MGT 247 Final Exam
A firm with a focused differentiation strategy focuses on increasing the willingness to pay for all customers in the market. T/F
False
Firms within the same industry automatically belong to the same strategic group. T/F
False
Producer surplus is the amount of utility consumers capture when they consume products at their reservation price. T/F
False
Strategic commitments are actions that can easily be reversed. T/F
False
The stronger the five forces, the higher the industry's profit potential, the industry become more attractive. T/F
False
Which of the following features about a buyer indicates that the buyer has high bargaining power?
when there are not many buyers that buy from the focal industry
Baby Organic makes moderately priced organic baby food pouches for children 1 to 3 years old. Baby Organic is located on the island of Geriatrica, a midsized island that has an elderly population and low birth rate. There are several other rivals that compete on the island. A new government policy has allowed an influx of new immigrants. These immigrants tend to have high birth rates and lots of children. All else equal, which of the following is mostly likely to happen in the baby/toddler food industry in which Baby Organic competes:
Rivalry will decrease
Which of the following is NOT a cost driver for a manufacturing firm?
Advanced technology offered as a product feature
A "perfectly competitive" industry structure is one that
All of the above
Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Which of the following is an implication of the market condition indicated in this scenario?
Any advantage that one firm has will be short-lived.
How does availability of complements act as a value driver?
Complements add value to a product when they are consumed together with it.
As the CEO of a large computer manufacturer, you notice that your revenues from computer sales have been declining over the last 3 quarters. Which of the following is most likely to be the cause of this decline? (When analyzing each cause, assume that is the only change, and that everything else about the company remains unchanged.)
Consumers shifting to smaller, cheaper computers
Benny's Closet Inc. is an apparel company that caters to highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Benny's Closet applying?
Cost-leadership
Tesla builds zero-emission battery-powered vehicles to reduce carbon emissions. That falls to which PESTEL category?
Ecological
Whole Foods focuses on a small market segment, affluent consumers who want to buy high-end, organic groceries. What is the appropriate name for Whole Foods's scope of competition?
Focused
How is a cost-leader protected from threats from powerful suppliers?
It is more able to absorb price increases through accepting lower profit margins
Q1: A firm that has put together a set of value generating resources in a complex way will:
Potentially have a sustainable competitive advantage because rivals will have difficulty imitating how the firm creates value
Firms need to modify, upgrade and reconfigure their resources because
The competitive environment is changing
Which of the following is most likely an implication of new firms entering an industry?
The incumbent firms will spend more to satisfy their existing customers.
Which of the following BEST describes the effect that bundling can have on an industry:
Threat of entry declines because a potential entrant may need to offer all of the types of products in the bundle to be competitive
A key feature of an oligopoly is that competing firms behave interdependently with each other. T/F
True
When smartphone manufacturers began including cameras and voice recorders, that was an example of industry convergence. T/F
True
The following best describes the bundling business model:
When two or more products are offered together, typically at a discount
Which of the following is NOT considered an important macro-environmental influence on businesses?
bargaining power of suppliers
Think Inc. is a new company in the publishing industry. It has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Think Inc. to acquire using its capital?
brand name
In an industry, the threat of entry is high when
capital requirements are low.
In the aircraft manufacturing industry, Boeing and Airbus are the only competitors. The threat of entry is low because
entering aircraft manufacturing industry requires huge capital investments
Economies of scale are cost advantages that accrue for firms with
larger output
Firms that compete within the same strategic group generally experience
more competitive rivalry than firms outside their strategic group.
Combining economies of learning with the existing production technology allows a firm to
move down a given learning curve.
Competitive rivalry based solely on ___ is destructive to firms as it transfers most of the value to the customers.
price-cutting
A firm's ________ relates to its ability to create value for customers (WTP) while containing the cost to do so (C).
strategic position
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.
When automobile magazines face competition from automobile blogs on the web, which of the 5 forces get stronger?
the threat of substitutes
Substitutes are less likely to reduce the profitability of an industry's products when:
It is costly to access the information necessary to judge the price-quality tradeoff of substitutes
