MGMT Capstone exam 2

What is the Pareto Principle? 80% of the effects come from 20% of the causes. 50% of the effects come from 50% of the causes. 20% of the effects come from 80% of the causes. 60% of the effects come from 40% of the causes.

80% of the effects come from 20% of the causes.

_________ occurs when one partner tries to exploit the alliance-specific investments made by another partner. Hold-up Misrepresentation Bondage Battery

Hold-up

Which stage of the product/business/industry life cycle involves an increase in competitive rivalry and late majority buyers? Decline stage Maturity stage Introduction stage Growth stage

Maturity stage

The research and development department of a pharmaceutical company is in the process of developing a new drug to cure Parkinson's disease. It requires additional resources to complete the process. To convince another pharmaceutical company to provide the necessary resources, it gives false information about how long the drug has been in the developmental pipeline and the guidelines followed in the production process. Which of the following is being exemplified in this case? Profit stealing Bondage Misrepresentation Hold-up

Misrepresentation

In the ___________ of the product/business/industry life cycle, sales begin to accelerate as innovation gains traction and increased market acceptance. growth stage introduction stage maturity stage decline stage

growth stage

Paws Corp., a manufacturer of pet products, tries to get a few customers to try out their products. The primary goal of the organization is to get some reference customers that will seed future growth to increase market acceptance. In this case, the organization is in the ___________ stage of the product life cycle. introduction decline growth maturity

introduction

the most common way to distinguish one type of alliance from another is by the _________. measure of profit each firm derives out of the alliance products of the firms involved in the alliance motive behind the alliance mechanism used to govern the alliance

mechanism used to govern the alliance

MorrisWhitaker Inc., a metallurgical firm, wants to create a new production plan. This step involves formalizing and institutionalizing new behaviors, methods, processes, or routines. This is an example of the ________ phase of organizational change. unfreezing refreezing monitoring changing

refreezing

The approach, or pricing strategy, a company uses to get paid for the value it delivers through its business model is called the ___________. differentiation model revenue model cost model customization model

revenue model

Which of the following is not in the McKinsey 7 S model? Strategy Systems Shared Values Skills Situations

situations

Which of the following is not an example of a company that uses/has used the strategy of Low End Disruptive Innovation? Amazon Apple Nucor Skype

skype

Nathan, a designer at Zeal Inc., comes up with a new idea. While Nathan considers turning it into a piece of art, Ricky, his colleague, suggests converting the idea into a product that generates revenue. Ricky's suggestion to convert the idea into a revenue-generating product refers to a(n) ___________. innovation revolution invention variation

innovation

Which of the following statements is true of the maturity stage of an industry's life cycle? Demand increases as the early majority is convinced that the product concept works. Toward the end of this stage product innovation starts to give way to process innovation. The market size of the product shrinks significantly. Growth starts to slow as total market penetration increases.

Growth starts to slow as total market penetration increases.

ThomasMyers Inc., a global automobile company, aims at developing a strategy to create and sustain a competitive environment. It wants to develop a structure that divides the labor and tasks of the organization. It aims at coordinating and controlling work of the different units within the firm. In the context of the 7 S model of organizational alignment, which of the following best exemplifies ThomasMyers' approach? Soft square Guiding coalition Scorecard Hard triangle

Hard triangle

How do companies in different strategic groups differ from each other? They employ different business models. They go after customers with different value propositions. They are in completely different industries (e.g., automobile vs. medicine). They are in completely different industries and employ different business models. They employ different business models and go after customers with different value propositions.

They employ different business models and go after customers with different value propositions.

Timber Inc. enters an exclusive partnership to ally with Teal Corp. in order to enter a foreign market. Which of the following statements is likely to be true in this case? Timber is likely to buy an activity from Teal using an arm's-length relationship. Timber and Teal are unlikely to receive inputs or activity from each other. Timber is likely to send a bid to Teal along with other suppliers for the lowest price. Timber is likely to acquire an activity or input from Teal to create a new value.

Timber is likely to acquire an activity or input from Teal to create a new value.

Alignment means that parts are properly positioned in relationship to each other. True False

True

Which of the following is one of the three criteria of an innovation presented in the animation? Useful Scalable Inimitable Disruptive

Useful

Zeal Inc., a software firm, decides to enter the publishing industry. While it has the financial resources required to enter the new market, it lacks the expertise and technical knowledge required to establish itself in the new industry. So, Zeal Inc. enters into strategic alliance with Chrome Corp., a leading e-publisher. Which of the following is likely to be true in this case? Zeal's vision is likely to contradict that of Chrome. Chrome is likely to provide its expertise only at the marketing stage. Chrome is likely to lose its relational advantage through this alliance. Zeal and Chrome are likely to cooperate even at the stage of research and development.

Zeal and Chrome are likely to cooperate even at the stage of research and development.

High conversion rate refers to ___________. a high percentage of sales achieved as a result of a firm's current marketing strategy the high rate at which people switch to a firm's product from a rival firm's product the high rate at which the production cost is returned in the form of profits from sales a high percentage of free users who are willing to convert to paid customers for premium features

a high percentage of free users who are willing to convert to paid customers for premium features

Which of the following companies uses the strategy of "Eliminating a Step in the Value Chain"? Nordstrom Mercedes-Benz Amazon Wal-Mart

amazon

An alliance is likely to rely most on relationships between individuals when it is based on _________. legal contracts collateral bonds goodwill trust shared ownership

goodwill trust

Peach Corp. continues to refine its chocolate products even as they look for innovative ways to reach customers through marketing and new distribution channels. In this case, the organization is in the ___________ stage of the product life cycle. introduction maturity decline growth

growth

Rimezine Inc., a pharmaceutical company, incurred losses in the current quarter due to low customer demand. It recognized and publicly admitted that the current strategies of the company are not producing acceptable results. The company is in the ________ phase of organizational change. changing hard triangle unfreezing soft square

unfreezing

A cell phone manufacturing company gives away a free case with a purchase of any product higher than $50. Which of the following is being exemplified in this case? A cross-sell strategy A third-party pay strategy A bundling strategy A blue ocean strategy

A bundling strategy

Borpon Inc. and Biocolog Corp. are well-established biotechnology companies. They enter into a strategic alliance in which they create and own a legally independent company. The new company is created from resources and assets contributed by the parent firms. Revenues, expenses, and profits are equally shared by both firms. Which of the following strategic alliances is adopted by Borpon and Biocolog? A contractual alliance A joint venture An equity alliance A distribution agreement

A joint venture

Sepia Inc., a fertilizer company, needs permission to test its new products on plantations owned by an agro-based industry. In return, the company is willing to pay a percentage of revenue to the agro-based industry. In this case, which of the following contractual alliances should be adopted by Sepia? A licensing agreement A supply agreement A distribution agreement An input agreement

A licensing agreement

John requires 500 shirts of a particular fabric and quality. He partners with Loumang Inc., a fabric manufacturing company, to develop certain customized inputs. Which of the following is being exemplified in this scenario? A distribution agreement A profit agreement A licensing agreement A supply agreement

A supply agreement

Inks Corp. is a manufacturer of pens. It creates a new product called Quink, a quick-drying ink pen that does not require the use of blotting paper. It creates this product by building on its established knowledge of the properties of ink and the mechanisms of a pen. Which of the following innovations is being exemplified in this case? A radical innovation A subversive innovation A revolutionary innovation An incremental innovation

An incremental innovation

Which of the following are ways a firm can take advantage of another firm in an alliance? Vertically integrating Misrepresentation Hold-up Both vertically integrating and hold-up Both misrepresentation and hold-up

Both misrepresentation and hold-up

Why should a company create a strategic alliance with one or more other companies? To differentiate more from competitors To combine resources and capabilities to create new value To make employees happy that may have connections with other companies Both to differentiate more from competitors and to combine resources and capabilities to create new value Both to combine resources and capabilities to create new value and to make employees happy that may have connections with other companies All of the choices are correct.

Both to differentiate more from competitors and to combine resources and capabilities to create new value

Identify a way firms create value through alliance. By increasing the transaction costs By pooling trade secrets By creating new industry-specific resources By combining unique resources

By combining unique resources

Robinson Inc., a manufacturer of smartphones, focuses on moving from its one set of strategic plans to another by increasingly engaging itself with customer services. It feels that it is important to increase the quality of products to increase and retain its customer base. Which of the following phases of organizational change is exemplified in this case? Changing Refreezing Unfreezing Hard triangle

Changing

Green Dye Inc., a manufacturing firm that produces organic products, is approached by Zoe, a leading clothes designer owning her own label. Together, they create a line of clothes using organic dye and fabric made from pure cotton. Which of the following is likely to be the primary value created by this alliance? Combining unique resources along different stages of the value chain Lowering distribution costs at all stages of the value chain Lowering the transaction costs at all stages of the value chain Offering customized retail benefits to increase the sale of the products

Combining unique resources along different stages of the value chain

Which of the following is not involved with the execution portion of strategy implementation? Accountability for action Creating organizational alignment Clear Goals Accurate measures of performance Rewards and incentives

Creating organizational alignment

Which of the following is not one of the innovative strategies presented in the animation? Differentiation High-End Disruption Mass Customization Blue Ocean Strategy

Differentiation

What classification of strategy best describes the strategy deployed by Netflix to take on Blockbuster? Incremental Disruptive Differentiation Low End

Disruptive

Which one of the following is NOT one of the basic alliance arrangements? Contractual alliance Equal alliance Equity alliance Joint venture

Equal alliance

A contractual alliance involves writing a contract that describes how much equity each partner receives. T/F

F

To achieve economies of scale in a strategic alliance, two or more companies combine unique resources. T/F

F

Strategy implementation depends only on the ability to execute. True False

False

An air conditioner manufacturer, Hues Corp., decides to form a strategic alliance with a firm to source components that make up the highest percentage of total costs. Which of the following suppliers is it most likely to choose as a partner? Den Corp., which produces the designer vents for Hues that come in different colors Fin Inc. which produces the compressors used in Hues air conditioners Jades Inc., which manufactures the packages required for finished products of Hues Black Corp., which prints Hues logo on the air conditioners

Fin Inc. which produces the compressors used in Hues air conditioners

Which of the following statements is true about how an arm's-length relationship is used in strategic alliance? Firms use the arm's-length relationship to purchase inputs at the lowest price. Firms cannot buy inputs from multiple sources using the arm's-length relationship. Firms typically use the arm's-length relationship between internal departments. Firms that use the arm's-length relationship acquire the production facilities of other firms.

Firms use the arm's-length relationship to purchase inputs at the lowest price.

Gem Inc. a clothing manufacturer, creates a new strategy to increase its customer base. Maya, a marketing student, observes that Gem engages in disintermediation, while Nate, her friend, believes that this observation is incorrect. Which of the following statements is likely to support Maya's observation? Gem is likely to create disruptive innovations to eliminate competition. Gem is likely to misrepresent facts in its promotions to increase sales. Gem is likely to eliminate middlemen and directly deliver products to customers. Gem is likely to offer coupons to regular customers and increase brand loyalty.

Gem is likely to eliminate middlemen and directly deliver products to customers.

Teal Inc. forms a strategic alliance with White Corp. In their contract, they specify how governance issues, operating issues, and termination issues would be resolved. Which of the following is likely to be covered under the clause that deals with governance issues? Under which circumstances Teal or White can exit the alliance How profits will be split between Teal and White How intellectual property will be shared by Teal and White What performance is expected by Teal and White from each other

How profits will be split between Teal and White

___________ refers to Professor Rich's argument that competitive intensity has increased, and that periods of competitive advantage have decreased. Mass customization Hypercompetition Third-party competition Standardization

Hypercompetition

Which of the following statements is true about strategic alliances? Strategic alliances exclude functions that are bought through bidding. In strategic alliances, companies may choose to cooperate at any stage along the value chain. In strategic alliances, the power to make decisions is always evenly distributed amidst the firms. Strategic alliances usually lead to one of the firms losing their relational advantage.

In strategic alliances, companies may choose to cooperate at any stage along the value chain.

Which of the following statements refers to incremental innovation? It is a pricing strategy that a company uses to get paid for the value it delivers through its business model. It can be described as building on a firm's established knowledge base to create minor improvements to the product or service a firm offers. It can be described as building on a competing firm's established knowledge base to steadily improve a firm's own product or service. It can be described as innovation that draws on a different knowledge base, technologies, or methods to deliver value in a truly unique way.

It can be described as building on a firm's established knowledge base to create minor improvements to the product or service a firm offers.

Which of the following statements is true of the blue ocean strategy? It relies on its existing knowledge of products to improvise on new features. It uses low-end disruptive innovations to compete in the market. It creates new demand in an uncontested market space. It disrupts an existing market by displacing an earlier technology.

It creates new demand in an uncontested market space.

Which of the following statements is a characteristic of a disruptive innovation? It typically uses old technologies used by competitors in the market. It typically offers value in a way that is easy to imitate. It disturbs an existing market by displacing an earlier technology. It sustains a company's current product offering by the firm's established knowledge.

It disturbs an existing market by displacing an earlier technology.

Which of the following statements is true of a firm that creates a radical innovation? It aims to sustain its current product offering and revenues. It employs a fundamentally different business model than its rivals. It focuses on the established knowledge base of a firm to deliver value. It relies on existing technologies and resources to create a new product.

It employs a fundamentally different business model than its rivals.

hich of the following statements is true of a firm that creates a radical innovation? It aims to sustain its current product offering and revenues. It employs a fundamentally different business model than its rivals. It focuses on the established knowledge base of a firm to deliver value. It relies on existing technologies and resources to create a new product.

It employs a fundamentally different business model than its rivals.

In the context of the 7 S model of organizational alignment, which of the following statements is true of structure? It includes recruitment, hiring, training, promotion, and compensation. It helps create alignment between goals, skills, and environmental needs. It is the ability of an individual to perform tasks. It represents the most important S in the 7 S model.

It helps create alignment between goals, skills, and environmental needs.

Identify a true statement about the innovative strategy of disintermediation. It creates products that outperform existing products in the market. It involves reconfiguring the value chain to eliminate activities or steps. It involves producing a low-cost product or service at the low-end or most price-sensitive segment of the market. It uses the price skimming strategy to gain a foothold in the market.

It involves reconfiguring the value chain to eliminate activities or steps.

identify a true statement about the innovative strategy of disintermediation. It creates products that outperform existing products in the market. It involves reconfiguring the value chain to eliminate activities or steps. It involves producing a low-cost product or service at the low-end or most price-sensitive segment of the market. It uses the price skimming strategy to gain a foothold in the market.

It involves reconfiguring the value chain to eliminate activities or steps.

Which of the following statements best describes a strategic alliance? It is an arrangement where a firm purchases an input from another firm with no obligation to have a long-term relationship with the other firm. It is a cooperative arrangement in which two or more firms combine their resources and capabilities to create new value. It is a cooperative arrangement where a firm which is on the verge of shutting down sells all of its assets to another firm. It is an unofficial arrangement in which two large firms cooperate unofficially to control production and prices within a certain market segment.

It is a cooperative arrangement in which two or more firms combine their resources and capabilities to create new value.

Ochre Inc. uses the freemium strategy to enter a market. This strategy becomes successful and the organization gains a wide customer base. Which of the following is likely to be true in this case? It is likely to gain new customers in an existing market only through price skimming. It is likely to use product differentiation to mark-up the initial price of the product. It is likely to use the high-end disruptive innovation strategy. It is likely to gain a wide customer base only if there is a high conversion rate.

It is likely to gain a wide customer base only if there is a high conversion rate.

Which of the following statements is true of the changing phase of organizational change? It entails moving away from certain actions, policies, or strategies before adopting anything new. It means moving from one set of behaviors and activities to another. It provides the fundamental motivation for change. It involves formalizing and institutionalizing new behaviors, methods, processes, or routines.

It means moving from one set of behaviors and activities to another.

Which of the following statements is true of the unfreezing phase of organizational change? It provides the fundamental motivation for change. It allows organizations to maintain the progress they made through change. It is the phase where an organization engages in a trial and error process. It means moving from one set of behaviors and activities to another.

It provides the fundamental motivation for change.

Which of the following statements is true of shared values? It helps create alignment between goals, skills, and environmental needs. It includes recruitment, hiring, training, promotion, and compensation. It represents the most important S in the 7 S model. It refers to the priorities and virtues that members of an organization see as important.

It refers to the priorities and virtues that members of an organization see as important.

Which of the following statements is true about strategy? It is the ability of an individual to perform tasks. It refers to the priorities, values, and virtues that members of an organization see as important. It represents the most important S in the 7 S model. It includes recruitment, hiring, training, promotion, and compensation.

It represents the most important S in the 7 S model.

Which of the following statements is true of an incremental innovation? It typically creates improvements based on the knowledge perceived from competitors. It sustains a company's current product offering and revenues. It focuses on a different knowledge base to deliver value in a truly unique way. It creates new values through a different set of resources and capabilities than that of rivals.

It sustains a company's current product offering and revenues.

which of the following statements is true of an incremental innovation? It typically creates improvements based on the knowledge perceived from competitors. It sustains a company's current product offering and revenues. It focuses on a different knowledge base to deliver value in a truly unique way. It creates new values through a different set of resources and capabilities than that of rivals.

It sustains a company's current product offering and revenues.

_________ occurs when one partner in an alliance creates false expectations about the resources it brings to the relationship or fails to deliver what it originally promised. Misrepresentation Bondage Profit stealing Hold-up

Misrepresentation

An organization forms an alliance contract. It specifies in detail the duties and obligations of each of the partners, how the profits are to be split by the partners, and the process by which disputes will be resolved. Which of the following clauses is likely to cover the duties and obligations of the partners, including warranties and minimum output levels required to satisfy the contract? Residual rights clause Performance clause Dispute clause Voting rights clause

Performance clause

Copper Inc., an existing clothing outlet, decides to shift from direct to online retailing. It offers the same products at a reduced price as it does not have to incur the costs to manage a store. In this case, which of the following patterns of innovative strategies has Copper adopted? Adding additional product features to increase the product life-cycle Forming product differentiation strategies to increase value Reconfiguring the value chain to eliminate activities Creating low-end disruptive innovations to decrease competition

Reconfiguring the value chain to eliminate activities

Richardson Corp., a biotechnology company, wants to hire people who have the abilities to perform tasks, maintain interpersonal relationships, and focus on values of the organization. In the context of the 7 S model of organizational alignment, which of the following best exemplifies Richardson's approach? Hard triangle Guiding coalition Soft square Scorecard

Soft square

LeeAllen Inc., a well-established healthcare centre, starts a new production unit. The company hires 100 new employees for the new unit to meet the customer demand. In the context of the 7 S model of organizational alignment, which of the following is exemplified in this case? Strategy Style Staffing Structure

Staffing

Which of the following is correct? Strategy implementation is unimportant because it follows naturally from formulation. Strategy implementation is important because people need to feel good about the new strategy before they enact it. Strategy implementation is easy because organizational members see how a new strategy will lead to competitive advantage. Strategy implementation is difficult because it requires the organization to re-align its internal processes around the new strategy.

Strategy implementation is difficult because it requires the organization to re-align its internal processes around the new strategy.

Godwel Inc., an insurance company, wants to assign accountability for particular tasks. It wants to measure the performance of every unit of the company. Which of the following organizational elements will help Godwel accomplish the given task? Skill Strategy Structure Style

Structure

Mark Dinewell Inc., a well-established restaurant chain has vice presidents for different geographic regions and functional managers for each of those regions. Which of the following organizational elements is exemplified in this case? Style Structure Skill Strategy

Structure

Companies that are in your industry but not in your strategic group are not direct competitors. True False

T

Switching from one strategic group to another is usually difficult. True False

TRUE

Two organizations that are positioned at different stages along the value chain form an alliance. The contract includes the conditions under which the contract will be closed and the consequences of closure for each partner. Which of the following clauses specifies the above conditions? Termination clauses Voting rights clauses Preemption rights clauses Noncompete clauses

Termination clauses

Rafael, the chief executive officer of a chemical firm, believes that concentrating on the hard triangle of the 7 S model will help bring in the necessary organizational alignment in a relatively short period of time. Which of the following statements, if true, would strengthen Rafael's belief? The elements of style and skills are often easy to codify and can speed up the process of change in an organizational structure. The elements of strategy, structure, and systems can help an organization to quickly reach the desired level of change within an organization. Changing the style or shared values of an organization is a less burdensome task for the top management. The organizational element of strategy is often difficult to codify.

The elements of strategy, structure, and systems can help an organization to quickly reach the desired level of change within an organization.

Which of the following statements is true about firms in a joint venture? The contributions made by individual firms are easy to measure. The parent firms share revenues and expenses in a particular ratio. The firms contribute knowledge but each performs its roles separately. The dependency level between partners is low.

The parent firms share revenues and expenses in a particular ratio.

Palm's, a new restaurant in Boston, enters the market with a new strategy. Cooking enthusiasts can co-create a dish for their family along with the in-house chefs. They also allow families to cook their meals together and dine by the poolside. None of the other restaurants in the city offers this unique service. This is an example of a ___________. mass-customization strategy high-end disruptive innovation blue ocean strategy low-end disruptive innovation

blue ocean strategy

Determining the best way to respond to _____________ is often a company's most central concern. difficult employees upset customers competitive threats ups and downs of the economy

competitive threats

Toyota's seat supplier built its factory next door to Toyota's main factory and built a conveyor built that transferred seats from the supplier into the Toyota factory. This is an example of _____________. combining unique resources creating alliance specific resources pooling similar resources making the best out of their situation

creating alliance specific resources

A salon that specializes in haircuts comes up with a new service that sets it apart from those of its rivals. Clients are requested to send in their photographs; the stylists then create a set of digital images with various looks. Once the client chooses a desired look, a stylist goes to the client's home to deliver the service. The strategy of creating digital images, which requires a unique set of resources and skills, is an example of a(n) ___________. incremental innovation progressive innovation altered innovation radical innovation

radical innovation

Drew's Cafe Inc. and Cuppa Corp., two local coffee chains, combine resources to enter the global market. They retain their individual ownership; however, they agree to share production facilities and manpower, and they also decide to market their products through combined promotional tools. The arrangement made by the two retail chains to combine resources and collaborate for a common objective refers to a _________. mass-customization strategy standardization venture product-differentiation strategy strategic alliance

strategic alliance

The soft square in the 7 S model refers to elements that are difficult for people to understand. take time to change. have little effect on a firm's strategy. are tangible elements managers can work on.

take time to change.

The hard triangle refers to elements of alignment are difficult to articulate. skills and other difficult things to change. tangible elements of the 7 S model that managers can easily work on. the partnership between managers, employees, and shareholders that allow strategic change to happen.

tangible elements of the 7 S model that managers can easily work on.