bus 402 midterm

provides services that consumers will value more than those of its rivals.

A firm is likely to have a competitive advantage when it Multiple Choice performs at a level similar to the other firms in the industry. provides goods similar to those of its competitors, but at a higher price. provides services that consumers will value more than those of its rivals. minimizes the difference between value creation and the costs involved.

Which of the following statements about competitive advantage is not true? Multiple Choice A firm will have a sustainable competitive advantage when it outperforms its competitors over a prolonged period of time. A firm can gain a competitive advantage by providing goods similar to its competitors' goods at a lower price. A firm's competitive advantage is always absolute, not relative. A firm's past performance does not guarantee its future performance.

A firm's competitive advantage is always absolute, not relative.

Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of political rather than economic considerations? Multiple Choice A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing. Airbus and Boeing are likely to exit the aircraft manufacturing industry when industry profit potential falls to zero. The traditional U.S. airlines Delta, United, and American Airlines have large fixed costs to maintain their network of routes that affords global coverage, frequently in conjunction with foreign partner airlines. Given their strategic commitments, neither Delta nor United is likely to merge with other airlines.

A number of European governments created Airbus through direct subsidies to provide a countervailing power to Boeing.

Which of the following questions would a firm's business strategy ideally answer? Multiple Choice How should we compete? Where should we compete? Why should we compete? How should we implement the functional strategy?

How should we compete?

Which of the following is not true concerning a customer-oriented mission? Multiple Choice It defines the means of how a customer need will be met. It has more flexibility than a product-oriented mission. It has a higher likelihood of remaining relevant in the long-term. Organizations that have customer-oriented missions are more likely to be successful.

It defines the means of how a customer need will be met.

Which of the following is not a disadvantage of the balanced scorecard approach? Multiple Choice It is a tool merely for strategy implementation, not for strategy formulation. It fails to allow managers to prepare the company for future growth. It fails to provide much insight into how metrics that deviate from the set goals can be put back on track. It provides only limited guidance about which metrics to choose to measure competitive advantage.

It fails to allow managers to prepare the company for future growth.

Too Fast Inc., a motorcycle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Too Fast Inc. from this scenario? Multiple Choice It has a direct investment in the other firms. It has a competitive advantage over the other firms. It has an exchange relationship with the other firms. It has competitive parity with the other firms.

It has a competitive advantage over the other firms.

Which of the following statements is true of an oligopoly? Multiple Choice Price-competition is the preferred mode of competition. It is often analyzed using game theory. Competing firms are most often independent of one another. It is characterized by low entry barriers.

It is often analyzed using game theory.

Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance? Multiple Choice It fails to allow managers and executives to find a balance between financial and strategic goals. It only relies on an internal view of the firm, ignoring the external view. It fails to allow managers to align their different perspectives to create a more focused corporation overall. It provides only limited guidance about which performance metrics to choose.

It provides only limited guidance about which performance metrics to choose.

Which of the following statements accurately brings out the difference between economies of scale and learning effects? Multiple Choice While there are no diseconomies to scale, there are diseconomies to learning. Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased. Firms experience economies of scale when output increases, and they experience learning effects when output decreases. Economies of scale reduce cost per unit, whereas learning effects increase cost per unit.

Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.

Let's Roll Inc. and Ride 4 Ever Cycles Inc. are two competing motorcycle companies. While Let's Roll's Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Ride 4 Ever Cycles is 54.2 percent. What do you infer from this financial data? Multiple Choice Let's Roll is less efficient than Ride 4 Ever Cycles in producing goods. Let's Roll has a higher profit margin than Ride 4 Ever Cycles. Let's Roll and Ride 4 Ever Cycles have achieved a competitive parity. Let's Roll is able to command a greater price premium for its products than Ride 4 Ever Cycles.

Let's Roll is less efficient than Ride 4 Ever Cycles in producing goods.

Stan has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Stan is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Stan is currently at __________ of the Level-5 leadership pyramid. Multiple Choice Level 1 Level 3 Level 4 Level 5

Level 4

Actions that allow a firm to address a competitive challenge are strategy.

Which of the following statements is true of strategy? Multiple Choice Statements of desire, on their own, are strategy. Tactical tools that are a part of a firm's functional and global initiatives are strategy. Operational effectiveness and competitive benchmarking are strategy. Actions that allow a firm to address a competitive challenge are strategy.

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the efficient-market hypothesis. In this perspective, a firm's share price provides an objective performance indicator. In the financial year 2016, for every $100 in revenues, Microsoft earned $21.5 in profit, while Apple earned $20.6 in profit. This demonstrates that Multiple Choice Microsoft was more efficient than Apple in producing its goods. Apple's inventory turnover was more than that of Microsoft's. Microsoft was using its capital more efficiently to generate revenue than Apple. Microsoft's return on revenue was higher than that of Apple.

Microsoft's return on revenue was higher than that of Apple

_________ are industry-specific factors that separate one strategic group from another. Multiple Choice Mobility barriers Competitive differences Complementary products/services Barriers to entry

Mobility barriers

When asked to explore the strengths and weaknesses of a firm, which of the following would be the best framework to employ? Multiple Choice Value Chain analysis PESTEL analysis Five Forces analysis None of these answers are correct.

None of these answers are correct.

Though the microwaves manufactured by Nuked Inc. and Hot Box Inc. sell at the same price of $600 per unit, the economic value created by Nuked Inc. is more than that of Hot Box Inc. In the context of this scenario, which of the following statements is true? Multiple Choice Nuked and Hot Box Inc. have achieved a competitive parity. Hot Box Inc. has differentiated its products more than Nuked Inc. has. Nuked has a relative cost advantage over Hot Box Inc.. Hot Box Inc. has been able to create more producer surplus for itself than Hot Box Inc.

Nuked has a relative cost advantage over Hot Box Inc..

Fones Inc. and Speed Dial Corp. are two competitors in the mobile phone market. The cost incurred by each company to manufacture smartphones is $200 per unit. Although both the companies sell their smartphones at the same price, Speed Dial Corp. has a larger market share in the smartphone industry. What does this imply? Multiple Choice Speed Dial Corp. has a cost advantage over Fones Inc. Fones Inc. has a competitive advantage over Speed Dial Corp. Speed Dial Corp. has been able to offer more perceived value than Fones Inc. Fones Inc. has created a higher value gap than Speed Dial Corp.

Speed Dial Corp. has been able to offer more perceived value than Fones Inc.

When the Alta Velocidad Española (AVE) was completed, it impacted Spain's local airline industry. Which of the following statements about the five forces does this reflect? Multiple Choice Substitutes were not readily available because customers cannot use other means of transport. Substitutes made it difficult for generating a profit potential in Spain's airline industry. The combination of the competitive forces leads to collusion among existing airlines. Entry barriers in Spain's airline industry are relatively high because of the high costs involved.

Substitutes made it difficult for generating a profit potential in Spain's airline industry.

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be the implication of that decision? Multiple Choice The company will tend to be more flexible when adapting to changing environments. The company will clearly define how it means to satisfy a customer need. The company will fail to establish a positive relationship between its vision statement and performance. The company will have a short-term, unidirectional focus.

The company will tend to be more flexible when adapting to changing environments.

Which of the following statements will effectively guide a strategist? Multiple Choice It is necessary to isolate the key stakeholders and their needs when formulating a strategy. Industry and firm effects that determine firm performance are independent of each other. Strategy is all about competitive benchmarking and operational effectiveness. The principles of strategic management can be applied universally to all organizations.

The principles of strategic management can be applied universally to all organizations.

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage? Multiple Choice The resource is easy to replicate. The resource is costly to imitate. The resource neutralizes external opportunities. The resource decreases the perceived value of its products.

The resource is costly to imitate.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? Multiple Choice They cannot employ technology efficiently. They can spread fixed costs over lesser units. They benefit from a less specialized division of labor. They can demand better terms from their suppliers.

They can demand better terms from their suppliers.

Which of the following statements is true of customer-oriented visions? Multiple Choice They tend to force managers to take a myopic view of the business environment. They define a business in terms of providing solutions to people's needs. They are inflexible with regard to adapting to changing environments. They state an organization's goals in terms of a good or service provided to customers.

They define a business in terms of providing solutions to people's needs.

Why are black swan events such as accounting scandals and the global financial crisis perceived as caused by cheap credit and subprime mortgages offered by financial institutions, bad for business? Multiple Choice They allow companies to gain a competitive advantage unfairly. They erode the implicit trust between the corporate world and society. They contribute to competitive parity, which hinders economic growth. They foster a false sense of prosperity, which results in economic depression.

They erode the implicit trust between the corporate world and society.

How do complements affect a primary product or service? Multiple Choice They reduce the value of the primary product. They act as the strategic equivalent of the primary product. They increase the demand for the primary product. They lower the utility of the primary product.

They increase the demand for the primary product.

Organizational core values are the answer to which of the following questions? Multiple Choice What commitments do we make to act both legally and ethically? Which of the value chain activities are primary? What is the value added to a good or service at each step in the production? What is the company's customer lifetime value

What commitments do we make to act both legally and ethically?

When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer? Multiple Choice How do customers view us? How do we create value? What intangible assets do we need? How do shareholders view us?

What intangible assets do we need?

Let's Talk Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus? Multiple Choice $150 $300 $650 $200

$200

By selling a laptop at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario? Multiple Choice $600 $1,300 $1,200 $700

$600

analysis

A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy Multiple Choice implementation. formulation. analysis. control.

Which of the following is an advantage of accounting data? Multiple Choice Accounting data consider off-balance sheet items, which makes comparing companies with different capital structures easy. Accounting profitability ratios not only show us the outcomes from past decisions, but also provide information to guarantee future performance. Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms. Accounting data focus mainly on intangible assets, which are more important than tangible assets in firms' stock market valuations.

Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.

While SMART Tech Inc. incurs $350 to manufacture a laptop, its competitor, Better Electronics Inc., incurs $300. However, laptops of both the companies have been able to create the same value among customers. From the given scenario, it can be inferred that Multiple Choice SMART Tech has a competitive advantage over Better Electronics. SMART Tech is a cost leader when compared to Better Electronics. Better Electronics and SMART Tech share a differentiation parity. Better Electronics can charge a higher price for its laptops.

Better Electronics and SMART Tech share a differentiation parity.

_________ is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it. Multiple Choice Consumer equity Consumer lifetime value Consumer surplus Consumer price index

Consumer surplus

Delish Corp is a chain of supermarkets that sells its fruits and vegetables at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Delish Corp adopted in this scenario? Multiple Choice Delish Corp is probably pursuing a differentiation strategy. Delish Corp is probably pursuing a cost-leadership strategy. Delish Corp is probably pursuing a market penetration strategy. Delish Corp is probably pursuing a growth strategy.

Delish Corp is probably pursuing a differentiation strategy.

Which of the following explains how dynamic capabilities are different from the resource-based view? Multiple Choice Dynamic capabilities deal with resource heterogeneity. Dynamic capabilities deal with intangible resources. Dynamic capabilities deal with tangible resources. Dynamic capabilities deal with applying resources over time.

Dynamic capabilities deal with applying resources over time

Which of the following statements is true of the Level-5 leadership pyramid? Multiple Choice Each level of leadership builds upon the previous one in the pyramid. Successful companies are led by Level-1 executives. At Level 3, managers are capable of devising a vision and mission to guide the firm toward superior performance. Once a manager moves to higher levels, he or she loses the qualities acquired in the previous levels to gain new ones.

Each level of leadership builds upon the previous one in the pyramid.

Which of the following statements does the upper-echelons theory support? Multiple Choice Organizational outcomes including strategic choices and performance levels reflect the values of external stakeholders. The leadership actions of executives are independent of their characteristics like age, education, and career experiences. Strong leadership is solely the result of innate abilities and not learning. Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.? Multiple Choice Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost. Ez Solutions Inc. will have to expand its operations to meet the increasing consumer demand. Ez Solutions Inc. will experience less competition from rival companies. Ez Solutions Inc. will find it easier to raise prices to increase profits.

Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

FL Systems Inc. and Oryxo Systems Inc. are two competing firms. FL Systems Inc. has $300,000 in tangible assets and $200,000 in intangible assets. Oryxo Systems Inc. has $150,000 in tangible assets and $347,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies? Multiple Choice Oryxo Systems Inc. has less valuable resources than FL Systems Inc. Oryxo Systems Inc. has less invisible assets than FL Systems Inc. FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage. FL Systems Inc. will find it easier than Oryxo Systems Inc. to sustain competitive advantage.

FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage.

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained? Multiple Choice Suppliers in the automotive industry had low bargaining power. Other American automakers of plug-in hybrid sports cars, like Fisker Automotive, filed for bankruptcy. Complementary products and services like battery charging and service stations were pervasive. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

exhibiting corporate citizenship

Which of the following is a philanthropic responsibility of a firm? Multiple Choice not infringing on other firms' patents providing products at appropriate prices exhibiting corporate citizenship obeying government regulations

Stakeholder impact analysis

________ is an important tool because it allows a manager to recognize, prioritize and address the needs of various stakeholders. Multiple Choice Stockholder appreciation Shareholder voting proxies Stakeholder impact analysis Shareholder Right's Plan

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is Multiple Choice a temporary competitive advantage. a state of perfect competition. strategic equivalence. direct imitation.

a temporary competitive advantage.

In the ________, firms change the underlying technology while holding cumulative output constant. Multiple Choice learning curve experience curve minimum efficient scale maximum efficient scale

experience curve

The pattern of faulty and biased decision making that occurs in groups whose members strive for agreement at the expense of good decision making is called Multiple Choice brainstorming. groupthink. devil's advocacy. bounded rationality.

groupthink.

According to the resource-based view, a firm's competitive advantage often stems from its ___________ opposed to its ___________. Multiple Choice intangible resources; tangible resources tangible resources; intangible resources current assets; long-term assets long-term assets; current assets

intangible resources; tangible resources

If a company has 25 million shares outstanding, and each share is traded at $400, the ________ is $10 billion. Multiple Choice total return to shareholders market capitalization customer lifetime value return on revenue

market capitalization

According to the upper-echelons theory, Multiple Choice top managers of a company should isolate themselves from the organizational values. organizational outcomes reflect the values of the top management team. strong strategic leadership is solely the result of learning. strategic commitments made by upper-level managers are inexpensive and short-term.

organizational outcomes reflect the values of the top management team

According to the value chain analysis, which of the following is a support activity? Multiple Choice production and operations supply chain management marketing and sales research and development

research and development

Within the context of strategic management it is important to understand that black swan events in the past have demonstrated that Multiple Choice stakeholders can affect or be affected by a firm's actions. capitalism as an economic system is highly reliable. companies can successfully integrate cost-leadership and differentiation strategies. globalization has reduced the need for standardized corporate ethics.

stakeholders can affect or be affected by a firm's actions.

Which of the following SWOT factors are internal to the firm? Multiple Choice strengths and weaknesses weaknesses and opportunities opportunities and threats threats and strengths

strengths and weaknesses

Which of the following groups will not be considered a company's internal stakeholder? Multiple Choice suppliers board members Incorrect shareholders managers

suppliers

Using the _______, managers can see how competitive advantage flows from a firm's distinct set of activities. Multiple Choice resource-based view VRIO framework value chain analysis SWOT analysis

value chain analysis

The _______ describes the internal activities a firm engages in when transforming inputs into outputs. Multiple Choice resource-based view PESTEL analysis value chain view SWOT analysis

value chain view

Which of the following statements related to a firm's stakeholders is not true? Multiple Choice While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits. If internal or external stakeholders withhold participation in the firm's exchange relationships, it can have severe negative performance implications. A firm's stakeholders include organizations and groups along with individuals who can affect or be affected by the firm's actions. Effective stakeholder management is an example of how managers can act to enhance a firm's competitive advantage.

While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities? Multiple Choice While a firm's resources are always tangible, its capabilities are by their very nature intangible. While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies. Unlike resources, capabilities do not find their expression in the firm's structure, routines, and culture. Unlike capabilities, the resources of the firm cannot be imitated by its competitors

While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

Which of the following firms most likely has the lowest bargaining power as a buyer? Multiple Choice an automobile company that can backwardly integrate to produce its own component parts a fast food chain that has multiple suppliers for processed meat a government agency that buys large quantities of cement from a private supplier a cell phone company that requires highly customized software for its phones

a cell phone company that requires highly customized software for its phones

The tenet behind the triple bottom line is that Multiple Choice a firm should solely focus on increasing the economic value created for its customers. a firm's primary objective should be increasing the total returns to its shareholders. a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy. a firm's return on revenue can be broken down into three ratios: COGS/Revenue, R&D/Revenue, and SG&A/Revenue.

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy

A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers. Multiple Choice resource flows capital gains capabilities activities

activities

In the context of the VRIO framework, a resource is said to be valuable if it Multiple Choice allows a firm to take advantage of an external opportunity. helps a firm increase its costs but lower its prices. results in a perfectly competitive industry structure. leads to competitive parity within an industry.

allows a firm to take advantage of an external opportunity.

Generally speaking, which of these situations is likely to lead to greater profits? Multiple Choice an industry that is about to undergo deregulation a situation that encourages operating at excess capacity a fragmented industry rather than a consolidated one an industry with fewer but larger competitors

an industry with fewer but larger competitors

Supreme Coffee Roasters is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Cheap Beans, in contrast, is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Vale's Coffee Inc. has found a balance between these two strategic groups by using automated ordering to free up its employees to work as master baristas and bakers, thus focusing on creating excellent products. It charges a price slightly above that of Cheap Beans. In this scenario, Vale's Coffee is following a Multiple Choice liquidation strategy. product diversification strategy. market penetration strategy. blue ocean strategy.

blue ocean strategy.

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ________ emerged as a consequence of the firm's resource allocation process. Multiple Choice unrealized strategy strategic alliance intended strategy bottom-up strategy

bottom-up strategy

How has Walmart staked out a unique strategic position? Multiple Choice by paying high wages to attract the most talented employees by providing excellent customer service in a luxury setting by cutting costs to offer lower prices than competitors by investing 100% of profits in community development programs

by cutting costs to offer lower prices than competitors

If costs are equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm Multiple Choice can charge a premium price for its products and services. has achieved a competitive parity in its chosen industry. has lost its competitive advantage to its competitor. can adopt a cost-leadership strategy.

can charge a premium price for its products and services.

What term is used to describe cooperation by competitors who want to achieve a strategic objective? Multiple Choice co-opetition strategic competition complementary assets strategic commitment

co-opetition

There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is Multiple Choice adding unique features that turn standard commodities into differentiated products. combining experience-based learning and process innovation to move onto a steeper learning curve. creating personalized customer service in order to minimize price sensitivity among customers. shifting to small-scale production processes in order to create highly customized products.

combining experience-based learning and process innovation to move onto a steeper learning curve.

Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem. Multiple Choice Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem. Multiple Choice complement value chain mobility barrier technological factor

complement

William estimated that a pair of Perfect Fit jeans would be worth $60 for its brand and durability. However, at the Perfect Fit store, the pair of jeans he wanted was available for $45. The difference of $15 in this scenario is referred to as the Multiple Choice consumer surplus. reservation price. producer surplus. break-even price.

consumer surplus.

According to the Level-5 leadership pyramid, the Level 2 manager is a(n) Multiple Choice strategic leader. competent manager. contributing team member. effective leader.

contributing team member.

The board of directors of Qwik Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate? Multiple Choice functional strategy business strategy divisional strategy corporate strategy

corporate strategy

Oberlo Autos competes against the global leaders in the automobile industry by developing and selling acceptable quality vehicles at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Oberlo Autos applying in this scenario? Multiple Choice differentiation strategy product diversification strategy cost-leadership strategy liquidation strategy

cost-leadership strategy

Measuring how a customer views a firm under the balanced scorecard framework is important because Multiple Choice customer perspective is directly linked to a firm's revenue and profit. the customer perspective reveals how rivals operate in the same industry. garnering customer feedback signals their importance to the company. knowing how customers view us can help us predict when an economic recession is coming.

customer perspective is directly linked to a firm's revenue and profit.

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm? Multiple Choice increasing productivity of the employees decreasing employee attrition within the firm decreasing government interference in the target market increasing inflation rates in the target market

decreasing government interference in the target market

Firms pursuing a cost-leadership strategy seek to Multiple Choice create higher value for customers and offer premium pricing. keep their cost structures at the same or similar levels as that of the competitors. deliver products or services at a lower cost than competitors. gain competitive advantage by reducing the value gap.

deliver products or services at a lower cost than competitors.

In a focused differentiation strategy, a firm seeks to Multiple Choice offer low-priced products and services with a narrow focus on a niche market. create higher customer value than the competitors in different segments of a mass market. deliver products or services with unique features to a specific, narrow part of the market. focus on reducing the value gap to differentiate itself from the competitors.

deliver products or services with unique features to a specific, narrow part of the market.

The viability of a differentiation strategy is severely undermined when the Multiple Choice difference between perceived value and costs is significant. focus of competition shifts to value-creating features rather than price. differential appeal is based more on intangible resources than tangible resources. differentiated products become commoditized throughout the industry.

differentiated products become commoditized throughout the industry.

ACME Inc. has retained you to review their low-cost strategy for their company. Based on several consultations with the client, you realize that their per unit costs are actually increasing as their business grows and expands. You conclude that this firm is experiencing Multiple Choice diseconomies of scale. economies of scope. diseconomies of scope. economies of scale.

diseconomies of scale.

The sum of consumer surplus and producer surplus for a good or service equals the Multiple Choice reservation price. firm's profit. economic value created. total return to shareholders

economic value created.

The value of goods/services in the eyes of consumers is static which makes it difficult to accurately assess what someone is willing to pay for that product and service. This limitation is most directly tied to which of the following multi-dimensional perspective below? Multiple Choice return on invested capital (ROIC) accounting profitability shareholder value appreciation economic value creation

economic value creation

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the Multiple Choice time compression economies. upper-echelons theory. price-demand function. efficient-market hypothesis.

efficient-market hypothesis

In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by Multiple Choice maximizing an external strength to exploit an internal opportunity. eliminating an internal weakness to mitigate an external threat. leveraging an external opportunity to overcome an internal threat. using an internal strength to exploit an external opportunity.

eliminating an internal weakness to mitigate an external threat.

The metaphor of a black swan best applies to Multiple Choice small businesses that become successful enough to raise capital through initial public offering. events that are considered highly unexpected and highly impactful when they do occur. highly profitable business units in low growth markets that are to be sustained solely for revenue generation. low profitable strategic business units within a large enterprise that are best divested or liquidated.

events that are considered highly unexpected and highly impactful when they do occur.

Gadgets n' Stuff Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Gadgets n' Stuff Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Gadgets n' Stuff Inc. is a(n) _________ for the appliance manufacturing company. Multiple Choice external stakeholder focus group representative sample internal stakeholder

external stakeholder

A fragmented industry turns into a consolidated industry when Multiple Choice there are no restrictive government policies introduced in the industry. firms reduce competition within the industry through mergers and acquisitions. the barriers to enter the industry are reduced. the products/services are seen as commodities.

firms reduce competition within the industry through mergers and acquisitions.

MicroChips Corp. is a company that supplies microprocessors to 2020 Processors Inc., a computer hardware company. When 2020 Processors Inc. demands lower prices for the microprocessors, MicroChips Corp. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from MicroChips Corp., 2020 Processors Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, MicroChips Corp., as a supplier, has exercised its bargaining power by threatening to Multiple Choice forward integrate. crowdsource. outsource. backward integrate.

forward integrate.

Hit Me Up is an instant messaging mobile application. Users have access to a basic version with limited message recipients for free, but they have to pay a fee to have unlimited message recipients or to use advanced features. Which of the following business models does this best illustrate? Multiple Choice subscription-based freemium pay-as-you-go razor-razor-blade

freemium

The greater the difference between value creation and cost, the Multiple Choice less likely a firm will gain competitive advantage. greater a firm's economic contribution. greater a firm's competitive parity. less likely that a firm's strategic position will be competitive.

greater a firm's economic contribution.

The relative bargaining power of suppliers is most likely low when Multiple Choice tThe relative bargaining power of suppliers is most likely low when Multiple Choice the suppliers provide products that are differentiated. incumbent firms face low switching costs when changing suppliers. there are no readily available substitutes for the products and services they offer. the suppliers' industry is more concentrated than the industry it sells to. there are no readily available substitutes for the products and services they offer. the suppliers' industry is more concentrated than the industry it sells to.

incumbent firms face low switching costs when changing suppliers.

ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) Multiple Choice plant. focus group. industry. occupational group.

industry.

A firm's ________ strategy is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy. Multiple Choice recognized realized dominant intended

intended

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is best described as a(n) Multiple Choice interest rate. service tax. royalty fee. surcharge.

interest rate.

One major limitation of using shareholder value appreciation as a measure for assessing competitive advantage is that stock prices often times reflect the irrational and psychological mood and behaviors of investors. Alan Greenspan, former head of the Federal Reserve referred to this as Multiple Choice efficient-market hypothesis. economic value creation. satisficing. irrational exuberance.

irrational exuberance.

When an organization briefly describes what they do and how they do it, they have more than likely articulated their Multiple Choice values statement. mission statement. strategic plan. strategic intent.

mission statement.

In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n) Multiple Choice perfectly competitive structure. monopolistically competitive structure. monogopoly. oligopoly.

monopolistically competitive structure.

A blue ocean strategy typically allows a firm to Multiple Choice provide unique product or service features at a premium price. add product features that raise costs without raising the perceived value. reduce the value gap created by their products. offer a differentiated product or service at low cost.

offer a differentiated product or service at low cost.

The cost-leadership strategy helps a firm achieve competitive advantage when it does which one of the following? Multiple Choice helps a firm create as large a gap as possible between the differential value created and the cost required permits a firm to perform similar activities than its rivals with greater costs or lower value creation permits a firm to perform different activities than its rivals with greater value creation permits a firm to perform similar activities differently than its rivals with resulting lower costs

permits a firm to perform similar activities differently than its rivals with resulting lower costs

Economic contribution is created when the Multiple Choice revenue generated by selling a unit of a product is equal to the cost incurred by the firm in producing it. price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it. price a customer is willing to pay for a good is less than what it costs the firm to manufacture it. value a consumer attaches to a good or service is lesser than what he or she paid for it.

price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

In this scenario, Vale's Coffee is following the blue ocean strategy. A blue ocean strategy allows a firm to offer a differentiated product or service at low cost. Dr. Shetty is able to drive down the cost of complex medical procedures from $100,000 to $2,000 not by doing one big thing, but rather by doing a thousand small things. This approach focuses on driving down the cost of health care through Multiple Choice value of input factors. cost of input factors. process innovation. product innovation.

process innovation.

As differentiation and cost-leadership are distinct strategic positions that require important trade-offs, it is Multiple Choice easy to build an ambidextrous organization. best for firms to avoid pursuing a generic business-level strategy. quite difficult to translate a blue ocean strategy into reality. easy to increase value and lower cost at the same time.

quite difficult to translate a blue ocean strategy into reality.

Which of the following has contributed to Tesla's competitive advantage in terms of stock appreciation? Multiple Choice copying the most popular features of competitors' vehicles reinvesting profits to continually design and produce better electric vehicles keeping its proprietary technologies secret using inexpensive materials to keep costs low

reinvesting profits to continually design and produce better electric vehicles

A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. According to the dynamic capabilities perspective, the $20,000 would most likely be referred to as the firm's Multiple Choice capital gain. frozen asset. resource flow. marginal utility.

resource flow.

Even though Easy Speak Inc. and KM Com Inc. operate in the same industry—telecommunications—each firm has a different and loyal customer base. While Easy Speak Inc. attracts young students and professionals through its efficient network coverage and pricing, KM Com Inc. attracts elderly customers solely due to its excellent customer service. Thus, both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? Multiple Choice resource imitation resource mobility resource substitution resource heterogeneity

resource heterogeneity

A consolidated industry turns into a fragmented industry when Multiple Choice restrictive government policies are introduced in the industry. firms reduce competition within the industry through mergers and acquisitions. technological advances lead to industry convergence. network effects enjoyed by incumbent firms within the industry become stronger.

restrictive government policies are introduced in the industry.

Which of the following is an example of a firm's capabilities? Multiple Choice routine activities performed in the firm, like physical delivery of products specific tasks involved in the invoicing of customers assets such as plant and machinery owned by the firm skills involved in training and managing a workforce

skills involved in training and managing a workforce

When a blue ocean strategy is successfully formulated and implemented, investments in differentiation and low costs are not Multiple Choice value drivers but cost drivers. cost drivers but value drivers. complements but substitutes. substitutes but complements.

substitutes but complements.

GiftBasket.com has successfully created a higher perceived value in the e-commerce industry, though it offers the same products at slightly higher prices than the competitors. This has been mainly attributed to the company's easy-to-navigate website, simple return procedures, fast delivery, and cash on delivery option. Thus, the value driver for GiftBasket.com is its Multiple Choice lower value gap. superior customer service. economies of scale. availability of complements.

superior customer service.

All of the following are examples of internal stakeholders except. Multiple Choice employees. stockholders. board members. suppliers.

suppliers.

Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period of time? Multiple Choice consistent power position long-term capital gain strategic positioning sustainable competitive advantage

sustainable competitive advantage

The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment? Multiple Choice the company's headquarters the company's brand equity the company's cash reserves the company's plant and equipment

the company's brand equity

Which of the following actions of an automobile firm will be considered as a strategic commitment? Multiple Choice the firm launching an existing model of a car in red as a limited edition for six months the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future the firm spending $100,000 on renting a manufacturing facility to meet the temporary demand for its cars the firm promoting its new model of coupe through a free European trip worth $15,000 to be won as an early-bird offer

the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

Evaluating the data collected from environmental analysis, the corporate executives of BigPharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate? Multiple Choice scenario planning bottom-up strategic approach reverse mentoring top-down strategic planning

top-down strategic planning

When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in Multiple Choice a competitive advantage through superior performance. trade-offs that work against each other. an increase in the firm's economic contribution. competitive parity with firms that have adopted either of the strategies.

trade-offs that work against each other.

The two primary competitive levers that managers can use in order to answer the question of how to compete are Multiple Choice accounting profitability and shareholder returns. profit and loss. core competencies and competitive advantage. value and cost.

value and cost.

A good strategy should be able to provide products and services to customers at an attractive price point while maintaining internal costs, resulting in Multiple Choice value creation. shareholder appreciation. competitive benchmarking. sustainable competitive advantage.

value creation.

Which of the following is not one of the VRIO characteristics of competitive advantage? Multiple Choice variable rare costly to imitate organized to capture value

variable

A company's vision primarily states Multiple Choice how the company plans to accomplish its goals. what the company actually does to generate revenues. what the company wants to ultimately accomplish. how the company plans to compete in its industry.

what the company wants to ultimately accomplish.

EatNow will face low profit potential.

EatNow is a fast-food restaurant that has recently entered the hospitality industry. Since most of its competitors are pursuing a low-cost position and doing well, EatNow also wants to adopt the same strategy. Which of the following will be a likely implication of this decision? EatNow will face low profit potential. EatNow will be able to create higher value for its customers. EatNow will be better placed to gain a competitive advantage in the industry. EatNow will not face any direct competition in the industry