business policy exam 1

To understand how effectively a firm uses its capital, one can use the ratio

net profits/invested capital

Which of the following situations would justify the use of manufacturing robots by a producer of packaged foods?

an increase in demand from the market

Which strategy addresses the question of how to compete?

business

A______ is a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission.

core values statement

Cost of input factors and economies of scale are ______ that managers can manipulate to keep costs in check.

cost drivers

Furniture retailer IKEA has used the value innovation framework of ______ to successfully implement a blue ocean strategy.

eliminate-reduce-raise-create

In terms of business strategy, blue oceans represent which of the following?

increased demand untapped market space

The most a consumer is willing to pay for a product is equivalent to the product's

total perceived consumer benefits

Which of the following frameworks work to provide a more holistic perspective on firm performance?

triple bottom line balanced scorecard

True or false: A company that achieves differentiation parity at a lower cost has implemented a successful cost-leadership strategy.

true

True or false: The freemium business model can be considered an evolutionary variation on the razor-razor blade model

true

Which of the following types of questions does scenario planning ask?

"What if?"

Which of the following accurately describes the relationship between value and cost that would suggest that firm A has created a competitive advantage over firm B?

(V - C)A > (V - C)B

A black swan event has which of the following characteristics?

It has a major impact on society.

Which of the following is true about a sustainable strategy for a business?

It is a strategy that can be pursued over time without harmful effects on people or the environment.

As JetBlue grew, which of the following occurred during the years following 2007?

It suffered a competitive disadvantage.

Which level of strategic leader presents a convincing vision and mission that helps groups improve their performance?

Level 4

According to the pyramid of five levels of strategic leadership, a Level-1 leader typically shows which capability?

Offers helpful and effective input.

Critics of the more formalized strategic planning approaches proposed a framework that accounts for which of the following realities?

Strategy can emerge from the bottom up. Strategy can be planned.

Why are businesses with product-oriented vision statements often less effective than businesses with customer-oriented vision statements?

Product-oriented companies have less flexibility to meet consumer needs.

Which capability is required to create superior product features?

R&D

Which of the following are characteristics of the strategic plan that makes up an intended strategy?

Rational Top-down Structured

What cognitive bias is in play when individuals draw conclusions based on very small samples or a single anecdote, thus violating the law of large numbers?

Representativeness

A standalone division of a larger conglomerate, with its own profit-and-loss responsibilities, is called a

SBU

To determine how well money devoted to sales support is being spent, managers look at the marketing intensity ratio, which is also known as ______.

SG&A/revenue

Which statements about stock market valuations are true?

Stock market valuation is equal to the number of outstanding shares multiplied by the share price. Viewed over the long term, stock market valuation is a useful metric for assessing competitive advantage.

What is the relationship between fixed costs and economies of scale?

The amount of fixed costs allocated to each unit of output decreases as output increases.

Which of the following are pricing options offered by a blue ocean strategy?

The firm can charge a higher price than the cost leader. The firm can charge a lower price than differentiators.

In terms of productivity, which of the following is true of learning curves?

They go down.

Strategic commitments tend to be which of the following?

Costly Difficult to reverse

Diseconomies of scale often appear when a firm

becomes too large and complex to manage efficiently

A tablet manufacturer that includes a free stylus with every purchase is using ______ to enhance users' experiences and increase the perceived value of its tablets.

complements

Which type of strategy is being used if a company offers a product at a lower cost than its competitors?

cost-leadership strategy

A company with a Blank______ vision statement tends to be more flexible and more likely to succeed.

customer-oriented

What kind of vision statement defines a company by describing its interest in developing solutions to consumer problems?

customer-oriented

Compared to the past, the importance of firms' intangibles has increased. Therefore the importance of a firm's book value has Blank______ as part of the firm's total stock market valuation.

decreased

Economies of scale are

decreases in cost per unit as output increases

What is the primary focus of a customer-oriented vision statement?

developing goods and services that solve consumer problems

A firm experiences ______ when an increase in output results in an increase in costs.

diseconomies of scale

A firm that hopes to achieve a competitive advantage by maintaining an efficient supply chain and taking advantage of economies of scale and a well-trained staff is focusing on ______.

cost drivers

The goal of using the AFI strategy framework for scenario planning is to create strategic plans that are

flexible

Everybody can use the basic version of Dropbox for free, but needs to pay for premium services. Dropbox operates on a ______ business model.

freemium

The pay-as-you-go model is

gaining momentum

Business strategy is developed by

general managers in strategic business units

The story concerning the discovery of Starbucks' Frappuccino is an example of a(n) Blank______ strategy, or an unplanned strategic initiative that originated at the bottom and moved to the top.

emergent

A common cognitive bias is Blank______, which occurs when decision makers continue to support and invest in a project, even after receiving feedback indicating that it is likely to fail.

escalating commitment

According to the Level-5 pyramid, which level of leadership has the fewest members?

executives

True or false: Emergent strategy is planned.

false

Answering the balanced scorecard question of "how do we create value?" challenges managers to develop strategic objectives that ensure which of the following?

future innovation future organizational learning future competitiveness

The cube-square rule makes it _______ for smaller stores to compete with larger retailers

harder

Positive adjustments in product features, customer service, and complements may enable managers t0

improve the firm's strategic position

Which of the following is not one of the steps in the traditional top-down strategic planning process?

measurement

What is System 1 of the brain according to Daniel Kahneman and Amos Tverksy?

the brain's default mode

Because external factors create volatility in stock prices, a better measure of a firm's performance over the long term is the

total return to shareholders

Investors in a company are mostly concerned about the company's

total return to shareholders

A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in ______.

value innovation

Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?

vision

Which of the following makes it more likely that producers will breach existing rules of commerce when responding to rapid developments in business models?

when the business models are disruptive

Jennie is the CEO of an information technology company. Based on the data that her researchers have compiled, she feels confident that her strategic plan for the company will be successful in the future, regardless of what happens. Based on this information, it seems that Jennie Blank______.

has an illusion of control

Managers must make strategic trade-offs involving choices between cost and value because

higher value tends to require higher costs

Marriott offers different hotels that cater to different types of travelers (e.g., Residence Inn, Marriott Courtyard, Marriott Fairfield Inn). What is this an example of?

how a firm can compete by offering more perceived value at a similar price

Which of the following are standard performance dimensions for a company? (Check all that apply.)

how much shareholder value a firm creates a firm's accounting profitability how much economic value a firm generates

Which of the following are elements of the social dimension of the triple bottom line?

human sustainability achieving work/life balance

What drives the learning curve effect?

increases in cumulative output within the existing technology

Fixed costs are Blank______ consumer demand.

independent of

A firm's competitive advantage is determined jointly by _____________ and firm effects.

industry effects

An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors

input

In the relationship between per-unit cost and output, the minimum efficient scale

is where the per-unit cost is lowest

According to the Level-5 leadership pyramid, a person is referred to as a contributing team member at which level?

level 2

In a focused cost-leadership strategy, a firm provides

low-cost products to a niche market

Which of the following industries use a subscription model?

magazines cellphone providers Internet providers

High-end pen manufacturer Mont Blanc pursues a differentiation strategy pursuing only those who need or want an expensive writing instrument. What scope of competition does this represent?

narrow

Whereas the firm's strategic position can be considered either differentiated or cost-focused, the scope of competition is considered ______.

narrow or broad

In a focused differentiation strategy, the competitive scope is _______ than in a traditional differentiation strategy

narrower

In a focused differentiation strategy, the competitive scope is _______ than in a traditional differentiation strategy.

narrower

In order to determine market capitalization, one multiplies which of the following together?

number of outstanding shares share price

When a firm does favorably compared to similar firms, it is said to

outperform

In order to be considered a legal owner of a public company, a person or organization must

own at least one share of the company's stock

Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?

power

A differentiation strategy is typically associated with ______ pricing.

premium

As a consequence of the rapid development of business models, ______ may breach existing rules of commerce.

producers

If a firm has a successful Blank______ strategy, its product will have a higher perceived value and the firm will have a competitive advantage over a competitor that creates a product at equal cost but with a lower reservation price.

product differentiation

A _____ vision statement defines a business by describing the goods or services it produces or offers

product-oriented

What type of vision statement focuses on the good or service provided?

product-oriented

What type of vision statement tends to limit a manager's flexibility and ability to adapt?

product-oriented

Another name for producer surplus is

profit

What cognitive bias involves using simple examples to make sense out of complex problems, even though the things being compared may be very different on a deeper level?

reason by analogy

When implementing the razor-razor blade strategy, companies make their profit from

complementary goods

Which cognitive bias is based on people's tendency to seek out information that aligns with their existing beliefs?

confirmation bias

All of the following are sources of strategic initiatives except

consumer demand

A strategy-planning activity in which top management envisions various what-if scenarios to anticipate plausible futures in order to derive strategic responses is known as planning.

scenario

Which of the following statements about the disadvantages of the accounting profitability perspective are correct?

Accounting data focus primarily on tangible assets. Accounting data are historical and therefore backward-looking.

True or false: When a user values two products equally, they are negatively correlated.

false

An inspiring vision helps employees

find meaning in their work.

Wholesaling is considered a(n) ______ business model.

traditional

True or false: The resource-allocation process (RAP) can be designed to support planned emergence

true

Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as

value innovation

Determining the products the customer wants and needs answers the ______ question of competition.

what

Which of the following are questions that managers must answer when pursuing value innovation?

which new product factors to create which product factors to reduce below the industry standard which product factors to eliminate which product factors to raise above the industry standard

Economies of ______ are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.

scope

A______ is any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

strategic initiative

What is the primary concern of functional strategy?

strategy implementation

Managers implement the blueprint of their business model through which of the following?

structures culture processes

A powerful strategic commitment assures

that steps are taken to achieve the mission

Which of the following are examples of black swan events?

the Fukushima nuclear disaster the accounting scandal at Enron the 9/11 terrorist attacks

Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms?

the NASDAQ computer index

A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits?

the ability to charge a premium price less intense competition from imitators

Strategy Implementation primarily involves which of the following?

the organization, coordination, and integration of how work gets done

Economic value creation is calculated as Blank

the sum of consumer and producer surplus

Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?

theory of bounded rationality

A ______ outlines the steps a manager will take to achieve competitive advantage in a single product market.

business-level strategy

True or false: Stock market valuations are often unreliable due to market fluctuations and are therefore not used to assess competitive advantage.

false

is an example of a black swan event.

2008 global financial crisis

is a form of communication that enables the CEO of a company to pick up on nonverbal information, such as moods and body language.

A face-to-face meeting

Which of the following scenarios would result in strengthening a firm's strategic position?

A firm adds a new product feature that greatly increases the perceived value of the product at a minimal cost to the firm.

Which of the following describes how Amazon disrupted the traditional wholesale model for book publishers?

Amazon sold e-books for its e-reader device at a loss to promote sales of the e-reader.

What tactic did Amazon use when entering the book selling space and introducing the Kindle?

Amazon used disruption.

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?

Differentiation provides protection against an increase in input prices

For CEOs, what is an advantage of face-to-face meetings?

They allow CEOs to effectively communicate their ideas and positions.

The ______ is the range of output needed to minimize the cost per unit as much as possible.

minimum efficient scale

A company with a cost-leadership strategy faces significant difficulties when

the focus of competition shifts from price to non-price attributes

Which of the following statements is best illustrated by the decades-long business rivalry between the technology giants Apple and Microsoft?

A firm's competitive advantage is transitory.

When one wants to further explore the difference in return on revenue (ROR) for two competitors, one can look at which of the following ratios? (Check the three that apply.)

COGS/revenue SG&A expense/revenue R&D expense/revenue

To determine how efficiently a company can produce a good, managers look to the

COGS/revenue ratio

Which statements about creating and implementing an effective business model are true?

Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals.

Which of the following industries use a subscription mod

Internet providers cellphone providers magazines

What is one potentially negative outcome that firms face when they deliver higher than expected growth?

Investors will expect a similarly high level of growth in the future.

In the strategy process, questions concerning HOW to compete, such as through differentiation, are referred to as Blank______strategy.

business

Public companies are required by law to release detailed accounting data, which enables

comparative analysis of firms

An important requirement for increasing economic value creation under a differentiation strategy is to

control costs

The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be ______.

correlated

A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with

cutting costs and increasing value at the same time

True or false: A Level-3 leader ought to be able to create long-lasting greatness through resolve and humbleness.

false

According to the Level-5 Pyramid, a Level-4 leader is also referred to as a(n)

effective leader

According to Daniel Kahneman and Amos Tversky, System 1 is analytical, logical, and deliberate.

false

A______ can help employees feel that they are doing something worthwhile and are part of something important and meaningful.

inspirational vision

When the high market valuation of internet-based firms, such as Facebook or Google, is analyzed, the importance of ______ becomes clear.

intangibles

Two important features that managers can adjust in an effort to improve the firm's strategic position are

product features and customer service

True or false: Tesla's high stock market valuation is partly justified by the company's learning curve.

true

The business model used by telecommunication companies when they provide a basic cell phone at no charge when the customer signs a two-year contract is a combination of which of the following types of business models?

razor-razor blade subscription

What cognitive bias is in play when individuals draw conclusions based on very small samples or a single anecdote, thus violating the law of large numbers?

reason of analogy

Which of the following are among the most commonly used metrics for comparing the performance of different companies? (Check all that apply.)

return on assets return on equity return on revenue

The ______ determines whether to pursue a specific narrow part of the market or to go after the broader market.

scope of competition

A ______ requires making a choice between a cost position and a value position.

strategic trade-off

Which of the following is the least formal approach to setting the strategy process?

strategy as planned emergence

One way that a company can try to avoid problems resulting from diseconomies of scale is to ______.

structure the company into smaller units

When managers analyze a wide variety of internal and external performance metrics in order to set financial and strategic goals, they often turn to a framework known as

the balanced scorecard

What are the two factors upon which the success of strategy of either cost leadership or differentiation is built?

the firm's internal strengths external opportunities in the market

The major assumption in the top-down strategic planning process is that Blank

the future can be predicted based on the past

Corporate strategy concerns questions related to

where to compete

A firm pursuing a blue ocean strategy can increase its profit margins by implementing which of the following pricing options?

Charge a higher price than the cost leader. Charge a lower price than the differentiator.

Which one of the following is a capability a Level-3 leader typically exhibits?

Does things right.

Which of the following questions is involved in functional strategy implementation?

How do we put our business strategy into action?

What should a successful vision do for an organization?

It should make employees feel that their work is important. It should inspire employees

What is the premise of Henry Mintzberg's position regarding strategic planning?

Strategy can be planned or emerge from the bottom-up

What is strategic leadership?

The use of influence and power by executives to direct the activities of individuals while pursuing an organization's goals

Under a wholesale model, RETAILERS (not the wholesalers) sell goods for

any price they want

Companies are required to provide ______ to shareholders, which are used in determining a firm's competitive advantage.

benchmarks

A firm uses the Blank______ business model when it sells a set of products that have different levels of demand for a price less than their total combined prices.

bundling

What are the four most important cost drivers that managers can manipulate?

cost of input factors experience curve effects learning curve effects economies of scale

A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.

cost-leadership

A firm that offers a liberal return policy and free shipping on goods ordered online hopes to increase its perceived value by focusing on ______.

customer service

Managers can increase the perceived value of their firms' product or service offerings by focusing on

customer service

Which value driver would be the focus of a company that sells products that are similar to competing products and that provides a 60-day guarantee with no questions asked?

customer service

A ______ strategy may fail when the focus of the competition shifts to price rather than unique product features.

differentiation

Which of the following are considered the two generic business-level strategies?

differentiation cost-leadership

Which of the following are business strategies JetBlue pursued in order to gain a competitive advantage?

differentiation and cost-leadership

Which of the following would be labeled variable costs by a computer manufacturer?

display screens hard drives

A company's total return to shareholders consists of which of the following?

dividends received stock price appreciation

The Luminarium Corporation has a market capitalization of $100,000,000, and each share is worth $100. How many outstanding shares of Luminarium Corporation are there?

1,000,000

Place the progression of steps in the traditional top-down strategic planning in order, with the first step at the top.

1. analysis 2. formation 3. Implementation

Place in order from first to last the steps in the devil's advocacy decision framework. (Place the first step at the top.)

1. team 1 formulates a curse of action 2. team 2 questions the assumptions of and critiques the proposed course of action 3. team 1 revises the proposed course of action based on the input from team 2 4, team 2 questions the assumptions of and critiques the revised course of action, and team 1 makes additional revisions 5. team 1 and team 2 agree upon a course of action

Why does the learning curve go down when productivity is considered?

As workers repeatedly engage in an activity, they become more efficient, driving down costs.

Which of the following is not necessarily a capability a Level-1 leader typically exhibits?

Contributes through collaboration.

What does the Frappuccino story illustrate about the strategic management process?

Emergent strategies can be very successful

Which statements about the disadvantages of the value creation perspective are true?

For large firms, it is difficult to estimate the economic value created for all products and services offered by the firm. The value that a consumer places on a good can vary according to how the consumer feels at a particular moment. It is difficult to determine the value that consumers place on a given good.

A balanced scorecard is a tool for strategy

Implementation

Which statement best describes escalating commitment?

Individuals acting as decision makers continue to support and invest in a project despite feedback indicating that it will fail.

Which statement best describes groupthink?

Individuals automatically agree with a leader without critically evaluating or challenging the leader's views and assumptions.

Which statement best describes the cognitive bias of representativeness?

Individuals reach conclusions based on a small sample size or otherwise limited data, thereby violating the law of large numbers.

Which statement best describes the cognitive bias known as reason by analogy?

Individuals use simple examples to explain complex problems, even though the ideas in question may be very different from each other.

Which conditions are most likely to foster a positive relationship between vision statements and firm performance?

Internal stakeholders are invested in defining the vision. Organizational structures align with the vision statements. The vision statements are customer-oriented.

Which of the following statements are true concerning a firm's business model?

It details the firm's competitive tactics and initiatives. It indicates the way the firm works with buyers and suppliers. It essentially explains how the firm intends to make money.

Which of the following are true of a firm's book value?

Its importance has declined over time. It is calculated as costs of assets minus accumulated depreciation. It captures the historical cost of a firm's assets.

In the scenario-planning approach, what happens during the analysis stage of the AFI framework?

Managers work to identify potential future scenarios.

allows for bottom-up strategic initiatives to occur within a company and to be reviewed by executives.

Planned emergence

Which of the following competitive forces can result in the erosion of margins for both differentiation and cost-leadership business strategies?

Power of suppliers Power of buyers Threat of entry

Which of the following are considered disadvantages of the shareholder value creation approach?

Stock prices are influenced by the psychological mood of investors. Stock prices can be highly volatile. Overall macroeconomic factors have a direct bearing on stock prices.

Baby Buggy Baby sells high-end baby strollers. In an attempt to maintain its competitive advantage, the firm began adding additional features to its strollers. Customers liked these features and sales increased, but the company's profit margins shrank. Which of the following is the likely reason for this?

The firm neglected to control costs.

Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability?

The information is derived from such data as income statements and balance sheets. The relative performance is evaluated using standardized financial metrics. The information is filed in a 10-K report.

Which of the following is a capability that a Level-2 manager typically exhibits?

The manager is capable of working effectively with others to accomplish common objectives.

Which of the following statements is true about a firm's stock price?

The price determines in part the stock's market valuation.

Which of the following is true about shareholders of a public company?

They can be individuals or organizations.

What distinguishes a Level-5 leader from other levels of leaders?

They create enduring greatness.

What must strategic leaders keep in mind if they are going to achieve successful strategic positioning?

To achieve strategic positioning, firms must make important trade-offs.

Which statements about vision statements and firm performance are true?

Vision statements and firm performance are sometimes associated with one another. A positive relationship between vision statements and firm performance is more likely to exist when the visions are customer-oriented.

Which of the following are the key questions for understanding the balanced scorecard?

What core competencies do we need? How do customers view us? How do shareholders view us? How do we create value?

To formulate an appropriate business-level strategy, managers must answer the "who-what-why-and-how" questions of competition. Which of the following would be the appropriate questions to answer?

What customer needs will we satisfy? Who are the customer segments will we serve? How will we satisfy our customers' needs?

Which of the following best describes an illusion of control?

a belief that a strategic plan will address any scenario

A differentiation strategy can be threatened when ______.

a product becomes commoditized, and the focus of the competition shifts to price

The acronym SG&A stands for sales, general, and expenses

administrative

Opportunity costs refer to the value of what could have been gained had a person pursued

an alternative use of available resources

If two firms produce very similar products at the same rate of output, and firm A is able to achieve lower per-unit costs than firm B by taking advantage of a new manufacturing technology, firm A is benefiting from

an experience-curve effect based on process innovation

For a differentiation strategy to strengthen a company's strategic position and boost its competitive advantage

an increase in value creation must exceed the increase in costs

When a person decides to quit their job and start a company, the salary that person gave up when quitting can be considered Blank______

an opportunity cost

In order to ensure that a firm is implementing the triple-bottom-line approach successfully, managers must

audit the company's results in fulfilling its social and ecological obligations

Which term refers to strategic initiatives that lower-level employees undertake of their own volition, typically in response to unanticipated events?

autonomous actions

In their annual filing with the Securities and Exchange Commission, public companies in the United States must report which of the following?

benchmarks the total return to shareholders

Which of the following is a term used to describe a highly unlikely event that has a significant impact on society?

black swan event

The minimum efficient scale indicates the level of output needed to _______ the cost per unit as much as possible.

bring down

Netflix had a successful business model based on a large library of streaming content but then achieved even more success by also producing and distributing original content. This is an example of the potential value off

business model innovation

When a firm goes bankrupt, shareholders

cannot recover their risk capital

The financial metric ROIC stands for return on invested

capital

Which of the following are input factors?

capital labor information technology services raw materials

Unique features and attributes that differentiate a product from competitors' offerings allow the firm to

charge premium pricing

Combining the razor-razor blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their Blank______ rate, or the proportion of subscribers who leave, down.

churn

Which of the following leads to systematic errors in decision making and hinders rational thinking?

cognitive biases

Which of the following are offered by a balanced scorecard?

common financial metrics operational measures on customer satisfaction measures of internal processes

The balanced scorecard framework enables managers to do which of the following?

communicate and link the strategic vision translate the strategic vision into operational goals implement feedback and organizational learning

If Tom would have paid $1,000 for a new laptop but was able to purchase one for $800, the $200 he saved is considered his Blank______.

consumer surplus

Achieving competitive advantage means maximizing the difference between which two of the following?

consumers' willingness to pay the cost to produce the good or service

What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?

devil's advocacy

Economic value created is the Blank______ the cost to produce a product/service and the amount the buyer is willing to pay for it.

difference between

A ______ strategy aims to create higher value for customers by offering products with unique features but a similar level of costs to those of competing products.

differentiation

A ______ strategy attempts to create products with unique and attractive features in order to increase the price that consumers are willing to pay.

differentiation

Which of the following dimensions make up the triple bottom line?

ecological social economic

How to compete on a business level is defined by the variables value and cost. Together they define the

economic value created

A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______.

economies of scale

Patti's Potato Chips is a national potato-chip manufacturer. Calpurnia's Crisps is a small-batch gourmet potato-chip maker. Based on just this information, which of the following is the greatest advantage Patti's has over Calpurnia's?

economies of scale

True or false: The best measure of competitive advantage can be found in the performance of specific departments

false

True or false: Top-down strategic planning is most effective when the environment is constantly changing

false

True or false: When companies commit to sustainable strategies, they do so purely out of a spirit of charity.

false

For a balanced scorecard to be effective, managers must do which of the following?

formulate an effective strategy for achieving competitive advantage translate their strategy into measurable objectives manage objectives according to the balanced-scorecard approach

Premium services that cost money, with complementary basic services, is a description of which type of business model?

freemium

strategy answers questions regarding how to implement the business strategy.

functional

Which cognitive bias involves individuals agreeing with a leader without critically evaluating or challenging the leader's views and assumptions?

groupthink

A company's stock price increases if the company

grows faster than expected

In order for a firm to successfully implement a business-level strategy, it must limit the impact of which of the following?

its own internal weaknesses external threats

Raoul is starting a new cosmetics company. His focus is on what he believes is a game-changing lipstick. He wants the lipstick to be accessible to everyone, but the manufacturing costs are higher than he had anticipated. If Raoul wants to achieve his desired strategic position of value creation at an affordable cost, he will need to ______. Multiple choice question.

make strategic trade-offs

Studies show that CEOs spend the majority of their time Blank

meeting people face-to-face

After creating a vision as part of the strategic management process, what must a a firm establish next?

mission

Since about the year 2000, assets not captured in firms' accounting data have become ______ to a firm's competitive advantage.

much more important

What are cognitive biases?

obstacles in thinking that result in systematic errors in decision making and hinder rational thinking

Which of the following are considered off-balance sheet items?

pension obligations operating leases

Shortcomings of top-down strategic planning are tha

plans for the future can be wrong there is uncertainty about the future

Rodney is making decisions about his newly formed business. He wants to focus on producing the highest-quality product in the market so he can maximize the product's value to customers. This will cause his product to have higher costs than others already in the market, but Rodney believes customers will pay more for the higher-quality product. Rodney's choice to use a differentiation business-level strategy is determining his company's strategic ______.

position

When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a______ business model.

razor-razor blade

The executives of a computer software company developed an intended strategy to make the company more competitive. The company's ultimate Blank______ strategy contained elements not only of the intended strategy but also unplanned elements from a(n) Blank______ strategy.

realized; emergent

From the view of a shareholder, the measure of competitive advantage that matters most is return on

risk capital

A manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an economy of , reducing overall production costs by finding multiple uses for its components and facilities.

scope

The ______ determines whether to pursue a specific narrow part of the market or to go after the broader market

scope of competition

The owner of small hotel resort would like to advertise in major American newspapers and magazines as a part of a larger strategy, but lacks the money to do so. One day, the hotelier meets the owner of a group of newspapers and magazines, who offers advertising space in exchange for a stay at the hotel. This is an example of which of the following?

serendipity

describe(s) random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives

serendipity

Which of the following are among the standard dimensions for measuring competitive advantage?

shareholder value accounting profitability economic value

The legal owners of publicly traded companies are called

shareholders

When a trade occurs, the consumer and producer both capture

some of the economic value

According to ______ theory, a firm exists within an interconnected network of constituencies, both within and outside the organization, and the firm is responsible to these constituencies.

stakeholder

In the learning curve, the ______ the learning curve, the more learning has taken place.

steeper

What are autonomous actions?

strategic initiatives that lower-level employees undertake of their own volition, often in response to unanticipated events

Choosing a business-level strategy helps to define a firm's ______ in a given product market.

strategic position

Which of the following are three approaches that strategic leaders rely on to formulate and implement strategy?

strategy as planned emergence scenario planning strategic planning

Which of the following is the conceptual framework developed by Jim Collins that describes the progression of leadership through distinct, sequential levels?

the Level-5 leadership pyramid

Different value drivers contribute to competitive advantage only if

the increase in perceived value exceeds the corresponding cost increase

The horizontal connection of the points of each value on the strategy canvas is known as ______.

the value curve

According to upper-echelons theory, the way strategic leaders of a firm interpret a situation is influenced by which of the following?

the values and experiences of the firm's leaders

Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in? Multiple choice question.

top-down strategic planning

To determine a product's producer surplus, which of the following must be compared?

total cost of production price charged

True or false: Smart strategic leaders devise ways to make sure that their employees feel invested in the firm's vision

true

A firm's strategic position is determined by the relationship of which two variables?

value creation and cost

The______ is simply a graphic representation of a firm's relative performance across different competitive factors in an industry.

value curve

Which of the following determine a firm's competitive advantage?

value position relative to competitors cost position relative to competitors

In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's

vision

In the strategic management process, which basic principle must be defined first?

vision

Strategy formulation concerns the choice of strategy in terms of Blank______ to compete

where and how