Busi 499 Test 1

To implement specific business strategies, general managers of strategic business units rely on

functional managers

As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to

how to implement business strategy.

Which of the following strategies does Tesla need to implement or achieve to gain a competitive advantage?

reinvest profits to build successively better electric automobiles

The primary objective of Porter's five forces model is to

understand the profit potential of industries

In a large company, who is most responsible for devising the corporate strategy?

CEO

Which of the following is an example of competitive parity?

A firm produces a similar number of wall clocks at a similar cost as its competitors.

Which of the following is a drawback of the SWOT analysis?

A problem with this framework is that a strength can also be a weakness, and that an opportunity can also simultaneously be a threat.

A sustainable strategy is one that produces a competitive advantage that can be maintained over time.

FALSE A sustainable strategy is a strategy along the social, economic, and ecological dimensions that can be pursued over time without detrimental effects on people or the planet.

In 2008, BlackBerry's market cap peaked at $75 billion. By 2017 this valuation had fallen more than 90 percent, to $3.9 billion. BlackBerry fell victim to two important PESTEL factors in its external environment: sociocultural and technological. How did technology contribute to BlackBerry's decline?

BlackBerry failed to change its device into one that could perform multiple tasks effectively.

________ precisely indicates how much of a firm's sales is converted into profits.

Return on revenue (ROR)

In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the

CEO

Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain low for the next six months. Which of the following is an implication of low interest rates?

Consumer demand will increase

Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.

FALSE Accounting, human resources, and research and development are examples of support activities that add value indirectly.

Managers should create two sets of core values, one for employees and one for themselves.

FALSE Employees tend to follow values practiced by strategic leaders. They observe the day-to-day decisions of top managers and quickly decide whether managers are merely paying lip service to the company's stated values. Organizational core values must be lived with integrity, especially by the top management team.

A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities

FALSE Ethical and philanthropic responsibilities are expected by society, but not required. Society and shareholders require economic and legal responsibilities.

Once a strategy has been formulated and implemented, it is important that the firm sticks to it no matter what happens.

FALSE Strategic leaders make decisions under conditions of uncertainty and complexity. They must carefully monitor and evaluate the progress toward key strategic objectives and make adjustments by fine-tuning any strategy as necessary.

The three tasks of the AFI strategy framework are to Assemble a prototype, Find a buyer, and Incorporate feedback.

FALSE The three tasks of the AFI strategy framework are to Analyze, Formulate, and Implement. This framework (1) explains and predicts differences in firm performance, and (2) helps managers formulate and implement a strategy grounded in internal and external analysis that can result in superior performance.

A good strategy is a set of actions that enables a firm to achieve its own internal goals without regard to the external environment

FALSE the success of a strategy heavily depends on the external environment. A good strategy is a set of actions that enables a firm to achieve superior performance relative to its competitors. In this light, a strategy which produces only a minor loss of revenues while competitors suffer heavy losses can be seen as successful.

How do low interest rates affect a business?

Firms can easily borrow money to finance future growth.

Juanita, a manager at a multinational organization, is trying to carefully scan and link the firm's internal environment to its external environment. The insights from this analysis will allow her to effectively leverage the company's internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats. In this scenario, which of the following managerial tools is Juanita employing?

SWOT analysis

Which of the following statements accurately brings out the difference between tangible and intangible resources?

Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased.

InVue, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, InVue's competitors have now begun to produce more-advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to the dynamic capabilities perspective, what should InVue do?

InVue should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment.

Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats?

It created a perception that owning its products was cool.

Which of the following is a primary feature of the five forces model?

It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. Which of the following factors in a firm's general environment does this mandate best indicate?

Legal factors

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

PESTEL Framework

Marina manages the supply chain for a company that sells diamond watches. She learns that economists are predicting a moderate to severe recession in the next six to eight months. Based on that information, what action should Marina recommend to the company's owner?

Reduce supply. Customers generally reduce their purchases of luxury items when the economy falters.

________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Strategic management

________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

Strategy

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit?

Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry

A small coffee shop faces significant potential competition because of the low capital requirements compared with business environments such as universities and laboratories.

TRUE

A mission describes how a firm will accomplish the broad goals set out in a vision statement

TRUE A mission describes what an organization actually does—that is, the products and services it plans to provide, and the markets in which it will compete. It defines how the vision is accomplished and is often introduced with the preposition by.

A vision describes in broad, inspirational terms what an organization hopes to accomplish in the future

TRUE A vision captures an organization's aspiration and spells out what it ultimately wants to accomplish. An effective vision pervades the organization with a sense of winning and motivates employees at all levels to aim for the same target, while leaving room for individual and team contributions

The core competencies of a firm are determined by the interplay of its tangible resources and intangible capabilities.

TRUE Core competencies emerge when managers skillfully combine tangible resources such as machinery and cash with capabilities such as an efficient company culture.

Executives whose visions and decisions help their companies achieve competitive advantage can be considered strategic leaders

TRUE Executives whose vision and decisions enable their organizations to achieve competitive advantage demonstrate strategic leadership.

Managers must first develop a strategy that is likely to produce a competitive advantage before implementing a balanced scorecard approach.

TRUE the balanced scorecard is a tool for strategy implementation, not for strategy formulation. It is up to a firm's managers to formulate a strategy that will enhance the chances of gaining and sustaining a competitive advantage. When implementing a balanced scorecard, managers need to be aware that a failure to achieve competitive advantage is not so much a reflection of a poor framework but of a strategic failure. The balanced scorecard is only as good as the skills of the managers who use it: they first must devise a strategy that enhances the odds of achieving competitive advantage.

In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?

Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image.

________, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Total return to shareholders

Which of the following examples uses a focused differentiation strategy?

a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle

Which of the following is the best characterization of sociocultural forces?

a society's culture, norms, and values

Luz manages a chain of bars and restaurants in a tri-county area that has recently experienced an economic boom because of fracking and high oil prices. What is most likely to happen when there is too much money in the tri-county economy?

an increase in prices

A firm always has a competitive disadvantage when its return on invested capital is

below the industry average

Corporate executives at LikeReal, Inc. decide to compete in the remote model airplane industry by making the largest model planes available. By doing this, they completed part of their

business strategy

A ________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

business-level strategy

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as

capabilities

In an industry, the threat of entry is high when

capital requirements are low.

A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n)

competitive advantage

Underperformance relative to other firms in the same industry or the industry average results in a(n) ________ for a firm.

competitive disadvantage

Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Cloud Cones best exemplifies a

core competency.

Strategic leadership pertains to the use of power and influence by ________ to direct the activities of others when pursuing an organization's goals.

corporate executives

The CEO of Chyron Media has decided to enter the markets of emerging nations like China and Brazil. This means that the books, magazines, and websites published under the Chyron Media banner would be made available in these nations. Which of the following strategies does this scenario best illustrate?

corporate strategy

Bargain Styles Inc. is an apparel company that caters to the highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Bargain Styles applying?

cost-leadership

Tangles Costume Jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Tangles using?

cost-leadership

According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were

easy to imitate

________ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.

economic value created

Swan Song is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Swan Song is following a

focused differentiation strategy

True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high-quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped TMC sustain its competitive advantage?

high costs involved in imitation

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on

increasing the perceived value created for customers, which allows it to charge a premium price.

After carefully assessing the market potential for solar-powered mobile devices, the top-level executives of Futuretronics Inc. decided that the company would be launching a line of solar-powered tablets within the next two years. This would mean that the tablet division would need to immediately begin research and development efforts. Which of the following strategies in the planned emergence model does this best illustrate?

intended strategy

Quick Market Inc. is a food supply company that wants to sell its products directly to consumers through mail order instead of going through supermarkets and other stores. However, supermarket chains want to make this transaction either illegal or more difficult for Quick Market. To accomplish this, they are using ________ to influence the political process.

lobbying forces

A firm's business strategy can lead to a competitive advantage if it allows the firm to

perform different activities than its rivals.

The difference between the price charged for a product and the cost to manufacture it is referred to as the

producer surplus

The "Natural Nourishment" granola bars manufactured by Global Good Foods have been the top-selling granola bars in the market. Though the market for granola bars is flooded with competitors, Global Good has been able to maintain its market position for a long time. This is mainly attributed to the pleasant texture of its granola, which comes from a proprietary processing technique used by the company. This competency of Global Good Foods will be considered as a(n) ________ resource in the VRIO framework.

rare

________ are the legal owners of public companies.

shareholders

Top-down strategic planning as an approach to the strategic management process will be most effective when the

size of the firm is large

If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally

stake out a unique position within the industry.

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period.

A ________ is best described as any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

strategic initiative

As the CEO of a conglomerate, Eva Morris exhibited her strong commitment toward the company's core value that customers' well-being is more important than profit when she convinced the board of directors to liquidate the company's pesticide subsidiary. The pesticide brand sold by her company was a major revenue earner in lesser-developed nations, but studies indicate that it is a carcinogen. Eva persuaded the board that the company had to be responsible toward society. In this scenario, Eva has demonstrated

strategic leadership

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C).

strategic position

Strategic thinking is different from strategic planning in that

strategic thinking includes all types of information sources while strategic planning does not

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

strategic trade-offs

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?

strategy analysis

In ________, a firm frames a guiding policy to address the competitive challenge.

strategy formulation

Through ________, a firm puts its guiding policy into practice by employing a set of coherent actions.

strategy implementation

Powell Lighting was the first company to start selling LED light bulbs in its country—a product that gained popularity among diverse groups. Soon, other companies started to sell their own brands of LED bulbs, thereby giving Powell Lighting ample competition. In response, Powell Lighting decided to limit its LED light bulbs to outdoor models. However, it ensured that these models were the longest-lasting and lowest-priced on the market. With this innovation, Powell Lighting consistently outperformed its competitors for ten years. In this scenario, Powell Lighting maintained a ________ through its innovative strategy.

sustainable competitive advantage

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's

tangible resources

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

the balanced-scorecard model

Which of the following bestdescribes a strategic trade-off?

the tension between value creation and the pressure to keep costs in check

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

the value (V) the consumer attaches to the dress

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

the value and the cost position of the firm relative to its competitors

The internet service provider industry in the country of Megalopolis is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the internet service provider industry, the

threat of new entrants is most likely low.

The cost of capital to create a product is a fixed cost because it is

unaffected by consumer demand.

Molly Hue Apparels Inc. (MHA) had been outsourcing its production to less-developed countries in order to reduce its cost of production. With the emergence of its competitor, Hova Inc., MHA lost its competitive advantage. Hova had its production units in its home country that allowed the company to bring out the latest trends to the market earlier than MHA. Also, MHA frequently suffered due to political instability and lack of intellectual property laws in the outsourced countries. Thus, parts of MHA's strategies became obsolete and it had to relocate its production. What are such obsolete strategies referred to as in the planned emergence model?

unrealized strategy

Crystal Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Crystal Tech Inc. to increase its profitability by lowering its production costs. Thus, Crystal's competency in designing and manufacturing microprocessors will be considered a(n) ________ resource in the VRIO framework.

valuable

________ denotes the dollar amount a consumer would attach to a good or service.

value

Product features, customer service, and complements are all examples of important

value drivers