mgmt 3 & 6

In assessing its primary activities, an airline would examine ___________. A. baggage handling B. employee training programs C. criteria for lease versus purchase decisions D. the effectiveness of its lobbying activities

A. baggage handling

Amazon Prime is credited for helping to increase the Amazon stock price by nearly 300 percent from 2008 to 2010. This is competitive advantage is known as _________. A. causal ambiguity B. product rarity C. service validity D. substitutability

A. causal ambiguity

Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce card calculators, digital cameras, and other small electronics. These collective skills are known as _________________. A. core competencies B. strategic resources C. shared activities D. economies of scope

A. core competencies

For firms such as CarMax, information systems have been a source of competitive advantage. Their proprietary information system captures, analyzes, interprets, and disseminates information about all cars on the CarMax lot. Which of the following can be attributed to this information system? A. decrease in uncertainties in hard to forecast areas such as inventory management B. decrease in operational efficiency C. reduced customer service D. decrease in sales

A. decrease in uncertainties in hard to forecast areas such as inventory management

Corporate-level strategy focuses on _____________. A. gaining long-term revenue B. gaining short-term profits C. decreasing business locations D. managing investment bankers and their interests

A. gaining long-term revenue

Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that _____________. A. the similarity required for sharing core competencies must be in the value chain, not in the product B. the products use similar distribution channels C. the target market is the same, even if the products are very different D. the methods of production are the same

A. the similarity required for sharing core competencies must be in the value chain, not in the product

McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of ____________. A. using related diversification to achieve value by sharing activities to create economies of scope B. using related diversification to achieve value by leveraging core competencies to create market power C. using unrelated diversification to create value by managing its portfolio to create financial synergies D. using unrelated diversification to create value by managing its portfolio to create restructuring advantages

A. using related diversification to achieve value by sharing activities to create economies of scope

Which of the following statements regarding internal development as a means of diversification is FALSE? A. Many companies use internal development to extend their product or service offers. B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services. C. The firm is able to capture wealth created without having to share the wealth with alliance partners. D. Firms can often develop products or services at a lower cost, if they rely on their own resources instead of external funding.

B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.

Portfolio management frameworks, such as the BCG matrix, share which of the following characteristics? A. Businesses are plotted on a 3-dimensional grid. B. Grid dimensions are based on external environments and internal capabilities/market positions. C. Position in the matrix suggests a need for sharing synergies. D. They are most helpful in helping businesses develop types of competitive advantage.

B. Grid dimensions are based on external environments and internal capabilities/market positions

Which of the following examples demonstrates how successful organizations manage their primary activities? A. Motorola has revised its compensation system to reward employees who learn a variety of skills. B. Hewlett Packard has cut lead time from five days to one by employing JIT inventory management. C. National Steel improved its efficiency by reducing the number of job classifications. D. Wal-Mart implemented a sophisticated information system that resulted in reduced inventory carrying costs and shortened customer response times.

B. Hewlett Packard has cut lead time from five days to one by employing JIT inventory management.

All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT: A. Every business cannot be accurately measured and compared on the two dimensions. B. It takes a dynamic view of competition which can lead to overly complex analyses. C. It views each business as a stand-alone entity and ignores the potential for synergies across businesses. D. While easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic prescriptions.

B. It takes a dynamic view of competition which can lead to overly complex analyses.

__________ are the competencies or skills that a firm employs to transform inputs into outputs. A. Tangible resources B. Organizational capabilities C. Reputational resources D. Intangible resources

B. Organizational capabilities

___________ is/are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling. A. Services B. Outbound logistics C. Inbound logistics D. Operations

B. Outbound logistics

Which of the following is NOT a limitation of SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis? A. Organizational strengths may not lead to competitive advantage. B. The SWOT focus on the external environment is too broad and integrative. C. SWOT gives a one-shot view of a moving target. D. SWOT overemphasizes a single dimension of strategy.

B. The SWOT focus on the external environment is too broad and integrative.

A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain ____________. A. no competitive advantage B. a temporary competitive advantage C. competitive parity D. a sustainable competitive advantage

B. a temporary competitive advantage

Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It supports _______________. A. only individual primary activities B. both individual primary and support activities and the entire value chain C. only individual support activities D. mostly support activities but does have some impact on primary activities

B. both individual primary and support activities and the entire value chain

All of the following are examples of socially complex organizational phenomena EXCEPT: A. a firm's culture B. complex physical technology C. interpersonal relations among a firm's managers D. leadership and trust

B. complex physical technology

The best measure of a company's ability to meet imminent financial obligations is known as the A. debt ratio B. current ratio C. total asset turnover D. profit margin

B. current ratio

In the resource-based view of the firm, examples of tangible resources include: A. financial resources, human resources, and firm competencies B. financial resources, physical resources, and technological resources C. financial resources, physical resources, and the capacity to combine intangible resources D. outstanding customer service, innovativeness of products, and reputation

B. financial resources, physical resources, and technological resources

Typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams is which of the following: A. tangible resources B. intangible resources C. reputational resources D. organizational capabilities

B. intangible resources

A marketing department that promises delivery faster than the ability of the production department to produce is an example of a lack of understanding of the _____________. A. organizational culture and leadership B. interrelationships among functional areas and firm strategies C. need to maintain the reputation of the company D. synergy of the business units

B. interrelationships among functional areas and firm strategies

Although general administration is often viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following EXCEPT: A. negotiating and maintaining ongoing relations with regulatory bodies B. marketing expertise increasing the revenues of the firm and enabling it to enter new markets C. effective information systems contributing significantly to overall cost leadership strategy for the firm D. top management providing a key role in collaborating with important customers

B. marketing expertise increasing the revenues of the firm and enabling it to enter new markets

The primary means by which a firm can diversify are __________, _________, and ________. A. mergers and acquisitions; differentiation; overall cost leadership B. mergers and acquisitions; joint ventures and strategic alliances; internal development C. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital D. mergers and acquisitions; internal development; differentiation

B. mergers and acquisitions; joint ventures and strategic alliances; internal development

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. This is known as ________. A. restructuring B. parenting C. leveraging core competencies D. increasing market power

B. parenting

Customer service includes ________. A. product promotion B. parts supply C. product distribution D. procurement of critical supplies

B. parts supply

The term golden parachute refers to _________. A. a clause requiring that huge dividend payments be made upon takeover B. pay given to executives fired because of a takeover C. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it D. managers of a firm in a hostile takeover approaching a third party about making the acquisition

B. pay given to executives fired because of a takeover

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics: A. psychographic uniqueness, path dependency, causal ambiguity, and substitutability B. physical uniqueness, path dependency, causal ambiguity, and social complexity C. rarity, path dependency, causal ambiguity, and social substitutability D. geographic uniqueness, cause dependency, social ambiguity, and path complexity

B. physical uniqueness, path dependency, causal ambiguity, and social complexity

In value-chain analysis, the activities of an organization are divided into two major categories of value activities: primary and support. Which of the following is a primary activity? A. purchasing key inputs B. repairing the product for the consumer C. recruiting and training employees D. monitoring the cost of producing the product through a cost accounting system

B. repairing the product for the consumer

A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon ____. A. path dependency B. social complexity C. physical uniqueness D. tangible resources

B. social complexity

Which of the following is a support activity? A. inbound logistics B. technology development C. operations D. customer service

B. technology development

The Cisco acquisition of Pure Digital Technologies, the parent of the Flip video camera, failed because __________________. A. Cisco had valuable competencies B. the Flip division of Cisco was slow and less responsive to market pressures C. consumers continued to purchase the camera D. Cisco had good vision of the market

B. the Flip division of Cisco was slow and less responsive to market pressures

Vertical integration is attractive when ____________. A. internal administrative costs are higher than transaction costs B. transaction costs are higher than internal administrative costs C. transaction costs and internal administrative costs are equal D. search costs are higher than monitoring costs

B. transaction costs are higher than internal administrative costs

Ratios that reflect whether or not a firm is efficiently using its resources are known as A. leverage ratios B. turnover ratios C. liquidity ratios D. profitability ratios

B. turnover ratios

XYZ Corp. is focusing on the objective of low-cost, high quality, on-time production by minimizing idle productive facilities and workers. The XYZ Corp. is taking advantage of a __________ system. A. Last In, First Out (LIFO) B. First In, First Out (FIFO) C. Just-In-Time (JIT) D. Highly mechanized

C. Just-In-Time (JIT)

In the BCG Matrix, a business that has a low market share in an industry characterized by high market growth is termed a ____________. A. Star B. Cash Cow C. Question Mark D. Dog

C. Question Mark

When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow would be known as a __________. A. Cash Cow B. Dog C. Star D. Question Mark

C. Star

An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called ______. A. greenmail B. a golden parachute C. a poison pill D. scorched earth

C. a poison pill

Transaction costs include all of the following costs EXCEPT A. search costs B. negotiating costs C. agency costs D. monitoring costs

C. agency costs

Divesting of businesses can accomplish many different objectives, except _______. A. enabling managers to focus their efforts more directly on the core businesses of the firm B. providing the firm with more resources to spend on more attractive alternatives C. dispersing manager focus D. raising cash to help fund existing businesses

C. dispersing manager focus

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes? A. rare B. valuable C. easy for competitors to substitute D. difficult for competitors to imitate

C. easy for competitors to substitute

The balanced scorecard provides top managers with a __________ view of the business. A. detailed and complex B. simple and routine C. fast but comprehensive D. long-term financial

C. fast but comprehensive

The balanced scorecard, developed by Kaplan and Norton, helps to integrate ______. A. financial analysis and the reputation of a firm B. intangible resources and operational measures C. financial analysis and stakeholder perspectives D. short-term perspectives and strategic positioning

C. financial analysis and stakeholder perspectives

The antitakeover tactic, _______, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. A. golden parachute B. poison pill C. greenmail D. scorched earth

C. greenmail

Historical comparisons provide information to managers about changes in the competitive position of a firm. Historical comparisons often are misleading _____________. A. if the overall strategy of the firm is the same B. if the firm shows constant growth C. in periods of recession or economic boom D. if the firm's stock is publicly traded

C. in periods of recession or economic boom

According to value-chain analysis, which of the following would be considered part of the general administration in a firm? A. human resource management B. technology development C. information systems D. procurement

C. information systems

The risks of vertical integration include all of the following EXCEPT: A. costs and expenses associated with increased overhead and capital expenditures. B. problems associated with unbalanced capacities along the value chain. C. lack of control over valuable assets. D. additional administrative costs associated with managing a more complex set of activities.

C. lack of control over valuable assets.

In the BCG Growth Share Matrix, the suggested strategy for Stars is to ________. A. milk them to finance other businesses B. invest large sums to gain a good market share C. maintain position and after the market growth slows use the business to provide cash flow D. not invest in them and to shift cash flow to other businesses

C. maintain position and after the market growth slows use the business to provide cash flow

An important implication of the balanced scorecard approach is that _______________. A. managers need to recognize that satisfaction of stockholder demands is their primary job B. the key emphasis on customer satisfaction and financial goals are only a means to that end C. managers should not look at their job as primarily balancing stakeholder demands D. gains in financial performance and customer satisfaction must come at a cost of employee satisfaction

C. managers should not look at their job as primarily balancing stakeholder demands

According to Michael Porter, there is a tremendous allure to _________. It is the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front-page story, and create excitement in markets. A. strategic alliances and joint ventures B. internal development C. mergers and acquisitions D. differentiation strategies

C. mergers and acquisitions

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide. A. strategic alliances; joint ventures B. strategic alliances; mergers C. mergers; acquisitions D. mergers; strategic alliances

C. mergers; acquisitions

Apple combines and packages proven technology in new and innovative ways. This is an example of its use of ____________. A. tangible resources B. intangible resources C. organizational capabilities D. strong primary activities

C. organizational capabilities

A crash R&D program by one firm cannot replicate a successful technology developed by another firm, when research findings cumulate. This is an example of ____________. A. social complexity B. physical uniqueness C. path dependency D. causal ambiguity

C. path dependency

Which of the following is not an advantage of Just-In-Time inventory systems? A. reduced raw material storage costs B. minimized idle production facilities and workers C. reduced dependence on suppliers D. reduced work-in-process inventories

C. reduced dependence on suppliers

Which of the following is not part of a good guideline list for managing strategic alliances? A. establishing a clear understanding between partners B. not shortchanging your partner C. relying primarily on a contract to make the joint venture work D. working hard to ensure a collaborative relationship between partners

C. relying primarily on a contract to make the joint venture work

Creating value within business units can happen when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. This is action is known as ______. A. parenting B. leveraging core competencies C. restructuring D. sharing activities

C. restructuring

When management uses common production facilities or purchasing procedures to distribute different but related products, they are ________________. A. building on core competencies B. achieving process gains C. sharing activities D. using portfolio analysis

C. sharing activities

Verizon Wireless and ILS Technology have a _________ whereby Verizon integrates technology developed by ILS to improve its machine-to machine (M2M) data transmission systems. M2M systems allow firms to securely transmit data to and from various devices. A. joint diversification B. divestment C. strategic alliance D. global integration

C. strategic alliance

The three key types of resources that are central to the resource-based view of the firm are: A. tangible resources, intangible resources, and organizational structure B. culture, tangible resources, intangible resources C. tangible resources, intangible resources, and organizational capabilities D. tangible resources, intangible resources, and top management

C. tangible resources, intangible resources, and organizational capabilities

Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if ___________. A. suppliers are loyal to the firm B. their expertise is firm-specific C. the cost to the firm of replacing them is high D. the firm's resources are path dependent

C. the cost to the firm of replacing them is high

The resource-based view (RBV) of the firm combines two perspectives: A. the primary and support activities of the firm B. the interrelationships among the primary activities of the firm and corporate management C. the internal analysis of the firm and the external analysis of the industry and competitive environment D. the industry and the competitive environment

C. the internal analysis of the firm and the external analysis of the industry and competitive environment

Which of the following would be most difficult to assess? A. the liquidity position of a firm B. market share growth C. the legitimacy and reputation of a firm D. the efficiency with which a firm utilizes its assets

C. the legitimacy and reputation of a firm

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of _______________. A. using related diversification to achieve value by pooling negotiating power to achieve market power B. using related diversification to achieve value by leveraging core competencies to achieve economies of scope C. using related diversification to achieve value by integrating vertically in order to acquire market power D. using related diversification to achieve value by integrating vertically in order to attain economies of scope

C. using related diversification to achieve value by integrating vertically in order to acquire market power

Inbound logistics include: A. machining and packaging. B. repair and parts supply. C. warehousing and inventory control. D. promotion and packaging.

C. warehousing and inventory control.

The downsides or limitations of mergers and acquisitions include all of the following EXCEPT: A. Premiums that are frequently paid to acquire a business are expensive. B. Difficulties exist in integrating the activities and resources of the acquired firm into on-going operations. C. There can be many cultural issues that can doom an otherwise promising acquisition. D. It is a slow means to enter new markets and acquire skills and competences.

D. It is a slow means to enter new markets and acquire skills and competences.

Which of the following is not a factor that helps to explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate? A. Employees have high bargaining power. B. The cost of employee replacement is high. C. The cost of exit is high for an employee. D. Managers have low bargaining power.

D. Managers have low bargaining power.

In managing the corporate portfolio, the BCG matrix would suggest that __________. A. Dogs should be invested in to increase market share and become Cash Cows B. Stars are in low growth markets and can provide excess cash to fund other opportunities C. Cash Cows require substantial cash outlays to maintain market share D. Question Marks can represent future Stars if their market share is increased

D. Question Marks can represent future Stars if their market share is increased

Which of the following is not a reason for merger and acquisition failures? A. The acquiring company pays too high a premium for the common stock of the target company. B. Top executives act in their best interests rather than those of the shareholders. C. The acquired company assets are poorly integrated into the acquiring company business lines. D. The acquisition leads to value creation.

D. The acquisition leads to value creation.

For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? A. The competence must help the business gain strength relative to its competition. B. The new business must be similar to existing businesses to benefit from a core competence. C. The collection of competencies should be unique, so that they cannot be easily imitated. D. The new business must have an established large market share.

D. The new business must have an established large market share.

According to the text, corporate restructuring includes A. capital restructuring, asset restructuring, and technology restructuring B. global diversification, capital restructuring, and asset restructuring C. management restructuring, financial restructuring, and procurement restructuring D. capital restructuring, asset restructuring, and management restructuring

D. capital restructuring, asset restructuring, and management restructuring

Portfolio management matrices are applied to what level of strategy? A. departmental level B. business level C. international level D. corporate level

D. corporate level

The balanced scorecard enables managers to consider their business from all of the following perspectives EXCEPT: A. customer perspective B. internal perspective C. innovation and learning perspective D. ethical perspective

D. ethical perspective

Antitakeover tactics include all of the following EXCEPT _________. A. greenmail B. poison pills C. golden parachutes D. golden handcuffs

D. golden handcuffs

In a retail service industry, which of the following is not a primary value-chain activity? A. purchasing goods B. operating stores C. partnering with vendors D. human resource management

D. human resource management

Which of the following lists consists of support activities? A. human resource management, technology development, customer service, and procurement B. human resource management, customer service, marketing and sales, and operations C. customer service, information systems, technology development, and procurement D. human resource management, technology development, procurement, and firm infrastructure

D. human resource management, technology development, procurement, and firm infrastructure

Cooperative relationships such as __________ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies. A. joint ventures B. mergers C. acquisitions D. joint ventures and strategic alliances

D. joint ventures and strategic alliances

Which of these categories of financial ratios is used to measure the ability of a firm to meet its short-term financial obligations? A. leverage ratios B. profitability ratios C. activity ratios D. liquidity ratios

D. liquidity ratios

A Cash Cow, in the BCG framework, refers to a business that has _______________. A. high market growth and relatively high market share B. relatively low market share and low market growth C. relatively low market share and high market growth D. low market growth and relatively high market share

D. low market growth and relatively high market share

Advertising is a __________ activity. Supply of replacement parts is a __________ activity. A. support; primary B. support; secondary C. primary; support D. primary; primary

D. primary; primary

Diversification initiatives include all of the following except ___________________. A. mergers and acquisitions B. strategic alliances C. joint ventures D. shareholder development

D. shareholder development

A firm should consider vertical integration when ___________. A. the competitive situation is highly volatile B. customer needs are evolving C. the suppliers of the firm willingly cooperate with the firm D. the suppliers of raw materials to the firm are often unable to maintain quality standards

D. the suppliers of raw materials to the firm are often unable to maintain quality standards

At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as superb human resource practices and budgeting systems. This is an example of __________________. A. using related diversification to achieve value by leveraging core competencies to attain economies of scope B. using related diversification to achieve value by leveraging core competencies to acquire market power C. using unrelated diversification to achieve value through portfolio management in order to acquire financial synergies D. using unrelated diversification to achieve value through restructuring and parenting

D. using unrelated diversification to achieve value through restructuring and parenting

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of ______________. A. leveraging core competencies B. sharing activities C. pooled negotiating power D. vertical integration

D. vertical integration

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with ___________. A. strategic alliances B. divestment C. horizontal integration D. vertical integration

D. vertical integration

A car manufacturer controls its own system of dealerships to ensure retail outlets for its products. This is an example of backward integration.

FALSE

A strength of the balanced scorecard is that it is very easy to implement and that there is little need for executive sponsorship.

FALSE

All diversification moves, including those involving mergers and acquisitions, erode performance

FALSE

Among the advantages of acquisitions are the expensive premiums that are frequently paid to acquire a business

FALSE

An advantage of a firm entering into a strategic alliance is that it does not have to share the wealth with its partners.

FALSE

An oil refinery secures land leases and develops its own drilling capacity to ensure a constant supply of crude oil. This is an example of forward integration.

FALSE

At Sephora.com, a customer service representative taking a phone call from a repeat customer has instant access to what shade of lipstick she likes best. This is an example of a procurement support activity in the value chain.

FALSE

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

FALSE

Campbell Soup uses an electronic network to facilitate its continuous-replenishment program with its most progressive retailers. This is known as an operations primary activity in the value chain.

FALSE

Cooper Industries has followed a successful strategy of related diversification. There are few similarities in the products it makes or the industries in which it competes.

FALSE

Core competencies do not create value in a business.

FALSE

Corporate-level strategy focuses on gaining short-term revenue through managing operations in multiple businesses.

FALSE

Economies of scope are cost savings from leveraging core competencies or sharing unrelated activities among businesses in a corporation.

FALSE

Employee exit cost is a factor that can increase employee bargaining power and help him or her appropriate profits of the firm.

FALSE

Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies.

FALSE

Firms that are successful in creating competitive advantages that are sustainable for a period of time do not have to be concerned about profits being retained by employees or managers.

FALSE

For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution.

FALSE

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party

FALSE

Historical comparisons are most appropriate during periods of recession or economic boom.

FALSE

If a corporation is to achieve synergy by sharing activities across its business units, it is not important to compromise on the design or performance of an activity that is to be shared.

FALSE

In value-chain analysis, value is measured by the market value of the total stock outstanding of the company.

FALSE

Inbound logistics include all activities associated with transforming inputs into the final product form such as machining, packaging, assembly, equipment, testing, printing, and facility operations.

FALSE

Intangible resources of a firm refer to its capacity to deploy tangible resources over time and leverage those resources effectively.

FALSE

It is not necessary for a core competence to be difficult to imitate or to be nonsubstitutable.

FALSE

Managers should focus their attention on interrelationships among value-chain activities within the firm, NOT on relationships among activities within the firm and other organizations (such as suppliers and customers).

FALSE

Market power refers to cost savings from leveraging core competencies or sharing activities among the businesses in a corporation.

FALSE

One advantage of SWOT analysis is that it helps managers to identify strengths that are almost always sources of competitive advantages that are sustainable.

FALSE

One of the obligatory aspects of strategic alliances is the dependence on written contracts to delimit responsibilities and enforce compliance.

FALSE

Path dependency has no impact on the inimitability of resources.

FALSE

Portfolio management should be considered as the primary basis for formulating corporate-level strategies.

FALSE

Research shows that the vast majority of acquisitions results in value creation rather than value destruction

FALSE

Some leading edge companies are applying the prosumer concept. Here, firms team up with their suppliers and alliance partners to satisfy their customer needs.

FALSE

Support activities provide support for primary activities, but not each other.

FALSE

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

FALSE

The SWOT analysis can show managers how to achieve a competitive advantage.

FALSE

The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial.

FALSE

The resource-based view of the firm focuses solely on the internal analysis of the operations of the firm.

FALSE

The strengths and capabilities of a firm are enough to enable it to achieve a competitive advantage in the marketplace.

FALSE

The two principal means by which firms achieve synergy through market power are pooled negotiating power and corporate parenting.

FALSE

Through joint ventures, firms can directly acquire the assets and competencies of other firms.

FALSE

Value-chain analysis can only be applied to manufacturing operations.

FALSE

When firms diversify into unrelated businesses, the primary potential benefits are horizontal relationships, i.e., businesses sharing tangible and intangible resources.

FALSE

When using industry norms as a standard of comparison, managers must be sure that the firms used in the comparisons are representative of all sizes and strategies within the industry.

FALSE

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with outside stakeholders

FALSE

A golden parachute is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target company managers will be paid a significant severance package.

TRUE

A primary benefit of the balanced scorecard is that it complements financial indicators with operational measures of customer satisfaction, internal processes, and the innovation and improvement activities of the organization.

TRUE

According to the transaction cost perspective in analyzing vertical integration, every market transaction involves some transaction cost.

TRUE

Although acquiring related businesses can enhance the bargaining power of a corporation, there is a risk of retaliation by competitors that can result in a diminishing of the desired bargaining power.

TRUE

Amazon Prime is an example of a difficult to imitate capability that gives it competitive advantage over its rivals

TRUE

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

TRUE

An advantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

TRUE

An important implication of the balanced scorecard is that managers need NOT look at their job as primarily balancing stakeholder demands.

TRUE

At times, the only other people who may have benefited from a merger-acquisition were the shareholders of the acquired firms.

TRUE

Capabilities that exhibit causal ambiguity are difficult to imitate.

TRUE

Dell lost its competitive advantage by 2009 in part because it placed its efforts on operational excellence to the exclusion of reinvention, according to Inder Sidhu.

TRUE

Diversification initiatives must be justified by the creation of value for shareholders.

TRUE

Economies of scope in a related diversification strategy result from the leveraging of core competencies and the sharing of activities such as production.

TRUE

Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value-chain analysis.

TRUE

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation it must at least create superior customer value and it must be difficult to imitate.

TRUE

Frito-Lay uses crowdsourcing to make its Super Bowl ads. This is an example of a primary activity in the value chain.

TRUE

Gillette developed the Fusion and Mach 3 shaving systems that created superior customer value as a result of their core competency in research and development.

TRUE

IBM leverages its competencies in computing technology to provide health care services. This is an example of a core competence being used across dissimilar businesses within the same corporation.

TRUE

In conducting a SWOT analysis, a risk for strategists is that they rely on traditional definitions of their industry and competitive environment and therefore focus too narrowly on current competitors.

TRUE

In considering the business from the customer perspective using the balanced scorecard, company performance is essential.

TRUE

In considering the business from the innovation and learning perspective using the balanced scorecard, the ability of the firm to do well is more dependent on its intangible and tangible assets.

TRUE

In considering the business from the internal business perspective using the balanced scorecard, customer-based measures must be translated into indicators of what the firm must do internally to meet customer expectations.

TRUE

In considering the business from the internal business perspective using the balanced scorecard, periodic financial statements are used to indicate the consequences of improved quality, response time, productivity, and innovative products. These consequences include improved sales.

TRUE

In recent years, many high tech firms such as Priceline.com have suffered from the negative impact of uncontrolled growth.

TRUE

In value-chain analysis, finance and accounting are considered part of the general administration of a firm.

TRUE

Leverage ratios provide measures of the capacity of a firm to meet its long-term financial obligations.

TRUE

Many acquisitions ultimately result in divestiture.

TRUE

One of the criteria for a core competence is that the different businesses in the corporation must be similar in at least one important way related to the core competence.

TRUE

One of the risks of vertical integration is that there may be problems associated with unbalanced capacities along the value chain of a firm.

TRUE

Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business.

TRUE

Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale.

TRUE

Products and services that are difficult to imitate help firms sustain their profitability.

TRUE

Reasons for acquisition failure include: ineffective integration of the acquisition, too high of a premium paid for the common stock of the target company, or inability to understand how the assets of the acquired firm would fit with the lines of business of the existing company.

TRUE

Related diversification enables a firm to benefit from horizontal relationships across different businesses in the diversified corporation by leveraging core competencies and sharing activities.

TRUE

Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.

TRUE

Shared activities among businesses in a corporation do not always have a positive effect on a differentiation strategy of a corporation.

TRUE

Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements

TRUE

Similar businesses working together or the affiliation of a business with a strong parent can strengthen the bargaining position of a company relative to suppliers and customers.

TRUE

Starbucks acquired the baker chain, La Boulange, with the intention of selling the bakery products at its coffee cafes. The increased market exposure for La Boulange is an example of a revenue enhancing benefit that can arise from the differentiation strategy.

TRUE

Tangible resources are assets that are relatively easy to identify such as financial and physical assets.

TRUE

Technology development is a much broader concept than research and development.

TRUE

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

TRUE

The main reason that automobile manufacturers have increased the amount of outsourced inputs is because of the importance of boom and bust cycles in the industry.

TRUE

The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies.

TRUE

The value-chain concept assumes that both primary and support activities are capable of producing value for customers.

TRUE

Toyota paid a heavy price for its excessive emphasis on cost control. By focusing on only one strength exclusively, it suffered severe losses. This is an example of the limitations of a SWOT analysis.

TRUE

Value-chain analysis assumes that the basic economic purpose of a firm is to create value and it is a useful framework for analyzing the strengths and weaknesses of the firm.

TRUE

Vertical integration is attractive when market transaction costs are higher than internal administrative costs

TRUE

When firms diversify into related businesses, the primary potential benefits come from horizontal relationships, which are businesses sharing intangible and tangible resources.

TRUE

When sharing activities across business units, a company can attain the highest cost savings when it acquires another from the same industry in the same country.

TRUE