MGMT 449 TEST

3. Which of the following represents an economic factor in a firm's external general environment?

The bargaining power of the firm's suppliers and buyers

Which of the following forces tends to be more important in determining a firm's performance?

The actions of managers within the firm

Which of the following best illustrates a strategic business unit (SBU)?

The consumer electronics division of a large company that also manufactures automobiles, apparel, and processed food

A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n)

competitive advantage

The first step in the strategic management process is to:

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

41. When applying the five forces model, the first step should ideally be:

defining the relevant industry

When a firm adopts a differentiation strategy to attain competitive advantage, it focuses on:

delivering unique features to its customers.

19. Top-down strategic planning works best when the:

environment does not change much.

The interaction between a firm and its diverse internal and external stakeholders is best described as a(n):

exchange relationship

State-level government agencies that check whether firms are meeting statutory safety measures in their production units are considered to be the firms' _____.

external stakeholders

After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to:

identify stakeholders' interests and claims

12. A company's strategic business unit:

is responsible for its own profit and loss.

Strategic commitments are actions that are:

long-term oriented

9. A firm's strategic position is likely to be strong when:

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

15. First Ledger Inc., an auditing company, replaced its existing accounting software with new accounting software from another supplier. Since the new software has different features and abilities, First Ledger Inc. has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents First Ledger Inc.'s _____.

switching cost

3. Visionary companies are able to outperform their competitors because:

they provide more aspirational visions.

In a firm, a strategist's job should be to:

understand the complex web of exchange relationships among different stakeholders

6. The primary objective of Porter's five forces model is to:

understand the profit potential of different industries.

35. Which of the following statements with regard to industry structures is true?

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

10. Which of the following statements is true of corporate strategy?

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

30. Which of the following best illustrates a firm operating in a monopolistically competitive industry?

An automobile manufacturer uses branding, pricing, and superior advertising to differentiate itself from a large number of other automobile manufacturers.

28. Which of the following strategies will be most detrimental to firms that are close rivals operating in an oligopolistic industry structure?

Competing against each other through price-cutting

14. Which of the following functions do the general managers in strategic business units primarily perform?

Design generic business strategies based on guidelines received from corporate headquarters

23. Which of the following is a feature of a monopolistically competitive industry? Few companies who compete. Walmart/Aldi

Differentiated products

Only internal stakeholders make specific contributions to a firm, which in turn provides different types of benefits to the external stakeholders.

False

5. Customer-oriented visions define a business in terms of goods or services provided.

False, Product orientated vision define a business in terms of goods or services provided

Irrespective of whether the stakeholders are internal or external, the claims and interests of all stakeholders are the same.

False, all the same

Customer-oriented visions reduce a company's ability to adapt to a changing environment.

False, customer oriented visions allow companies to adjust to changing environments

2. Product-oriented visions define a business in terms of providing solutions to customers.

False, product oriented visions define a business in terms of a good or service provided

Product-oriented visions allow companies to effectively adapt to changing environments.

False, product-orientated visions do not allow companies to adapt to changing environments

As the legal owners, employees in a public-stock company have the most legitimate claim on a company's profits.

False, shareholders

25. Which of the following is a feature of an oligopolistic industry structure?

High entry barriers

29. Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?

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

18. Which of the following statements is true of top-down strategic planning?

In this process, the formulation of strategy is separate from implementation.

8. Which of the following is a primary feature of the five forces model?

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

Which of the following factors most effectively contributed to the success of JetBlue airlines in comparison to other airlines like Delta, United, or American?

Its point-to-point business model

2. The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. This has ensured that all firms in the country pay their employees at least $8,000 per year, which has brought about a higher standard of living for the people of Filvia. Which of the following factors in a firm's general environment does this mandate best indicate?

Legal factors

40. _____ are best described as industry-specific factors that separate one strategic group from another.

Mobility barriers

14. 3T Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all 3T users are free. When a person switches to a 3T network, his or her entire network of family and friends is likely to switch to the same network to avail the benefit of free calls and messages. In addition, an existing user who gets a new user to register with 3T Inc. is given a free wireless connection. This has helped to keep competition away from 3T. In this scenario, which of the following factors is acting as an entry barrier for 3T Inc.?

Network effects

26. 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?

Oligopoly - few firms, large market share

Which of the following statements should ideally reflect a firm's strategy for competitive advantage?

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

1. The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

PESTEL framework

20. 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?

Perfect competition

22. In which of the following industry competitive structures do selling firms have the lowest pricing power?

Perfect competition

39. Which of the following statements is true about strategic groups?

Profitability varies between different strategic groups.

17. How are the two approaches namely strategic planning and scenario planning different from strategy-as-planned-emergence approach?

Relative to strategic planning and scenario planning, strategy as a planned emergence model is a less formal and less stylized approach to the development of strategy.

33. In the smartphone industry, Google is a complement-or to Samsung. Which of the following statements best explains why this is true?

Samsung's smartphones increase in value when they are pre-installed with Google's Android system.

20. Which of the following is a top-down approach to the development of strategy that involves asking "what if" questions to anticipate plausible futures?

Scenario planning

11. Keeping in mind the five forces in the airline industry, which of the following best explains the situation in the industry?

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

9. In a large company, who is most responsible for devising the corporate strategy?

The CEO of the company

4. Which of the following do the sociocultural forces in a firm's external environment best represent?

The family size of the firm's target market

34. Which of the following is a drawback of Porter's five forces model?

The model fails to consider that threat of substitutes can come from outside a given industry.

16. Which of the following strategies best illustrates a functional strategy?

The production manager at the apparel division of Style Culture Co. has decided that the department will hire contract workers for three months to meet the temporary demand.

10. Which of the following statements is NOT true about the five forces in Porter's competitive analysis model?

The stronger the five forces in an industry, the greater the industry's profit potential.

19. 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?

The threat of substitutes

Which of the following statements accurately describes firm effects?

They attribute firm performance to the actions managers take within a chosen industry

13. How are cumulative learning and experience effects of a company most likely to affect Michael Porter's five forces?

Threat of new entrants will be low

Within stakeholder groups there can be significant variation in the power a stakeholder may exert on a firm.

True

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

Trying to be everything to everybody by combining different competitive strategies

18. Which of the following would most likely NOT indicate that sellers are a strong competitive force in an industry?

When the buyers' cost of switching to substitutes is low

5. When do employees fail to adopt the organizational values of a firm?

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

24. Beans Inc. operates in a perfectly competitive agricultural industry. Classica Apparel Inc., in contrast, operates in a monopolistically competitive industry. Keeping this information in mind, which of the following statements is true?

While Classica Apparel Inc. will have the power to set the prices for its products, Beans Inc. will have little or no ability to do so.

A firm's stakeholder strategy primarily allows the firm to:

analyze and manage how various external and internal stakeholders interact to jointly create and trade value.

27. A key feature of an oligopoly is that the competing firms _____.

are interdependent

4. To be effective, firms need to:

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

16. 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 _____.

backward integration

New Communications Inc. is a newspaper publishing company whose average return on invested capital is approximately 5 percent. Because newspaper publishing is a declining industry, the industry average has been negative (-5 percent) for the last few years. In this scenario, New Communications Inc. has a _____.

competitive advantage

Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.

competitive disadvantage

32. A company is best described as a _____ to an existing company if customers value the existing company's product or service offering more when they are able to combine it with the other company's product or service.

complementor

7. The CEO of True West Products Inc. (TWC) is a company that sells a wide range of products. It has decided to enter the markets of emerging nations like China and Brazil. This means that the cars, consumer electronics, and services such as hotels included under the TWC banner would be made available in these nations. Which of the following strategies does this scenario best illustrate?

corporate stratagy

37. Companies in the same strategic group are _____ to each other.

direct competitors

21. True Gold 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:

easily achieve a sustainable competitive advantage.

Pure Food Inc., a multinational company, relies on its media partner Radio Ex to regularly advertise its offers, sales, and new products. Radio Ex is invested in this relationship because it generates most of its revenue from advertising Pure Food's products. In this scenario, Radio Ex is Pure Food Inc.'s _____.

external stakeholder

36. A strategic group will typically include:

firms within the same industry.

7. In the _____ developed by Michael Porter, competition 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.

five forces model

15. Strategies developed at the departmental level, such as the accounting human resource, production, and marketing departments, within a strategic business unit are referred to as _____.

functional strategies

12. Economies of scale are cost advantages that accrue for firms with:

high fixed costs.

Which of the following is NOT an example of a software company's external stakeholder?

project managers

A firm is said to gain a competitive advantage when it can:

provide products similar to its competitors, but at lower prices

As the legal owners, _____ have the most legitimate claim on a company's profits.

shareholders

A core tenet of stakeholder strategy is that a:

single-minded focus on shareholders alone exposes a firm to undue risks that can threaten the very survival of the enterprise

If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally:

stake out a unique position within the industry

Derek, a retired CEO, invests capital in a start-up company that creates mobile applications. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Derek is the start-up company's _____.

stakeholder

38. Home Cart, Home Essentials, Good Store, and Price King are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases. All the four stores cater to the needs of highly price-sensitive customers. Thus, together Home Cart, Home Essentials, Good Store, and Price King form a _____.

strategic group

21. A _____ is best described as any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

strategic initiative

5. A firm's _____ relates to its ability to create value for customers (V) while containing the cost to do so (C).

strategic position

8. As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to:

where to compete.