Capstone Exam 1.1

Industry effects describing the underlying ____ structure of the industry

economic

When your company acquires additional loans, other things equal, your credit rating increases immediately

false

When your company issues more shares of stock, other things equal, your ROE increases

false

When your company makes more profit, other things equal, your EPS decreases

false

Which of the following does Twitter need to implement to increase its competitive advantage?

increase its user base

The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?

it has a competitive advantage in the industry

Which of the following factors most effectively contributed to the success of Threadless in comparison to other companies with T-shirt designs, including American Eagle, Old Navy, and Urban Outfitters?

its reliance on crowdsourcing

Which of the following statements should ideally reflect a firm's strategy for competitive advantage?

Our aim is to create superior customer value while controlling cost

Underperformance relative to other firms in the same industry or the industry average results in a(n) ____ for a firm?

competitive disadvantage

Silver Screen Cinemas inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario?

Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little

Which of the following statements about strategy is not true?

Operational effectiveness and competitive benchmarking should be treated as strategy

Rapida Inc. and Click Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately -5 percent. The current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most likely have

competitive parity with each other

Which of the following scenarios illustrates a firm that has sustainable competitive advantage?

Wang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years

A firm always has a competitive advantage when its return on invested capital is

above the industry average

If SA Pharmaceuticals obtains an 18% return on invested capital, which of the following will help determine if it has competitive advantage over the other pharmaceuticals?

comparing the return to the return on invested capital obtained by other firms in the same industry

A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n)

competitive advantage

The Scoop, Ltd. is a magazine publishing company whose average return on invested capital approximately 5 percent. Because magazine publishing is a declining industry, the industry average has been negative (-5 percent) for the last few years. In this scenario, The Scoop Ltd. has a

competitive advantage

A firm is said to gain a competitive advantage when it can

provide products similar to its competitors, but at lower prices

Jake's Taxi Service is a new entrant to the taxi industry. It has achieved success by staking out a unique position in the industry. How did Jake's Taxi Service most likely achieve this position?

providing long-distance cab fares at a lower rate than competitors; servicing the same area as competitors

Pink Couture Inc. and Pink Blush Inc. are two companies in the apparel industry. While Pink Couture Inc. focuses on providing unique product features and superior customer service, Pink Blush Inc. focuses on low prices and minimal customer service. Both companies have been able to gain a competitive advantage. This is most likely because the companies have

pursued distinct strategic positions

While working to prioritize and fulfill their responsibilities, members of a firm's management team should

represent the interests of the shareholders

If a company wants to gain a competitive advantage in a high competitive industry, it should ideally

stake out a unique position within the industry

___________________ involves ensuring proper strategic controls and organizational designs

strategic implementation

_________ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

strategic management

FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-motor businesses) at the same price. Also, the company's cost are substantially low due to minimal investment in operation and administration. In this scenario, FindFor Inc. has most likely been able to provide superior value and cost control through

strategic positioning

_______ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

strategy

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?

strategy analysis

__________________ may be considered he "advance work" that must be done in order to effectively formulate and implement strategies.

strategy analysis

In __________, a firm frames a guiding policy to address the competitive challenge.

strategy formulation

Through ____________, a firm puts its guiding policy into practice by employing a set of coherent actions.

strategy implementation

Patterson Foods Inc. was the first company to start selling energy bars in country -- a product that gained popularity among diverse groups. Soon, other companies started to sell their own brands of energy bars, thereby giving Patterson Foods ample competition. In response, Patterson Foods decided to limit its variety of energy bars to only four.

sustainable competitive advantage

Which of the following forces tend to be more important in determining a firm's performance?

the actions of managers in all the firms in the industry

A company wants to determine how industry effects have affected its profitability. Which of the following elements should the company focus on?

the barriers to entry and exit within the industry

Which of the following is an implication of all firms in an industry pursuing a low-cost position through application of competitive bench-marking?

the firms would eventually have no resources to invest in product and process improvements

Which of the following statements accurately describes firm effects?

they attribute firm performance to the industry in which the firm competes

A strategic perspective in an organization should be emphasized

throughout the organization

When your company issues more shares of stock, other things equal, your EPS decreases

true

When your company purchase back your common stocks, other things equal, your ROE increases

true

When your company purchase back your common stocks, other things equal,your EPS increases

true

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

trying to be everything to everybody by combining different competitive strategies