Final Exam Study Guide
A primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.
business-level strategy
is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs.
Vertical integration
Which of the following firms is most prone to experiencing a diversification discount?
a company that pursues unrelated diversification
Companies that pursue related diversification are able to create a diversification premium because they
are able to increase value due to economies of scope.
Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?
CEO
When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in
strategic trade-offs
A firm's business strategy will lead to a competitive advantage if it allows the firm to
perform different activities than its rivals
How is the early majority section of consumers different from the late majority section?
Although the early majority is confident in their ability to master a new technology, the late majority is not.
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?
AccuroDisk creates a greater economic value than TD Storage.
Which of the following statements is not true about innovation?
Innovation has to be high-tech in order to be a potent competitive weapon.
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?
architectural innovation
How was Netflix able to outperform both Hulu and Amazon?
by focusing its resources on producing high-quality content for content streaming
A successfully implemented blue ocean strategy allows a firm to
charge a higher price than the cost-leader in the industry.
There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is
combining experience-based learning and process innovation to move onto a steeper learning curve.
A cost-leader is protected from the threat of new entrants primarily due to its
economies of scale.
Firms often consolidate industries through horizontal mergers and acquisitions to
increase their market power.
According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?
innovation that allows competitors to emerge with more economical replacements
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)
intrapreneur.
Decisions relating to the range of products and services a firm will offer determine the firm's
level of diversification.
Which of the following motivations for business growth involves principal-agent problems?
motivating managers
Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?
observable product features
All of the following are tools primarily used to achieve cost-leadership except
offering products at a premium price.
Adidas acquired Reebok primarily to
overcome its competitive disadvantage against Nike.
Incumbent firms favor incremental innovation over radical innovation because
radical innovation will disturb the existing power distribution within the firms.
In emerging economies, the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity within the industry is high, and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost-leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD television industry currently in?
shakeout stage
In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are
similar to those that need to be developed and superior to those of competitors in the targeted area.
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because
the U.S. population was growing slowly and becoming more health conscious.
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because
the horizontal integration activity has the potential to reduce competitive intensity in an industry.
What is strategic entrepreneurship?
the pursuit of an innovation that uses concepts from strategic management
Which of the following is not a reason why firms enter alliances?
to replace competitive advantage with competitive parity
Researchers at Games First Inc. spent several months coming up with a fun game for toddlers that incorporates a new idea in preschool education. This scenario describes step of the innovation process.
two