Strategic management

In ________Blank, the stockholders are the legal owners of the company who delegate decision-making authority to professional managers. proprietorships nonprofit companies family-owned firms public stock companies

public stock companies

As differentiation and cost-leadership are distinct strategic positions that require important trade-offs, it is best for firms to avoid pursuing a generic business-level strategy. quite difficult to translate a blue ocean strategy into reality. quite difficult to translate a blue ocean strategy into reality. easy to increase value and lower cost at the same time.

quite difficult to translate a blue ocean strategy into reality.

The greater the difference between value creation and cost, the less likely that a firm's strategic position will be competitive. less likely a firm will gain competitive advantage. greater a firm's economic contribution. greater a firm's competitive parity.

greater a firm's economic contribution.

________ is best described as the difference between the value a consumer attaches to a good or service and what they paid for it. Consumer equity Consumer price index Consumer surplus Consumer lifetime value

Consumer surplus

A firm that follows the differentiation strategy is protected from the threat of new entrants primarily due to its - reputation for quality. - low pricing. - low cost per unit. - diseconomies of scale.

Reputation for quality

________Blank factors in the PESTEL framework result from the pressure that various groups, such as government bodies, nongovernmental organizations, and social movements, can exert to influence the decisions and behaviors of firms. Ecological Sociocultural Economic Political

Political

All of the following are examples of internal stakeholders except suppliers. employees. stockholders. board members.

suppliers

Commuter Scooter is a public company whose shares are currently trading in the market at $100 each. The company manufactures electric scooters at the cost of $600 per unit and sells them in the market for $1,000 each. What is the company's producer surplus? $300 $400 $500 $700

400

Prestigo Systems and Zykolux Systems are two competing firms. Prestigo Systems has $400,000 in tangible assets and $150,000 in intangible assets. Zykolux Systems has $130,000 in tangible assets and $415,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies? A- Prestigo Systems will find it harder than Zykolux Systems to attain competitive advantage. B- Zykolux Systems has fewer invisible assets than Prestigo Systems. C- Prestigo Systems will find it easier than Zykolux Systems to sustain competitive advantage. D- Zykolux Systems has fewer valuable resources than Prestigo Systems.

A is correct

Which of the following is an advantage of accounting data? Accounting data consider off-balance sheet items, which makes comparing companies with different capital structures easy. Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms. Accounting profitability ratios not only show us the outcomes from past decisions, but also provide information to guarantee future performance. Accounting data focus mainly on intangible assets, which are more important than tangible assets in firms' stock market valuations.

Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.

How do complements affect a primary product or service? A- They reduce the value of the primary product. B- They increase the demand for the primary product. C- They act as the strategic equivalent of the primary product. D- They lower the utility of the primary product.

Answer B is correct

One major limitation of using accounting profitability as a measure for competitive advantage is its focus on A- business strategy versus corporate strategy. B- business strategy versus corporate strategy. C- tangible assets versus intangible assets. D- resources rather than capabilities.

Answer C is correct

The tenet behind the triple bottom line is that A- a firm's primary objective should be increasing the total returns to its shareholders. B- a firm's return on revenue can be broken down into three ratios: COGS/Revenue, R&D/Revenue, and SG&A/Revenue. C- a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy. D- a firm should solely focus on increasing the economic value created for its customers.

Answer C is correct

Which of the following actions of an automobile firm will be considered as a strategic commitment? A- the firm promoting its new model of coupe through a free European trip worth $15,000 to be won as an early-bird offer B- the firm spending $100,000 on renting a manufacturing facility to meet the temporary demand for its cars C- the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future D- the firm launching an existing model of a car in red as a limited edition for six months

Answer C is correct - Strategic commitment refers to long-term decisions and actions that the company undertakes to achieve long-term goals and competitive advantages in the market.

In class we said the balanced scorecard helps do all of the following except? Helps managers achieve their strategic objectives more effectively Uses internal and external performance metrics Balances both financial and strategic goals Balance the goals related to people, profit, and planet

Balance the goals related to people, profit, and planet

In class we said that to implement a balanced scorecard performance system, you should? A- shoot for 6-10 targets to encourage stretch goals B- focus on the connection between the internal and learning and growth perspectives C- map out each perspective with specific targets D- look at trailing measures over leading measures

C is correct

In "The Right Game" article, the authors propose that in Game Theory firms are often ___________ and ____________ cooperating with other firms at the same time. building markets, cooperating competiting, cooperating competing, building markets competing, colluding

competiting, cooperating

According to our class discussion on the VRIO framework, you could infer that 3M is organized to capture value because it? A- has an image that attracts the brightest and most talented scientists and engineers B- has the best lab for new product development in the country C- has cross-functional teams that see the problem from different perspectives D- understands customer problems before inventing solutions

D is correct

According to the SWOT analysis, which of the following choices concerns a firm's internal strengths and weakness? resources, support activities, and future prospects dynamic strategic fit resources, capabilities, and competencies general environment

resources, capabilities, and competencies

Which of the following explains how dynamic capabilities are different from the resource-based view? - Dynamic capabilities deal with tangible resources. - Dynamic capabilities deal with resource heterogeneity. - Dynamic capabilities deal with applying resources over time. - Dynamic capabilities deal with intangible resources.

Dynamic capabilities deal with applying resources over time.

The annual net profit after taxes for Smith Corp., a multinational conglomerate, is $5.5 billion. As legal owners, which of the following stakeholder groups has the most legitimate claim on this profit? government managers local communities shareholders

shareholders

Which of the following statements is true of the Level-5 leadership pyramid? Once a manager moves to higher levels, he or she loses the qualities acquired in the previous levels to gain new ones. Successful companies are led by Level-1 executives. Each level of leadership builds upon the previous one in the pyramid. At Level 3, managers are capable of devising a vision and mission to guide the firm toward superior performance.

Each level of leadership builds upon the previous one in the pyramid.

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.? Ez Solutions Inc. will experience less competition from rival companies. Ez Solutions Inc. will find it easier to raise prices to increase profits. Ez Solutions Inc. will have to expand its operations to meet the increasing consumer demand. Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

Which of the following questions would a firm's business strategy ideally answer? How should we compete? Why should we compete? How should we implement the functional strategy? Where should we compete?

How should we compete?

Instant Grub is a fast-food restaurant that has recently entered the hospitality industry. Since most of its competitors are pursuing a low-cost position and doing well, Instant Grub also wants to adopt the same strategy. Which of the following will be a likely implication of this decision? Instant Grub will be able to create higher value for its customers. Instant Grub will not face any direct competition in the industry. Instant Grub will be better placed to gain a competitive advantage in the industry. Instant Grub will face low profit potential.

Instant Grub will face low profit potential.

Which of the following is a feature of a fragmented industry? It consists of many small firms. One large firm dominates the industry. It tends to generate high profitability. It allows firms to set prices.

It consists of many small firms.

Which of the following is not true concerning a customer-oriented mission? - It defines the means of how a customer need will be met. - It has a higher likelihood of remaining relevant in the long-term. - It has more flexibility than a product-oriented mission. - Organizations that have customer-oriented missions are more likely to be successful.

It defines the means of how a customer need will be met.

Free 2 Roam Inc., an all-terrain vehicle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Free 2 Roam Inc. from this scenario? It has an exchange relationship with the other firms. It has a direct investment in the other firms. It has competitive parity with the other firms. It has a competitive advantage over the other firms.

It has a competitive advantage over the other firms.

Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance? It only relies on an internal view of the firm, ignoring the external view. It fails to allow managers and executives to find a balance between financial and strategic goals. It fails to allow managers to align their different perspectives to create a more focused corporation overall. It provides only limited guidance about which performance metrics to choose.

It provides only limited guidance about which performance metrics to choose.

Shiny Kitchen Inc. and Juicello Corp. are two competitors in the electric juicer market. The cost incurred by each company to manufacture juicers is $75 per unit. Although both the companies sell their juicers at the same price, Juicello has a larger market share in the electric juicer industry. What does this imply? - Shiny Kitchen has created a higher value gap than Juicello. - Shiny Kitchen has a competitive advantage over Juicello. - Juicello has a cost advantage over Shiny Kitchen Inc. - Juicello offers more perceived value than Shiny Kitchen.

Juicello offers more perceived value than Shiny Kitchen.

Which of the following statements accurately brings out the difference between economies of scale and learning effects? Firms experience economies of scale when output increases, and they experience learning effects when output decreases. Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased. While there are no diseconomies to scale, there are diseconomies to learning. Economies of scale reduce cost per unit, whereas learning effects increase cost per unit.

Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.

_______ is an important tool because it allows a manager to recognize, prioritize and address the needs of various stakeholders. Stakeholder impact analysis Stockholder appreciation Shareholder voting proxies Shareholder Right's Plan

Stakeholder impact analysis

Which of the following is an example of a firm's capabilities? routine activities performed in the firm, like physical delivery of products specific tasks involved in the invoicing of customers skills involved in training and managing a workforce assets such as plant and machinery owned by the firm

skills involved in training and managing a workforce

If a company chooses to keep its vision product-oriented rather than customer-oriented, what will be the implication of that decision? The company will define its business in terms of providing solutions to customer needs. Managers throughout the organization will have more strategic flexibility. The company will define its business in terms of providing solutions to customer needs. The company will tend to be less flexible when adapting to changing environments.

The company will tend to be less flexible when adapting to changing environments.

Which of the following examples shows economic value created? Hint: we described this in the value chain. The value a consumer attaches to a good or service is lesser than what he or she paid for it. The price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it. The price a customer is willing to pay for a good is less than what it costs the firm to manufacture it. The revenue generated by selling a unit of a product is equal to the cost incurred by the firm in producing it.

The price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

Onivo Auto has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a comparable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage? The resource is easy to replicate. The resource neutralizes external opportunities. The resource is costly to imitate. The resource decreases the perceived value of its products.

The resource is costly to imitate.

Which of the following is true of public stock companies? There exists an implicit contract based on trust between society and the public stock company. The public stock company is not an important institutional arrangement in developing economies. Public stock companies are not required to disclose financial statements. Society expects public stock companies to add value to society by making profits for shareholders.

There exists an implicit contract based on trust between society and the public stock company.

Which of the following statements is true of a monopoly? Competing firms are most often independent of one another. There is only one, often large firm supplying the market. It is characterized by low entry barriers. It is often analyzed using game theory.

There is only one, often large firm supplying the market.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? They can demand better terms from their suppliers. They benefit from a less specialized division of labor. They can spread fixed costs over lesser units. They cannot employ technology efficiently.

They can demand better terms from their suppliers.

Which of the following statements accurately brings out the difference between an organization's vision and mission? Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished. Mission is the organization's aspirations for the future and vision is about how these aspirations can be made true over time. Vision is short-term: oriented and related to the organization's present, whereas the mission is futuristic. Vision is valid at the functional level of the organization, whereas mission covers the entire organization.

Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished.

Organizational core values are the answer to which of the following questions? Which of the value chain activities are primary? What is the value added to a good or service at each step in the production? What commitments do we make to act both legally and ethically? What is the company's customer lifetime value?

What commitments do we make to act both legally and ethically?

From the leadership chapter we described that the Vision Statements describes __________________________ the specific goals of the organization What the organization wants to accomplish how the organizational will accomplish its goals what industry and markets the organization wants to compete in

What the organization wants to accomplish

Strategic group mapping establishes that rivals inside a strategic group serve different customers. product features and prices are irrelevant to a strategic group. competitive rivalry is strongest between firms that are within the same strategic group. competitive pressures within an industry are similar among all strategic groups.

competitive rivalry is strongest between firms that are within the same strategic group.

Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________Blank, is believed to add value to the original product offering (or service) when the two are used in tandem. (hint: "The Right Game" article described this sixth force. complement value chain mobility barrier technological factor

complement

When a blue ocean strategy is successfully formulated and implemented, investments in differentiation and low costs are not substitutes but complements. cost drivers but value drivers. complements but substitutes. value drivers but cost drivers

substitutes but complements.

Controlling the cost of inputs, leveraging economies of scale, and learning by doing are all tools used primarily to achieve cost leadership. increase perceived value. improve customer service. reach differentiation parity.

achieve cost leadership.

A firm's _______Blank are best described as distinct and fine-grained business processes such as taking orders, delivering products, or invoicing customers. activities resource flows capabilities capital gains

activities

In the context of the VRIO framework, a resource is said to be valuable if it results in a perfectly competitive industry structure. helps a firm increase its costs but lower its prices. allows a firm to take advantage of an external opportunity. leads to competitive parity within an industry.

allows a firm to take advantage of an external opportunity.

In a perfectly competitive industry structure, competitors cannot quickly acquire resources used by the current market leader. resource heterogeneity is high. resource immobility is high. any competitive advantage that one firm has will be short-lived.

any competitive advantage that one firm has will be short-lived.

What metaphor is used to describe events that are considered highly unexpected but have a high impact on businesses when they do occur? camel's nose black swan boiling frog purple squirrel

black swan

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ________Blank emerged as a consequence of the firm's resource allocation process. strategic alliance unrealized strategy intended strategy bottom-up strategy

bottom-up strategy

From our case discussion last week, you could infer that Meta plans to? move back to the office to imrpove teamwork and ideation partner with Space X to enter the space debre cleanup business build a virtual reality plateform to avoid competition from apple and microsoft take over the world

build a virtual reality plateform to avoid competition from apple and microsoft

According to our Airbnb discussion and case, which of the following could be a threat in Airbnb's SWOT analysis? the lower priced rental market vacated by their competition lacking marketing experience changing city and government legislation location of their business headquarters

changing city and government legislation

Which of the following is a form of intellectual property? - organizational structure - organizational knowledge - equipment - patents

patents

Which of the following describes the concept of co-opetition according to "The Right Game" article? cooperation by firms to build a larger market cooperation among firms to divide up a market a product, service, or competency that adds value to the original product offering when the two are used in tandem obstacles that interfere with a firm's ability to leave an industry

cooperation by firms to build a larger market

The board of directors of Qwik Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate? business strategy functional strategy corporate strategy divisional strategy

corporate strategy

Firms seeking to deliver products or services at a lower cost than competitors are pursuing which strategy? benefit creation cost leadership process innovation differentiation

cost leadership

Oberlo Autos competes against the global leaders in the automobile industry by developing and selling acceptable quality vehicles at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Oberlo Autos applying in this scenario? liquidation strategy product diversification strategy cost-leadership strategy differentiation strategy

cost-leadership strategy

To make a cost-competitive mass-market vehicle, Tesla must do which of the following? hint: this is known as producing economies of scale. decrease production volume decrease the cost per vehicle as output increases maintain the same tooling of its manufacturing facility rely less on robotics

decrease the cost per vehicle as output increases

In a focused differentiation strategy, a firm seeks to focus on reducing the value gap to differentiate itself from the competitors. deliver products or services with unique features to a specific, narrow part of the market. create higher customer value than the competitors in different segments of a mass market. offer low-priced products and services with a narrow focus on a niche market.

deliver products or services with unique features to a specific, narrow part of the market.

ACME Inc. has retained you to review their low-cost strategy for their company. Based on several consultations with the client, you realize that their per unit costs are actually increasing as their business grows and expands. You conclude that this firm is experiencing economies of scope. diseconomies of scale. diseconomies of scope. economies of scale.

diseconomies of scale.

For a firm to sustain its competitive advantage, any fit between its internal strengths and the external environment must be permanent. dynamic. valuable. static.

dynamic

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the? time compression economies. efficient-market hypothesis. upper-echelons theory. price-demand function.

efficient-market hypothesis.

In the context of a SWOT analysis, one way a firm can develop a defensive strategic alternative is by leveraging an external opportunity to overcome an internal threat. using an internal strength to exploit an external opportunity. maximizing an external strength to exploit an internal opportunity. eliminating or minimizing an internal weakness to mitigate an external threat.

eliminating or minimizing an internal weakness to mitigate an external threat.

All of the following below are examples of external stakeholders except customers. government. communities. employees.

employees

In the ________, firms change the underlying technology while holding cumulative output constant. minimum efficient scale learning curve maximum efficient scale experience curve

experience curve

According to the Patagonia case study, you can infer that Ivon Chouinard is? A businessperson at heart has pursued a shared value creation strategy with Patagonia Keeping open communication channels with his team, even if he is not in the office Concerned about growing the business as fast as possible so they can give more to environmental causes

has pursued a shared value creation strategy with Patagonia

From our class discussion of the 5 Forces Model, you could infer that the airline industry is characterized by? perfect competition, which has squeezed out any profitability high rivalry and high profits for those who airlines that have consolidated high rivalry and low profits overall low supplier bargaining power

high rivalry and low profits overall

Because a consolidated industry tends to be more profitable than a fragmented one, firms have a tendency to change the industry structure in their favor, making it more consolidated through? hint: This has happened in the airline industry. horizontal mergers and acquisitions. a reduction in barriers to the industry. increasing the number of products or services offered. restrictive government policies.

horizontal mergers and acquisitions.

In class we described that leaders spend most of their day? networking at public events on teleconference calls in face to face meetings working alone

in face to face meetings

In class we described the advantages of making markets in the coopetition model as? lowering cost for suppliers and increasing value for competitors increasing value for customers and lower cost for suppliers more competition lowering margins but better choices increasing customer reservation price larger market for suppliers but a red queen effect due to firms pursuing similar strategies

increasing value for customers and lower cost for suppliers

ABC Hardrives Inc., All Digital Inc., and FastFax Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from a similar set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) plant. industry. occupational group. focus group.

industry

A firm's ________Blank strategy is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy. intended recognized dominant recognized

intended

One major limitation of using shareholder value appreciation as a measure for assessing competitive advantage is that stock prices often times reflect the irrational and psychological mood and behaviors of investors. Alan Greenspan, former head of the Federal Reserve referred to this as economic value creation. the efficient-market hypothesis. the tragedy of the commons. irrational exuberance.

irrational exuberance.

In class we said that a main limitation of the PESTEL framework is? it doesn't account for things like changes to the ecological environment it is static it takes too long to be useful factors don't affect strategic groups within the industry

it is static

In class we discussed how when strategies become too all encompassing, they create the primary problem of: lack of focus on where to spend resources Shareholders not knowing where resources are being allocated being marketing statements rather than strategic statements legitimacy due to lack of SMART goals

lack of focus on where to spend resources

If a company has 50 million shares outstanding, and each share is traded at $200, the ________Blank is $10 billion. total return to shareholders return on revenue customer lifetime value market capitalization

market capitalization

An organization's ________Blank describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete vision promissory note mission code of conduct

mission

A blue ocean strategy typically allows a firm to - offer a differentiated product or service at a greater cost than other differentiators - cross into highly contested markets without competing on price - offer a differentiated product or service at low cost. - add product features that raise costs without raising the perceived value.

offer a differentiated product or service at low cost.

According to the upper-echelons theory, strong strategic leadership is solely the result of learning. top managers of a company should isolate themselves from the organizational values. organizational outcomes reflect the values of the top management team. strategic commitments made by upper-level managers are inexpensive and short-term.

organizational outcomes reflect the values of the top management team.

The online retailer SW19 Inc. has successfully created a higher perceived value in the tennis equipment and apparel industry, even though it offers the same products at slightly higher prices than its competitors. This has been mainly attributed to the company's easy-to-navigate website, simple return procedures, and fast delivery. Thus, the value driver for SW19 is its economies of scale. economies of scale. superior customer service. lower value gap.

superior customer service.

Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period of time? consistent power position long-term capital gain strategic positioning sustainable competitive advantage

sustainable competitive advantage

Which of the following actions of an automobile firm will be considered as a strategic commitment? the firm launching an existing model of a car in red as a limited edition for six months the firm spending $100,000 on renting a manufacturing facility to meet the temporary demand for its cars the firm promoting its new model of coupe through a free European trip worth $15,000 to be won as an early-bird offer the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

Evaluating the data collected from environmental analysis, the corporate executives of BigPharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate? top-down strategic planning bottom-up strategic approach scenario planning basement level strategy

top-down strategic planning

Strategic positioning requires which of the following? adopting a zero-sum strategy trying to be everything to everybody using trade-offs focusing on one activity instead of combining them

using trade-offs

A good strategy should be able to provide products and services to customers at an attractive price point while maintaining internal costs, resulting in sustainable competitive advantage. value creation. shareholder appreciation. competitive benchmarking.

value creation.

A company's vision primarily states how the company plans to compete in its industry. how the company plans to accomplish its goals. what the company wants to ultimately accomplish. what the company actually does to generate revenues.

what the company wants to ultimately accomplish.

In class we described that to find your company's unique value proposition you should look at? what you do really well and what your customers want what dynamic capabilities you can produce by investing in value chain activities where the largest margins are in your industry what your competitors also do really well and what your customers want

what you do really well and what your customers want

Michael Porter and Mark Kramer are in favor of the shared value creation framework because they believe that it - is the duty of a company to focus on benefitting shareholders who have the most legitimate claim on profits. - is the responsibility of the company to focus on creating profits and nothing else. - will help to pit economic and societal needs in a trade-off. - will not only allow companies to gain and sustain a competitive advantage, but it will also reshape capitalism and its relationship to society.

will not only allow companies to gain and sustain a competitive advantage, but it will also reshape capitalism and its relationship to society.