different groups of customers. d. create products based on four main dimensions - price, distribution, promotion and advertising, and product features.

b. improve the efficiency and effectiveness of one or more value creation activities of the company. These strategies help companies build valuable resources to attain superior efficiency, quality innovation and customer responsiveness.

What is the main reason a company may choose to pursue a related diversification strategy instead of an unrelated diversification strategy? a. The company's competencies are applied across fewer industries. b. The company's top managers are skilled at raising the profitability of poorly run businesses. c. The company's competencies can be applied across a greater number of industries. d. The company's managers use their superior management competencies to improve the competitive advantage and keep bureaucratic costs under control.

c. The company's competencies can be applied across a greater number of industries.

A diversification strategy should enable a company or its individual business units to create value in the value chain to: a. increase cost. b. manage industry partnerships. c. establish differentiation and increase pricing options. d. maintain cost.

c. establish differentiation and increase pricing options.

The multi-business model of related diversification takes advantage of all of these commonalities, except: a. manufacturing commonalities. b. marketing commonalities. c. technological commonalities. d. customer base commonalities.

d. customer base commonalities.

A company that manufactures brakes for cars has just released a line of all-terrain vehicles. Using the same research and findings from the development of the ATV brakes, the manufacturer is redesigning its car brakes. By sharing the research across the business units for both vehicles, the company is increasing company profitability through: a. restructuring. b. product bundling. c. commonalities. d. economies of scope.

d. economies of scope.

Superior quality is an important functional-level strategy for both low cost and differentiation strategies. Strategic managers for a company pursuing a low cost strategy should focus on: a. increasing quality as excellence to add perceived value by the customer. b. research and development to launch innovative products and open new markets. c. enhancing its global presence by opening manufacturing plants in regions with the largest numbers of customers. d. improving the ability to manufacture products by reducing production inputs to lower cost.

d. improving the ability to manufacture products by reducing production inputs to lower cost.

Value innovation is when a company: a. creates a new market space with an entirely new kind of product offering. b. utilizes a superior R&D department to enhance its product reliability in form, function, style, durability, and performance. c. decides what group of customers it will pursue in its business-level strategy, detailing a segmentation strategy. d. offers an innovation that allows for greater value to be offered through superior differentiation at a lower cost than was previously thought possible.

d. offers an innovation that allows for greater value to be offered through superior differentiation at a lower cost than was previously thought possible.

Quality can be thought of in two dimensions: a. low cost structure and high performance. b. efficiency and innovation. c. defect rates and warranty returns. d. reliability and excellence

d. reliability and excellence.

Which of these strategies represents a company that has selected a differentiation strategy? a. A grocery store chain that is converting their local neighborhood stores to warehouses and having customers select items online or through an app and pick them up in a drive through without having to leave their vehicle. b. A company that is selling low-cost tablets and removing many of the expensive features of the tablet to provide access to customers who previously couldn't afford a tablet. c. A tool manufacturer that currently offers the lowest price among its competitors is seeking to increase its profit margin by creating internal efficiencies that will drive its internal cost structure down farther. d. A restaurant entrepreneur that announces a new fast-food chain where every item on the menu is just $1.

a. A grocery store chain that is converting their local neighborhood stores to warehouses and having customers select items online or through an app and pick them up in a drive through without having to leave their vehicle.

Customer responsiveness can be an important factor for non-profit organizations. How might a food pantry improve its customer responsiveness? a. Shift the hours it is open to later in the evening to accommodate people who work during the day but still require assistance. b. Collaborate with a local grocery store to accept non-perishable food that is technically past its expiration date but that is still able to be consumed. c. Organize its volunteers to work in shifts in an assembly-line style operation to sort and stock food. d. Create an easy online donation system for the general public to financially support the organization quickly and easily.

a. Shift the hours it is open to later in the evening to accommodate people who work during the day but still require assistance.

The IT team at a bank has a role to play in efficiency. As a service provider, the company must learn and develop more efficient ways to process customer requests and meet customer needs. Which of these is an example of the IT team contributing to increases in efficiency? a. The team builds a network that connects all of the branches to each other virtually so that transactions that occur in one branch of the bank are visible throughout the company in real-time. b. The team has a system that tracks IT support tickets - requests for support from the IT help desk. The metrics collected by the system report that it takes 7% longer to get an answer from IT this year than it did last year. c. The team implements a new system for entering new customer data that adds more than 50 additional fields to be collected at the time of sign up. d. The team evaluates the current software platform and a potential new software platform and determines the cost of the upgrade investment is too great to justify installing the new software.

a. The team builds a network that connects all of the branches to each other virtually so that transactions that occur in one branch of the bank are visible throughout the company in real-time.

The efficiency frontier represents: a. a position where companies have found the right balance between differentiation and low cost strategies. b. the point in which a company adopting a low cost strategy can be profitable. c. a company strategy to push the limits of innovation to achieve a superior differentiation. d. a firm that redefines their product offering through value innovation to create a new market space.

a. a position where companies have found the right balance between differentiation and low cost strategies.

A high-end clothing manufacturer has a policy to inspect each article of clothing before it is shipped to customers. Recently, the number of finished items that are failing this final inspection has more than doubled from 3% six months ago to 7% last month. This company would benefit from a strategy designed to: a. examine the reliability of the process. b. improve its customer responsiveness. c. enhance its efficiency. d. build a structure for increased innovation.

a. examine the reliability of the process.

Unrelated diversification is a corporate-level strategy in which firms own unrelated businesses and attempt to increase their value through an internal capital market and/or the use of: a. general organizational competencies. b. external capital market. c. commonality and shared industry expertise. d. shared research and development functions.

a. general organizational competencies.

An entrepreneur started a small consulting business to provide training on multi-cultural communication to large corporations, educating managers on how to communicate with people who have a different ethnic background than their own. In his conversations with customers, he learns there is a need for training on socio-economic issues as well. He develops a training class for teaching managers the differences in communication and perception across socioeconomic situations that he can provide to multiple customers. This is an example of strategies to improve: a. positioning strategy. b. customer responsiveness and innovation. c. efficiency. d. mass customization.

b. customer responsiveness and innovation.

A diversification strategy commonly used when two or more companies agree to share resources to create new business in a growth industry is called a(n): a. acquisition. b. joint venture. c. internal new venturing. d. unrelated diversification.

b. joint venture.

As companies gain more experience producing their products, they are able to reduce unit costs because: a. suppliers and distributors offer lower costs to more established companies. b. the combination of learning effects and economies of scale lead to more efficient manufacturing. c. they can charge more for their products as their brands become more established and well-known in the marketplace. d. their equipment is more specialized to manufacture products reducing the cost structure.

b. the combination of learning effects and economies of scale lead to more efficient manufacturing.

A computer software company has been successful in marketing its employee productivity software for construction companies. Which of these conditions presents the best scenario for a company interested in pursuing a related diversification strategy? a. A local construction company is for sale and the owner has approached the software company owner to ask if they'd be interested in purchasing it. b. A customer is interested in seeing if the productivity software could be modified to meet the needs of specific employee productivity needs. c. Construction companies ask if your team is able to provide managed IT services to handle the operation of the software and all of the company's other IT needs related to other software and hardware. d. The company has excess capital and is interested in investing it in an existing business in the most profitable industry it can identify.

c. Construction companies ask if your team is able to provide managed IT services to handle the operation of the software and all of the company's other IT needs related to other software and hardware.

In a differentiation strategy, a company can distinguish itself from its rivals by: a. offering its product or service at a lower price. b. providing similar or equal service or products. c. delivering superior functions and features. d. portraying them negatively in its advertising and promotions.

c. delivering superior functions and features.

Customer responsiveness is an important differentiating attribute because: a. it is rated and ranked by consumer news outlets. b. job candidates utilize it to determine if they will work for a company. c. it helps build brand loyalty and can give a company more pricing options. d. it is a measure of how much capital it takes for a company to turn its outputs into inputs.

c. it helps build brand loyalty and can give a company more pricing options.

Often, internal new ventures fail because: a. their market entry is on too large of a scale. b. they utilize their best managers for the new venture division. c. their market entry is on too small of a scale. d. the company is too focused on its customers.

c. their market entry is on too small of a scale.

Understanding market segmentation is an important step in formulating business-level strategies because: a. companies can choose three different kinds of strategies based on their strategy to offer a standard or customized product to customers with different needs. b. companies should ignore differences among customer needs and always offer a single standardized product. c. companies pursuing a low cost strategy must also utilize a segmentation strategy to offer different products to different customers. d. it will assist a company in defining the industry and market sector where it will operate.

a. companies can choose three different kinds of strategies based on their strategy to offer a standard or customized product to customers with different needs.

Starbucks bought bakery, La Boulange, and plans to introduce its bakery items in its stores. By purchasing a company with an established competency in bakery operations, Starbucks is entering the industry by what method? a. Joint venture b. Acquisition c. Internal new venture d. Horizontal integration

b. Acquisition

What is the main difference between a company choosing to pursue an acquisition strategy versus an internal new venture strategy? a. An internal new venture is chosen when the company already has the distinctive competency it needs to enter the new industry. In an acquisition, a company does not have the distinctive competency and chooses to purchase a company that does. b. An acquisition is chosen when the company already has the distinctive competency it needs to enter the new industry, whereas in an internal new venture, a company does not have the distinctive competency and therefore purchases a company that does. c. An internal new venture invests its funds in new resources. In an acquisition, the company is looking to decrease costs by purchasing the existing resources of another company. d. A company is seeking to reduce costs through a new venture. In an acquisition, the company has unlimited funds to spend on the new business unit.

a. An internal new venture is chosen when the company already has the distinctive competency it needs to enter the new industry. In an acquisition, a company does not have the distinctive competency and chooses to purchase a company that does.

An entrepreneur establishes a social justice online retail company. The company purchases authentic artwork, jewelry and crafts at a fair price from artisans in developing countries and then sells them through a website. As a company following a differentiation strategy, which of these functional-level strategies will be important for sustaining the business? a. Developing a robust marketing program to promote the social justice elements of the business and gain insights into consumer purchasing behavior on the website b. Leveraging its purchasing power to pressure artisans into selling their goods at a reduced price c. Adopting a lean manufacturing technique to reduce production costs d. Incentivizing employees with bonuses for cutting costs within the operation

a. Developing a robust marketing program to promote the social justice elements of the business and gain insights into consumer purchasing behavior on the website

A company that finds itself "stuck in the middle" between a low cost strategy and a differentiation strategy can utilize value innovation to push toward or past the efficiency frontier. Consider the example of Eddie Bauer in the text. How might the company introduce a value innovation to move closer to the efficiency frontier? a. It must find a way to reduce its costs without sacrificing style and other elements of its differentiation. b. It must spend more money on its differentiation, making the brand appear more upscale and attractive to consumers, regardless of the cost. c. It must reduce costs across the board with no functional department spared from the cuts so that it can operate efficiently. d. It should continue operating in its current cost structure and with its current differentiation strategy.

a. It must find a way to reduce its costs without sacrificing style and other elements of its differentiation.

The business-level strategies that support a differentiation strategy are: a. based around ensuring that customers perceive a product to have greater value targeted to a single customer niche and its unique needs. b. focused on reducing cost throughout the value chain of activities. c. based on creating superior efficiency and superior product reliability. d. focused on decreasing customer churn and utilizing economies of scale.

a. based around ensuring that customers perceive a product to have greater value targeted to a single customer niche and its unique needs.

A company can achieve value innovation by: a. identifying a process innovation that would be challenging for its rivals to imitate because of their prior strategic commitments. b. segmenting their customer base and creating products to serve each group of customers. c. imitating its competitors' business-level strategy and customer segmentation. d. reducing manufacturing costs and streamlining its supply chain.

a. identifying a process innovation that would be challenging for its rivals to imitate because of their prior strategic commitments. Established companies may have made investments in one way of doing business. A value innovation would require them to shift those investments to follow suit.

Diversification can increase profitability when strategic managers: a. leverage competencies to create business units in new industries. b. withhold resources between business units to realize synergies or economies of scope. c. utilize general organization competencies that decrease the performance of all of a company's business units. d. transfer competencies between business units in the same industry or market segment.

a. leverage competencies to create business units in new industries.

A makeup retailer is interested in opening a spray tanning salon. Both businesses are related to cosmetics, but their operations are dramatically different. The makeup retailer is very successful in its customer loyalty program, which has served as a great marketing technique. The company hopes to implement this same program within the tanning salon business. This is an example of: a. leveraging its competencies. b. transferring its competencies. c. organizational design skills. d. economies of scope.

a. leveraging its competencies.

Rebecca is the CEO and founder of a start-up health food company. To improve customer responsiveness in her company, she can: a. make personal phone calls to five customers per week thanking them each time they purchase products from the company. b. prioritize efficiency and cost controls above all corporate initiatives and incentivize employees to cut costs whenever possible. c. design a bonus program that rewards the engineer or technical researcher that develops the best tasting health food each quarter. d. develop a total quality management (TQM) system in the company.

a. make personal phone calls to five customers per week thanking them each time they purchase products from the company.

The human resource team's role in functional-level strategies aimed at increasing innovation include: a. recruiting and hiring creative technical team members with an expertise in the company's core product offerings. b. organizing quality training for shop floor production team members. c. executive coaching for mid-level managers who have the potential to serve in the company's key leadership and infrastructure positions. d. assessments of the skills and performance of members of the sales team.

a. recruiting and hiring creative technical team members with an expertise in the company's core product offerings.

A company can sometimes implement a strategy designed to improve one factor of competitive advantage but also change another factor because: a. the factors are often interrelated, and functional-level strategies can have a positive or negative impact on each other. b. the managers don't recognize unintended consequences of their strategies. c. the company adopts the wrong strategies to achieve its goals. d. the factors are dependent on each other and you cannot have a strategy that doesn't include all four of them.

a. the factors are often interrelated, and functional-level strategies can have a positive or negative impact on each other. A company can sometimes employ a strategy that increases customer responsiveness but decreases efficiency or improves innovation but reduces quality. Companies must balance and prioritize their strategies to achieve their goals.

Companies that select a differentiation strategy must also recognize: a. the importance of controlling cost to maintain profitability. b. that customers are unwilling to pay a premium for products that satisfy the same needs as products from competitor companies. c. that they will be less profitable than companies that utilize a low cost strategy. d. that they will have limited pricing options for their products.

a. the importance of controlling cost to maintain profitability.

Diversification is: a. the process of entering new industries distinct from a company's core or original industry, to make new kinds of products for customers in new markets. b. the process of exiting declining industries that are distinct from a company's core or original industry, to make new kinds of product for customers in new markets. c. the process of entering existing industries similar to a company's core or original industry to remake products for customers in established markets. d. the process of exiting new industries distinct from a company's core or original industry, to make new kinds of products for customers in new markets.

a. the process of entering new industries distinct from a company's core or original industry, to make new kinds of products for customers in new markets.

A jeans company is pursuing a low cost strategy and has achieved a position in which it is the lowest cost manufacturer of denim products. One of the ways the company can achieve a competitive advantage against its rivals is to: a. undercut them in a price war to increase volumes and drive weaker low cost rivals out of business. b. add features and cost to the jeans to compete with higher priced differentiated brands. c. build brand loyalty through an intense marketing and media blitz. d. focus on selling a wide variety of jean styles and colors to appeal to different market segments.

a. undercut them in a price war to increase volumes and drive weaker low cost rivals out of business. The lowest cost company is best positioned to survive price rivalry in its industry.

Which of these functional-level strategies is designed to improve quality as reliability for a company pursuing a low cost strategy? a. A hotel chain builds a 100-seat call center to manage customer service and after-sales technical support. b. A manufacturer implements a Six Sigma training program with a goal to double the number of Six Sigma black belts within 5 years. c. An IT company enhances its research & development team through a major recruiting effort from engineering colleges. d. An electronic component supplier develops an information technology system to track inventory as it is being used by its customers to forecast and fulfill future orders.

b. A manufacturer implements a Six Sigma training program with a goal to double the number of Six Sigma black belts within 5 years.

Shop floor employees can be a major source of ideas for improving product quality. Which of these represents a potential strategy for collecting ideas from team members for improving quality? a. An intranet site where employees can read articles from the CEO and vice presidents about their commitment to quality. b. A poster in the break room about everyone doing their part for quality along with a suggestion box encouraging employees to submit their ideas. c. A chart on the communication board that lists the percentage of defective products found during inspections each day. d. Monthly training talks about quality in which only the quality manager discusses the proper way to perform specific production tasks.

b. A poster in the break room about everyone doing their part for quality along with a suggestion box encouraging employees to submit their ideas.

Which of these companies is pursuing a strategy of unrelated diversification? a. Tesla, a manufacturer of electric cars, is using the same battery technology to develop battery systems for home electricity. b. GE has a division that manufactures jet engines and another division that operates financial services, including credit cards and credit financing. c. Best Buy operates both its retail stores and its Geek Squad IT support group within the same business and store organization. d. Over the years, Kroger has acquired multiple grocery store chains and currently operates Ralphs, Ruler Foods, Dillons Marketplace and Harris Teeter.

b. GE has a division that manufactures jet engines and another division that operates financial services, including credit cards and credit financing.

Which of these properly identifies the role a function can play in implementing reliability improvement methodologies? a. Marketing team providing feedback from customers about new product features they are seeking. b. HR team instituting a Six Sigma training program. c. Production team offering mass customization options through a flexible manufacturing technology. d. The leadership team models a commitment to customer focus.

b. HR team instituting a Six Sigma training program.

Which of these companies pushed the efficiency frontier in their industry with a value innovation? a. Chick-fil-A chooses not to operate its restaurants on Sundays. b. Ikea created a store environment where customers selected their own flat-packed furniture and assembled it themselves at home. c. Kmart works to compete in the discount retail industry by adding designer products to its offering. d. GM adds the Chevy Volt, an electric car, to its car line to lower its fleet emissions and appeal to environmentally conscious drivers.

b. Ikea created a store environment where customers selected their own flat-packed furniture and assembled it themselves at home.

Which of these companies is pursuing a differentiation strategy to gain a competitive advantage? a. Big Lots! advertises its low prices and revolving offering of products to appeal to value shoppers. b. Starbucks utilizes an upscale customer experience, high-quality coffee drinks and brand building to charge a premium price for its products. c. Vonage, a supplier of cloud-based communication, offers customers a voice over IP alternative to traditional home phone service. d. Kroger grocery store Big K brand soda offers the same flavor options as Coca-Cola and Pepsi brands.

b. Starbucks utilizes an upscale customer experience, high-quality coffee drinks and brand building to charge a premium price for its products.

Which of these scenarios is an example of the R&D team contributing to the efficiency of a manufacturing process for a tool manufacturer, reducing the unit cost of the product? a. The team conducts a brainstorming session with the sales and marketing teams to discuss potential new breakthrough product innovations and takes one of the ideas into the next stage of development. b. The team reviews the component parts included in a line of drills with 25 variations in size and power. It finds that the 25 drills can share 75% of the same components and still work properly. The plant modifies the process to use more shared components. c. The team develops a new multi-use tool that works as both a saw and a drill. Customers in the field can have just one tool with two attachments, rather than investing in two separate tools. d. The team meets with customers at an industry trade show to gain feedback from them about the tools they are working with in the field. They ask about the additional features that the workers would find useful.

b. The team reviews the component parts included in a line of drills with 25 variations in size and power. It finds that the 25 drills can share 75% of the same components and still work properly. The plant modifies the process to use more shared components.

Companies struggle with innovation because success is dependent on multiple factors, including: a. high investment costs, lack of creativity, low margins and high demand. b. certainty concerning demand, commercialization, positioning, technological myopia and slow cycle time. c. decentralized leadership, long-term development and customization. d. ordering ease, delivery, installation, customer training, customer consulting and maintenance and repair.

b. certainty concerning demand, commercialization, positioning, technological myopia and slow cycle time. R&D has a high failure rate and must be managed to be successful.

A movie theatre business starts a video game arcade using a similar business model. The goal is to diversify its product offerings and transfer its distinctive competencies from operating the movie theatre to establishing the video game arcade. Both businesses focus on the consumption of media. This helps the company increase the profitability of the businesses through its _________. a. product bundling b. commonalities c. economies of scope d. leveraging of competencies

b. commonalities

A company CEO can help his or her organization improve through innovation by: a. committing resources to copying competitors' innovations. b. ensuring that research and development is not performed by a single department, but instead has input from multiple functional areas. c. investing in newer machinery that will have less down-time and require fewer repairs and lower maintenance costs. d. directing the sales and marketing team to work alongside customers using the company's products and capture information about their experience.

b. ensuring that research and development is not performed by a single department, but instead has input from multiple functional areas. Company leadership must facilitate cross-functional cooperation and properly motivate teams to be inclusive of multiple viewpoints.

Innovation can be a source of competitive advantage in two ways, including: a. tapping into new markets and working against competitors with a streamlined product portfolio. b. finding ways to distribute or manufacture the product with fewer inputs and making the product better so that the company can charge more for it. c. preventing competitors from releasing their own new products and retaining existing customers. d. increasing the cost structure of the company through overhead and hiring the most talented team members.

b. finding ways to distribute or manufacture the product with fewer inputs and making the product better so that the company can charge more for it. Innovation can help provide a competitive advantage through a lower cost structure or through differentiation.

The more commonalities that can be formed between business units, the more beneficial it is in related diversification because: a. there is less work to be done when entering the new industries. b. there is more potential to realize profit-enhancing benefits. c. it creates an efficient internal capital market. d. there is less potential to realize profit-enhancing benefits.

b. there is more potential to realize profit-enhancing benefits.

Companies competing with a blue ocean strategy can create an advantage because: a. they have created a lower price structure for a product or service that still satisfies the same needs as other companies in their industry. b. they are able to define and set the rules for the new industry segment where they are operating. c. they are achieving low cost by operating across geographic markets using the flow of skills between different company subsidiaries. d. they are acquiring companies in their supply chain to deliver greater efficiencies and lower their costs.

b. they are able to define and set the rules for the new industry segment where they are operating.

A low cost strategy is one where a company: a. offers customers the lowest price, even if it has to sell below its production cost. b. undercuts its rivals on price to gain market share while still making a profit. c. provides a unique product at a premium price that customers are willing to pay. d. sells a commodity product at the same or nearly the same price as its competitors.

b. undercuts its rivals on price to gain market share while still making a profit.

Which of these companies is most in need of a strategy to improve customer responsiveness? a. A television manufacturer has had trouble keeping up with its competitors. The company hasn't released a significant new technology in the last three years. All of its new televisions are using preexisting technology. b. A grocery store chain has an inventory challenge. The store is purchasing fresh produce at a rate that is faster than customers are buying it, leading to excess produce that goes bad on the shelf and must be discarded. c. A cable television company has a public relations problem. Customers have been posting on social media that the phone lines are clogged and it takes more than 30 minutes on hold for them to speak to a representative about their cable bill. d. A fast food restaurant has seen a steep decline in sales of its previously top-selling burger since making a small change to its sauce recipe ingredients. It used to purchase its mayonnaise from one distributor and now purchases from a different seller.

c. A cable television company has a public relations problem. Customers have been posting on social media that the phone lines are clogged and it takes more than 30 minutes on hold for them to speak to a representative about their cable bill.

Which of these companies is experiencing a benefit of tight cross-functional integration in its innovation strategy? a. A company has a 5% success rate on its R&D projects in comparison to a 25% average success rate in its industry. b. A company's cycle time is three times longer than most of its competitors, resulting in it coming out with new products slower than its rivals. c. A company manages its R&D costs to shorten the length of time for return on investment in new products from 1 year after launch to 6 months after launch. d. A company's newest product meets customer needs but is challenging to manufacture due to the complexity of its assembly process.

c. A company manages its R&D costs to shorten the length of time for return on investment in new products from 1 year after launch to 6 months after launch. The time it takes for a new innovation to turn a profit is an important indicator of success.

Which of these companies is achieving a competitive advantage through a low cost strategy? a. A car company with the largest volume sales in North America but a profit margin below the industry average. b. An electronics company with the highest consumer rated features and most advanced technology. c. A high volume quick-serve restaurant chain that is controlling costs through centralized food production and a streamlined supply chain. d. A retail store offering high commissions to its sales teams to ensure they provide superior customer service while driving sales on high-profit items.

c. A high volume quick-serve restaurant chain that is controlling costs through centralized food production and a streamlined supply chain.

To develop a blue ocean strategy a company should consider four actions - eliminate, reduce, raise and create. A start-up video game company is considering how it can operate in a blue ocean. What action might it take? a. Collaborate with game makers to ensure the most popular games are compatible with your platform. b. Reduce the cost of games for your platform by reverting to retro graphics. c. Develop a video game platform that seriously reduces the manufacturing cost, and therefore the price, of the console without limiting technology. d. Add motion-detection capabilities to the game platform, similar to those used by the Wii.

c. Develop a video game platform that seriously reduces the manufacturing cost, and therefore the price, of the console without limiting technology.

Achieving quality as excellence is just as important in a service business as it is in a product business. A web services company that has a difficult and confusing online interface for consumers to select the services they need could increase its quality by focusing on which attribute? a. Responsiveness b. Maintenance and repair c. Ordering ease d. Durability

c. Ordering ease

A positioning strategy is: a. the set of key messages the marketing team will utilize to tell customers about a product. b. the manufacturing design of a product, including the number of component parts needed to assemble it. c. a specific set of options for a product based upon four main dimensions of marketing: price, distribution, promotion and advertising, and product features. d. the company's infrastructure and leadership team's support of a new product or new product features.

c. a specific set of options for a product based upon four main dimensions of marketing: price, distribution, promotion and advertising, and product features.

There are four generic business-level strategies, including: a. segmented low-cost strategy, broad low-cost strategy, segmented differentiation strategy and broad differentiation strategy. b. customization strategy, positioning strategy, innovation strategy and quality strategy. c. broad low-cost strategy, focus low-cost strategy, broad differentiation strategy and focus differentiation strategy. d. horizontal integration strategy, vertical integration strategy, strategic outsourcing strategy and cooperative relationship strategy.

c. broad low-cost strategy, focus low-cost strategy, broad differentiation strategy and focus differentiation strategy.

To fund diversification initiatives, managers of companies use: a. funds from other business units. b. investment loans from shareholders. c. free cash flow. d. limited cash flow.

c. free cash flow.

Which of these includes a strategy for improving quality as excellence? a. A soap company conducts a market research survey to understand customer priorities when purchasing laundry detergent. b. A machine company establishes a Six Sigma training program for its production team. c. A food company invests in a piece of equipment that cuts in half the amount of time required to make its core product. d. A quick-service restaurant implements a personality assessment for cashiers to rate their level of positivity and hires the most upbeat candidates for this role.

d. A quick-service restaurant implements a personality assessment for cashiers to rate their level of positivity and hires the most upbeat candidates for this role.

Cross-functional teams are critical to reducing innovation failures. One benefit of integration among departments is that: a. it allows for fewer people to be involved in research and development, making it easier to keep new products a secret from competitors. b. it ensures that only engineers and technical specialists are making product development decisions. c. it speeds up product development by streamlining the team that is working on projects. d. R&D teams, marketing and production teams work together to ensure the new product can be efficiently manufactured and will have a demand in the marketplace.

d. R&D teams, marketing and production teams work together to ensure the new product can be efficiently manufactured and will have a demand in the marketplace.

What are the advantages of entering a new venture on a large scale rather than a small scale? a. Higher risk of major loss b. It takes less time to enter the industry c. Reduces potential losses d. Rapidly build brand loyalty

d. Rapidly build brand loyalty

What are the advantages of pursuing an unrelated diversification strategy over a related diversification strategy? a. There is greater coordination between business units. b. Functional competencies would be useful in many different industries. c. Higher bureaucratic costs. d. The company doesn't need coordination between business units

d. The company doesn't need coordination between business units

Poor quality component parts from outside suppliers can play a contributing role in poor-quality finished goods. What team might take steps to counteract this? a. The IT team may track all finished good defects and collect data about which of the company's production lines they were manufactured on. b. The marketing team might ask customers to take defective products apart to determine which element is malfunctioning. c. The leadership team may encourage all internal teams to meet monthly to discuss quality improvements to the end products. d. The materials management or logistics team may work with suppliers on an inspection process to ensure only 100% inspected components are delivered to the manufacturer.

d. The materials management or logistics team may work with suppliers on an inspection process to ensure only 100% inspected components are delivered to the manufacturer

A company that used to be exclusively a large market grocery retailer has been gradually acquiring other retail businesses including auto parts, hardware, and craft store chains. All of the mentioned retailers were failing family-owned small businesses. By attaching its big brand name and placing key managers in charge of each of the businesses, all of them have become successful. Based on this information, what type of diversification strategy did the company use? a. Related diversification b. Joint venture c. Internal capital market d. Unrelated diversification

d. Unrelated diversification

A Blue Ocean strategy encourages strategic leaders to consider four questions, including "what factors can we create that rivals do not offer, thereby increasing value?" Which of these might be an answer to this question for a company operating in the legal services industry? a. We can do all of our legal work by attorneys, without assistance from paralegals. b. We can flatten our hierarchy and get rid of the associate-to-partner promotion path to pay our attorneys less. c. We can raise our hourly fee to the same level as our nearest competitor. d. We can offer our customers project pricing instead of hourly pricing so that they have predictability for their legal expenses.

d. We can offer our customers project pricing instead of hourly pricing so that they have predictability for their legal expenses.

Effective quality improvements through functional-level strategies is the responsibility of: a. a single department - the quality management team within production. b. senior leadership, who must set a tone of quality-first. c. the quality manager. d. all functional teams with each playing a role in improving product or service quality

d. all functional teams with each playing a role in improving product or service quality

Synergies arise when one or more of a diversified company's business units are able to lower costs because they can more effectively pool, share, and utilize expensive resources or capabilities. This is called: a. product bundling. b. economies of scale. c. commonality. d. economies of scope.

d. economies of scope. When a company is able to use existing resources across business units, it lowers the cost structure for both units.

A potato chip manufacturer currently has a manufacturing line devoted to regular chips as well as individual lines dedicated to each variety, such as barbeque, sour cream and onion and cheese. The regular chip line operates for three shifts per day, but the varieties only run for one shift per day. To maximize efficiency, the company should consider: a. just-in-time systems to ensure that the raw material supplies - potatoes - are arriving several days before they are needed in the production process. b. counteracting diseconomies of scale by splitting the company into separate divisions, each one devoted to a specific variety. c. learning effects to improve the manufacturing speed of its regular chip line to reduce the number of shifts it is running and reduce overhead. d. flexible production technology, which would allow the company to produce different varieties off of the same line with brief set ups in between.

d. flexible production technology, which would allow the company to produce different varieties off of the same line with brief set ups in between.

Netflix has a strategy to employ only the top performers in each job role and pay them at the top of market value. The company philosophy is to only retain these top performers and to let others who don't perform as well go, regardless of the impact this has on the employee turnover rate. This Human Resources strategy is an example of: a. pay for performance b. self-managing teams c. employee training d. hiring strategy

d. hiring strategy This is a hiring (and firing) strategy. The company is using a process to identify the people they consider to be the most effective team members and attract them with high pay. Anyone who doesn't align with those attributes is let go, rather than developed or coached, resulting in the HR team hiring a new team member.

The incentive structure and organization of a company can be an important part of a business-level strategy. Flat organizations can be a structure used by companies pursuing a: a. differentiation strategy. b. blue ocean strategy. c. integration strategy. d. low cost strategy.

d. low cost strategy. Companies pursuing a low cost strategy have very few levels of management hierarchy, clear lines of accountability and control systems focused on productivity and cost containment.