Capstone Exam 1

determining the value of a good/service through the perspective of consumers is not a simple task because consumers have different spending habits.

Abdul and Laticia both love hot coffee. Abdul likes to keep his coffee hot during the day, while Laetitia doesn't mind drinking room temperature coffee. Abdul is willing to spend more money on a thermos than Laticia is willing to spend. This example illustrates the following major limitation of employing the economic value creation framework because a. overall macroeconomic factors such as the unemployment rate, and interest and exchange rates all have a direct bearing on stock prices. b. determining the value of a good/service through the perspective of consumers is not a simple task because consumers have different spending habits. c. accounting data focus mainly on tangible assets, which are no longer the most important. d. accounting data are historical and thus backward-looking.

Axel, the company's founder, died a few years ago, yet the company is doing well.

Axe Capital is a public stock company. Which of the following best exemplifies the legal personality of the company? a. Luis, a shareholder, can legally sell shares of Axe Capital in the stock market. b. Jennifer is a shareholder of Axe Capital but does not have any managerial duties. c. Will, an employee at Axe Capital, is not responsible for any losses that Axe Capital incurs. d. Axel, the company's founder, died a few years ago, yet the company is doing well.

Differentiation

Skin Science Inc. produces a line of skincare products that it sells at higher prices than its competitors. The company has a large and loyal customer base due to its unique formulations, high-quality ingredients, and superior customer service. Which of the following generic business strategies has Skin Science adopted in this scenario? a. cost-leadership b. differentiation c. market penetration d. product diversification

to give all children in the United States the opportunity to attain an excellent education

The Founder of Teach for America, Wendy Kopp, wants to make teaching an attractive option for promising young professionals. Identify the phrase that represents the vision she developed for Teach for America. a) to improve standardized test scores across the board b) to cut wasteful spending from education budgets c) to encourage parents to take a more active role in their children's education d) to give all children in the United States the opportunity to attain an excellent education

The company identity and budget are entirely aligned around creating shared value.

Which of the following descriptions correctly characterizes a CSV perspective? a. The company identity and budget are entirely aligned around creating shared value. b. The company's budget can easily be modified in response to shifting preferences. c. The company commitment to social responsibility is subject to external pressures. d. The company's budget includes philanthropic contributions designed to "do good."

a tennis pro shop that sells high-quality, custom racquets priced at $350 dollars per racquet

Which of the following examples uses a focused differentiation strategy? a. a tennis pro shop that sells high-quality, custom racquets priced at $350 dollars per racquet b. a coffee shop that offers mediocre lattes and brewed coffee at a price of $5 per small cup c. a hotel chain that offers high-quality furnishings and service with room rates under $75 per night d. a clothing brand that offers gender-neutral hoodies and sweatpants priced at $20 per item

the composition of the strategic group to which the firm belongs

Which of the following external forces is a part of a firm's task environment? a) the composition of the strategic group to which the firm belongs b) the interest rates prevalent in the economy in which the firm operates c) the inflation level in the economy in which the firm operates d) the recent innovations in process technology, including lean manufacturing

We will adhere to universally accepted and accurate accounting principles.

Which of the following goals relates to the G dimension of ESG criteria for evaluating company performance? a. We will oppose all forms of racial, gender, and sexual discrimination. b. We will reduce our carbon footprint by 50 percent or more in five years. c. We will adhere to universally accepted and accurate accounting principles. d. We will guarantee fair wages and human rights throughout out supply chain.

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

Which of the following statements accurately brings out the difference between tangible and intangible resources? a. Tangible resources contribute to a company's competitive advantage, whereas intangible resources have little effect on competitive advantage. b. Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased. c. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. d. Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily replicated.

scenario planning

Which of the following strategy plans might work best in an industry that is considered a fast-changing environment with new laws going into effect regularly? a) scenario planning b) top-down planning c) bottom-up planning d) dominant planning

false

A CSV perspective leads to tinkering with isolated components as needed; in contrast, the CSR approach is an integral part of a firm's competitive strategy from the beginning. (t/f)

profit potential

According to the five forces model, the stronger the five forces, the lower the industry's a) bargaining power. b) profit potential. c) economic risk. d) monopolistic potential

network effects

All Signal Inc., a telephone service provider, has a large user base mainly because phone calls and messages between All Signal users are free. When people switch to an All Signals network, their entire network of family and friends is likely to switch to the same network to receive the benefit of free calls and messages. In addition, an existing user who gets a new user to register with All Signal Inc. is given a free wireless connection. This has helped to keep competition away from All Signal. In this scenario, which of the following factors is acting as an entry barrier for All Signal Inc.? a) economies of scale b)high capital requirement c) network effects d) high fixed costs

true

Applying the five forces model to business-level strategy allows managers to assess the benefits and risks of both cost-leadership and differentiation strategies. (t/f)

Water King can charge a premium price on its boat engines.

Both Lorenzo's Engines and Water King incur a cost of $5,000 to manufacture a boat engine. However, the economic value created by Water King is more than that created by Lorenzo's Engines. What does this indicate? a. Lorenzo's has a competitive advantage over Water King. b. Both Lorenzo's and Water King have achieved competitive parity. c. Water King can charge a premium price on its boat engines. d. Lorenzo's has created a higher value gap than Water King.

false

Differentiation and cost-leadership strategies are only effective in manufacturing industries.

highlight the number of celebrities who use SmartReads e-readers.

Facing stiff competition in the e-reader market, SmartReads wants to protect its competitive advantage by increasing the perceived value of its reader. SmartReads's best strategy to accomplish this would be to a. increase the cost of production to add innovative new features. b. highlight the number of celebrities who use SmartReads e-readers. c. lower the retail price of its e-reader to attract new customers. d. try to imitate some of the features found in competing products.

economies of scale

Given the structure of the automobile industry, entering the auto manufacturing industry seemed risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche? a) network effects b) economies of scale c) customer switching costs d) capital requirements

Sociocultural

In recent years a growing number of U.S. consumers have become more health conscious about what they eat. According to the PESTEL Framework this trend could best be classified as a________ trend. a) sociocultural b) healthy eating c) political d) legal

Ethical

Industrial Drills, a company that manufactures industrial tools, incurs higher costs because of its refusal to outsource its manufacturing to countries where labor costs are lower. The reflects Industrial Drills' ______ responsibility. a. economic b. legal c. ethical d. demographic

limited liability for investors.

Josie wants to invest in the stock market but is afraid of losing more money than what she invests. Josie need not worry because of a. limited liability for investors. b. transferability of investor ownership. c. legal personality. d. separation of legal ownership and management control.

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

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit? a) Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry. b) Suppliers have weak bargaining power because they offer products that are not differentiated. c) Entry barriers in the industry are high, resulting in hardly any new airlines popping up. d) Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

Red Queen

Lawrence decided to copy the competition to gain a competitive advantage for his company. After a year, he realized his company failed to gain such an advantage. Lawrence most likely failed because of the _________ effect. a. Green pawn b. grandiose c. globalization d. Red Queen

true

One of Apple's core competencies is establishing and maintaining a digital ecosystem. (t/f)

false

One of holding company Alphabet's tangible resources is Google, its most prominent subsidiary. (t/f)

core rigidities

One of the reasons that Circuit City filed for bankruptcy was due to its inability to reinvest, hone, and upgrade its once-impressive resource base. Ultimately, Circuit City's core competences became a) core rigidities. b) value chain activities. c) strategic resources. d) costly to imitate.

value drivers

Product features, customer service, and complements are all examples of important a. cost curves. b. cost drivers. c. value curves. d. value drivers.

resource heterogeneity

Southwest Airlines (SWA) and Alaska Airlines (ASA) both compete in the same strategic group as low-cost, point-to-point airlines, but they draw upon different resource bundles. SWA's employee productivity tends to be higher than ASA's because the two companies differ in their human and organizational resources. This example best illustrates which of the following assumptions regarding the resource-based view? a) resource immobility b) resource allocation c) resource homogeneity d) resource heterogeneity

costly, long-term-oriented, and difficult to reverse.

Strategic commitments are actions that are A) inexpensive, long-term-oriented, and difficult to reverse. b) inexpensive, short-term-oriented, and easy to reverse. c) costly, long-term-oriented, and difficult to reverse. d) costly, short-term-oriented, and easy to reverse

how

The broad question that business-level strategy answers is________ the firm will compete. a. when b. where c. who d. how

Exchange relationship

The interaction between a firm and its diverse internal and external stakeholders is best described as a(n) a. ergonomic relationship b. cartel arrangement c. exchange relationship d. fiduciary responsibility

Stategic Management

The process that describes the method by which managers conceive of and implement a strategy that can lead to a sustainable competitive advantage is called a) strategic process b) strategic technology c) strategic management d) strategic planning

False-competitive advantage is only achieved by generating above average returns, relative to competition

Tony's Pizza shop is able to net $10,000 a week; this makes the shop profitable. Its number one competitor, Leo's Pies, is also profitable, netting $12,000 a week. Lil Anthony's Pizza Palace nets $13,000 a week. Since Tony's Pizza Shop is profitable, we can conclude that it has a competitive advantage in its industry. a. True-competitive advantage is achieved through profitability alone b. True-competitive advantage is achieved since Tony has a positive net income c. False-competitive advantage is only achieved by generating above average returns, relative to competition d. False-Tony more than likely has a sustained competitive advantage since he's been in business longer.

environmental, social, governance

What does ESG stand for in corporate strategy? a. ethical, sustainable, global b. environmental, social, governance c. environmental sustainability goals d. economic and societal goals

Customer-oriented visions tend to be more flexible when adapting to changing environments.

Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented? a) Customer-oriented visions tend to have a more short-range view of changing environments. b) Customer-oriented visions tend to have a more myopic view of changing environments. c) Customer-oriented visions tend to be more flexible when adapting to changing environments. d) Customer-oriented visions tend to be more stable when dealing with changing environments.

creating superior value while containing costs

the goal of a good strategy is focused primarily on a. creating superior value while containing costs b. making as much money as possible c. employing lean manufacturing and Six Sigma d. encouraging investors to buy more shares of the firm

All people should have access to food and fibers produced using sustainable farming methods.

Agro Ecology Inc. is a company that manufactures mechanical and biological products to support sustainable farming methods. The company envisions that sustainable farming will replace industrial agricultural practices in the near future. Which of the following statements would make an accurate vision for Agro Ecology? a) Agro Ecology aims to make working fun and pleasurable for its employees. b) We provide environmentally safe agricultural products by investing in research and innovation. c) All people should have access to food and fibers produced using sustainable farming methods. d) We make products that support environmentally conscious agriculture.

Tangible Resources

Amazon's network of distribution centers allows it to drastically reduce its delivery times compared with most other online retailers. These distribution centers are examples of Amazon's a. core competency. b. intangible resources. c. tangible resources. d. capabilities.

GeoVax Inc. will be more flexible than First Pharma Inc. when adapting to changing environments.

First Pharma Inc. and GeoVax Inc. are two competing firms in the pharmaceutical industry. While First Pharma Inc.'s vision is "to be a preeminent drug manufacturer in the industry," GeoVax Inc.'s vision is "to make good health a reality for everyone around the world." Which of the following is an implication of these different visions? a) GeoVax Inc.'s vision is more product-oriented than the vision of First Pharma Inc. b) First Pharma Inc. is more likely to have a positive relationship between its vision and firm performance than GeoVax Inc. c) First Pharma Inc.'s vision is more long-term and futuristic than GeoVax Inc.'s vision. d) GeoVax Inc. will be more flexible than First Pharma Inc. when adapting to changing environments.

core competency

Frozen Gold is a fast-growing chain of ice cream shops. It has developed an edge over its competitors by providing customers with a wide array of unique flavors and fostering a hip atmosphere in its stores. This advantage of Frozen Gold best exemplifies a a. markup. b. resource flow. c. capital gain. d. core competency.

firm will have a sustained competitive advantage because of unique resources that are difficult for others to replicate.

In the context of the resource-based model of competitive advantage, if a successful firm exhibits resource immobility it means that the a. rival firms have better accessibility to quality resources, which they will be able to acquire and deploy to their benefit. b. firm will have a sustained competitive advantage because of unique resources that are difficult for others to replicate. c. competitors can easily replicate or copy the firm's resource bundles and capabilities. d. resources of the firm cannot be effectively deployed within its own organization.

Avenir Inc. has been able to outperform its competitors because its method of training cross-department teams is difficult for competitors to replicate.

In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility? a. Tuffy Gaskets Inc has earned a good reputation among its shareholders by investing heavily inup-to-date production equipment that increases productivity. b. Havermill Communications has lost market share because it was slow to change to digital publishing. c. Rev-Em Motorcycles has been able to gain a competitive advantage because of its ability to efficiently move its resources from one manufacturing unit to another. d. Avenir Inc. has been able to outperform its competitors because its method of training cross-department teams is difficult for competitors to replicate.

stakeholder

Sean, a retired CEO, invests capital in a start-up company that creates budgeting software. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Sean is the start-up company's a. headhunter b category captain c. employee d. stakeholder

perfect competition exists.

The competitive advantage that one firm has will be short-lived in an industry in which a. resource immobility is high. b. perfect competition exists. c. resource heterogeneity is high. d. capabilities of a firm are not easily replicable.

threat of new entrants is most likely low.

The internet service provider industry in the country of Wakanda 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 a) threat of substitutes is most likely high. b) threat of new entrants is most likely low. c) bargaining power of buyers is most likely low. d) entry barriers are most likely nonexistent.

beating rivals on product attributes while offering a better price.

When a firm is able to successfully employ a blue ocean strategy, it will create a competitive advantage by a. combining high quality and product features to provide service that customers truly value. b. using a first-mover advantage to be the lowest price in the market. c. winning market share with a highly differentiated product. d. beating rivals on product attributes while offering a better price.

Threat of Entry

Which of the five forces is Starbucks answering when it repeatedly upgrades and refreshes its stores and offerings? a) threat of entry b) power of supplier c) competitive rivalry d) threat of substitute products

The social responsibility of a business is to increase its profits.

Which one of the following statements below can best be linked to the Nobel laureate Milton Friedman? a. Corporate social responsibility is absolutely vital to a firm's long-term success. b. The social responsibility of a business is to increase its profits. c. Corporate social responsibility is a universally accepted and practiced principle. d. Corporate social responsibility should be incorporate in MNEs.

the stage of the business cycle that the country is in

Khaled, a manager, is writing an analysis of his employer's current and possible future revenues. Which of the following could he identify as an economic factor in his firm's external general environment? a) the government regulations and laws in the country in which the firm exists b) the stage of the business cycle that the country is in c) the values and norms prevalent in the society in which the firm operates d) the bargaining power of the firm's suppliers and buyers

organizational structures are aligned with the firm's vision statement.

A positive relationship between vision statements and firm performance is more likely to exist when a) visions are product-oriented. b) internal stakeholders are isolated from defining and revising the visions. c) organizational structures are aligned with the firm's vision statement. d) vision statements are equivalent to listening to the customers.

competition

In the five forces model developed by Michael Porter,________ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry, such as buyers, suppliers, the potential new entry of other firms, and the threat of substitutes. a) a stakeholder b) regulation c) competition d) a barrier to entry

A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision.

Which of the following summarizes the difference between a firm's vision and mission? a) A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision. b) A vision states the ethical values of a firm; a mission states the monetary goals of a firm. c) A vision states how much a firm wants to earn; a mission states how these earnings will be accomplished. d) A vision states the management values of a firm; a mission states the values of the other workers.

false

A SWOT analysis would provide a definitive answer as to whether a firm's growing footprint in overseas markets is a strength or weakness. (t/f)

joint company, community, and societal value creation.

A company employing a CSV perspective focuses on a. citizenship, philanthropy, and fair-trade purchasing. b. joint company, community, and societal value creation. c. creating value through its competitive advantage. d. the external public relations benefits of "doing good."

perform different activities than its rivals.

A firm's business strategy can lead to a competitive advantage if it allows the firm to a. execute the same activities performed by the rivals in a similar manner. b. reduce the value gap. c. perform different activities than its rivals. d. position itself below the productivity frontier.

the gap between the value the firm's product generates and the cost to produce it is large.

A firm's strategic position is likely to be strong when a) the entry barriers within the industry it operates in are low and the exit barriers are high. b) its suppliers and vendors can easily forward-integrate and buyers can backward-integrate. c) all the five forces in Porter's model are strong. d) the gap between the value the firm's product generates and the cost to produce it is large.

strategic position

A firm's________ is based on creating value for customers (V) while containing the cost (C). a) strategic position b) growth strategy c) industry analysis d) co-operative strategy

strategic position

A firm's________ is based on creating value for customers (V) while containing the cost (C). a) strategic position b) industry effects c) advantage of the marketplace d) industry analysis

Tragedy of the Commons

A problem that arises when individuals, companies, or nations pursue their own self-interest without considering the well-being of society or the global community is known as a a. competitive disadvantage. b. Nash equilibrium. c. black swan event. d. tragedy of the commons.

execution

A successful strategy details a set of goal-directed actions that managers make to gain and sustain a competitive advantage.; in order to create this strategy, managers must focus on three pillars. Which of the following below is NOT one of these pillars? a. formulation b. execution c. implementation d. analysis

business-level strategy

A________ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market. a. business-level strategy b. code of ethics c. mission statement d. functional-level strategy

have the most legitimate claim on profits.

According to the perspective of shareholder capitalism, shareholders in public stock companies a. are restricted from buying shares of two competing companies. b. have the most legitimate claim on profits. c. have significant decision-making power. d. have unlimited financial liability.

intangible resources

According to the resource-based view, a firm's competitive advantage often stems from its a) intangible resources. b) tangible resources. c) dynamic strengths. d) external environment.

shareholders

As the legal owners, ___________ have the most legitimate claim on a company's profits. a. creditors b. employees c. shareholders d. board members

enthusiastic company culture

As the manager of a relatively new company assessing what could give your business a competitive advantage, you are analyzing company resources to identify core competencies. Which of the following resources is most likely to generate a competitive advantage? a. new production facilities b. large cash holdings c. stockpile of supplies d. enthusiastic company culture

non-price competition

Firms that are classified as operating in an oligopoly tend to have some pricing power if they are able to differentiate their product or service offerings from those of their competitors, so the recommended mode of competition is a) non-price competition. b) price-based competition. c) hypercompetition. d) service-based competition.

Isolating Mechanisms

Firms that can employ and establish________ are more likely to protect their competitive advantage from being copied and/or eroding away. a) isolating mechanisms b) key human capital c) cash equivalents d) a strong competitor response

more competitive rivalry than firms outside their strategic group.

Firms that compete within the same strategic group generally experience a) more competitive rivalry than firms outside their strategic group. b) less competitive rivalry than firms outside their strategic group. c) the same competitive rivalry than firms outside their strategic group. d) no competitive rivalry because they are substitutes.

upgrade its engineering department and improve its supply chain.

CarTsar Inc. is a manufacturer of automobile parts, which it sells to retail auto supply stores. Its core competencies include superior design and engineering capabilities, as well as a highly integrated and efficient supply chain. To sustain its competitive advantage, CarTsar should first a. seek to replicate its nearest competitor's competency in innovative marketing. b. attempt to cut costs by replacing assembly line workers with robots. c. upgrade its engineering department and improve its supply chain. d. diversify its product offerings by developing parts for construction equipment.

simple to imitate

Crocs, inventor of the iconic plastic clog, was unable to sustain its competitive advantage over its rivals because its key strategic resource was a. overly sophisticated marketing. b. not patented in a timely manner. c. simple to imitate. d. valuable in the eyes of the consumer.

I disagree; firms should only pursue this strategy if they are able to reconcile the tradeoffs of each generic strategy.

Evaluate the following statement: Strategic leaders should always try to pursue a blue ocean strategy because it is the most complex, coveted, and most desirable strategy that exists. a. I agree; firms should always pursue a blue ocean strategy because the benefits outweigh the cost. b. I agree; firms should pursue a blue ocean strategy because it's harder for competitors to replicate. c. I disagree; firms should never pursue a blue ocean strategy because it's much too complex. d. I disagree; firms should only pursue this strategy if they are able to reconcile the tradeoffs of each generic strategy.

It depends, because the effectiveness of vision statements differs by type.

Do vision statements help firms gain and sustain competitive advantage? a) It depends, because the effectiveness of vision statements differs by type. b) Yes, but only if the vision statements are short, concise and are well written. c) No, vision statements do not, but mission statements do. d) They do only if the vision statement follows the strategic management process.

knife maker that produces high-end chef's knives.

Five Star Inc. is a knife manufacturer known for its high-quality steel chef's knives, and it follows a differentiation strategy. In this scenario, Five Star Inc. should ideally compare its strategic position with a a. knife company that sells refurbished steel knives. b. knife retailer that sells high-end, premium knives. c. knife maker that manufactures low-priced knives. d. knife maker that produces high-end chef's knives.

position power.

Gina is the founder and CEO of a successful technology firm. In a memo, she informs the company's employees that remote workers will be required to attend onsite teambuilding events at least once per quarter. In this example, Gina's authority to institute a policy change is based on a) strategic leadership b) informal power c) position power d) strategic initiative

Great Sound uses recycled materials to create its commercially successful products.

Great Sound Inc. is a publicly traded company that specializes in manufacturing consumer electronics. Which of the following best exemplifies the implementation of a shared value creation framework at Great Sound Inc.? a. Great Sound's employees work in shifts to adhere to the eight-hour workday rule. b. Great Sound's products are developed in a high-tech R&D facility based in Florida. c. Great Sound uses recycled materials to create its commercially successful products. d. Great Sound has a customer reward program for its most loyal customers.

Threat of new entrants will be low.

How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces? a) Threat of new entrants will be low. b) Bargaining power of suppliers will be high. c) Availability of complements will be low. d) Threat of substitute products and services will be high.

delivers low-cost products and services to a specific, narrow part of the market.

In a focused cost-leadership strategy, a firm a. caters to the segment of the market that is least cost sensitive. b. provides high-priced products for many different segments of the mass market. c. delivers low-cost products and services to a specific, narrow part of the market. d. focuses on reducing the economic value created to drive down costs.

implementation

In strategic management, strategists engage in three pillars. These three pillars include the _______ of major goals and objectives. a. implementation b. presentation c. objectification d. unification

entering the aircraft manufacturing industry requires huge capital investments.

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

decides a course of action to address the stakeholders' concerns

In the final step of the stakeholder impact analysis, a firm a. identifies its stakeholders' interests and claims b. differentiates its internal stakeholders from its external stakeholders c. recognizes the opportunities and threats stakeholders present d. decides a course of action to address the stakeholders' concerns

stakeholders can be both internal and external while stockholders own shares of a firm and are classified as internal to the firm

John is a bit confused about the difference between stakeholders and stockholders. You meet with John and inform him that the main difference is a. stakeholders are both internal and external to the firm while stockholders are considered external to the firm b. stakeholders are considered internal to the firm while stockholders are external to the firm c. stakeholders can be both internal and external while stockholders own shares of a firm and are classified as internal to the firm d. stakeholders are external to the firm while stockholders are considered internal to the firm

AFI strategy framework

Juan wants to open his own hot dog restaurant but doesn't know anything about business. He needs help determining who his competition is, how he should craft his strategy to compete and how he'll implement his strategy to achieve a competitive advantage. He's hired you to help him get started. As a result, you will probably use which of the following? a. AFI strategy framework b. Red Queen effect c. competitive benchmarking d. stakeholder impact analysis

internal stakeholder

Louise owns a large portion of Sturdy Appliance's stock. However, she is not employed by the company. In this scenario, Louise is the company's a. external stakeholder b. internal stakeholder c. creditor d. customer

economies of scope

Marriott is able to create greater economic value than its competitors due to its ability to take advantage of________, which describe the savings that come from producing two (or more) outputs at less cost than producing one output individually, while utilizing the same amount of resources and technology. a. diseconomies of scale b. economies of scope c. economies of scale d. cost of input factors

Mohawk would pass a major portion of this increase along as a price increase to its customers.

Mohawk is a leader in sustainable and innovative carpeting and floorings, as evidenced by its signature product, the world's first organic cotton carpet. Its product is unique and has appealing customer attributes. If Mohawk's raw material costs increased by 12 percent this year, what would be the likely outcome? a. Mohawk would lower profit margins to absorb this cost increase. b. The company would launch an all-out effort to reduce other costs by 12 percent. c. Mohawk would pass a major portion of this increase along as a price increase to its customers. d Mohawk would seek lower-cost materials, even if it meant losing the carbon-neutral label on the product.

both ethical and effective in advancing a company's goals.

Organizational values help individuals make choices that are a) legal but unethical. b) both illegal and effective. c) both ethical and effective in advancing a company's goals. d) ethical but ineffective in achieving long-term success.

How do we accomplish our goals in the organization?

Organizational values help people make choices that are ethical and company-goal-oriented. These values answer which strategic management question? a) What do we want to accomplish as a company? b) How do we accomplish our goals in the organization? c) What are we about as a firm compared to our competitors? d) What is the best way to compete in the industry?

have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.

PolyCon Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports strategy scholars' warning that public companies a. often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation. b. have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events. c. do not focus enough on increasing firm profits, thereby contributing to low value creation. d. have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events.

Cost Leadership

Sophie's sandwich shop offers burgers and sandwiches similar to national competitors in the fast-food market but at a much lower price. What strategy is Sophie's using? a. cost-leadership b. differentiation c. niche marketing d. product diversification

Shareholders of Stark Industries are responsible to the company only to the capital they have invested.

Stark Industries is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability? a. Employees of Stark Industries are legally permitted to invest their capital in the company's stock. b. Employees of Stark Industries are also the owners of the company. c. Shareholders of Stark Industries are responsible to the company only to the capital they have invested. d. Shareholders of Stark Industries are not permitted to trade their company stock at the New York Stock Exchange (NYSE).

corporate executives

Strategic leadership refers to the use of power and influence by________ to direct the activities of others when pursuing an organization's goals. a) production workers b) lower-level managers c) external stakeholders d) corporate executives

upper-echelons theory

The CEO of EveryCar was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable, low-maintenance vehicles that could be bought by low-income households. Which of the following does this example demonstrate? a) dominant strategic planning b) Level-5 leadership pyramid c) upper-echelons theory d) scenario planning

identifying who the stakeholders are

The first step in stakeholder impact analysis involves which of the following? a. identifying the social responsibilities to stakeholders b. identifying the opportunities that stakeholders present c. identifying the interests of the stakeholders d. identifying who the stakeholders are

legal responsibilities

The minimum wage in the country of Hanns is $8 an hour. Delish, a restaurant in Hanns' capital city, pays its servers $8 per hour. However, the management of the restaurant feels that this amount is excessive for workers whole only job is to clears tables. By continuing to adhere to the rules set by the government of Hanns, which of the following responsibilities is Delish satisfying? a. legal responsibilities b. philanthropic responsibilities c. ethical responsibilities d. demographic responsibilities

a CSV approach

The strategic decision to design a supply chain to provide higher quality products at a lower cost while also reducing environmental impact represents a. a CSV approach. b. shareholder capitalism. c. fair-trade purchasing. d. a competitive advantage.

True

The stronger the five forces, the lower the industry's ability to earn above-average profits and gain and sustain a competitive advantage. (t/f)

false

The term "tragedy of the commons" refers to a problem that affects a company's shareholders but not its management or board of directors. (t/f)

tangible

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are a. market brand value. b. organizational culture. c. intangible. d. tangible.

False

The upper-echelons theory favors the idea that effective strategic leadership results from innate abilities rather than learning. (T/F)

The incumbent firms will spend more to satisfy their existing customers.

TicToc Corp. is a manufacturer of smart watches that track the wearer's heart rate and sleep patterns. Which of the following is most likely an implication of new firms entering this industry? a) The bargaining power of buyers will reduce. b) The industry's overall profit potential and sales will increase. c) The rivalry among existing competitors will reduce. d) The incumbent firms will spend more to satisfy their existing customers.

they provide more aspirational visions.

Visionary companies are able to outperform their competitors because a) their vision statements are more product-oriented. b) they provide more aspirational visions. c) their visions are primarily financial. d) they isolate internal stakeholders in defining their visions.

Corporate Social Responsibility

Wellness Data Corp. focuses on its competitive advantage as its fundamental and top priority; it uses some of its profits to do good in its community. This demonstrates a. a balanced scorecard. b. creating shared value. c. corporate social responsibility. d. a sustained competitive advantage.

SWOT analysis

When conducting a________ it's best to examine both PESTEL and Porter's five forces analyses because these tools focus on the external environment. a) SWOT analysis b) value chain analysis c) VRIO framework d) resource-based analysis

selling vaccines at a subsidized price in a less developed country even though this results in reduced shareholder returns

Which of following practices of a firm satisfies its ethical responsibilities? a. using plastic as the packaging material, even though it is harmful to the environment, yet legal b. outsourcing production to a less developed country and paying wages that are below its own country's accepted minimum wages c. using advertising and other forms of promotion to endorse luxurious lifestyles d. selling vaccines at a subsidized price in a less developed country even though this results in reduced shareholder returns

a manager taking care of the firm's operations in a foreign market

Which of the following best qualifies as a firm's internal stakeholder? a. an auditor assigned to the firm by a federal government agency b. a labor union with whom the firm's employees can affiliate c. a manager taking care of the firm's operations in a foreign market d. a competitor manufacturing the same products as that of the firm

Emerald Autos reduces engine emissions below federal guidelines to reduce pollution.

Which of the following is an example of a business acting upon an organizational core value? a) Emerald Autos reduces engine emissions below federal guidelines to reduce pollution. b) Emerald Autos lowers its retail prices to gain an advantage over its closest competitor. c) Emerald Autos finances research for developing more powerful engines. d) Emerald Autos launches an ad campaign that promotes the company as being environmentally friendly.

the ability to engage in forward vertical integration

Which of the following is not captured when examining a competitive industry structure? a) the ability to engage in forward vertical integration b) the number and size of an industry's competitors c) the firm's degree of pricing power d) the type of product or service (commodity or differentiated product)

What customer needs, wishes, and desires will we satisfy?

Which of the following questions should strategic leaders ask while formulating a business-level strategy? a. When should we introduce our product/service in the market? b. What customer needs, wishes, and desires will we satisfy? c. How do the employees, shareholders, and customers view us? d. Which corporate governance mechanisms should we use?

Nowadays Corp. distributes only 40 percent of its annual profit after taxes to shareholders, while the remaining is invested for further research and distributed among employees and the local community

Which of the following scenarios best illustrates a good stakeholder strategy? a. ASI Inc. follows a strategy in which maximization of the shareholder's wealth is the primary concern of the managers b. Ben's Buttons Inc. ensures that its employees are paid the least in the industry so that its external stakeholders can get the best price. c. Nowadays Corp. distributes only 40 percent of its annual profit after taxes to shareholders, while the remaining is invested for further research and distributed among employees and the local community d. Knights for Lights Corp. ensures that it is fully exploits free natural resources, so that most of its profits go to shareholders in the form of dividends.

a firm's ethical responsibilities go beyond its legal responsibilities

Which of the following statements about the social responsibilities of a business is accurate? a. a firm's ethical responsibilities go beyond its legal responsibilities b. shareholders mandatorily require a firm to perform its ethical, but not its philanthropic responsibilities. c. legal responsibilities are foundational building block of a firm's social responsibility d. economic responsibilities are often subsumed under the idea of corporate citizenship, reflecting the notion of voluntarily giving back to society

Doing so could yield significant business opportunities that could improve the living standard of people living below the poverty line around the world.

Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework? a. Doing so could yield significant business opportunities that could improve the living standard of people living below the poverty line around the world. b. Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. c. Doing so could be the only way to meet stockholder expectations in a highly competitive market. d. Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.

core competencies

________ allow(s) a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost. a) Core competencies b) Strengths c) A value chain d) Competition

organizational core values

________ are best described as the ethical standards and norms that govern the behavior of individuals within a firm. a) Job descriptions b) Customs duties c) Corrective controls d) Organizational core values

false

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

separation of legal ownership and management control

Which of the following characteristics of a public stock company deals with principals and agents? a. limited liability of investors b. transferability of investor ownership c. separation of legal ownership and management control d. legal personality

Bigger & Better Inc. is "stuck in the middle" and has a competitive disadvantage.

Bigger & Better Inc. is a big-box retailer in direct competition with Walmart and Target. Bigger & Better Inc. initially tried to respond to Walmart by cutting its prices and reducing costs. Walmart has greater buying power and a more efficient supply chain; therefore, Bigger & Better Inc. was not able to compete on costs. The company then tried to differentiate itself by signing a celebrity to create an in-house line of clothing. However, Target has a celebrity clothing line that has a more differentiated appeal. The economic value created by Bigger & Better Inc. is currently less than Target and Walmart. It can be said that a. Bigger & Better Inc. is successful in creating an integration strategy positioned between Walmart and Target. b. Bigger & Better Inc. is "stuck in the middle" and has a competitive disadvantage. c. Bigger & Better Inc. is still creating an integration strategy positioned between Walmart and Target and is on the right track. It should continue this business strategy. d. Bigger & Better Inc. is "stuck in the middle" and has a competitive advantage.

following a different generic business strategy within the same industry can lead to a competitive advantage for more than one organization.

The fact that both Whole Foods (a high-end grocery store) and Aldi (an inexpensive grocery store) have a competitive advantage in the grocery store industry is an indication that a. following a different generic business strategy within the same industry can lead to a competitive advantage for more than one organization. b. following the same generic business strategy can allow for two firms competing in the same industry to have a competitive advantage at the same time. c. in order to evaluate whether Whole Foods has a sustained competitive advantage it is useful to compare it to Aldi from a cost perspective. d. in order to evaluate whether Aldi has a sustained competitive advantage, it is useful to compare it to Whole Foods from a differentiation perspective.

ComfyShoe Inc. wants to be the best manufacturer of insoles in the industry.

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

Companies exist because they create value for customers in ways that customers are unable to replicate on their own.

When performing internal analysis of firms, how would you answer the question, "Why do companies exist?" a) Companies exist because they create value for customers in ways that customers are unable to replicate on their own. b) Companies exist because they provide a means of investment income for shareholders, who otherwise would be able to invest only in government securities. c) Companies exist because they provide a tax base for government to draw upon in creating and maintaining public works projects. d) Companies exist because they give college professors something to teach about.

buyers will be reluctant to pay for a product unless the quality is acceptable.

When pursuing a cost-leadership strategy, a business must remember that a. buyers will be reluctant to pay for a product unless the quality is acceptable. b. buyers will be reluctant to pay for a product unless the quality is superior. c. buyers will be reluctant to pay for the product unless it is customized. d. product quality is more important in a broad market than in a narrow one.