MGMT 495 Nordin Final Study Guide

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

vertical integration

[ ] 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 statements is not true about innovation? A) Innovation has to be high-tech in order to be a potent competitive weapon. B) Successful innovation allows a firm to extract temporary monopoly profits. C) Process innovations are made possible through advances such as the Internet. D) Innovation as a competitive weapon can simultaneously create and destroy value.

A) Innovation has to be high-tech in order to be a potent competitive weapon

How was Netflix able to outperform both Hulu and Amazon? A) by focusing its resources on producing high-quality content for content streaming B) by expanding from content streaming to theatrical releases and cable content C) by expanding its content streaming to include foreign markets D) by focusing its resources on buying classic blockbusters movies

A) by focusing its resources on producing high-quality content for content streaming

As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. 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 smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate? A) disruptive innovation B) radical innovation C) architectural innovation D) incremental innovation

A) disruptive 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) innovation that allows competitors to emerge with more economical replacements B) suppliers requesting a 2% price increase across the industry C) new entrants with small production scale D) competition switching from non-price attributes to pricing

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

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

A) radical innovation will disturb the existing power distribution within the firms

Medetect Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Medetect? A) serial acquisitions B) acquisitions C) mergers D) serial mergers

A) serial acquisitions

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? A) shakeout stage B) growth stage C) growth stage D) decline stage

A) shakeout stage

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. A) two B) one C) four D) three

A) two

Although long-standing enemies, Apple and IBM formed an alliance partnership. How did this partnership benefit both Apple and IBM? A) Apple's core competency with business services and IBM's core competency with consumer services complemented each other. B) Apple's core competency with consumer services and IBM's core competency with business services complemented each other. C) Apple's core competency with marketing and IBM's core competency with manufacturing complemented each other. D) Apple's core competency with manufacturing and IBM's core competency with marketing complemented each other.

B) Apple's core competency with consumer services and IBM's core competency with business services complemented each other

A successfully implemented blue ocean strategy allows a firm to: A) increase its price above that of the differentiator in the industry. B) charge a higher price than the cost-leader in the industry. C) reduce its value gap beyond that created by the cost-leader in the industry. D) create lesser economic value than the differentiator in the industry.

B) Charge a higher price than the cost-leader in the industry

Companies that pursue related diversification are able to create a diversification premium because they: A) can operate beyond the minimum efficient scale. B) are able to increase value due to economies of scope. C) can reduce the value gap created by its products. D) are able to leverage time compression economies.

B) are able to increase value due to economies of scope

Highly diversified firms experience a diversification discount in the stock market because they: A) cannot influence costs. B) are unable to create additional value. C) cannot leverage financial economies. D) are unable to overcome institutional weaknesses in emerging economies.

B) are unable to create additional value

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: A) adding unique features that turn standard commodities into differentiated products. B) combining experience-based learning and process innovation to move onto a steeper learning curve. C) creating personalized customer service in order to minimize price sensitivity among customers. D) shifting to small-scale production processes in order to create highly customized products.

B) combining experience-based learning and process innovation to move onto a steeper learning curve

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) intrapreneur. C) early adopter. D) category captain.

B) intrapreneur

A(n) [ ] occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances that connect different parts of the industry value chain. A) joint venture B) non-equity alliance C) equity alliance D) greenfield venture

B) non-equity alliance

All of the following are tools primarily used to achieve cost-leadership except: A) controlling the cost of inputs. B) offering products at a premium price. C) leveraging economies of scale. D) learning by doing.

B) offering products at a premium price

Adidas acquired Reebok primarily to: A) pursue an unrelated diversification strategy. B) overcome its competitive disadvantage against Nike. C) overcome its principal-agent problems. D) get access to the superior technology of Reebok.

B) overcome its competitive disadvantage against Nike

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: A) the surviving firms will need protection against the relaxed entry barriers. B) the horizontal integration activity has the potential to reduce competitive intensity in an industry. C) the surviving firms will need to be protected against the increasing bargaining power of the suppliers. D) the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive.

B) the horizontal integration activity has the potential to reduce competitive intensity in an industry

What is strategic entrepreneurship? A) the pursuit of an innovation that benefits society B) the pursuit of an innovation that uses concepts from strategic management C) the pursuit of an innovation that benefits the ecosystem D) the pursuit of an innovation that uses concepts from the triple-bottom-line approach

B) the pursuit of an innovation that uses concepts from strategic management

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

C) Economies of scale

Decisions relating to the range of products and services a firm will offer determine the firm's A) geographic scope. B) absorptive capacity. C) level of diversification. D) vertical integration.

C) Level of diversification

Which of the following motivations for business growth involves principal-agent problems? A) increasing market power B) reducing risk C) motivating managers D) increasing profits

C) Motivating managers

A firm's business strategy will 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

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) influence the purchase decisions of early adopters. B) are driven by technology concerns rather than the practicality of a new product. 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

Which of the following statements is true of explicit knowledge? A) Equity knowledge is acquired only through actively participating in a process. B) Explicit knowledge is knowledge that cannot be codified. C) Explicit knowledge is shared in non-equity alliance firms. D) Explicit knowledge is about knowing how to do a certain task.

C) explicit knowledge is shared in non-equity alliance firms

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

C) observable product features

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

C) strategic trade-offs

A [ ] primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market. A) mission statement B) code of ethics C) functional-level strategy D) business-level strategy

D) Business-level strategy

Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A) vertical integration B) forward integration C) backward integration D) horizontal integration

D) Horizontal integration

Firms often consolidate industries through horizontal mergers and acquisitions to A) lower their stock prices. B) solve principal-agent problems. C) motivate managers. D) increase their market power.

D) increase their market power

What is a value gap?

economic value creation

A cost-leader is protected from the threat of new entrants primarily due to its:

economies of scale

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.

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?

the CEO

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 concious