Exam 1

In the United States, the time period for the right to exclude others from the use of a patented technology is ________ from the filing date of a patent application. A) 20 years B) 25 months C) 15 months D) 25 years

A) 20 years

AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply? A) AccuroDisk and TD Storage share differentiation parity. B) TD Storage has a competitive advantage over AccuroDisk in terms of perceived value. C) AccuroDisk creates a greater economic value than TD Storage. D) TD Storage is a cost-leader when compared to AccuroDisk.

C) AccuroDisk creates a greater economic value than TD Storage.

________ precisely indicates how much of a firm's sales is converted into profits. A) Break-even price B) Working capital turnover C) Return on revenue D) Inventory turnover

C) Return on revenue

________ is best described as a measure of how effectively capital is being used by a firm to generate revenue. A) Return on revenue B) Risk capital C) Working capital turnover D) Revenue per employee

C) Working capital turnover

As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to A) where to compete. B) when to compete. C) how to implement business strategy. D) how to enter target markets.

C) how to implement business strategy

A traditional top-down strategic planning process typically begins with A) employees at the operational level identifying problems within an organization. B) functional managers formulating functional strategies for their respective departments. C) strategic leaders adjusting a company's vision and mission based on environmental analysis. D) employees who have close contact with customers taking autonomous actions.

C) strategic leaders adjusting a company's vision and mission based on environmental analysis.

Strategies developed at the departmental level, such as the accounting, human resources, production, and marketing departments, within a strategic business unit are referred to as ________ strategies. A) grand B) corporate C) business D) functional

D) functional

To implement specific business strategies, general managers of strategic business units rely on A) external stakeholders. B) corporate executives. C) strategic leaders. D) functional managers.

D) functional managers.

The four-step innovation process ends with A) idea generation. B) invention. C) idea testing. D) imitation.

D) imitation.

When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as A) stuck in the middle. B) buried at the bottom. C) burned at the top. D) caught in the transition.

A) stuck in the middle.

In ________, a firm frames a guiding policy to address the competitive challenge. A) strategy control B) strategy implementation C) strategy formulation D) strategy analysis

C) strategy formulation

Ironhorse Tools has used $700,000 from its total annual earnings of $1,650,000 to invest in upgrading its manufacturing facilities. Its accounts receivable from customers is estimated to be $130,000 and accounts payable $75,000. In monetary terms, what would Ironhorse's resource flows be? A) $1,650,000 B) $130,000 C) $75,000 D) $700,000

D) $700,000

________ 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

D) Organizational core values

Merton's Toothpaste has been the leader of dental care products for about 40 years. However, this company relied too long on its competency of reducing cavities without refining or upgrading other aspects of its product. As a result, other personal hygiene companies that began to offer toothpastes with natural whitening agents gained a competitive advantage over Merton's. This case is an example of A) resource flow. B) dynamic capabilities. C) core rigidity. D) value chain.

c) core rigidity.

When do employees fail to adopt the organizational values of a firm? A) when the internal stakeholders of the firm are involved in designing the values B) when the top managers in the firm are merely paying lip service to the firm's stated values C) when the strategic leaders in the firm propagate and exhibit the same values D) when the organizational structure, such as its strategic decision making, is aligned with its values

when the top managers in the firm are merely paying lip service to the firm's stated values

Which of the following statements is true of the social responsibilities of a business? A) A firm's ethical responsibilities go beyond its legal responsibilities. B) Shareholders mandatorily require a firm to perform its ethical and philanthropic responsibilities. C) Ethical responsibilities are the foundational building block of a firm's social responsibility. D) Legal responsibilities are often subsumed under the idea of corporate citizenship, reflecting the notion of voluntarily giving back to society.

A) A firm's ethical responsibilities go beyond its legal responsibilities.

Etsuro is a management consultant. Baker Corp. asks him to evaluate their company, and he finds that the difference between the cost of producing the firm's products and the value of those products is extremely narrow. What should Etsuro suggest that Baker Corp. management do? A) Find a way to widen the gap between cost and value. B) Find a way to pass on as much profit as possible to suppliers and customers. C) Shore up the company's strong position by erecting entry barriers. D) Encourage customers to buy complements to their products.

A) Find a way to widen the gap between cost and value

) While Fun Frames incurs a cost of $12 for a pair of eyeglasses, Highwire, its competitor, manufactures a pair of glasses at $10. Both the companies are able to sell their glasses for a maximum of $30 per pair. Which of the following statements is true in this scenario? A) Fun Frames and Highwire have achieved differentiation parity. B) Fun Frames is a cost-leader when compared to Highwire. C) Fun Frames has created a greater economic value than Highwire. D) Highwire has a higher opportunity cost than Fun Frames.

A) Fun Frames and Highwire have achieved differentiation parity.

Which of the following is an implication of high employee turnover in a company? A) It results in a reduction in the company's intangible-resource stocks. B) It makes the source of the company's competitive advantage causally ambiguous. C) It makes the source of the company's competitive advantage socially complex. D) It results in greater immobility and heterogeneity of the company's resources.

A) It results in a reduction in the company's intangible-resource stocks.

________ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale. A) Minimum efficient scale B) Break-even output C) Maximum output capacity D) Optimum sustainable yield

A) Minimum efficient scale

While Tender Chicken Inc. operates in a monopolistically competitive industry, Future Wireless Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true? A) The threat of new entrants will be higher for Tender Chicken than for Future Wireless. B) Tender Chicken will have more pricing power than Future Wireless does. C) Tender Chicken will have more profit potential than Future Wireless. D) The number of buyers will be limited for both Tender Chicken and Future Wireless.

A) The threat of new entrants will be higher for Tender Chicken than for Future Wireless

Years ago, the travel industry was controlled by a few large travel companies that booked holidays, air tickets, bus tickets, and hotels for their customers. However, with the emergence of the internet, smaller travel agencies started mushrooming in the industry and customers started making their own reservations. Which of the following can be inferred from this information? A) The travel industry changed from a consolidated structure to a fragmented one. B) The pricing power of the incumbent firms in the travel industry has increased. C) The bargaining power of buyers in the travel industry has decreased. D) The structure of the travel industry changed from monopolistic competition to an oligopolistic one.

A) The travel industry changed from a consolidated structure to a fragmented one.

In an industry, the threat of entry is high when A) capital requirements are low. B) expected returns are low. C) technological know-how is industry specific. D) switching costs are high.

A) capital requirements are low.

Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of A) co-opetition. B) perfect competition. C) monopolization. D) conglomeration.

A) co-opetition.

To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to A) contribute to the firm's strategic position as either low-cost leader or differentiator. B) reduce the immobility and the heterogeneity of the firm's resources. C) create a static fit between the company's internal resources and the external environment. D) reduce the causal ambiguity and the social complexity of the firm's source of success

A) contribute to the firm's strategic position as either low-cost leader or differentiator.

Tangles Costume Jewelry offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Tangles using? A) cost-leadership B) differentiation C) niche marketing D) product diversification

A) cost-leadership

Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones are visually similar to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.? A) direct imitation B) strategic equivalence C) substitution D) innovation

A) direct imitation

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

A) the composition of the strategic group to which the firm belongs

When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale? A) 2,000-3,000 units B) 3,000-4,000 units C) below 2,000 units D) above 4,000 units

B) 3,000-4,000 units

In the context of industrial growth, which of the following statements is true of standards? A) Standards emerge exclusively from bottom-up through competition in the marketplace. B) As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices. C) Standards are exclusively imposed top-down by government or other standard-setting agencies such as the Institute of Electrical and Electronics Engineers. D) After a standard is established in an industry, the basis of competition tends to move away from process innovations toward product innovations.

B) As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices

Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply? A) The resource stock of Bass Automobiles Inc. increased. B) Bass Automobiles Inc. faced resource leakage. C) The resource flow into Unicorn Autos Inc. was reduced. D) Bass Automobiles Inc.'s tangible assets decreased.

B) Bass Automobiles Inc. faced resource leakage.

) 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? A) BlackBerry failed to offer strong security features for its device. B) BlackBerry failed to change its device into one that could perform multiple tasks effectively. C) BlackBerry failed to adapt to a groundswell that involved workers bringing mobile devices to work. D) BlackBerry failed to produce an efficient emailing system using a keyboard.

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

Which of the following is an accurate statement about learning effects? A) Learning effects are captured at one point in time. B) Learning effects occur over time as output accumulates. C) Learning effects are significant in all production processes. D) Learning effects can produce diseconomies.

B) Learning effects occur over time as output accumulates

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based? A) The number and size of competitors remain constant throughout the industry life cycle. B) Each stage of the industry life cycle is dominated by a different customer group. C) Industries tend to follow an unpredictable industry life cycle. D) The supply and demand sides of the market remain constant irrespective of the phase of the industry life cycle.

B) Each stage of the industry life cycle is dominated by a different customer group.

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply? A) The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be non-price based. B) The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation. C) The electric car industry will move to the growth stage, whereas the industry for MP3 players will enter the growth stage next. D) The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.

B) The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation.

47) Which of the conditions prevail when an industry is at the end of its life cycle? A) The level of process innovation reaches its maximum as firms attempt to lower cost. B) The industry structure is perfectly competitive with a large number of buyers and sellers. C) The strategic objectives of businesses will involve gaining market acceptance. D) The market reaches its maximum size at this stage.

B) The industry structure is perfectly competitive with a large number of buyers and sellers.

Which of the following is a feature of the maturity stage of the industry life cycle? A) The competitive intensity within the industry is at its peak. B) The market reaches its maximum size. C) The industry structure is more monopolistically competitive. D) The focus on product innovation is higher than that on process innovation.

B) The market reaches its maximum size.

Facing stiff competition in the e-reader market, Sumac Industries wants to protect its competitive advantage by increasing the perceived value of its reader. Sumac'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 Sumac 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.

B) highlight the number of celebrities who use Sumac e-readers.

After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to A) recognize the opportunities and threats the stakeholders present. B) identify stakeholders' interests and claims. C) formulate a stakeholder strategy. D) address the stakeholders' concerns.

B) identify stakeholders' interests and claims

) Incumbent firms favor incremental innovation over radical innovation because A) their business decisions are independent of the other parties in their innovation ecosystem. B) radical innovation will disturb the existing power distribution within the firms. C) incumbent firms do not have formal organizational structures and processes like the way new entrants do. D) incremental innovations help firms sustain a permanent competitive advantage, whereas radical innovations only help gain a temporary advantage.

B) radical innovation will disturb the existing power distribution within the firms.

Which of the following is a drawback of the SWOT analysis? A) The SWOT analysis takes into account only the internal environment of a firm, ignoring the equally important external environment. B) This framework is only applicable to the manufacturing industries; it is ineffective when applied to the service firms. C) A problem with this framework is that a strength can also be a weakness, and that an opportunity can also simultaneously be a threat. D) A drawback of this framework is that it allows managers to evaluate only a firm's current situation and not its future prospects.

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

Which of the following fundamental insights was provided by Porter's five forces framework from the completion of the Alta Velocidad Española (AVE)? A) A strong threat of substitutes decreases the rivalry among existing competitors. B) All the five forces must work together to have a meaningful impact. C) Any of the five forces on its own, if sufficiently strong, can extract industry profitability. D) Competition must be defined more narrowly to remain confined to the industry's closest competitors.

C) Any of the five forces on its own, if sufficiently strong, can extract industry profitability.

Which of the following factors most contributes to the U.S. automotive industry being characterized by high entry barriers? A) New auto companies create electric cars powered by simpler motors and gearboxes. B) New entrants in the automotive industry expect that incumbents will not or cannot retaliate. C) Car manufacturers require large-scale production in order to be cost-competitive. D) Few industrial products are as easy to build as cars powered by internal combustion engines.

C) Car manufacturers require large-scale production in order to be cost-competitive.

Which of the following most accurately describes a difference between incremental innovation and radical innovation? A) Incremental innovation researches new materials; radical innovation researches new processes. B) Incremental innovation targets new markets and technologies; radical innovation reinvents markets and technologies. C) Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base. D) Incremental innovation draws on novel methods; radical innovation draws on proven methods.

C) Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.

________ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy. A) Embargoes B) Cartel arrangements C) Isolating mechanisms D) Market niches

C) Isolating mechanisms

Starfish Sodas has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine Starfish's position? A) Starfish improves the recipe for its most popular soda without increasing the price. B) Starfish introduces a new biodegradable bottle that raises cost and perceived value. C) Starfish's customers start to consider soda a commodity. D) Starfish's product has not established an acceptable standard of quality.

C) Starfish's customers start to consider soda a commodity.

) Bethany is a chef who owns three moderately successful restaurants with innovative menus. Based on what you have read, which of these approaches could help her improve her profits? A) Change her menus and décor to appeal to economy-minded consumers. B) Carefully time the opening of her business and focus on underserved niches. C) Use her existing knowledge, equipment, and staff to launch a catering business. D) Expand to new locations in economically struggling areas.

C) Use her existing knowledge, equipment, and staff to launch a catering business.

While the domestic airline industry is in the maturity stage of the industry life cycle, the internet-enabled appliance industry is in its growth stage. Which of the following can be inferred from the given data? A) The number of competitors will be greater in the domestic airline industry than the internet-enabled appliance industry. B) The internet-enabled appliance industry is ahead of the domestic airline industry in the industry life cycle. C) While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants. D) The mode of competition will be price-based in the internet-enabled appliance industry and will be non-price-based in the domestic airline industry.

C) While the domestic airline industry is mostly free from excess capacity, the internet-enabled appliance industry will have new entrants.

Airbase is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Airbase should ideally compare its strategic position with A) a company that sells small kitchen appliances at affordable prices. B) a consumer electronics company that sells high-end devices. C) a consumer electronics company popular among price-conscious customers. D) an online company that sells customized electronics accessories

C) a consumer electronics company popular among price-conscious customers.

The customers entering the market in the growth stage are primarily A) technology enthusiasts. B) laggards. C) early adopters. D) late majority.

C) early adopters.

Whole Foods differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on A) decreasing the existing value gap by providing luxury goods to customers. B) maintaining a less steeper learning curve as compared to its competitors. C) increasing the perceived value created for customers, which allows it to charge a premium price. D) lowering its costs compared to its competitors,' while offering adequate value for its products and services.

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

Due to resource immobility, a critical assumption in the resource-based model of a firm, the A) competitive advantage of a firm exists for a short period of time. B) resource bundles of a firm can be easily imitated by competitors. C) resource differences between firms last for a long time. D) competencies and capabilities of all firms in an industry are similar.

C) resource differences between firms last for a long time.

CordKing Electronics has entered a stage in which the demand for their innovative fax machines has declined. Now most customers are buying replacement parts or buying their second fax machine from the firm. What stage in the industry life cycle does this scenario describe? A) growth stage B) maturity stage C) shakeout stage D) decline stage

C) shakeout stage

As the legal owners, ________ have the most legitimate claim on a company's profits. A) creditors B) employees C) shareholders D) board members

C) shareholders

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 A) core competency. B) intangible resources. C) tangible resources. D) capabilities.

C) tangible resources

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? A) intended strategy B) emergent strategy C) unrealized strategy D) tactical strategy

C) unrealized strategy

Which of the following is primarily a value driver? A) cost of input factors B) economies of scope C) experience-curve effects D) complements

D) complements

Your company, a small software development firm, has attracted many of the top young programmers in your area. As a result, the apps you produce have been praised for their innovative features and intuitive user experience. According to the bathtub metaphor in the dynamic capabilities perspective, what is the best way for you to protect against resource leakage? A) Invest in an online marketing campaign for existing products to retain customers. B) Open a satellite office overseas to support the company culture of taking chances. C) Attempt to undercut the competition by imitating their top-selling product. D) Improve the benefits package to retain key employees and reduce turnover.

D) Improve the benefits package to retain key employees and reduce turnover.

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? A) Blake Mouton managerial grid B) Ansoff's matrix C) BCG analysis D) SWOT analysis

D) SWOT analysis`

The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & development expense/Revenue, and A) Accounting profitability/Revenue. B) Economic value created/Revenue. C) Total return to shareholders/Revenue. D) Selling, general, & administrative expense/Revenue.

D) Selling, general, & administrative expense/Revenue.

In Strategy Highlight 2.1, what type of strategy did Diana, the Starbucks store manager in southern California, use to develop the new iced beverage for her store? A) She used a rational planning approach to strategy planning. B) She created a dominant strategy plan. C) She used scenario planning. D) She used an emergent strategy.

D) She used an emergent strategy.

In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness? A) fall in the purchasing power of the firm's customers B) increased competition in the industry where the firm operates C) irregularity in the raw materials supply throughout the industry D) decline in the firm's market share

D) decline in the firm's market share

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? A) resource mobility B) inexhaustible nature C) intangibility of the company's resource D) high costs involved in imitation

D) high costs involved in imitation

The first step in stakeholder impact analysis involves A) formulating a stakeholder strategy to balance the different needs of various stakeholders. B) identifying the opportunities and threats the stakeholders present. C) describing the economic, legal, ethical, and philanthropic responsibilities of the firm toward society. D) identifying the stakeholders that currently have, or potentially can have, a material effect on a company.

D) identifying the stakeholders that currently have, or potentially can have, a material effect on a company.

Brain Boost Inc. is a leading educational toy company. Competitors across the globe have failed to imitate Brain Boost's production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Brain Boost Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? A) resource homogeneity B) resource cost C) resource substitution D) resource immobility

D) resource immobility

Vincente, 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, Vincente is the start-up company's A) headhunter. B) category captain. C) employee. D) stakeholder.

D) stakeholder.

During market testing, Sensation Cosmetics (SC) realized that the cosmetics industry was dominated by multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. SC management realized that a new entrant would require a different business model to be successful. Thus, SC started selling its products through direct marketing. In this scenario, Sensation Cosmetics accomplished substitution primarily through A) path dependence. B) technology transfer. C) knowledge diffusion. D) strategic equivalence.

D) strategic equivalence.

Gladiator Apparel is the market leader in the sportswear industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gladiator Apparel is most likely to be considered a rare resource that is contributing to its competitive advantage? A) the company's land and buildings B) the company's plant and machinery C) the company's raw material supplies D) the company's design patents

D) the company's design patents

The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment? A) a reputation for fast customer service B) a culture of proactive communication C) patents for electronic components D) the punch presses that produce parts

D) the punch presses that produce parts

When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger? A) the emergence of entry barriers B) the bargaining power of suppliers C) the availability of complements D) the threat of substitutes

D) the threat of substitutes

Which of the following is a firm effect that has an impact on the competitive advantage of a firm? A) the exit barriers within the industry in which the firm operates B) the number of companies operating in the industry in which the firm operates C) the intensity of rivalry among existing companies in the firm's chosen industry D) the value and the cost position of the firm relative to its competitors

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

Product features, customer service, and complements are all examples of important A) cost curves. B) cost drivers. C) value curves. D) value drivers.

D) value drivers

An observer may conclude that the organizational culture of Zappos, an online retailer for shoes and clothing, might be the basis for its competitive advantage. However, reverse social engineering to crack Zappos' code of success might be much more difficult for a company trying to exactly imitate its strategy. Thus, the source of Zappos competitive advantage is said to be A) socially complex. B) inexhaustible. C) non-substitutable. D) nonambiguous.

A) socially complex.

The primary objective of Porter's five forces model is to A) understand valuable, rare, and hard-to-imitate resources. B) understand the profit potential of industries. C) reduce the gap between the value of a firm's product and its cost of production. D) break down a firm's value chain activities into primary and support.

B) understand the profit potential of industries.

The CEO of Mabel Automobiles 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

C) upper-echelons theory

When does a firm fall into the large competitive chasm between early adopters and early majority? A) when it cannot attract technological enthusiasts to try the beta versions of its products B) when it creates strong network effects during the growth stage C) when it fails to successfully launch a mass-market version of its product D) when the early majority create herding effects for its products

C) when it fails to successfully launch a mass-market version of its product

Fadia Ammunition Inc., a firm controlled and managed by the government of Fadia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate? A) monopolistic competition B) monopoly C) oligopoly D) perfect competition

B) monopoly

Through ________, a firm puts its guiding policy into practice by employing a set of coherent actions. A) strategy control B) strategy implementation C) strategy formulation D) strategy analysis

B) strategy implementation

A new product often has a high price when it is launched because of a A) large investment in designing a product while producing small quantities. B) large investment in marketing a product while producing small quantities. C) large investment in designing a product while producing large quantities. D) large investment in marketing a product while producing large quantities

A) large investment in designing a product while producing small quantities.

14) Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments? A) strategy analysis B) strategy implementation C) strategy formulation D) strategy control

A) strategy analysis

Due to economic regression in Freedonia, the profitability of the large corporation Happiness Products Inc. (HPI) was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would HPI find it most easy to exit? A) the automobile industry, where the company has contractual obligations with suppliers B) the airline business, where the company's strategic commitments are long-term C) the e-commerce retail business, where investments on assets are low D) the pharmaceutical business, where the company has a large number of fixed costs

C) the e-commerce retail business, where investments on assets are low

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.

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

The best example of a firm's external stakeholder is a(n) A) government agency that regulates the prices of products manufactured by the firm. B) board member from a wholly-owned foreign subsidiary of the firm. C) shareholder who has invested money in the firm but is not employed by the firm. D) employee of the firm who is responsible for a contract project.

A) government agency that regulates the prices of products manufactured by the firm.

________ is best described as decreases in cost per unit as output increases. A) Economies of scale B) Economies of scope C) Time compression economies D) Economies of replication

A) Economies of scale

Potomac Industries is a manufacturer of high-definition televisions. The industry has gone through a period of rapid growth and expansion, and has started to experience a decline in the rate of growth. Several smaller firms have been bought out by larger competitors, and competition for market share is intensifying. Which of the following strategies is most likely to give Potomac a competitive advantage? A) Implement process innovations that lower per-unit costs. B) Introduce product innovations that differentiate Potomac televisions from the competition. C) Imitate the features of the highest-selling television on the market. D) Increase spending on marketing and attempt to acquire a high-profile celebrity spokesperson

A) Implement process innovations that lower per-unit costs.

) Economies of scale are cost advantages that accrue for firms with A) high fixed costs. B) low employee turnover. C) larger output. D) high capital risks.

C) larger output.

51) 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.

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

Which of the following provides an example of a firm in a red ocean? A) Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive. B) Cheap Apparel offered clothing at a price matching that of its competitors and, as a result, it had lower profit margins. C) Goode Apparel offered clothing at a mid-range price but failed to differentiate its product as being of decent quality. D) Top Drawer Apparel offered clothing at a higher price than competitors and, as a result, failed to make a profit.

A) Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.

Which of the following businesses is most likely to disrupt an existing industry? A) Closer Connex developed an earphone that receives emails and text messages and converts them to voice messages. The first models had poor reception, but they rapidly improved over time. B) Mega Technologies reconfigured the components used in its touchscreen tablets to create a new type of wearable device for use in restaurants and other service industries. C) Particle Inc. developed a teleportation technology that can transport physical materials instantaneously across great distances. D) Altrea added advanced camera technology to its premium line of smartphones so that they would take the highest-quality photos of all phones on the market.

A) Closer Connex developed an earphone that receives emails and text messages and converts them to voice messages. The first models had poor reception, but they rapidly improved over time.

While implementing strategic group mapping for the U.S. domestic airline industry, two strategic groups become apparent: low-cost, point-to-point airlines (Virgin Atlantic, Alaska Airlines, JetBlue, and Southwest Airlines) versus differentiated airlines using a hub-and-spoke system (American, Delta, and United). Which of the following statements is true about these two strategic groups? A) Competitive rivalry between Virgin Atlantic and JetBlue is likely to be higher than that between American and Southwest Airlines. B) American, United, and Delta Airlines will be affected differently by Porter's five competitive forces. C) Alaska Airlines and Delta Airlines will be affected by the external environment in very similar ways. D) Competitive rivalry between Virgin Atlantic and Delta Airlines is likely to be higher than that between American, Delta, and United.

A) Competitive rivalry between Virgin Atlantic and JetBlue is likely to be higher than that between American and Southwest Airlines.

Carlos is the manager of a graphic design firm, and he relies on a top-down strategic management approach to maintain tight control over the activities of his employees. The company has recently started to lose market share to its more innovative competitors, and Carlos wants to encourage his employees to start contributing to the strategy formulation process to make the company more competitive. Which of the following steps should Carlos take? A) Designate Friday afternoons as time for employees to pursue outside interests loosely related to the business. B) Schedule individual meetings with employees and demand that they come prepared with five ideas. C) Take an extended vacation and see how the business naturally reorganizes itself in his absence. D) Allow employees to take whatever approach they feel is appropriate when dealing with customers.

A) Designate Friday afternoons as time for employees to pursue outside interests loosely related to the business.

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? A) InVue should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment. B) InVue should stick to its existing core competency, that is HD LED technology, as it is the best in that segment. C) InVue should take steps to reduce the causal ambiguity and socially complexity of its core competency. D) InVue should work on enhancing the mobility of its core competency.

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

Soil and Sod Gardening Supplies has a vision of helping every American learn how to grow their own food. Its management team recently unveiled the mission statement "A garden at every home." What is wrong with this mission statement? A) It does not indicate how the company will accomplish its goals. B) It does not include a stretch goal. C) It is not inspirational and motivating for employees. D) It is too specific.

A) It does not indicate how the company will accomplish its goals.

40) Cobalt Sodas has seen its market share erode in recent years, as consumers increasingly turn toward healthier beverage choices such as unsweetened sparkling water. Hoping to rekindle interest in sugary sodas, Cobalt decides to produce a limited run of "throwback" cans using labeling first introduced in the 1980s. What is wrong with this strategy? A) It fails to face the competitive challenge. B) It does not involve concrete actions. C) It lacks strategic commitments. D) It tries to be everything to everybody.

A) It fails to face the competitive challenge.

27) The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario? A) It has a competitive advantage in the industry. B) It has a competitive disadvantage in the industry. C) It has competitive parity with other firms in the industry. D) It has formed a strategic alliance with other firms in the industry.

A) It has a competitive advantage in the industry.

How is a cost-leader protected from threats from powerful suppliers? A) It is more able to absorb price increases through accepting lower profit margins. B) It is more able to absorb price increases through generating higher profit margins. C) It is able to create a significant difference between perceived value and current market prices. D) It is able to create a significant difference between actual value and future market prices.

A) It is more able to absorb price increases through accepting lower profit margins.

How does causal ambiguity act as an isolating mechanism for organizations? A) It makes it difficult for the competitors to understand why a company has been so successful. B) It creates a situation in which different social and business systems interact with one another. C) It makes it difficult for competitors to deploy their resources by creating ambiguity within their organizational structures. D) It makes it difficult for competitors to imitate core competencies quickly due to time compression diseconomies.

A) It makes it difficult for the competitors to understand why a company has been so successful.

Which of the following best exemplifies social complexity as an isolating mechanism? A) Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success. B) Kristin's Cosmetics failed to acquire the resources for its eyeliner at a low cost and thereby lost its competitive advantage over Monica's Makeup. C) Kristin's Cosmetics had difficulty competing with Monica's Makeup because it could not access the many makeup factories in Kentucky as easily as its competitor. D) Kristin's Cosmetics did not fully understand the reasons for the success of Monica's Makeup and therefore had difficulty competing with the firm.

A) Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success.

How is a firm's task environment different from its general environment? A) Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment. B) Managers have no direct effect over external factors in the task environment; they have some influence over external forces in the general environment. C) Managers have no direct effect over external factors in the task environment; they have influence over all external forces in the general environment. D) Managers have influence over all external factors in the task environment; they have no direct effect over external forces in the general environment.

A) Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment.

The owners of Puff Ball bakery want to open a second retail outlet. Which of the following scenarios is most likely to yield a competitive advantage? A) Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction. B) Purchase an existing bakery from a business that closed due to declining sales and try to revive it. C) Build a shop in a sparsely populated rural area where the land is inexpensive and few other bakeries exist. D) Open a shop in a crowded downtown location where several other bakeries have been successful over the years.

A) Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction.

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

A) Pegasus Autos reduces engine emissions below federal guidelines to reduce pollution.

Which of the following scenarios would be characteristic of an entrepreneur? A) Rachel implemented a new and more efficient way to produce pottery. B) Mary imitated a new, more efficient method of producing pottery. C) Alissa scaled back the production of pottery because it wasn't cost effective. D) Ursula used a proven marketing method to advertise her pottery.

A) Rachel implemented a new and more efficient way to produce pottery.

PowerPills is a highly successful vitamin manufacturer. At the close of its most recent fiscal year, the company's balance sheet showed cash holdings of $110 million. Which of the following actions will provide the most benefit for stakeholders? A) Reinvest profits into expanding the company and creating more jobs. B) Reward the CEO with a significant bonus payment. C) Save the excess cash as a precaution against black swan events. D) Buy out the leading competitor to reduce competition and maintain price stability

A) Reinvest profits into expanding the company and creating more jobs.

Which of the following statements is true of strategic initiatives? A) Strategic initiatives can be the result of a response to external trends or come from internal sources. B) When lower-level employees are less empowered, the possibility of strategic initiatives is higher. C) Strategic initiatives result from top-down planning by executives and not through a bottom-up process. D) Random events and accidental happenstances reduce the possibility of strategic initiatives in organizations.

A) Strategic initiatives can be the result of a response to external trends or come from internal sources.

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.

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

In a large company, who is most responsible for devising the corporate strategy? A) the CEO of the company B) the lower-level employees in the company C) the head of the production department in the company D) the human resource manager in the company

A) The CEO

Which of the following is a feature of the growth stage of the industry life cycle? A) The consumer demand increases. B) The prices of goods begin to rise. C) The basis of competition moves away from process innovation. D) The number of competitors decreases.

A) The consumer demand increases.

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines? A) The overall industry profitability will increase. B) The threat of strong competitive forces such as supplier power will increase. C) The industry will face excess capacity in the future. D) The structure of the industry will change from consolidated to one that is fragmented.

A) The overall industry profitability will increase.

Ivan is the founder of a firm producing self-driving vehicles. Because the industry is so new and chaotic, Ivan favors a top-down strategic planning approach in which he exerts strong control over all aspects of the business, from product development and design to manufacturing and marketing. What is wrong with this scenario? A) The self-driving vehicle industry is changing too much for the top-down approach to be effective. B) The top-down approach can only be applied to specific business functions. C) The top-down approach leaves other employees uncertain about their roles in the company. D) The top-down approach is expensive to maintain, leaving the company at a competitive disadvantage.

A) The self-driving vehicle industry is changing too much for the top-down approach to be effective.

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle? A) There is more strategic variety in the growth stage when compared to the introduction stage. B) The number of competitors is more in the introduction stage than the growth stage. C) The market size for a new product or service is larger in the introduction stage when compared to the growth stage. D) While achieving market acceptance is the strategic objective during the introduction stage, the objective in the growth stage is to pursue a harvest strategy.

A) There is more strategic variety in the growth stage when compared to the introduction stage.

56) Which of the following statements about product-oriented visions is true? A) They tend to force managers to take a myopic view of the competitive landscape. B) They allow companies to effectively adapt to changing environments. C) They define a business in terms of providing solutions to customers. D) They allow firms to set goals that focus primarily on filling the organization's needs.

A) They tend to force managers to take a myopic view of the competitive landscape.

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.

A) Threat of new entrants will be low.

Which of the following provides an example of what AFI strategy framework is used for? A) Using AFI, the Gasquet Motor Company was able to implement a strategy that produced high-quality cars more efficiently and thereby reduced costs. B) Using AFI, the Chen Restaurant Group was able to improve employee benefits and thereby increase employee loyalty. C) Using AFI, the Sanchez Clothing Company was able to implement a strategy that allowed them to give more money to charities and thereby gain good press. D) Using AFI, the Richardson Tea Group was able to reduce the pollution it caused while processing tea and thereby receive an award.

A) Using AFI, the Gasquet Motor Company was able to implement a strategy that produced high-quality cars more efficiently and thereby reduced costs.

Which of the following is an assumption that top-down strategic planning rests on? A) We can predict the future from the past. B) Time cannot be compressed at will. C) Decisions made in the past do not affect our future. D) Change is constant.

A) We can predict the future from the past.

43) The first step to gain and sustain a competitive advantage is to A) define a firm's vision, mission, and values. B) understand the strategies of the competitors. C) put the guiding policies of a firm into practice. D) develop functional and business-level strategies.

A) define a firm's vision, mission, and values.

In a large company, who is most responsible for devising the corporate strategy? A) the CEO of the company B) the lower-level employees in the company C) the head of the production department in the company D) the human resource manager in the company

A) the CEO of the company

You are the manager of Impromptu Printing, a leading print shop. Impromptu's resources include a highly experienced staff and state-of-the-art printing presses. However, your closest competition has started to cut into your market share by offering same-day turnaround on most orders. Although your staffing and equipment is not optimized for rapid production, you decide to start offering a same-day guarantee to your customers. According to the resource-based view, what is wrong with this decision? A) You have failed to take into account resource immobility. B) Customers tend to have negative opinions of firms that imitate other firms. C) Employees are often resistant to changes in strategy. D) Your business is not organized to capture value.

A) You have failed to take into account resource immobility.

GoodGear is a mobile platform that matches independent fashion designers with consumers who want a personalized wardrobe. Which of the following initiatives would best allow GoodGear to fine-tune its offerings to better meet the needs of its consumers? A) allowing users to provide feedback to producers on the style and fit of clothing B) conducting anonymous phone surveys about consumers' fashion preferences C) hiring an outside consultant to evaluate the offerings of GoodGear's producers D) studying the financial records of various fashion design companies to determine trends

A) allowing users to provide feedback to producers on the style and fit of clothing

Canon was able to redesign the copying machine so that it didn't need professional service—reliability was built directly into the machine, and the user could replace parts, such as the cartridge. What Xerox had not envisioned was the possibility that the components of the copying machine could be put together in an altogether different way that was more user-friendly. This example describes A) architectural innovation. B) incremental innovation. C) radical innovation. D) disruptive innovation.

A) architectural innovation

48) To be effective, firms need to A) back up their visions with strategic commitments that are costly and difficult to reverse. B) increase their strategic flexibility by developing product-oriented vision statements. C) isolate top managers from the organizational values. D) pursue visions that are exclusively financial and not aspirational.

A) back up their visions with strategic commitments that are costly and difficult to reverse.

31) A firm always has a competitive disadvantage when its return on invested capital is A) below the industry average. B) 2 percent or lower in a declining industry. C) about the same as its closest competitor. D) declining steadily over two or more years.

A) below the industry average.

Which of the following describes a situation in which firms acquire resources at a low cost, laying the foundation for a competitive advantage later? A) better expectations of future resource value B) path dependence affecting current decisions C) causal ambiguity D) social complexity

A) better expectations of future resource value

In a successful ________ strategy, the trade-offs between differentiation and low cost are reconciled. A) blue ocean B) focused differentiation C) liquidation D) divestment

A) blue ocean

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

A) business-level strategy

42) The Founder of Teach for America, Wendy Kopp, established a mission by building on her vision, which is "One day, all children in this nation will have the opportunity to attain an excellent education." Considering this, how did Klopp implement the mission of Teach for America? A) by enlisting talented young professionals as teachers B) by offering funds to increase the salaries of low-income teachers C) by starting her own line of private schools D) by starting a fundraising campaign to improve school infrastructure

A) by enlisting talented young professionals as teachers

If Zephyr Electronics obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies? A) comparing the return to the return on invested capital obtained by other firms in the industry B) assessing the value based on the shareholders' expectations of return on their capital C) evaluating the liquidity ratios for other pharmaceutical companies D) comparing the value to the history of the firm's return of investment over a number of years

A) comparing the return to the return on invested capital obtained by other firms in the industry

20) A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n) A) competitive advantage. B) balanced scorecard. C) power position. D) equity leverage.

A) competitive advantage.

Mainline Ltd. is a landline telephone manufacturer whose average return on invested capital is approximately 2 percent. Because demand for landline telephones has declined significantly, the industry average return on invested capital has been negative (-5 percent) for the last few years. In this scenario, Mainline Ltd. has a A) competitive advantage. B) balanced scorecard. C) competitive disadvantage. D) power position.

A) competitive advantage.

Mercurial Foods is the parent company of several chain restaurants offering a variety of cuisines. The top management at Mercurial has decided to enter the frozen foods industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate? A) corporate strategy B) business strategy C) functional strategy D) divisional strategy

A) corporate strategy

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? A) corporate strategy B) functional strategy C) business strategy D) divisional strategy

A) 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? A) cost-leadership B) differentiation C) niche marketing D) product diversification

A) cost-leadership

Fuller Apparel's core value statement reads we will ensure our clothing is made with the highest respect toward human rights and environmental protection. Which of the following actions exemplifies how Fuller's core values drive its strategic decision making? A) demanding that textile suppliers pay livable wages and maintain safe production facilities B) introducing an online customer service unit to keep customers happy C) investing in more efficient machinery to reduce costs and lower prices for consumers D) purchasing a full-page advertisement in a major newspaper touting the company's values

A) demanding that textile suppliers pay livable wages and maintain safe production facilities

Which of the following functions do the general managers in strategic business units primarily perform? A) design generic business strategies based on guidelines received from corporate headquarters B) set overarching strategic objectives to unify the entire conglomerate under one mission C) take responsibility for decisions and actions within a single functional area D) allocate scarce resources among different business divisions

A) design generic business strategies based on guidelines received from corporate headquarters

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the A) differentiator is able to create a significant difference between perceived value and current market prices. B) differentiator is able to significantly reduce the value gap. C) source of a competitor's differential appeal is tangible rather than intangible. D) new product features added raise costs but not the perceived value in the minds of consumers.

A) differentiator is able to create a significant difference between perceived value and current market prices.

A(n) ________ leverages new technologies to attack existing markets. A) disruptive innovation B) incremental innovation C) radical innovation D) architectural innovation

A) disruptive innovation

In the pyramid of corporate social responsibility, ________ responsibilities are the foundational building block. A) economic B) ethical C) philanthropic D) legal

A) economic

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.

A) entering the aircraft manufacturing industry requires huge capital investments.

As a research scholar, Denise had built a helicam as part of her project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, she started a new venture where she could customize these helicams to fit the specific needs of the buyers and sell them. Denise can be best described as a(n) A) entrepreneur. B) category captain. C) franchisor. D) early adopter.

A) entrepreneur.

In the AFI strategy framework, strategy analysis primarily involves A) evaluating the effects of internal resources and core competencies on a firm's potential to gain and sustain a competitive advantage. B) designing a business, corporate, and global strategy to gain and sustain a competitive advantage. C) organizing a firm in order to effectively put the formulated strategy into practice. D) deciding the type of corporate governance that would be most effective in the implementation of a strategy.

A) evaluating the effects of internal resources and core competencies on a firm's potential to gain and sustain a competitive advantage.

A strategic group will typically include A) firms within the same industry. B) customers belonging to a particular socioeconomic class. C) firms employing similar number of employees, irrespective of their industries. D) employees within a firm earning the same amount in salary.

A) firms within the same industry.

As the inventor of hypertension medication, OneSure Pharmaceuticals (OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiry of OSP's patents, regular users did not want to switch because they were concerned about possible side effects. Which of the following benefits does this scenario best illustrate? A) first-mover advantages B) social benefits C) network externalities D) fringe benefits

A) first-mover advantages

A firm will fail to create a sustained competitive advantage when the A) fit between its internal strengths and the external environment is static. B) source of its competitive advantage is causally ambiguous. C) source of its competitive advantage is socially complex. D) resource bundles exhibit heterogeneity and immobility.

A) fit between its internal strengths and the external environment is static.

Nendry is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Nendry has decided to pursue a differentiation strategy. In this case, she should A) focus on adding unique features to her product that customers will value. B) concentrate on improving process technologies to achieve economies of scale. C) enforce strict budget controls at all levels of the organization. D) devote all resources to reducing the value gap.

A) focus on adding unique features to her product that customers will value.

The distribution department at Golden Grains Wheat Company has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its bags of wheat. Which of the following strategies does this scenario best illustrate? A) functional strategy B) corporate strategy C) master strategy D) business strategy

A) functional strategy

Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to A) gain a market share and make up the loss in margin through increased sales. B) create higher value creation and thus generate greater profit margins. C) gain a market share and make up the loss in margin through increased pricing. D) create higher value creation and thus generate greater sales.

A) gain a market share and make up the loss in margin through increased sales.

Which of the following customer segments as described in the chasm framework make up the mass market? A) the early and late majority together B) the early adopters alone C) the technology enthusiasts and laggards together D) the technology enthusiasts alone

A) the early and late majority together

Although Mountaintop Electronics still sells its DVD players, a product in its decline stage, the investments made by the company on improving or marketing the product are very low. The company has allocated the least amount of human and financial capital to this department. Which of the following strategies has Mountaintop Electronics adopted in this scenario? A) harvest strategy B) maintain strategy C) consolidation strategy D) differentiation strategy

A) harvest strategy

The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator? A) high price, high comfort, high customer service, high concessions variety, low hours of operation B) low price, high comfort, high customer service, high concessions variety, low hours of operation C) high price, low comfort, low customer service, high concessions variety, low hours of operation D) low price, low comfort, low customer service, low concessions variety, low hours of operation

A) high price, high comfort, high customer service, high concessions variety, low hours of operation

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength? A) increase in a firm's customer loyalty B) growth in the size of the market in which a firm operates C) rise in the income of the demographic segment to which a firm caters D) loss of a competitor's reputation

A) increase in a firm's customer loyalty

Lillypad Toys is a manufacturer of educational toys for children. Six months ago, the company's research and development division came up with an idea for a unique touchscreen device that can be used to introduce children to a number of foreign languages. Three months ago, the company produced a working prototype, and last month the company successfully launched its new device on the commercial market. What should Lillypad's managers prepare for next? A) increased competition from imitators B) a prolonged period of uncontested success C) a sharp decline in demand for the product D) a difficult struggle to move from invention to innovation

A) increased competition from imitators

Bryan is a manager at a software firm. The CEO tells him that the industry as a whole has become increasingly profitable over the past five years. Based on this information, Bryan is most likely to expect A) increased competition in the future and therefore he should recommend that the company upgrade its products to slow the entry of rival companies. B) increased profitability in the future and therefore he should recommend that the company remain on its current course. C) a leveling off of profitability in the next few years and therefore he should recommend that the company cooperate with its rivals to stimulate the industry. D) decreased competition in the next few years and therefore he should recommend that the company take advantage of its pricing power.

A) increased competition in the future and therefore he should recommend that the company upgrade its products to slow the entry of rival companies.

A factor favoring the success of disruptive innovation is that A) incumbent firms are slow to change. B) new entrants have highly formal organizational structures and processes. C) the low end of the market is highly guarded. D) incumbent firms focus on radical innovation rather than incremental innovation.

A) incumbent firms are slow to change.

With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as? A) industry convergence B) backward integration C) product differentiation D) customer myopia

A) industry convergence

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? A) intended strategy B) emergent strategy C) unrealized strategy D) tactical strategy

A) intended strategy

Which of the following lists the stages of the industry life cycle in the correct order? A) introduction, growth, shakeout, maturity, and decline B) introduction, shakeout, growth, maturity, and decline C) introduction, growth, maturity, shakeout, and decline D) introduction, shakeout, maturity, growth, and decline

A) introduction, growth, shakeout, maturity, and decline

Heartbeat Industries has recently introduced a new production method that will make the production of their medical devices more cost-effective. Which of the following will most likely be the result of this innovation? A) jumps to a steeper learning curve B) destabilizes a steeper learning curve C) stabilizes the existing learning curve D) moves down the existing learning curve

A) jumps to a steeper learning curve

When a firm combines experience based learning and process innovation, the firm A) jumps to a steeper learning curve. B) experiences an increase in per-unit cost. C) loses its competitive advantage. D) moves down the existing learning curve.

A) jumps to a steeper learning curve.

Meadows Mowers initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as? A) learning-curve effect B) network effect C) black-swan event D) time compression diseconomies

A) learning-curve effect

The minimum wage in the country of New Morland is $8 an hour. Odion, a restaurant in New Morland's capital city, pays its servers $8 per hour. However, the management of the restaurant feels that this amount is excessive for workers whose only job is to clear tables. By continuing to adhere to the rules set by the government of New Morland, which of the following responsibilities is Odion satisfying? A) legal responsibilities B) philanthropic responsibilities C) ethical responsibilities D) demographic responsibilities

A) legal responsibilities

Which of the following is a macroeconomic factor that can affect a firm's strategy? A) power of buyers B) power of suppliers C) levels of employment D) threat of substitutes

C) levels of employment

) Both BioThink Inc. and GD Pharma Inc. have discovered similar vaccines to prevent cancer. While GD Pharma's vaccine sells at $100 per unit, BioThink sells its vaccine at $90 per unit. This price differentiation has mainly been attributed to the companies' capital decisions. While BioThink used its retained earnings to develop the vaccine, GD Pharma borrowed funds from banks to develop the vaccine. Thus, GD Pharma pays a higher interest on its capital, which makes it necessary to price its vaccine higher. Thus, the key driver for BioThink's competitive advantage is A) low-cost input factors. B) economies of scale. C) superior customer service. D) availability of complements.

A) low-cost input factors.

Salubre Pharmaceuticals invested $3.4 billion dollars to develop a new drug for individuals with diabetes. After Salubre receives FDA approval of the drug, its marginal cost to produce the drug for market will be A) low. B) high. C) moderate. D) unpredictable.

A) low.

Jamie is a manager in an industry that has a few large players and that has remained relatively stable over the past few years. He finds out that legislators are proposing new laws to deregulate the industry. If the laws pass, which of these scenarios will Jamie most likely face? A) many new competitors B) technological innovation C) the end of globalization D) across-the-board price increases

A) many new competitors

Magical Productions is a large production company that controls a major portion of the television industry's market share along with two other firms. Despite its competitiveness with the two other firms, it is influenced by their actions and often has to consider their strategic actions before acting on its own. In this scenario, Magical Productions is most likely functioning in a(n) ________ industry. A) oligopolistic B) monopolistic C) perfectly competitive D) monopolistically competitive

A) oligopolistic

Trendline Architects' core competency is building multi-family housing in urban areas. This competency is based primarily on the decisions made by the company's top management over several years to focus on building in densely populated cities. This process is called A) path dependence. B) dependence complexity. C) causal dependence. D) path immobility.

A) path dependence

Competitive rivalry based solely on ________ is destructive to firms as it transfers most of the value created in the industry to the customers. A) price-cutting B) new product releases C) promotional campaigns D) product differentiation

A) price-cutting

To reduce the amount of time it takes to apply packaging to its finished products, North Star Foods is implementing new equipment at its production plants. By doing this, North Star is addressing a ________ in the value chain analysis. A) primary activity B) secondary activity C) support activity D) premier activity

A) primary activity

) The ratio Cost of goods sold/Revenue indicates how efficiently a company can A) produce a good. B) sell a good. C) advertise a good. D) design a good.

A) produce a good.

The strategic objective of a first mover during the introduction stage of the industry life cycle is to A) pursue a harvest strategy. B) survive by drawing on deep pockets. C) achieve market acceptance. D) lower entry barriers.

A) pursue a harvest strategy.

Southwest Airlines (SWA) has enjoyed a sustained competitive advantage, allowing it to outperform its competitors over several decades. Continental and Delta attempted to copy SWA with their offerings of Continental Lite and Song, respectively. Neither Continental nor Delta, however, was able to successfully imitate the resource bundles and firm capabilities that make SWA unique. Which of the following is this case an example of? A) resource immobility B) resource heterogeneity C) resource imitation D) resource substitution

A) resource immobility

The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of the dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well prepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing ________ as the approach to the development of strategy. A) scenario planning B) top-down strategic planning C) reverse engineering D) pattern recognition

A) scenario planning

) Dynamic capabilities are especially relevant for surviving and competing in markets that A) shift quickly. B) shift slowly. C) remain constant. D) remain unpredictable.

A) shift quickly.

A ________ is best described as any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures. A) strategic initiative B) value chain C) supply chain D) corrective action

A) 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 A) strategic leadership. B) intrapreneurship. C) Machiavellianism. D) individualism.

A) strategic leadership.

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C). A) strategic position B) industry effects C) advantage of the marketplace D) industry analysis

A) strategic position

) Strategic thinking is different from strategic planning in that A) strategic thinking includes all types of information sources while strategic planning does not. B) strategic thinking relies more on hard data than strategic planning. C) strategic thinking is regimented and confining, whereas strategic planning is more flexible. D) strategic thinking can create an illusion of control, whereas strategic planning avoids this.

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

A high percentage of R&D/Revenue ratio indicates a(n) A) strong focus on innovation to improve current products and services. B) inefficiency in the management to focus on new products. C) strong focus on marketing and sales to promote products and services. D) negligent investment toward research and development.

A) strong focus on innovation

Value drivers contribute to a firm's competitive advantage only if A) the increase in value creation exceeds the increase in costs. B) they can shrink the firm's value gap. C) they can restrict the firm from claiming a premium price for its products. D) the decrease in perceived value leads to an increase in costs.

A) the increase in value creation exceeds the increase in costs.

A blue ocean strategy differs from a low-cost strategy in that A) the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value. B) the focus of a blue ocean strategy is on lowering the economic value created, whereas a cost-leader focuses on increasing the economic value created. C) economies of scale are more important to a blue ocean strategy, while economies of scope are more important to a cost-leader. D) a blue ocean's research and development focus is on process technologies, and a cost-leader's focus is on product technologies.

A) the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value.

The typical four-step innovation process begins with A) the modification and recombination of an existing product or process. B) the presentation of an idea as findings derived from basic research. C) the commercialization of an invention by entrepreneurs. D) a competitor's attempt to imitate an innovation.

A) the modification and recombination of an existing product or process.

What is an invention? A) the transformation of an idea into a new product or process B) a unique idea that has not been thought of before C) the transformation of an idea into a successful product D) a unique idea that has been patented

A) the transformation of an idea into a new product or process

During strategy implementation, managers primarily focus on deciding the A) type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice. B) industries and markets the firm should compete in to be able to gain and sustain a competitive advantage. C) relationship between competitive advantage and firm performance. D) role strategic leaders should play in gaining and sustaining a competitive advantage.

A) type of corporate governance that is most effective and ways in which it can put the formulated strategy into practice.

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. A) valuable B) substitute C) imitable D) organized

A) valuable

) How do low interest rates affect a business? A) Firms tend to defer investments until rates rise. B) Firms can easily borrow money to finance future growth. C) Consumer demand slows down. D) Business credit is harder to obtain.

B) Firms can easily borrow money to finance future growth.

Mara is a management consultant for a soda manufacturer that wants to expand into health drinks such as green tea and after-workout drinks. Based on what you have read, which of these is sensible advice for Mara to offer her client? A) "Pinpoint the best time to enter this new market, and then make a yes-or-no decision quickly." B) "Carefully consider the entry choices over time before making a decision." C) "Your best bet is to undercut competitors' prices and lure them into a price war." D) "Focus on what your company does well rather than trying to expand into untried areas."

B) "Carefully consider the entry choices over time before making a decision."

During an interview for a CEO position, Elena's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be? A) "Neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful." B) "Firm effects. I will be able to have the most impact on those." C) "Industry effects. They have the most substantial effect on superior firm performance." D) "Neither. I would focus on business cycle effects. These are the most predictable, so they are worth the most effort."

B) "Firm effects. I will be able to have the most impact on those."

When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the production cost is again $5 per unit. At 14,000 units and above, the production cost increases further. At what output level does the firm experience economies of scale? A) 9,000 units B) 11,000 units C) 13,000 units D) 15,000 units

B) 11,000 units

At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n) A) 80 percent learning curve. B) 90 percent learning curve. C) 60 percent learning curve. D) 54 percent learning curve.

B) 90 percent learning curve

Which of the following statements is true of corporate strategy? A) The objective of corporate-level strategy is to ensure that the sum of the values of individual business units is greater than the overall corporate value. B) A corporate strategy must be able to create synergies across business units that are quite different. C) Formulating a corporate strategy involves general managers answering questions relating to how to compete in order to achieve superior performance. D) Deciding whether to adopt a differentiation or a cost-leadership strategy is part of formulating the corporate strategy.

B) A corporate strategy must be able to create synergies across business units that are quite different.

) The ________ is a model that links strategy analysis, strategy formulation, and strategy implementation, which together helps managers plan and implement a strategy that can improve performance and result in competitive advantage. A) Ansoff's growth strategy matrix B) AFI strategy framework C) Sarbanes-Oxley Act D) stakeholder impact analysis

B) AFI strategy framework

44) Free Winds, Inc. is a company that manufactures a variety of generators that run on wind power. The company envisions that wind technology will replace all forms of exhaustible energy sources in the near future. Which of the following statements will make an accurate vision for Free Winds? A) We make products that run on wind energy. B) All nations around the globe should be able to provide energy produced by sustainable sources. C) The company aims to make working fun and pleasurable for its employees. D) We provide energy-efficient sources and services by investing in research and innovation.

B) All nations around the globe should be able to provide energy produced by sustainable sources.

50) Fuentes Electronics is a major manufacturer of microwave ovens. Which of the following statements will best inspire the organization with a shared vision for Fuentes Electronics? A) At Fuentes Electronics, employees know that they will make a competitive wage. B) At Fuentes Electronics, employees at all levels are motivated to make the best microwave ovens on the market. C) At Fuentes Electronics, employees want to create a cheaper microwave oven than our closest competitor does. D) At Fuentes Electronics, employees can trust our managers to steer company.

B) At Fuentes Electronics, employees at all levels are motivated to make the best microwave ovens on the market.

Which of the following statements is true of customer-oriented visions? A) Customer-oriented visions identify how a customer need will be met. B) Customer-oriented vision statements are not the same as listening to your customer. C) Customer-oriented visions reduce a company's ability to adapt to a changing environment. D) Customer-oriented visions define a business in terms of goods or services provided.

B) Customer-oriented vision statements are not the same as listening to your customer.

32) Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario? A) Silver Screen Cinemas will charge a premium price for its customers, while Digi Now will implement everyday low pricing. B) Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little. C) Digi Now will keep its customer service at an acceptable level, while Silver Screen Cinemas will provide superior customer service. D) Silver Screen Cinemas and Digi Now will use a similar approach to create value for customers by attempting to offer everything to everybody.

B) Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.

It is April 2018 and Mark is a novice investor who wants to decide between purchasing shares in EagleCorp or Myna Bird Inc. In fiscal year 2017, EagleCorp's return on invested capital (ROIC) was 15 percent, and its cost of capital was 12 percent. During the same period, Myna Bird Inc.'s ROIC was 22 percent and its cost of capital was 25 percent. What does this information tell Mark? A) Myna Bird Inc. is more likely to create value while EagleCorp is more likely to destroy value. B) EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value. C) Both Myna Bird Inc. and EagleCorp are likely to create value. D) Neither Myna Bird Inc. nor EagleCorp are likely to create value.

B) EagleCorp is more likely to create value while Myna Bird Inc. is more likely to destroy value.

Ira can be categorized under the late majority customer segment. Which of the following behaviors is he most likely to exhibit? A) He will be confident in her ability to master any new technology. B) He will prefer to buy from well-established brands rather than unknown new ventures. C) He will not rely on endorsements by the early majority or early adopters. D) He will buy beta versions of new products and technology.

B) He will prefer to buy from well-established brands rather than unknown new ventures.

You are the manager in charge of setting the strategy for a new frozen yogurt company. Which of the following questions would be appropriate for you to ask during the analysis phase of the AFI strategy framework? A) Should we open our first location in Los Angeles or New York City? B) How have consumer preferences in frozen yogurt flavors changed in the last five years? C) Should we be competing nationally or internationally? D) Can we secure relationships with enough organic dairy farmers to meet our commitment to using the healthiest ingredients?

B) How have consumer preferences in frozen yogurt flavors changed in the last five years?

Igor's Furniture has seen its profit margins shrink over the past several years as increased competition has driven down furniture prices. You have been tasked with improving the company's margins. Which of the following approaches makes the most sense within the context of strategic activity systems? A) Go against the trend and raise prices. B) Install modern manufacturing equipment to improve efficiency. C) Increase spending on online marketing efforts. D) Focus on imitating the most successful products of competitors.

B) Install modern manufacturing equipment to improve efficiency.

Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then A) Finolo and Ethver will have a VRIO resource. B) Invoro will have a resource that is valuable but no longer rare. C) Invoro will have a sustainable competitive advantage in the industry. D) Invoro will have a resource that is rare but no longer valuable.

B) Invoro will have a resource that is valuable but no longer rare.

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? A) It produced the highest-quality headphones. B) It created a perception that owning its products was cool. C) It emphasized marketing over core competency. D) It focused on sponsoring future athletic superstars.

B) It created a perception that owning its products was cool.

Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the best reason for this development? A) It failed to drive up the perceived customer value. B) It failed to refine its strategic position over time. C) It failed to move into a contested market space. D) It failed to offer enough strategic trade-offs.

B) It failed to refine its strategic position over time.

GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information? A) BC Inc. will be less competitive than GN Corp. because of its smaller investment in tangible assets. B) It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage. C) Judging from the assets listed, BC Inc. has probably been in the industry a much shorter time than GN Corp. D) There is no resource heterogeneity between the two firms, BC Inc. and GN Corp., as they operate in the same industry.

B) It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage.

What must a cost-leadership strategy accomplish to be successful? A) It must increase the firm's cost above that of its competitors while offering adequate value. B) It must reduce the firm's cost below that of its competitors while offering adequate value. C) It must increase the firm's cost above that of its competitors while offering superior value. D) It must reduce the firm's cost below that of its competitors while offering superior value

B) It must reduce the firm's cost below that of its competitors while offering adequate value.

Which of the following best explains why a blue ocean strategy is difficult to implement? A) It combines the benefits of similar strategic positions—differentiation and low cost. B) It requires the reconciliation of fundamentally different strategic positions—differentiation and low cost. C) It requires the combination of fundamentally similar strategic positions—differentiation and strategic innovation. D) It requires the reconciliation of fundamentally different strategic positions—differentiation and strategic innovation.

B) It requires the reconciliation of fundamentally different strategic positions—differentiation and low cost.

Trung has been an employee with PureEnergy Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Trung has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far? A) Level 5 B) Level 4 C) Level 3 D) Level 2

B) Level 4

Which of the following is a drawback of Porter's five forces model? A) The model describes competition narrowly as a firm's closest competitors. B) Managers cannot determine the changing speed of an industry or the rate of innovation. C) It fails to provide a basis for deriving implications for a firm's strategic position within an industry. D) The model fails to consider that threat of substitutes can come from outside a given industry

B) Managers cannot determine the changing speed of an industry or the rate of innovation.

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

B) economies of scale

Which of the following scenarios best exemplifies a platform business? A) Devin purchases electronic parts from a variety of vendors and assembles them into inexpensive MP3 players that he sells to consumers. B) Myra operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy. C) Raul operates a consulting firm in which businesses hire him to assess deficiencies in their organizational culture. D) Gena founded a bike-based transportation company that offers environmentally-friendly rides to customers within a 25-mile radius.

B) Myra operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy.

Which of the following accurately describes how Netflix used innovation to gain a competitive advantage? A) Netflix moved from content development to upgrading its data analytics to provide faster online streaming. B) Netflix applied big data analytics to its user preferences to provide highly personalized viewing recommendations. C) Netflix moved from online streaming to online DVD rentals via the Internet. D) Netflix applied first mover advantages to lock up talent needed to produce original content for DVD rentals and online streaming.

B) Netflix applied big data analytics to its user preferences to provide highly personalized viewing recommendations.

________ describes a process in which the options one faces in a current situation are limited by decisions made in the past. A) Social complexity B) Path dependence C) Cannibalization D) Causal ambiguity

B) Path dependence

Ida has been tasked with formulating the business strategy for Contour Cosmetics' new line of lipsticks. Which of the following ideas would Ida be likely to include in her proposal? A) Open kiosks in shopping centers located in developing countries with rising disposable incomes. B) Promote the lipsticks as the longest-lasting on the market. C) Invest in building an online store for Contour products. D) Reorganize the manufacturing division to gain efficiency.

B) Promote the lipsticks as the longest-lasting on the market.

Dominic is the founder of an innovative "impromptu catering" business that provides elegant, healthy party food and decorations on less than 24 hours' notice. The company has grown by over 150 percent in the past year. Dominic credits some of the company's success to studying the strategies of prominent social entrepreneurs, such as Wikipedia's Jimmy Wales. What can Dominic do to exemplify the social entrepreneurship model? A) Launch a social media platform for food lovers. B) Provide free weekly catered meals for the homeless. C) Seek investments from venture capitalists. D) Buy out his closest competitors to ensure a competitive advantage.

B) Provide free weekly catered meals for the homeless.

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? A) Increase supply. During recessions, businesses that focus on low-cost solutions make significant profits. B) Reduce supply. Customers generally reduce their purchases of luxury items when the economy falters. C) Maintain the supply at its current rate. Economic forecasts are rarely accurate. D) Wait six months and see what happens. Recessions rarely affect consumer spending.

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

________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. A) Behavior modification B) Strategy C) Credo D) Competency management

B) Strategy

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.

B) 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 is a drawback of using the industry life cycle as a framework to guide strategic choice? A) The framework believes that the life cycle of industries is unpredictable. B) The framework does not explain everything about changes in industries. C) The framework is based on the tenet that industries can be rejuvenated even in the declining stage. D) The framework believes that the number and size of competitors remain constant throughout the life cycle.

B) The framework does not explain everything about changes in industries.

How do strong ethical values benefit a firm? A) They lay the groundwork for a quick increase of profits and short-term success. B) They serve as the guardrails put in place to keep the company on track when pursuing its mission. C) They provide strong public relations, which can either benefit or hinder competitive advantage. D) They emphasize benefiting stakeholders by significantly increasing profit.

B) They serve as the guardrails put in place to keep the company on track when pursuing its mission.

Which of the following provides an example of how a firm's valuable resource can be imitated? A) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of a generic medieval cathedral. B) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of the Leaning Tower of Pisa. C) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of the U.S.S. Enterprise aircraft carrier. D) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of a castle from a fantasy movie.

B) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of the Leaning Tower of Pisa.

Heirloom Furniture is a brand reputed for its wide variants of sofas that introduced a new range of mattresses and bed frames a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is Heirloom applying? A) mass customization B) economies of scope C) learning-curve effect D) network effect

B) economies of scope

Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters? A) While the customer segment in the introduction stage consists of early adopters, the customers entering the market in the growth stage are technology enthusiasts. B) Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns. C) While early adopters make up the smallest market segment, technology enthusiasts make up the mass market. D) Firms need to communicate products' potential applications in a more direct way when attracting technology enthusiasts rather than early adopters.

B) Unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns.

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true? A) The industry for cell phones with holographic keyboards will face greater competition than the tablet industry. B) While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation. C) While the industry for cell phones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits. D) The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be non-price.

B) While the industry for cell phones with holographic keyboards will focus more on product innovation, the tablet industry will focus more on process innovation.

Which of the following is the best characterization of sociocultural forces? A) a firm's culture, norms, and values B) a society's culture, norms, and values C) a competitor's culture, norms, and values D) a focus group's culture, norms, and values

B) a society's culture, norms, and values

In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the A) functional managers. B) chief executive officer. C) external stakeholders. D) general manager.

B) chief executive officer.

What part of the AFI strategy framework does the question "How does the firm make money?" relate to? A) strategic leadership and the strategy process B) competitive advantage, firm performance, and business models C) external analysis D) internal analysis

B) competitive advantage, firm performance, and business models

Rapida Inc. and Click Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most likely have A) competitive advantage over other firms in their industry. B) competitive parity with each other. C) strategic alliance with each other. D) economies of scope instead of economies of scale.

B) competitive parity with each other.

A resource-based view of a firm provides a model that systematically aids in identifying A) core rigidities. B) core competencies. C) competitive disadvantage. D) competitive parity.

B) core competencies

Seth's Computer Repair has maintained a competitive advantage based on its thorough and professional service, reasonable pricing, and money-back guarantee. Management at the company is so committed to doing repairs well that they often have rejected employee suggestions to expedite their processes. Recently, the company has begun to lose customers to a new local service offering same day in-home repairs and 24/7 online customer support. According to the dynamic capabilities perspective, Seth's Computer Repair has lost its competitive advantage due to A) value chain disruption. B) core rigidity. C) resource flows. D) resource stocks.

B) core rigidity.

While creating its AFI strategy framework, Valdez Consultants decided what markets the firm should compete in. By doing this, what type of strategy did the company devise? A) business strategy B) corporate strategy C) global strategy D) ethical strategy

B) corporate strategy

In a firm's external environment, ________ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class. A) political trends B) demographic trends C) ecological trends D) economic trends

B) demographic trends

Beach Grub is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. Yet, the restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Beach Grub adopted in this scenario? A) cost-leadership B) differentiation C) market penetration D) product diversification

B) differentiation

Companies in the same strategic group are ________ to each other. A) strategic allies B) direct competitors C) merger partners D) stakeholders or shareholders

B) direct competitors

When Simple Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as? A) minimum efficient scale B) diseconomies of scale C) experience curve effect D) learning-curve effect

B) diseconomies of scale

According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were A) invaluable and common. B) easy to imitate. C) extremely rare. D) non-substitutable.

B) easy to imitate.

The amount of xylene that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment, and considered a legal offense. Consequently, CW Paints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures xylene-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is CW Paints Corp. primarily compromising in this scenario? A) legal responsibilities toward the government B) economic responsibilities toward its shareholders C) philanthropic responsibilities toward the local community D) ethical responsibilities toward the society

B) economic responsibilities toward its shareholders

Backyard BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage? A) lowering the quality of ingredients below what customers expect to control costs B) eliminating brick-and-mortar locations and offering delivery from a central kitchen C) raising prices without improving on the quality of food D) marketing itself as a high-end restaurant and competing with more refined restaurants in the area

B) eliminating brick-and-mortar locations and offering delivery from a central kitchen

The production head at the Omnitone Paint Company would frequently stay back after office hours and experiment with new color combinations even though this was part of the new product development team's job. As a result of these experiments, he came up with two new interior paint colors, foggy morning and mint julep. The new colors proved popular among test groups, and quickly became some of Omnitone's best-selling products. Which of the following strategies does this scenario best illustrate? A) intended strategy B) emergent strategy C) unrealized strategy D) tactical strategy

B) emergent strategy

To support the rise of emergent strategies, an organization should A) centralize decision making and all other activities. B) empower lower-level employees to take up autonomous actions. C) limit serendipity that is in the form of random events and accidental happenstances. D) rely solely on hard data to formulate strategies.

B) empower lower-level employees to take up autonomous actions.

The founder of T-Square Construction strongly believes in the notion of corporate social responsibility, so he has proposed a number of philanthropic activities that he expects the company to pursue. In order to accomplish this vision, the managers should first A) review all legal codes in the areas in which T-Square operates and ensure all permits are up-to-date. B) ensure that the company is profitable and has a sustainable competitive advantage. C) make sure it is paying employees wages that allow them to live comfortably. D) ask for public input on issues that the company can help address.

B) ensure that the company is profitable and has a sustainable competitive advantage.

Organizational core values are the ________ that govern the behavior of individuals within a firm or organization. A) economic measures B) ethical standards and norms C) political principles and policies D) social beliefs and actions

B) ethical standards and norms

O'Ryan Plastics maintains a manufacturing plant overseas. The local government has just been overthrown by a military group that opposes foreign influence in the country. According to the SWOT analysis, the political situation in this location is considered to be an A) external opportunity. B) external threat. C) internal strength. D) internal weakness.

B) external threat.

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 its unique resources that are difficult for others to replicate 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.

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

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it A) loses its competitive advantage. B) gains market share from other firms. C) lowers the economic value created. D) results in diseconomies of scale.

B) gains market share from other firms.

In which of the following stages of the industry life cycle is a standard first established? A) maturity stage B) growth stage C) shakeout stage D) introduction stage

B) growth stage

The leading producer of cell phone backup batteries, Jumpstart, has achieved great success because they produce high-quality battery backups that are not too expensive. Even so, another company that produces lower-quality batteries at the same price has also achieved some success, but not as much as Jumpstart. Also, in general, the price of backup batteries has declined because of economies of scale and learning. In addition, Jumpstart has added complementary assets, such as a carrying case. Considering all of these factors, the backup battery industry is most likely in the A) introduction stage. B) growth stage. C) shakeout stage. D) maturity stage.

B) growth stage.

Intel's Celeron chip and Atom chip are initiatives to A) introduce a new product in a new market to extend its leadership. B) guard the company against disruptive innovation by protecting the low end of the market. C) stall its own disruption strategies and wait for its rivals to introduce disruptive forces. D) target that section of the market that is not particularly price sensitive

B) guard the company against disruptive innovation by protecting the low end of the market.

In the decline stage, which of the following strategies involves a reduction of investments in product support? A) exit strategy B) harvest strategy C) maintain strategy D) consolidate strategy

B) harvest strategy

Foot Friendly is a manufacturer of athletic shoes. It has released an improved version of its premier running shoe in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate? A) radical innovation B) incremental innovation C) architectural innovation D) disruptive innovation

B) incremental innovation

According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy? A) competition switching from non-price attributes to pricing B) innovation that allows competitors to emerge with more economical replacements C) new entrants with small production scale D) suppliers requesting a 2% price increase across the industry

B) innovation that allows competitors to emerge with more economical replacements

Eleanor owns a large portion of Apex Apparel's stock. However, she is not employed by the company. In this scenario, Rachel is the company's A) external stakeholder. B) internal stakeholder. C) creditor. D) customer.

B) internal stakeholder.

General Electric (GE) disrupted itself in the healthcare industry by A) replacing the top levels of the executive hierarchy. B) introducing inexpensive and smaller diagnostic devices in developing countries. C) saturating the global market with multiple diagnostic devices. D) targeting the comparatively less price-sensitive sections of the market.

B) introducing inexpensive and smaller diagnostic devices in developing countries.

Green Jeans, Inc. had a mission to become the leading producer of environmentally friendly blue jeans, an emerging and in-demand category in the apparel industry. Its strategy involved leveraging a network of organic cotton farmers and suppliers of environmentally responsible synthetic materials to create a product that is durable, attractive, affordable, and 100% recyclable. However, because it did not upgrade its outdated production facilities, Green Jeans could not assemble its products at a low-enough cost to offer the jeans at a price that was attractive to customers. Green Jeans' strategy failed because A) it failed to consider the competitive challenge. B) it was not backed up with strategic commitments. C) managers did not live by the company's core values. D) the company did not stake out a unique strategy position.

B) it was not backed up with strategic commitments.

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. A) ecological factors B) lobbying forces C) interest rates D) demographic research

B) lobbying forces

46) Strategic commitments are actions that are A) inexpensive. B) long-term oriented. C) easy to reverse. D) easy to imitate.

B) long-term oriented.

The ratio of SG&A/Revenue is an indicator of a firm's focus on A) researching to produce innovative products and services. B) marketing and sales to promote its products and services. C) producing a good in an efficient manner. D) creating a good that is cost-effective.

B) marketing and sales to promote its products and services

Corner Market Inc. is a supermarket chain. Due to strong competition from other stores in the industry, Corner Market has aggressively used branding, pricing, and superior customer service to uniquely position itself in the market. As a result, the supermarket chain has been able to differentiate itself from its competitors and sell its products at higher prices. Which of the following industry competitive structures does this scenario best illustrate? A) perfect competition B) monopolistic competition C) monopoly D) oligopoly

B) monopolistic competition

Combining economies of learning with the existing production technology allows a firm to A) move up a given experience curve. B) move down a given learning curve. C) jump to a less steeper learning curve. D) jump to a flatter experience curve.

B) move down a given learning curve.

Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? A) monopolistic competition B) oligopoly C) monopoly D) perfect competition

B) oligopoly

When ReGen Pharmaceuticals released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. However, any attempts by competitors to copy the chemical composition would result in infringement of ReGen Pharmaceuticals intellectual property rights. Thus, the drug is protected by a A) promissory bill. B) patent. C) franchise. D) royalty.

B) patent.

Which of the following is typically an economic responsibility of a firm? A) sourcing raw materials from highly developed countries B) paying adequate returns to the firm's stockholders on the capital invested by them C) donating resources, in terms of money and time, toward community development D) helping a nation increase its import of goods and services

B) paying adequate returns to the firm's stockholders on the capital invested by them

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.

B) perfect competition exists

Burke Furnishings is a company that manufactures and sells home furniture. It sources its materials from another country to keep costs low. An assembly line worker in one of its manufacturing centers noticed that there was increasing concern regarding the potential toxicity of the flame-resistant materials used in the furniture. In response, she compiled a list of nontoxic flame-resistant materials that the company could use. When her manager learned about this, he presented the prospect and got it approved from the top management team. This is an example of the A) top-down strategic planning approach. B) planned emergence approach. C) scenario planning process. D) reverse engineering process.

B) planned emergence approach.

28) A firm is said to gain a competitive advantage when it can A) exceed its own previous performances. B) provide products similar to its competitors, but at lower prices. C) perform at the same level as that of its competitors. D) minimize the difference between value creation and cost.

B) provide products similar to its competitors, but at lower prices.

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. A) imitable B) rare C) intangible D) organizational

B) rare

Which of the following strategies does Tesla need to implement or achieve to gain a competitive advantage? A) imitate the features of the most popular SUVs on the market B) reinvest profits to build successively better electric automobiles C) sell advertising space on their cars' digital displays D) substitute less-expensive components to keep costs low

B) reinvest profits to build successively better electric automobiles

Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which One Electro Inc. lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated? A) resource value B) resource heterogeneity C) resource immobility D) resource imitation

B) resource heterogeneity

InTex manufactures medical devices. The firm's profitability depends on several variables that are subject to occasional change, including the cost of parts and labor, changes in medical practices, and the price of oil used in both manufacturing and shipping. To account for the potential impact of changes to any of these variables, InTex managers should implement a(n) ________ approach. A) top-down strategic planning B) scenario planning C) upper-echelon D) strategic business units

B) scenario planning

Top-down strategic planning as an approach to the strategic management process will be most effective when the A) environment is constantly changing. B) size of the firm is large. C) probability of black swan events is high. D) top management wants to decentralize decision making

B) size of the firm is large

Tony's Pizza has been trying to directly copy the strategies of Moonlight Pies. Even though it is evident that the success of Moonlight Pies' success comes from the freshness and variety of ingredients it uses, Tony's Pizza has not been able to introduce the same types of produce into its recipes. This is because Moonlight's network of relationships with local growers, as well as its efficient supply chain, are very difficult to emulate. Which of the following barriers to imitation does this scenario best illustrate? A) path dependence B) social complexity C) resource mobility D) resource homogeneity

B) social complexity

The key objective for firms during the growth phase is to A) invest as many resources as possible in product innovations. B) stake out a strong strategic position not easily imitated by rivals. C) pursue a harvest strategy. D) reduce their network effects.

B) stake out a strong strategic position not easily imitated by rivals.

BlueStainless Corp. has been able to gain and sustain a competitive advantage due to its strong relationship with its employees, customers, suppliers, and local communities. The company believes in lifetime employment and ensures that its employees grow along with the company. Investors are more than satisfied with the returns on their investments. Also, 3 percent of the company's profit is spent on community development. With initiatives like these, customers feel privileged to associate themselves with BlueStainless products. This scenario best illustrates the implementation of a A) strategic analysis. B) stakeholder strategy. C) wild card event. D) black swan event.

B) stakeholder strategy.

The former CEO of Sam's Club, a division with its own profit-and-loss responsibility, Rosalind Brewer, reported to Walmart's CEO, C. Douglas McMillon, who as corporate executive oversees Walmart's entire operations. Sam's Club, therefore, is a ________ of Walmart. A) corporate partner B) strategic business unit C) branch office D) house brand manufacturer

B) strategic business unit

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in A) collective bargaining. B) strategic trade-offs. C) arbitration. D) mediation.

B) strategic trade-offs.

According to AFI strategy framework, in which of the following tasks of strategic management is a firm's vision, mission, and values identified? A) strategy control B) strategy analysis C) strategy formulation D) strategy implementation

B) strategy analysis

Which of the following tasks in the AFI strategy framework involves putting the formulated strategy into practice through organizational structure, culture, and controls? A) strategy formulation B) strategy implementation C) strategy analysis D) strategy evaluation

B) strategy implementation

Online retailer NetShop had been drastically losing market share to its competitors. The management hired a reputed consulting firm to advise the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its poor customer service, including slow response times to customer inquiries and unclear return policies. These ineffective policies and procedures led to many disgruntled customers and a steady migration to more customer-friendly retailers. NetShop can best solve its problem by working on its A) immobile assets. B) support activities. C) resource flows. D) resource stocks.

B) support activities.

National Safety Inc., an insurance firm, replaced its existing project management software with new software from another supplier. Since the new software has different features and abilities, National Safety has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents National Safety's A) opportunity cost. B) switching cost. C) octroi charge. D) excise duty.

B) switching cost.

Which of the following was a key motivator for participants in the Occupy movement of 2011? A) the need for a capitalist economic system B) the issue of income disparity C) the need to reduce government intervention in businesses D) the desire to dump ecologically dangerous products overseas

B) the issue of income disparity

Kirsten, a manager, is writing an analysis of her employer's current and possible future revenues. Which of the following could she identify as an economic factor in her 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

B) the stage of the business cycle that the country is in

Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Peerless Inc. find it most difficult to exit? A) the management consultancy industry in which the company's fixed costs are low B) the steel industry in which the company has obligations like severance pay toward employees C) the corporate training industry in which the company's commitments are mostly short-term D) the e-commerce industry where the company has no long-term contractual agreements with suppliers

B) the steel industry in which the company has obligations like severance pay toward employees

47) 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.

B) they provide more aspirational visions.

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 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.

B) threat of new entrants is most likely low.

Red Sapphire is a wristwatch company known for its luxury watches and that follows a differentiation strategy. In this scenario, Red Sapphire should ideally compare its strategic position with a A) watch retailer that sells pre-owned watches. B) watch maker that sells high-end, premium watches. C) watch maker that manufactures low-priced watches. D) watch maker that follows a differentiation strategy.

B) watch maker that sells high-end, premium watches. C) watch maker that

A value curve indicates a lack of effectiveness in a firm's strategic profile when it A) stays level. B) zigzags. C) trends downward. D) trends upward.

B) zigzags.

Which of the following statements with regard to industry structures is true? A) They are stable over time, not dynamic. B) Having a large number of competitors generally equates to higher industry profitability. C) A consolidated industry tends to be more profitable than a fragmented one. D) Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power.

C) A consolidated industry tends to be more profitable than a fragmented one.

Gilroy Crackers enjoys a competitive advantage as a cost leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Gilroy Crackers? A) Gilroy's leading competitor develops a new low-sodium product. B) Gilroy's most reliable production worker takes a job in another industry. C) A major winter storm shuts down Gilroy's production for several days. D) A wheat shortage raises input costs across the industry.

C) A major winter storm shuts down Gilroy's production for several days.

As manager of a major producer of automobile airbags, you have recently introduced the following vision statement: to protect the health of every driver and passenger. How can you ensure that your employees feel invested in and inspired by the firm's vision? A) Include a "vision adherence assessment" in each employee's annual performance review. B) Hang banners around the production facility touting the new vision statement. C) Ask employees for feedback on the vision statement and revise based on their input. D) Give a speech explaining why everyone should support the new vision.

C) Ask employees for feedback on the vision statement and revise based on their input.

Which of the following is a feature of the shakeout phase of the industry life cycle? A) There is rapid industry growth during this stage. B) Market demand in this stage primarily consists of first-time adopters. C) Competitive intensity within the industry increases. D) The mode of competition shifts from price to non-price in this stage.

C) Competitive intensity within the industry increases.`

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.

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

Hannah is the Chief Operating Officer of the startup AppPalace. In which of the following scenarios does Hannah exhibit strategic leadership? A) Hannah directs the company to produce an app for reptile enthusiasts, a community she happens to be a part of. Even though the app ends up losing significant amounts of money, Hannah is proud of the product and uses it every day. B) Citing budget concerns, Hannah ignores the directions from AppPalace's CEO to double the size of the customer support staff. As a result, the company misses its third quarter customer satisfaction target but exceeds its net profit expectations by 5 percent. C) Hannah schedules a meeting with the manager of the marketing department and overcomes his skepticism about a new campaign aimed at customers in the 55+ age group. Over the next three months, AppPalace gains 250,000 new users in that group. D) With a major pitch to potential investors coming up, Hannah works alone for 10 hours a day until she writes the perfect sales pitch. Even though the rest of her team doubts that they can meet the performance goals Hannah has set, she makes the presentation anyway.

C) Hannah schedules a meeting with the manager of the marketing department and overcomes his skepticism about a new campaign aimed at customers in the 55+ age group. Over the next three months, AppPalace gains 250,000 new users in that group.

Zoom Zoom Car Rental follows a cost-leadership strategy. Which of the following firms will most likely be its direct competitor? A) Classic Car Rentals Inc., which follows a cost-increase strategy B) Paul Bunyan Car and Truck Rentals, which follows a differentiation strategy C) Reliable Rental Cars, which follows a low-cost strategy D) Rent-an-Auto LLC, which follows a standardization strategy

C) Reliable Rental Cars, which follows a low-cost strategy

Unicorn Toys faces stiff competition from Playtime Inc., a rival firm with which Unicorn Toys has achieved differentiation parity. Both firms have invested in state-of-the art production facilities and have similar learning curves of 85 percent. Assuming neither firm can reduce the cost of its input factors, how can Unicorn Toys achieve a competitive advantage as a cost leader? A) Reduce the manufacturing staff by half to save on labor costs. B) Increase spending on product features. C) Have a cumulative output that is greater than Playtime Inc.'s. D) Eliminate several features that customers value to cut costs.

C) Have a cumulative output that is greater than Playtime Inc.'s.

Euan manages product design and development at a toy company. The junior managers who report to him tell him that new complementors for the firm's products are available. What should Euan's reaction be? A) He should consult lawyers about the possibility of suing for copyright infringement. B) If the industry barriers to entry are low, he doesn't need to do anything. C) He needs to find out if his company as well as other companies can provide the complements. D) If the industry barriers to entry are high, he doesn't need to do anything.

C) He needs to find out if his company as well as other companies can provide the complements.

) How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure? A) In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile. B) In perfect competition, it is extremely difficult to replicate the resource bundles of a firm, whereas in the resource-based model, it is extremely easy to imitate them. C) In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry. D) In the resource-based model, only physical assets of a firm are considered as resources, whereas in perfect competition, a firm's capabilities and competencies are also considered as resources.

C) In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry.

Which of the following describes an airline that is most likely stuck in the middle? A) Red Carpet Airline that offers complimentary drinks and meals, coast-to-coast coverage via connecting hubs, plush airport lounges, and high prices. B) Plush Airline that offers international routes and global coverage, high customer service, high reliability, and high prices. C) Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices. D) Bottom Line Airline that offers no assigned seating, no in-flight amenities, no drinks or meals, no airport lounges, and low prices.

C) Just Right Airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices.

Marigold Servers, a web services firm, has experienced a 7% decline in revenues in consecutive quarters. In an effort to reduce operating costs, managers reduced the customer service staff from 12 employees to 6. Management also enlisted the remaining employees to help produce a new company vision: to give customers of all budgets a customizable, stress-free web hosting experience. What is wrong with this scenario? A) Marigold's vision is not customer-oriented. B) Internal stakeholders were not invested in defining the vision. C) Marigold's organizational structures do not align with the vision. D) Marigold's vision is not aspirational.

C) Marigold's organizational structures do not align with the vision.

Thomas is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly-qualified team members, Thomas is unable to shift to a cost leadership strategy. Which strategy is most likely to achieve a competitive advantage? A) Offer similar services as competitors but raise prices to increase profits. B) Lower prices but continue employing high-paid expert gardeners. C) Narrow the scope of competition and focus on unique features such as the use of organic materials. D) Maintain prices but replace all the expert employees with less-skilled workers to control costs.

C) Narrow the scope of competition and focus on unique features such as the use of organic materials.

39) Which of the following statements should ideally reflect a firm's strategy for competitive advantage? A) Our strategy is to win at any cost. B) We will be number one in the industry. C) Our aim is to create superior customer value while controlling costs. D) We want to be the market leader by replicating our competitor's strategy.

C) Our aim is to create superior customer value while controlling costs.

Which of the following scenarios best illustrates a good stakeholder strategy? A) VP Inc. follows a strategy in which maximization of the shareholder's wealth is the primary concern of the managers. B) Carrvero Inc. ensures that its employees are paid the least in the industry so that its external stakeholders can get the best price. C) PA 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) Gen Pharma Corp. ensures that it fully exploits free natural resources, so that most of its profits go to shareholders in the form of dividends.

C) PA 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 statements is true about strategic groups? A) It is not possible to have two different strategic groups within the same industry. B) Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups. C) Profitability varies between different strategic groups. D) Companies within the same strategic group are complementors to each other.

C) Profitability varies between different strategic groups.

Addams Coaches Inc. is a bus line with service to several major cities. It has several competitors that each offer service to one or two cities, and based on its current outlays, it cannot match or beat those competitors on price. Because of long-term contracts and an increase in the cost of gasoline, it is not possible to reduce expenditures at this time. Which of these strategies should Addams pursue instead? A) Create a strategic group through mergers. B) Compete based on inter-group rivalry, not intra-group rivalry. C) Pursue a differentiated strategy. D) Close the business until the cost of gas decreases.

C) Pursue a differentiated strategy.

Which of the following statements accurately describes a firm's resource stock? A) Resource stocks are a firm's level of resources that are common to competitors. B) Resource stocks are a firm's future estimate of both tangible and intangible resources. C) Resource stocks are a firm's current level of intangible resources. D) Resource stocks are a firm's level of investments to maintain or build a resource.

C) Resource stocks are a firm's current level of intangible resources.

Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Sparrow Inc. is more than that created by Bison Autos. What does this indicate? A) Bison Autos has a competitive advantage over Sparrow Inc. B) Both Bison Autos and Sparrow Inc. have achieved competitive parity. C) Sparrow Inc. can charge a premium price on its automobiles. D) Bison Autos has created a higher value gap than Sparrow Inc.

C) Sparrow Inc. can charge a premium price on its automobiles.

) What is the strategic management process? A) The CEO decides who the product managers will be for a company. B) The CEO defines the main problems facing a company. C) Strategic leaders design a method to formulate and implement strategy. D) Strategic leaders focus on creating a vision that reflects the company's strategy.

C) Strategic leaders design a method to formulate and implement strategy.

________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage. A) Supply chain management B) Integrated technology management C) Strategic management D) Inventory management

C) Strategic management

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? A) Maintain prices but significantly increase spending on customer service and other amenities. B) Lower prices but eliminate several of the features that have come to define Coastal Haven properties for consumers, such as complimentary meals and in-room massages. C) Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image. D) Raise prices without increasing spending on customer service or resort features.

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

A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this? A) The employees will be isolated from the process of setting the company's vision and mission. B) The lower-level employees will be restricted to the tasks involved in strategic implementation. C) The company's organizational structure and systems will be designed to support bottom-up strategic initiatives. D) The top management will create a strategy that is based on hard data alone, rather than an inspiring vision.

C) The company's organizational structure and systems will be designed to support bottom-up strategic initiatives.

The "diagonal assembly system" was a production system pioneered by the automobile company Gogo. Recently, Gogo was able to sue a competitor and won the suit, thereby receiving $100 million in damages. Which of the following would most likely enable Gogo to win such a lawsuit? A) The competitor ran advertising that criticized Gogo's assembly system. B) The competitor failed to apply for a patent of its own assembly system. C) The competitor infringed on Gogo's patent of the "diagonal assembly system." D) The competitor developed an assembly system that worked on a newer theory than Gogo's system.

C) The competitor infringed on Gogo's patent of the "diagonal assembly system."

37) Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive benchmarking? A) No firm would face direct competition from others in the industry; hence, profit potential would be high. B) Each firm would be catering to a different customer segment. C) The firms would eventually have no resources to invest in product and process improvements. D) Each firm would be in a better position to gain a competitive advantage.

C) The firms would eventually have no resources to invest in product and process improvements.

Which of the following applies to the Strength-Threats quadrant of the SWOT matrix? A) The local fast-food chain Easy Hot Dogs expanded its limited menu to maintain its advantage against stiff competition. B) The local fast-food chain Easy Hot Dogs added a salad bar to maintain its competitive advantage against stiff competition. C) The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its competitive advantage against stiff competition. D) The local fast-food chain Easy Hot Dogs revised its image of being a cheap-food place to being a wholesome family place to maintain its competitive advantage against stiff competition.

C) The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its competitive advantage against stiff competition.

Which of the following methods of developing a strategy best illustrates scenario planning? A) Based on the previous year's profits, the CEO of Solva Inc. decided to adopt an expansion strategy in its home market. B) A sales person at MP Foods Inc. suggested that the company should introduce an organic version of its gelato to cater to the needs of the increasingly health-conscious population. C) The managers at Lyon Clothing Inc. formulated a strategy that is able to handle small to medium to large increases in the prices of cotton in the future. D) The CEO of BCT Inc., a large conglomerate, has decided to enter the South American market based on the competitor's success in the same market.

C) The managers at Lyon Clothing Inc. formulated a strategy that is able to handle small to medium to large increases in the prices of cotton in the future.

) Which of the following statements is true of the early majority section of consumers? A) They come into the market during the introduction stage. B) They are unaware that many hyped new product introductions will fade away. C) They weigh the benefits and costs carefully when adopting a new product. D) They make up the smallest market segment.

C) They weigh the benefits and costs carefully when adopting a new product

Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? A) Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. B) New entrants are embedded in an innovation ecosystem, while incumbent firms are not. C) Unlike incumbent firms, new entrants do not have formal organizational structures and processes. D) Incumbent firms do not have the advantages of network effects that new entrants have.

C) Unlike incumbent firms, new entrants do not have formal organizational

45) True Help is a nonprofit organization that works toward rehabilitating the homeless. The credo of the organization is "help us help you." For an organization like True Help, which of the following statements would make an appropriate mission? A) Help us help you find a home. B) One day, everyone in this nation will have a home to protect themselves. C) We help the homeless gain and sustain financial independence by providing employment opportunities. D) Our mission is to turn this not-for-profit organization into a for-profit organization so that the stakeholders benefit.

C) We help the homeless gain and sustain financial independence by providing employment opportunities.

22) Which of the following scenarios illustrates a firm that has a sustainable competitive advantage? A) Jamison Inc. generated revenue of $300,000 this financial year, which is close to the industrial revenue average of $320,000. B) CR Inc. almost doubled its sales to 9,000 units this year compared to its previous year's sales of 5,000 units, though the industry average is 10,000 units. C) Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three yearsterm-22. D) Peak Inc. was able to outperform its competitors with its new production system, in terms of revenue, for a brief period of four months.

C) Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years.

Assume that the market for print book publishing has entered the maturity stage. Which of the following would mostlikely exist during this stage? A) a few start-up publishers B) many small to midsized publishers C) a few large publishers D) one large publisher

C) a few large publishers

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

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

Golden Harvest is a restaurant located inside a five-star hotel. It caters mainly to customers who are concerned about quality dining rather than the prices. In this scenario, which of the following will be a part of Golden Harvest's strategic group? A) a nearby fast-food restaurant B) a food kiosk in an adjacent subway station C) a premium rooftop restaurant in the same city D) a mobile food cart parked opposite to the five-star hotel

C) a premium rooftop restaurant in the same city

17) Which of the following is an element of good strategy? A) a summary of the firm's history within its industry B) a guiding policy to address employee satisfaction C) a set of coherent actions to implement the firm's guiding policy D) an approach that underestimates the competition

C) a set of coherent actions to implement the firm's guiding policy

In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity? A) an increase in its financial resources B) an increase in its brand equity C) an increase in its customers' disposable income D) an increase in its employee productivity

C) an increase in its customers' disposable income

When firms innovate by leveraging existing technologies into new markets, they are said to be involved in A) incremental innovations. B) radical innovations. C) architectural innovations. D) disruptive innovations.

C) architectural innovations

Body Sync Inc. is a chain of gyms. It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months. Included in the package are two health checkups and a gym kit. These add-ons by themselves are not very valuable, but as a package they can enhance the perceived value of the service offerings. In this case, Body Sync's primary value driver is A) economies of scale. B) learning-curve effects. C) availability of complements. D) experience-curve effects.

C) availability of complements.

When the strong dictatorial rule in Backenstein unexpectedly collapsed due to the shocking death of the royal family in an explosion, the nation's economy experienced drastic changes. The laws became more restrictive, the country lost many locally produced resources and products, and the distribution of wealth became inequitable. The unexpected event that led to these changes can best be described as a(n) ________ event. A) extinction B) wild card C) black swan D) miracle

C) black swan

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

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

Assume a firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by A) path dependence. B) dependence complexity. C) causal ambiguity. D) social complexity.

C) causal ambiguity.

Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company' s product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of A) time compression diseconomies. B) resource homogeneity. C) causal ambiguity. D) path dependence.

C) causal ambiguity.

) 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 like buyers, suppliers, potential new entry of other firms, and the threat of substitutes. A) a stakeholder B) regulation C) competition D) a barrier to entry

C) competition

When the market for standalone Global Positioning System (GPS) devices declined with the arrival of GPS-enabled mobile phones, Magnet Inc., a manufacturer of GPS devices, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has Magnet adopted in this scenario? A) harvest strategy B) maintain strategy C) consolidation strategy D) differentiation strategy

C) consolidation strategy

When a firm pursues a maintain strategy, it A) exits a declining industry to maintain the goodwill of its overall brand name. B) reduces investments in product support and allocates only a minimum of human and other resources. C) continues to support marketing efforts even if the demand for the product is declining. D) chooses to consolidate the industry by buying rival firms, those who plan to exit.

C) continues to support marketing efforts even if the demand for the product is declining.

The pharmaceutical company Merck's new drug Vioxx was a blockbuster, generating revenues of $2.5 billion a year by 2002 and growing fast. When allegations that the drug caused heart attacks and strokes began to appear in the medical community, and that Merck had suppressed evidence about Vioxx's dangerous side effects from early clinical trials, Merck announced the voluntary withdrawal of Vioxx from the market. In this example, Merck provides an example of what can happen if a company deviates from its A) voluntary responsibilities. B) realized strategy. C) core values. D) strategic decisions.

C) core values.

49) 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.

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

48) The demand for flip phones has drastically reduced, and there are only a few consumer electronics companies selling them at extremely low prices. Also, the current buyers of flip phones are mainly categorized under laggards. Which of the following stages of the industry life cycle is the flip phone industry in currently? A) growth stage B) maturity stage C) decline stage D) commercialization stage

C) decline stage

) A new company named Far Reach Inc. entered the radio retail business, which is a fairly consolidated industry. In response, two large incumbent radio retailers, Smooth Waves and Clear Signal, lowered the price of their radios. Also, they spent more money to improve their radios and on additional marketing. By doing this, Smooth Waves and Clear Signal A) decreased industry exit barriers. B) increased industry exit barriers. C) decreased industry profit potential. D) increased industry profit potential.

C) decreased industry profit potential.

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.

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

Leading guitar string producer Wound Up Inc. has enjoyed a competitive advantage based on its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated strings. One of Wound Up's competitors, however, has recently developed a similar coating using less expensive ingredients, which allows it to charge a lower price than Wound Up for similar-quality strings. Wound Up's competitive advantage is in danger due to A) a lack of perceived value. B) a lack of organization. C) direct imitation and substitution. D) resource immobility.

C) direct imitation and substitution.

When Japanese carmakers entered the existing U.S. automobile market by first offering small fuel-efficient cars, and then leveraging their low-cost and high-quality advantages into high-end luxury segments, they were engaging in A) regressive innovation. B) radical innovation. C) disruptive innovation. D) architectural innovation.

C) disruptive innovation.

DiscountHaven Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against DiscountHaven's low prices. Thus, DiscountHaven has a competitive advantage due to its A) superior customer service. B) time compression economies. C) economies of scale. D) learning-curve effects.

C) economies of scale

It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they A) are driven by technology concerns rather than the practicality of a new product. B) influence the purchase decisions of early adopters. C) enter into the market in large numbers, creating a herding effect. D) have the highest purchasing power when compared to the other customer segments.

C) enter into the market in large numbers, creating a herding effect.

Patriot Tools, a company that manufactures industrial tools, incurs higher costs because of its refusal to outsource its manufacturing to countries where labor costs are lower. This reflects Patriot Tools' ________ responsibility. A) economic B) legal C) ethical D) demographic

C) ethical

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.

C) exchange relationship

The concept of a(n) ________ attempts to capture both learning effects and process improvements at firms. A) managerial grid B) growth matrix C) experience curve D) diminishing utility curve

C) experience curve

To be successful and to survive the shakeout stage of the industry life cycle, a firm should A) charge higher prices than its competitors. B) focus on product innovation rather than process innovation. C) gain economies of scale. D) shift from price to non-price competition.

C) gain economies of scale.

A. G. Lafley at Procter & Gamble (P&G) had implemented an open-innovation model, which had greatly benefitted the company. In the light of this information, we can conclude that A. G. Lafley is a(n) A) venture capitalist. B) category captain. C) intrapreneur. D) early adopter.

C) intrapreneur.

While the personal computer industry is flooded and growing with laptops and tablets, Malik recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Ivan best represent? A) early adopters B) category captains C) laggards D) early majority

C) laggards

To initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy. These questions focus on A) increasing cost and maintaining perceived customer benefits. B) lowering cost and maintaining perceived customer benefits. C) lowering cost and increasing perceived customer benefits. D) increasing cost and increasing perceived customer benefits.

C) lowering cost and increasing perceived customer benefits.

Clear Calls Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all Clear Calls users are free. When a person switches to a Clear Calls network, his or her 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 Clear Calls Inc. is given a free wireless connection. This has helped to keep competition away from Clear Calls. In this scenario, which of the following factors is acting as an entry barrier for Clear Calls Inc.? A) economies of scale B) high capital requirement C) network effects D) high fixed costs

C) network effects

In a radical innovation, a firm targets A) existing markets by using new technologies. B) new markets by using existing technologies. C) new markets by using new technologies. D) existing markets by using existing technologies.

C) new markets by using new technologies.

The primary goal of a firm pursuing a blue ocean strategy should be to A) create the highest perceived value in its respective industry. B) build a reputation of being the lowest-cost producer in its chosen industry. C) offer a differentiated product or service at a low cost. D) achieve a less steep learning curve.

C) offer a differentiated product or service at a low cost.

Pure Carat Inc. is a company that sells 24-carat gold biscuits to companies that manufacture jewelry. Since the company operates in an industry where many other suppliers sell standardized products, it can most likely A) easily achieve a temporary competitive advantage. B) easily achieve a sustainable competitive advantage. C) only achieve competitive parity. D) maintain its absolute advantage for long time.

C) only achieve competitive parity.

A firm's resistance to changes in the status quo is referred to as A) organizational parity. B) organizational liquidity. C) organizational inertia. D) organizational efficacy.

C) organizational inertia.

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.

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

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate? A) monopoly B) oligopoly C) perfect competition D) monopolistic competition

C) perfect competition

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.

C) perform different activities than its rivals.

A firm experiences diseconomies of scale when it A) has a constant return to scale. B) moves down the experience curve. C) produces at an output level beyond the minimum efficient scale. D) has a steep learning curve when compared to its competitors.

C) produces at an output level beyond the minimum efficient scale.

Fleet Foot Shoes has been successful at differentiating itself from competitors by claiming a premium price for its athletic footwear based on superior design and high-quality materials. In this scenario, which of the following is the key value driver? A) economies of scale B) low-cost input factors C) product features D) premium prices

C) product features

36) Noodles 2 Go and Sal's Trattoria are two restaurants serving Italian cuisine. While Noodles 2 Go focuses on providing quick, affordable pasta dishes for the lunch crowd, Sal's Trattoria focuses on serving home-style dishes in an upscale, romantic setting. Both companies have been able to gain a competitive advantage. This is most likely because the companies have A) benefitted from economies of scale. B) entered into a cartel arrangement. C) pursued distinct strategic positions. D) engaged in direct imitation and substitution.

C) pursued distinct strategic positions.

Edna Gomez is the founder of the restaurant chain Good and Green. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and all packaging is manufactured from recycled material. Also, her company sources ingredients from farms within 100 miles from her locations. Edna's belief is that her restaurants should be able to support the community at large. Which of the following terms best describes Edna Gomez? A) headhunter B) category captain C) social entrepreneur D) trade creditor

C) social entrepreneur

Blue Billion Inc. is a large company that sells a variety of products such as cosmetics, jewelry, frozen foods, navigation electronics, and airplanes. Apart from this, the company also has a strong presence in the service industry through its chain of dance studios, casinos, and nightclubs. Each of its product divisions operates as an individual business and is responsible for its own profits and losses. Thus, these product divisions under Blue Billion can be referred to as A) limited liability companies. B) functional departments. C) strategic business units. D) corporations.

C) strategic business units.

Hammer and Nails, Local Motion, DIY Palace, and Handy Paradise are all hardware stores that compete against each other through everyday low pricing and discounts on bulk purchases. All four stores cater to the needs of highly price-sensitive customers. Thus, together these stores form a A) focus group. B) command group. C) strategic group. D) cross-functional group.

C) strategic group.

Zenya is the founder of an online service that allows users to rent out spare rooms in their homes. She has hired a number of extremely bright employees whose opinions are central to the company's success in the fast-paced online services industry. Which type of strategic management process would be most likely to fully utilize the strengths embodied by her team and position the company to capitalize upon autonomous actions and serendipity? A) strategic planning B) scenario planning C) strategy as planned emergence D) ad-hoc planning

C) strategy as planned emergence

Smooth Fusion Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage? A) the cloud computing service that it uses B) the capital the company raised from its shareholders C) the expertise acquired by the employees in the company D) the headquarters building owned by the company

C) the expertise acquired by the employees in the company

Anders is researching sociocultural factors related to his employer, a sporting goods manufacturer. Which of the following would be part of the sociocultural forces in a firm's external environment? A) the interest rates prevalent in an economy B) the laws protecting small enterprises in a nation C) the family size of the firm's target market D) the rate of employee attrition within the firm

C) the family size of the firm's target market

Which of the following best describes a strategic trade-off? A) the tension between innovation and keeping manufacturing costs down B) the tension between maintaining both high-quality products and service C) the tension between value creation and the pressure to keep costs in check D) the tension between raising prices and keeping a loyal clientele

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

When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because Blue Tech Inc.'s models were inferior to the third- and fourth-generation models its competitors were selling. In this scenario, Blue Tech Inc.'s failure can be best attributed to A) causal ambiguity. B) diseconomies of scope and scale. C) time compression diseconomies. D) social complexity.

C) time compression diseconomies.

59) Which of the following is a customer-oriented vision? A) to be the most progressive insurance company B) to be the best automobile company in the world C) to enable businesses to improve their employee communications D) to manufacture innovative products through continuous learning

C) to enable businesses to improve their employee communications

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance? A) choosing a distinct but different strategic position in the industry B) working toward increasing the difference between value creation and cost C) trying to be everything to everybody by combining different competitive strategies D) focusing on creating value for customers rather than destroying rivals

C) trying to be everything to everybody by combining different competitive strategies

) Cartech 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, Cartech 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.

C) upgrade its engineering department and improve its supply chain.

19) Which of the following is an example of competitive parity? A) A firm manufactures higher-quality wall clocks than its competitors. B) A firm provides wall clocks that its consumers value more than other wall clocks. C) A firm sells wall clocks at a lower price than its competitors. D) A firm produces a similar number of wall clocks at a similar cost as its competitors.

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

Due to its large sales volume and low cost structure, Quick Serve Mini-Marts enjoys a cost leadership position. Which of the following scenarios might threaten Quick Serve's competitive advantage? A) Existing competitors in the mini-mart industry lower their prices to match those of Quick Serve. B) Industry suppliers raise their prices. C) Competitors engage in an all-out price war. D) A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout.

D) A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout.

Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Judging from the market conditions described in this scenario, which of the following statements is true? A) Resource immobility of the firms will be low. B) The industry structure will be far from perfect competition. C) Barriers to entry within the industry will be high. D) Any advantage that one firm has will be short-lived.

D) Any advantage that one firm has will be short-lived.

Which of the following best describes a Level 5 manager in the Level-5 leadership pyramid? A) Connie is an employee who just started her career at DK Inc.; she has already been appreciated for her knowledge and skills in the new company. B) Dmitri is an employee at Infinite Circle Inc.; he has helped his team achieve their targets by contributing to the team's efforts. C) Luigi is part of the marketing team at RT Corp.; he has been given the charge of managing a team of three, so he will be promoted to a manager's position next month. D) Asoka is the CEO of Green Machines Inc.; he has helped his company in gaining and sustaining a competitive advantage through ethical decision making.

D) Asoka is the CEO of Green Machines Inc.; he has helped his company in gaining and sustaining a competitive advantage through ethical decision making.

How does availability of complements act as a value driver? A) Complements add value to a product by offering an inferior substitute to it. B) Complements add value to a product by competing with it. C) Complements add value to a product when they imitate it. D) Complements add value to a product when they are consumed in tandem with it.

D) Complements add value to a product when they are consumed in tandem with it.

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? A) Cost of capital for firms will be high. B) Firms will invest less in future growth. C) Economic growth rate will fall. D) Consumer demand will increase.

D) Consumer demand will increase.

Which of the following summarizes the difference between corporate strategy and business strategy? A) Corporate strategy deals with how to compete; business strategy deals with where to compete. B) Corporate strategy deals with when to compete; business strategy deals with how to compete. C) Corporate strategy deals with how to compete; business strategy deals with when to compete. D) Corporate strategy deals with where to compete; business strategy deals with how to compete.

D) Corporate strategy deals with where to compete; business strategy deals with how to compete.

How is differentiation parity different from cost parity? A) Differentiation parity deals with pricing not innovation. B) Differentiation parity deals with innovation not value. C) Differentiation parity deals with pricing not value. D) Differentiation parity deals with value not cost.

D) Differentiation parity deals with value not cost.

Fran owns Consolidated Auto Parts, a company that got its start making auto parts related for hybrid vehicles, but her firm has had difficulty establishing itself as a maker of parts for the more-profitable internal combustion engine. What is most likely contributing to Consolidated's problem in this area? A) Newcomers cannot use existing assets or reconfigure their value chains. B) New competitors usually ignore stakeholders who are not stockholders. C) It is difficult for outsiders to gauge which stage of the "life cycle" that industry is in. D) Entry barriers usually protect the incumbent players in a profitable industry.

D) Entry barriers usually protect the incumbent players in a profitable industry.

What does it mean for a firm to have an 80 percent learning curve? A) Every time the cumulative output increases by 80 percent, the cost per unit will decline by 20 percent. B) Every time the cumulative output is doubled, the cost per unit will decline by 80 percent. C) Every time the cumulative output goes up by 20 percent, the cost per unit will decline by 80 percent. D) Every time the cumulative output is doubled, the cost per unit will decline by 20 percent

D) Every time the cumulative output is doubled, the cost per unit will decline by 20 percent

Pioneer Pharma Inc. and GH Medicines Corp. are two competing firms in the pharmaceutical industry. While Pioneer Pharma Inc.'s vision is "to be a preeminent drug manufacturer in the industry," GH Medicines Corp.'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) GH Medicines' vision is more product-oriented than the vision of Pioneer Pharma. B) Pioneer Pharma is more likely to have a positive relationship between its vision and firm performance than GH Medicines. C) Pioneer Pharma's vision is more long-term and futuristic than GH Medicines' vision. D) GH Medicines will be more flexible than Pioneer Pharma when adapting to changing environments.

D) GH Medicines will be more flexible than Pioneer Pharma when adapting to changing environments.

TriCorp is a major financial services corporation. With the CEO of TriCorp preparing to retire, several top managers are vying for the position. Jared considers himself to be a leading candidate. He not only has advanced degrees from business schools and more than a decade of experience working for TriCorp, but he also has personally ensured that his division has exceeded its performance benchmarks over the past three years, even though many of his employees are dissatisfied because they feel they are stagnating in their jobs. According to the level 5 leadership pyramid, why has Jared failed to exhibit the qualities of a level-5 leader? A) His individual skills are not well developed. B) His actions do not match the organization's strategy. C) He lacks the organizational ability to accomplish the organization's goals. D) He is not able to help others reach their full potential.

D) He is not able to help others reach their full potential

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly? A) Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized. B) In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four. C) Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices. D) In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

D) In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

Understanding the Resource Allocation Process (RAP) will have large effects on shaping a firm's realized strategy. Which of the following is an example of such an allocation of resources? A) Starbucks' launch of iced drinks B) Teach For America's mission statement C) Merck's voluntary withdrawal of Vioxx from the market D) Intel's rule to "maximize margin-per-wafer-start"

D) Intel's rule to "maximize margin-per-wafer-start"

Which of the following is a primary feature of the five forces model? A) It is concerned exclusively about the intensity of rivalry among direct competitors. B) It takes into account a firm's internal resources, capabilities, and core competencies. C) It helps managers determine the changing speed of an industry or the rate of innovation. D) It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

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

Yuki is part of a sales team. He effectively coordinates his tasks with others in the team and willingly contributes to their efforts in achieving the team's objectives. Thus, Yuki is in ________ of the Level-5 leadership pyramid. A) Level 5 B) Level 4 C) Level 3 D) Level 2

D) Level 2

As the strategic manager of CutRite Scissors, you are tasked with producing a strategy for introducing a new line of premium scissors. Your competitor produces a line of similar scissors at a cost of $1 and sells them for $12. Because your company has inferior production capabilities, your scissors will cost $3 each to produce. However, your handle is proven to be more comfortable than your competitors'. Assuming you are guaranteed to sell the same number of units as your competitor, which of the following strategies is most likely to achieve a competitive advantage? A) Reduce the quality of materials used in CutRite scissors to bring unit costs down to $1, then sell the scissors for $12. B) Continue to produce CutRite scissors for $3 but set the price at $10. C) Offer a buy-one-get-one-free sale on CutRite scissors. D) Market CutRite scissors as a higher-quality alternative and sell them for $15.

D) Market CutRite scissors as a higher-quality alternative and sell them for $15.

How did Marriott use economies of scope to achieve greater economic value than its competitors? A) Marriott sees increases in cost per hotel unit as number of customers increases. B) Marriott sees decreases in cost per hotel unit as number of customers increases. C) Marriott lowered its cost structure by focusing its production assets on one type of hotel, which increased the diversity of its hotel line and thus its differentiated appeal. D) Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal.

D) Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal.

38) Toy sales have declined by 10 percent each year, forcing many retailers to exit the industry. To eliminate its remaining competition, Bleaker Toys sells all of its product at a loss and relies on its significant cash holdings to cover costs until its competition is forced to exit the industry. Is this an example of a successful strategy? Why or why not? A) Yes. Any strategy that forces competition from the market is by definition successful. B) Yes. Bleaker has achieved a sustainable competitive advantage by selling its toys at a lower price than competitors. C) No. Bleaker has failed to create value for its customers. D) No. Bleaker's strategy and competitive advantage are unsustainable.

D) No. Bleaker's strategy and competitive advantage are unsustainable.

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A) VRIO framework B) SWOT analysis C) BCG matrix D) PESTEL framework

D) PESTEL framework

Which of the following businesses is most susceptible to negative network effects? A) Moonglow Shoes produces a line of lightweight running shoes that are endorsed by an Olympic gold medalist. B) Clover Technologies produces computer processing chips and sells them to a variety of manufacturers for use in smartphones and other devices. C) Green Tools manufactures solar powered gardening implements and sells them online. D) Pics Match is a social media platform where users upload photos to the site and are matched with other users who have taken similar photos.

D) Pics Match is a social media platform where users upload photos to the site and are matched with other users who have taken similar photos.

After conducting a SWOT analysis, your firm has decided to focus on addressing issues located in the Weaknesses-Opportunities quadrant. Which of the following steps are you most likely to take? A) Devote more resources to an extremely popular advertising campaign to promote an exciting new product. B) Shut down struggling retail outlets in an economically depressed region. C) Deploy top sales personnel to prevent buyers from migrating towards lower-priced competition. D) Reorganize the inefficient research and development department to bring innovative products to market more quickly.

D) Reorganize the inefficient research and development department to bring innovative products to market more quickly.

53) Upper management at Softstep 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) Softstep Inc. wants to adapt their insoles to the changing demands of consumers. B) Softstep Inc. wants to always satisfy the consumers who purchase insoles. C) Softstep Inc. wants to provide the best benefits for employees in the insole industry. D) Softstep Inc. wants to be the best manufacturer of insoles in the industry.

D) Softstep Inc. wants to be the best manufacturer of insoles in the industry.

In which of the following situations is the power of suppliers high in an industry? A) Suppliers offer products that are undifferentiated. B) Suppliers can credibly threaten to backward integrate into the industry. C) Suppliers depend heavily on the industry for their revenues. D) Suppliers' industry is more concentrated than the industry it sells to.

D) Suppliers' industry is more concentrated than the industry it sells to.

Lu runs a company that manufactures satellites for commercial and government use. It has few rivals. At the moment, the power of buyers, the power of suppliers, and the threat of substitutes are all low. Based on this information, what can Lu conclude? A) The manufacturer is likely to see little profit until the power of buyers improves. B) In this scenario, suppliers are likely to create and sell effective substitutes. C) This firm is an example of near-perfect competition. D) The company is likely to be very profitable as long as the threat to entry is low.

D) The company is likely to be very profitable as long as the threat to entry is low.

Which of the following is a competitive benefit experienced by the first mover firm in an industry? A) The first mover will be able to achieve a less steep learning curve. B) The first mover will be able to reduce the switching costs. C) The first mover will not have to patent its products or technology. D) The first mover will be able to reduce costs through economies of scale.

D) The first mover will be able to reduce costs through economies of scale.

Kimba Inc. 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.

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

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage? A) The barriers to entry increase during this stage. B) The firms in the industry yield the highest profits during this phase. C) Rivalry among competitors decreases in this stage. D) The weaker firms are forced out of the industry in this stage.

D) The weaker firms are forced out of the industry in this stage.

) In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility? A) AP Corp. has earned a good reputation among its shareholders by investing more heavily in equipment than in building up brand equity. B) Two Triangle Inc. has lost its market share because its resources are rigid, inflexible, and static. C) Blue Elixir Corp. has been able to gain a competitive advantage because of its ability to efficiently move its resources from one manufacturing unit to another. D) True 3 Inc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate.

D) True 3 Inc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate.

Which of the following business models in the landscaping industry is likely to scale most efficiently? A) a company that offers three different bundles of services at a low, medium, and high price point depending on the level of care required by the customer B) a company that deploys a team of both skilled and unskilled landscapers to each customer's location regardless of their needs C) a company that charges the same hourly rate for landscaping services no matter what the situation requires D) a company that allows users of its website to schedule appointments with landscapers who specialize in the exact service required

D) a company that allows users of its website to schedule appointments with landscapers who specialize in the exact service required

Which of the following examples uses a focused differentiation strategy? A) a tennis pro shop that sells low-quality racquets priced at 150 dollars per racquet B) a coffee shop that offers mediocre lattes at a price of five dollars for a small latte C) a hotel chain that offers high-quality furnishings and service with room rates of under 75 dollars per night D) a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle

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

Which of the following strategies best illustrates a generic business strategy? A) a cost-cutting strategy that corporate executives in the headquarters want all business units of a large conglomerate to implement B) a strategy to use monetary incentives to motivate employees working on a project C) a decision to computerize a firm's database in order to improve customer service D) a decision to niche market the jewelry sold by a company while the apparel division under the same company sells its products through mass marketing

D) a decision to niche market the jewelry sold by a company while the apparel division under the same company sells its products through mass marketing

) 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? A) too many goods and services B) a drop in interest rates C) high economic growth D) an increase in prices

D) an increase in prices

DigitalHealth Electronics Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which of the following types of innovations does this scenario best illustrate? A) disruptive innovation B) incremental innovation C) radical innovation D) architectural innovation

D) architectural innovation

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be A) economies of scale. B) learning-curve effects. C) experience-curve effects. D) availability of complements.

D) availability of complements

Strategic leadership pertains 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

D) corporate executives

Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a supermarket chain. It demands that All Needs create more shelf space in its stores for Soapsuds' products. However, All Needs Inc. refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash." In this scenario, All Needs Inc. has exercised its bargaining power as a buyer through A) price stability. B) retroactive market share. C) enhanced technology. D) backward integration.

D) backward integration.

Superlative Productions spent 10 million dollars to buy the rights to a best-selling novel. The company then prepared for production by hiring a screenwriter to adapt the novel, casting the main roles, renting cameras and other equipment, and scouting locations in southern Arizona. Which of the following pairs of resources are both intangible? A) money spent to buy rights to the novel; screenwriter's experience adapting novels B) money spent to buy rights to the novel; locations in southern Arizona C) best-selling novel; locations in southern Arizona D) best-selling novel; screenwriter's experience adapting novels

D) best-selling novel; screenwriter's experience adapting novels

Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa Rica, where its main suppliers were located, would double in less than three years. This would significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans was able to maintain its profit margins in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate? A) intellectual property protection B) causal ambiguity C) time compression diseconomies D) better expectations of future resource value

D) better expectations of future resource value

In the multiplex industry, Vibrant Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Global Cine Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is True Movies Inc., which offers a customer experience comparable to that of Vibrant Movies at a price almost as low as that of Global Cine. What strategy is True Movies pursuing in this scenario? A) liquidation strategy B) product diversification strategy C) market penetration strategy D) blue ocean strategy

D) blue ocean strategy

Threadbare Industries is a new high-end textile company that has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Threadbare Industries to acquire using its capital? A) a new CEO B) software C) a lease for a new building D) brand name

D) brand name

) Pear Tree Electronics is a large conglomerate that operates in 17 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity, or the value of potential future revenues generated by all its customers in a lifetime. Based on this guideline received from the top management team, the product leader of the home audio division has decided to adopt a cost-leadership strategy in all his 17 units. Thus, the decision made by the product leader best illustrates a ________ strategy. A) corporate B) functional C) grand D) business

D) business

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 A) implementation strategy. B) corporate strategy. C) functional strategy. D) business strategy.

D) business strategy.

Petra's Programming competes on cost with WonderWeb in the web design industry. Both firms operate on a 90 percent learning curve, and neither firm is capable of increasing its cumulative output any further. How might Petra's Programming achieve a cost leadership position while maintaining customer satisfaction? A) by increasing the amount of time the company spends on each website by 25 percent without raising prices B) by eliminating costly service features like 24/7 customer support C) by reducing its client base and lowering output D) by incorporating new programming techniques to take advantage of experience curve effects

D) by incorporating new programming techniques to take advantage of experience curve effects

How has Apple been able to sustain its competitive advantage in the smartphone industry? A) by reducing its network effects B) by targeting its new products and services toward laggards C) by driving the price for the end user to zero D) by regularly introducing incremental improvements in its products

D) by regularly introducing incremental improvements in its products

) Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as A) tangible resources. B) reserves. C) capital gains. D) capabilities.

D) capabilities.

Which of the following is an example of social entrepreneurship? The committee approved the new formula for an all-purpose cleaner because it A) cleaned better than other cleaners and used easy-to-obtain ingredients. B) cleaned better than other cleaners and did not cost more to produce. C) cleaned as well as other cleaners and could be produced more efficiently. D) cleaned as well as other cleaners and used organic ingredients.

D) cleaned as well as other cleaners and used organic ingredients.

24) Underperformance relative to other firms in the same industry or the industry average results in a(n) ________ for a firm. A) sustainable competitive advantage B) increased power distance C) diseconomies of scope D) competitive disadvantage

D) 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 A) markup. B) resource flow. C) capital gain. D) core competency.

D) core competency.

Due to political instability in the country of East Gerdon, the strategic leaders at the headquarters of Mako Manufacturing have decided to close all production facilities in the country until stability returns. Mako's managers have formulated a ________-level strategy. A) business B) divisional C) functional D) corporate

D) corporate

Demand for traditional fast-food providers such as McDonald's, Burger King, and Wendy's has been on a decline in recent years. Consumers have become more health conscious and demand has shifted to alternative restaurants like Subway, Chick-fil-A, and Chipotle. Attempts by McDonald's and Wendy's to steal customers from one another include frequent discounting tactics such as dollar menus. Such competitive actions are indicative of A) profitability increases. B) perfect competition. C) natural monopolies. D) cutthroat competition.

D) cutthroat competition.

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.

D) decides a course of action to address the stakeholders' concerns.

As a start-up company, DigiWrist entered the low end of the highly competitive smartwatch industry with its low-cost smartwatches. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartwatches in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate? A) radical innovation B) incremental innovation C) architectural innovation D) disruptive innovation

D) disruptive innovation

Streaming video services replacing brick-and-mortar video rental stores would be an example of a(n) A) regressive innovation. B) radical innovation. C) architectural innovation. D) disruptive innovation.

D) disruptive innovation.

Sunshine Technologies introduced a tablet that could run completely on solar energy and was less expensive than competitors' tablets. On the downside, it required more frequent charging than the competition's tablets. However, the technology of the Sunshine tablet improved rapidly, thereby improving its recharge frequency. This example describes A) architectural innovation. B) incremental innovation. C) radical innovation. D) disruptive innovation.

D) disruptive innovation.

A(n) ________ is best described as the strategic option that top managers decide most closely matches the current reality and which is then executed. A) bottom-up emergent strategy B) executive summary C) realized strategy D) dominant strategic plan

D) dominant strategic plan

At the time when Ellen decided to purchase a tablet computer, the product had just become accessible to the mass market. She did not purchase the tablet until after she was convinced that the benefits it would offer her would far exceed its price. Also, she waited for her friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Ellen best represent? A) laggards B) technology enthusiasts C) early adopters D) early majority

D) early majority

Marble Inc. is a new firm that entered the smartwatch industry during the growth stage of the industry life cycle. It managed to become one of the top-three smartwatch manufacturers during the shakeout stage due to its low-cost structure. What features should Marble emphasize in its product marketing to ensure it successfully crosses the chasm into the maturity stage? A) advanced capabilities B) the company's outsider status C) sleek and trendy design D) ease of use

D) ease of use

As manager of a relatively new company, you are tasked with analyzing company resources to identify core competencies capable of supporting a competitive advantage. 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

D) enthusiastic company culture

Managers use the AFI strategy framework to A) help their business achieve and sustain competitive parity. B) minimize the wealth of their shareholders. C) help reduce the economic contribution of their business. D) explain and predict differences in firm performance.

D) explain and predict differences in firm performance.

Organic Food Inc., a multinational company, relies on its media partner Radio Plus to regularly advertise its offers, sales, and new products. Radio Plus is invested in this relationship because it generates most of its revenue from advertising Organic Food's products. In this scenario, Radio Plus is Organic Food Inc.'s A) stockholder. B) workforce. C) internal stakeholder. D) external stakeholder.

D) external stakeholder.

Windmill Inc., a vendor, regularly supplies capacitors to Inland Electronics for use in its products. Therefore, Windmill Inc. is Inland Electronics' A) internal stakeholder. B) director. C) shareholder. D) external stakeholder.

D) external stakeholder.

A differentiation strategy works best when a A) firm has tangible resources, its focus of competition shifts to price, and equivalent substitutes are readily available. B) firm's focus of competition shifts to price, and when increasing differentiation of product features do not create additional value. C) firm's differentiated products are commoditized, and costs of providing uniqueness do not rise above the customer's willingness to pay. D) firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

D) firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

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 A) product diversification strategy. B) liquidation strategy. C) broad differentiation strategy. D) focused differentiation strategy.

D) focused differentiation strategy.

In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry? A) if the company is able to put up a credible threat of retaliation B) if the capital requirements in the industry are high C) if the customer switching costs in the industry are high D) if the industry has recently become deregulated

D) if the industry has recently become deregulated

Due to several black swan events in the past, the A) shareholders of public companies have become more confident in investing their resources in businesses. B) need for corporate governance and transparency has decreased within various industries. C) nations around the globe have explicitly appreciated and accepted capitalism as an economic system. D) implicit trust relationship between the corporate world and society at large has deteriorated.

D) implicit trust relationship between the corporate world and society at large has deteriorated.

Which of the following drivers simultaneously increases value while lowering cost? A) economies of scale B) superior customer service C) availability of complements D) innovation

D) innovation

Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will be successful today only if its A) competitive advantage is derived from static resource or market advantages. B) resource advantage is not causally ambiguous or socially complex. C) resource advantage is maintained for a short period of time. D) internal strengths change with its external environment in a dynamic fashion

D) internal strengths change with its external environment in a dynamic fashion

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? A) ecological factors B) sociocultural factors C) technological factors D) legal factors

D) legal factors

Quick Clean Chemicals outsources its production to contract manufacturers located in underdeveloped nations where unskilled labor is available in plenty for very low wages. This has helped the company become a price leader in the chemicals industry. Which of the following is the key driver behind Quick Clean's strategic position? A) network effects B) superior customer service C) availability of complements D) low-cost input factors

D) low-cost input factors

According to the value chain analysis, which of the following is a primary activity? A) research and development B) human resources management C) accounting and finance D) marketing and sales

D) marketing and sales

Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Vietnamese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Curry Rush is most likely operating in a(n) A) oligopoly. B) monopoly. C) perfectly competitive industry. D) monopolistically competitive industry.

D) monopolistically competitive industry.

Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage? A) reputation for innovation B) reputation for quality C) superior customer experience D) observable product features

D) observable product features

Three large firms dominate the telecommunication industry of United Canava: AD Telecom Inc., Mystic Telecom Corp., and Total Talk Inc. Instead of cutting prices competitively, these firms have resorted to non-price competition through branding and product differentiation. Which of the following industry competitive structures are these companies most likely in? A) monopoly B) perfect competition C) monopolistic competition D) oligopoly

D) oligopoly

The management of Toshi Manufacturing showed a commitment to ________ by increasing the salary of many female employees to meet its goal of having equal pay for women and men who perform comparable work. A) scenario planning B) upper-echelons theory C) product-oriented vision D) organizational core values

D) organizational core values

During an AFI planning session, the managers of the Fukuhara Motorcycle Corporation decided to place various stages of production in different countries in order to implement the strategy of cutting overhead costs. By doing this, what issue did the firm address? A) philanthropic strategy B) business ethics C) corporate governance D) organizational design

D) organizational design

Iceberg Storage, a leading hard drive manufacturer, recently filed for bankruptcy. While most of Iceberg's competitors were shifting away from physical data storage devices toward online cloud storage services, Iceberg invested most of its retained earnings in the effort to improve its hard drives. Once the hard-drive market drastically declined, Iceberg Storage was unable to capitalize on the new technology. Which of the following does this scenario best illustrate? A) causal ambiguity B) knowledge diffusion C) social complexity D) path dependence

D) path dependence

35) Jake's Taxi Service is a new entrant to the taxi industry. It has achieved success by staking out a unique position in the industry. How did Jake's Taxi Service mostly likely achieve this position? A) providing long-distance cab fares at a higher rate than competitors; servicing a larger area than competitors B) providing long-distance cab fares at a lower rate than competitors; servicing a smaller area than competitors C) providing long-distance cab fares at a higher rate than competitors; servicing the same area as competitors D) providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors

D) providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors

) Which of following practices of a firm satisfies its ethical responsibilities? A) using plastic as the packaging material 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

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

A customer-oriented vision statement focuses employees to think about how best to A) make a product easier to use. B) increase their efficiency to benefit consumers. C) improve a popular product. D) solve a problem for a consumer.

D) solve a problem for a consumer.

34) If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally A) execute an integrated cost-leadership and differentiation position. B) copy the strategies of other firms through competitive benchmarking. C) provide goods or services similar to its competitors at higher prices. D) stake out a unique position within the industry.

D) stake out a unique position within the industry.

FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially lower than its competitors because of minimal investments in operation and administration. In this scenario, FindFor Inc. has most likely been able to provide superior value and cost control through A) strategic parity. B) strategic profiling. C) strategic liquidation. D) strategic positioning.

D) strategic positioning.

Which of the following stages in the AFI strategy framework involves designing a business, corporate, and global strategy? A) strategy control B) strategy implementation C) strategy analysis D) strategy formulation

D) strategy formulation

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. A) balanced scorecard B) fiduciary responsibility C) consistent power position D) sustainable competitive advantage

D) sustainable competitive advantage

) Riya has recently started a restaurant in a commercial area that already has many other established restaurants and popular fast-food chains. Riya owns the building in which her restaurant is located, rather than leasing premises as her competitors do. This factor allows her to offer her products at a more competitive price. Riya has also invested a huge amount in designing the restaurant's interior and in equipping the kitchen with the appliances that are most widely used in her industry. In this scenario, which of the following is the most valuable resource for Riya's business? A) the investments made by Riya on the restaurant's interior B) the type of kitchen equipment widely used in her industry C) the restaurant's late entry into the market D) the building owned by Riya, which reduces cost of operations

D) the building owned by Riya, which reduces cost of operations

Who among the following is responsible for making business strategies in a large conglomerate? A) the board of directors at the headquarters B) the shareholder of the company C) the lower-level employees in the company D) the general managers of individual business units

D) the general managers of individual business units

Bubble Buddy is a company that manufactures hot tubs. Which of the following best illustrates a product-oriented vision for Bubble Buddy? A) to make people's lives simple and easy B) to demonstrate to customers the health benefits of hot tubs C) to help people improve the value of their homes D) to be the pioneering manufacturer of hot tubs

D) to be the pioneering manufacturer of hot tubs

41) 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.

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

Which of the following vision statements is most likely to produce a sustainable competitive advantage for an auto dealership? A) to generate the highest revenues of any dealership in the region B) to sell only the highest-rated luxury vehicles C) to open dealerships all across the country. D) to help our customers find the perfect car for their individual needs.

D) to help our customers find the perfect car for their individual needs.

The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called A) cost driving. B) cost innovation. C) value driving. D) value innovation.

D) value innovation.

Which of the following features about a buyer indicates that the buyer has high bargaining power? A) when the buyer cannot credibly threaten to backwardly integrate into the industry B) when the buyer cannot purchase specific products from other sellers C) when the buyer faces high switching costs D) when the buyer operates in an industry where products are undifferentiated

D) when the buyer operates in an industry where products are undifferentiated

Perpetual Batteries recently came under criticism when a newspaper article revealed that the company's production plant had leaked a chemical compound into a sensitive wetland ecosystem. Although use of the chemical was not technically prohibited by law, the local government levied a small fine for cleaning up the spill. Environmental groups, however, argued that continued use of the chemical was damaging to the local wildlife and threatened to organize a boycott against Perpetual Batteries. What should Perpetual Batteries do to ensure that it meets its ethical responsibilities? A) Pay the fine levied by the local government and resume operations. B) Move its production facilities to an area that is less concerned with environmental issues. C) Take out an advertisement arguing that use of the chemical is perfectly legal. D) Design batteries without the chemical and market them as environmentally friendly.

Design batteries without the chemical and market them as environmentally friendly.