MGT 3830 Chapter 4

40. The fundamental choice for capability acquisitions is the decision to either: @Pages and References: Pages 182-185 a. Buy them or sell them b. Develop them or maintain them c. Buy them or build them d. Buy them or copy them

C

46. The value chain analysis of Singapore Airlines shown is: @Pages and References: Pages 185-186 a. A fully-worked professional analysis that could be sold to SA b. A first cut analysis, the result of ten minutes work c. A good start on analysis but now needs to be followed up with hard figures of cost comparisons between SA and its rivals d. A waste of time; SA does not have a cost leadership strategy anyway

C

23. If an industry has a stable environment and firms pursue similar strategies: @Pages and References: Pages 174-175 a. Firms with similar resources and capabilities should have similar profit rates b. Firms with similar resources and capabilities should have similar structures c. Firms without similar resources and capabilities will have left the industry d. Strategists may as well shoot themselves, this industry is so boring

A

31. Isolating mechanisms are: @Pages and References: Pages 179-185 a. Barriers that slow or stop the equalization of profits between firms, such as barriers to imitation b. Mechanisms that speed up the equalization of profits between firms c. Barriers that prevent potential entrants from grabbing a significant market share in the industry d. Mechanisms that limit or enhance the ex post equilibration of rents among individual firms, depending on their relative bargaining powers

A

32. To successfully imitate the strategy of another firm, an organization must: @Pages and References: Pages 179-185 a. Identify and diagnose the rival's advantage, believe in its ability to deliver a superior return, and, finally, acquire the resource b. Identify and diagnose the rival's advantage, and then acquire the resource c. Benchmark the rival's activities and resources, believe in a superior return, and build the rival's resource in-house d. Benchmark the rival's activities and resources, identify the rival's weaknesses, and, finally, believe in its ability to deliver a superior return

A

37. Is it easy for Sears Holdings (Kmart) to understand Wal-Mart's competitive advantages? @Pages and References: Pages 181-182 a. No, it is not that easy b. Yes: just walk into any Wal-Mart store c. Any professional retailer could d. Answers b and c

A

45. A value chain analysis: @Pages and References: Pages 185-186 a. Is an alternative framework within which to compare costs with your competitors b. Is an alternative framework within which to compare cost improvements in the last few years c. Is an alternative framework within which to compare a firm's profit margins with its competitors d. Is a framework for analyzing the chain of production of a good from nature to the 'final consumer'

A

48. Increasing flight reliability at Singapore Airlines: @Pages and References: Pages 192-197 a. Is likely to be the outcome of several linked activities b. Is basically down to the age of the planes c. Depends on the incentives given to ground and air crew for planes to take off on time d. Answers b and c

A

54. In many industries the market leaders @Pages and References: Pages 192-197 a. Manage to reconcile low costs with some effective differentiation b. Are the cost leaders c. Have very well-differentiated brands a. Answers b and c

A

24. A firm's ability to turn change in its external environment into profit: @Pages and References: Pages 175-176 a. Requires just one key resource: information b. Depends on its ability to respond by changing its capabilities appropriately c. Is the test of a Sustained Focus strategy d. Is always measured by its market share

B

30. Once established, competitive advantage is: @Pages and References: Pages 179-185 a. Relatively stable over time b. Subject to erosion by competitors or entrants c. A firm's reward for leading the industry d. Easily maintained unless entry barriers are high

B

35. Rivals can be pre-empted from entering a firm's markets using the above methods only if: @Pages and References: Page 181 a. There are significant economies of scale in this industry b. There is significant first-mover advantage in this industry c. Brand names matter to consumers in this industry d. Answers a and b

B

42. Cost leadership means a firm must: @Pages and References: Pages 185-186 a. Exploit all sources of cost advantage before tailoring the product to each customer b. Exploit all sources of cost advantage in providing customers with a standardised product c. Exploit all sources of cost advantage in providing each customer with their minimum requirements d. Exploit all sources of cost advantage while providing every customer an individual service

B

43. Differentiation is when a firm: @Pages and References: Pages 185-186 a. Offers customers something valuable and unique b. Offers customers something valuable and unique other than a low price c. Offers customers a uniquely low price d. Offers customers products with many additional features

B

53. A cost leadership strategy: @Pages and References: Pages 192-197 a. Requires a commodity product b. Requires a firm to commoditize their product - i.e. no frills - even if the industry's product is differentiable (e.g. cars or airlines) c. Can be achieved with a unique brand image d. Can only be achieved in the modern world by outsourcing to cheap-labor countries

B

56. Porter says that firms get stuck in the middle because: @Pages and References: Pages 192-197 a. The mindsets of cost-minimization and differentiation are culturally opposed, and firms cannot optimize the investments needed for both at once b. As A above and firms need very different organizational processes to achieve the lowest costs or effective differentiation in the industry c. Many firms are run by CEOs who think strategically, but fail to act strategically d. Many firms have had several different CEOs, each determined to pursue different strategies

B

20. Competitive advantage can be defined as: @Pages and References: Page 174 a. The difference between a firm's return on assets and its return on sales b. A firm's ability to earn a persistently higher profit margin than its rivals c. A firm's ability to earn a persistently higher profit rate than its rivals d. A firm's ability to outwit its competitors

C

26. Zara's response to very fast-changing fashion demands was: @Pages and References: Pages 175-176 a. To fight on price by cutting costs to the absolute minimum b. To have thousands of products in stock at all times c. To cut the product launch cycle from concept to store to three weeks d. To hire the best designers and decide new fashions in advance

C

28. Apple's ITunes success was an example of: @Pages and References: Pages 176-179 a. A great new IT product: compatible hardware, software and content all working together b. The decline of the conventional recorded music industry c. An innovative and legal business model replacing the conventional (legal) recorded music business model d. Apple's non-stop stream of wacky gimmicks

C

34. A firm can pre-empt imitation by: @Pages and References: Page 181 a. Vigorous legal action b. Threatening to imitate its imitators c. Introducing new products to fill each niche, investing in capacity ahead of market growth and filing many patents d. None of these: imitators should be welcomed

C

39. Overall, the Singapore Airlines case shows: @Pages and References: Pages 181-182 a. SA's biggest resource is the innate culture of its staff b. SA's biggest resource is the location of its hub c. That rivals may copy parts of your business strategy but some unique resources and causal ambiguity can successfully hide your key distinctive capabilities d. Answers a and b

C

41. The development of "collateralized debt obligations", by Drexel Burnham Lambert, shows that: @Pages and References: Pages 182-185 a. Well-paid bankers always come up with good ideas b. The financial system can be very fragile c. Financial products are easily copied so first movers must quickly establish a large track record of successful trades d. A financial crisis was inevitable

C

44. The seven drivers of cost advantage: @Pages and References: Pages 185-186 a. Must be equally examined in all firms b. Can be a useful framework within which to compare a firm's cost improvements in the last few years c. Can be a useful framework within which to compare a firm's costs with its competitors © 2012 John Wiley & Sons Ltd. www.foundationsofstrategy.com d. Can be a useful framework within which to compare a firm's profit margins with its competitors

C

52. A typical cost leadership strategy involves: @Pages and References: Pages 192-197 a. A firm producing a few limited-feature standard products, or providing a very standardised service b. A medium or small firm with minimal overheads, and cheaply acquired (sometimes second-hand) assets c. Answers a and b d. Being the firm with the highest market share, and, often, the best-known brand in the industry

C

19. Singapore Airlines appears to have competitive advantages from: @Pages and References: Pages 171-174 a. Lower costs than many of its rivals b. Better plane utilization rates than its rivals c. Better service levels than many of its rivals d. All of the above

D

21. A firm with a competitive advantage other than superior profitability may have? @Pages and References: Page 174 a. A rising market share b. Strong and rising customer loyalty, or good executive perks, or both c. Invested in new technologies its rivals do not have d. Some or all of the above

D

25. Requirements for quick organizational response to a turbulent environment are: @Pages and References: Pages 175-176 a. Flexible manufacturing systems and a good 'gut' feel for customer trends b. Excellent resources and capabilities c. Short product launch cycle times and excellent quality control d. Quick, accurate information, and short product launch cycle times

D

27. "Strategic innovation" means introducing: @Pages and References: Pages 176-179 a. New products b. New markets c. New technologies d. All of the above, or introducing new ways of doing business

D

29. "Strategic innovation" involves: @Pages and References: Pages 176-179 a. Limitless financial and organizational resources b. Spending more on Research & Development than your competitors c. Top managers' total dedication to achieving timely innovations d. Pioneering in at least one of the three dimensions: new industry, new customer segment, or new source of competitive advantage

D

36. To imitate the competitive advantage of another company, a firm must first: @Pages and References: Pages 181-182 *a. Understand the basis of its rival's success b. Collect comprehensive information about its rival c. Analyse its rival's marketing strategy d. None of the above

D

38. Causal ambiguity and uncertain imitability are: @Pages and References: Pages 181-182 a. Two academic phrases to describe a state of confusion b. Related because causal ambiguity causes uncertain imitability (the rival doesn't know what to imitate) c. Anyone who tries to imitate something they don't fully understand is asking for trouble d. All of the above

D

50. It is quite natural to combine cost leadership and differentiation strategies: @Pages and References: Pages 192-197 a. Into a strategy where you focus on doing both b. No: Porter says they are mutually exclusive c. If you do, you will probably end up being 'stuck in the middle' d. Answers b and c

D

51. Being 'stuck in the middle' gives low profits because: @Pages and References: Pages 192-197 a. The firm loses those customers who want the lowest prices © 2012 John Wiley & Sons Ltd. www.foundationsofstrategy.com b. The firm loses those customers who want the best product on the market c. Employees become confused about what the firm's goals and strategy really are d. All of the above

D

22. Competitive advantage: Pages and References: Pages 174-175 a. Exists only when an industry is in long term equilibrium b. Emerges from external and internal sources c. Both a and b d. Neither a nor b

B

55. The success of Japanese Total Quality Management: @Pages and References: Pages 192-197 a. Shows that it is possible to pursue Cost Leadership and Differentiation strategies simultaneously b. Refutes the perceived trade-off between low cost products and high quality products c. Has made Porter's analysis outdated d. Answers b and c

B

57. Overall, the Singapore Airlines case shows that: a. Firms do face the stark choices of being stuck in the middle that Porter cites b. Firms can create cultures that do motivate staff to continually eliminate waste, reduce costs and improve customer service c. Firms that create causal ambiguity cause creative ambiguity d. Cost leadership and low costs are the same thing

B

47. The central task of a differentiation strategy is: @Pages and References: Pages 185-186 a. To see how you can 'tweak' the product by adding new features that differentiate it from rival products b. To add valuable new features to your product so long as the extra value to customers exceeds the extra cost to you of supplying it c. To ask how all your customers' interactions with your product could be enhanced even more d, All of the above

C

33. How can a firm hide its superior profits? @Pages and References: Pages 179-181 a. By masking its results so that rivals fail to see its success b. By avoiding disclosing financial performance c. By temporarily lowering prices, so that the firm forgoes short term profits but succeeds in dissuading potential entrants d. Any of the above

D

49. Porter's value chain: @Pages and References: Pages 192-197 a. Can only be used to analyse cost leadership strategies b. Can be used to look at the current and additional costs of changes in a differentiation strategy c. Can be used to examine the current and additional service levels offered to customers in a differentiation strategy d. Answers b and c

D