Business Policy Ch. 1-5 Quiz

If TechnoGeek and VarsityBlue compete in the same market for the same customer and TechnoGeek generates $900 of economic value each time it sells a product or service while VarsityBlue generates $400 of economic value each time it sells a product or service, TechnoGeek has a(n) ________ of $500.

competitive advantage

In many ways, the difference between traditional economics research and strategic management research is that the former attempts to explain why ________, while the latter attempts to explain________.

competitive advantages should not persist; when they can

List the elements of the general environment.

- technological change - demographic trends - cultural trends - economic climate - legal and political conditions - specific international events

The best example of a firm following a cost-leadership business strategy is

Ryanair

Resources in the resource based view are defined as the tangible and intangible assets that a firm controls, which it can use to conceive and implement its strategies

TRUE

According to the S-C-P model, attributes of the industry structure within which a firm operates define the range of options and constraints facing a firm.

True

The five forces framework is based on the S-C-P model and identifies the five most common threats facing firms from their local competitive environment and the conditions under which these threats are more or less likely to be present.

True

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. Given Sematechs business level strategy, which organizational structure is the most appropriate?

U-form structure

The two types of measures of competitive advantage include:

accounting measures and economic measures

If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage, this competitive advantage is said to be protected from imitation by

casual ambiguity

If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of

competitive dynamics

Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog were considering expanding beyond the cosmetics industry into pharmaceuticals in order to gain competitive advantages by operating in multiple markets and industries, this would be an example of which type of strategy?

corporate level strategy

A firm that chooses a _______ focuses on gaining advantages by reducing its cost below all of its competitors.

cost-leadership business strategy

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. Sematech is pursuing which strategy?

cost-leadership business strategy

The business level strategy Coach is pursuing is likely to

decrease the threat of new entrants due to the additional cost they would face to overcome Coach's reputation advantages

________ exists when a firm's costs rise as a function of its volume of production

dis-economies of scale

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. If Sematech were to continue seeking methods to maintain the company's cost-leadership position that would be costly to duplicate, which of the following is most likely to be a basis of cost leadership that may be costly to duplicate?

exploiting learning-curve economies

Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a

external analysis

The threat of direct competition tends to be high when

firms are unable to differentiate their products

The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choice.

general environment

The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of

human resources

If firms that do not possess valuable and rare resources or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed

imperfectly imitable

Economies of scale are said to exist when the ___________________________________ are associated with ________.

increases in firm size (measured in terms of volume of production) ; lower costs (measured in terms of average cost per unit of production)

Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog undertook an analysis to help it understand which of its resources and capabilities are likely to be sources of competitive advantage and which are less likely to sources of such advantages it would be performing

internal analysis

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. By employing a lower-cost competitive strategy, Sematech has made itself:

less vulnerable to the power of suppliers

Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as

leverage ratios

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. If Sematech's efforts to increase its production capacity resulted in increased complexity and an inability of managers to control and operate the firm efficiently, this would b an example of:

managerial diseconomies

If Coach had an organizational structure that used cross-functional teams, the members of which reported not only to their functional boss (i.e. the head of production) but also to the head of the team, Coach could be said to be using which organizational structure?

matrix

Learning-curve-cost advantages are

not restricted to manufacturing

What are 2 broad categories of differences that may lead to competitive advantage?

price setting and product differentiation

Which generic business level strategy is Coach pursuing?

product differentiation

Which of the following bases of Coach's competitive advantage is likely to be the easiest to duplicate?

product features

In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered ________ and a potential source of competitive advantage

rare

Given that the leather handbag market that Coach largely competes in can be considered a mature market, Coach should focus its product differentiation efforts on

refining products as a basis of product differentiation

Which of the following bases of Coach's competitive advantage is likely to be the most difficult to duplicate?

reputation

Which of the following bases of product differentiation does Coach appear to be employing?

reputation, consumer marketing, and product features

One feature of Coach's compensation policies is likely to be

rewards for creative flair

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. By increasing production volume in an effort to reduce costs, Sematech is pursuing which sources of cost advantage

size differences and economies of scale

resources and capabilities, such as interpersonal relations among managers and a firm's culture, that may be costly to imitate because they are beyond the ability to firms to systematically manage and influence are referred to as

socially complex

a firm's ________ is defined as its theory about how to gain competitive advantage.

strategy

Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of

sustained competitive advantage

What is the definition of Economic Value?

the difference between the perceived benefit gained by a customer that purchases a firms product or service and the full economic cost of the product or service

Overall, the average level of performance in an industry is likely to be highest when

the threat level of all five forces is low