exam 2 mgmt

A _____ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market. A. business-level strategy B. code of ethics C. mission statement D. functional-level strategy

A

A firm's strategic position reflects: A. Whether it is competing on differentiation or cost. B. Whether it is competing within a targeted strategic group or not. C. Whether is has a competitive advantage or not. D. Whether it has first-mover advantages or not.

A

A primary advantage of organizing economic activity within firms is the A. ability to coordinate highly complex tasks to allow for specialized division of labor. B. low administrative costs because of reduced bureaucracy. C. eradication of the principal-agent problem. D. high-powered incentive to work as salaried employees for an existing firm.

A

A(n) ______________ is the value lost due to choosing to use resources for one alternative over another. A. Opportunity cost B. Alternative loss C. Resource loss D. Opportunity loss

A

As the inventor of hypertension medication, OneSure Pharmaceuticals (OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiration of OSP's patents, regular users did not want to switch because they were concerned about possible side effects. Which of the following benefits does this scenario best illustrate? A. first-mover advantages B. social benefits C. network externalities D. fringe benefits

A

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing. A.industry B.functional department C. economy D.customer segment

A

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the A. return on risk capital. B. economic value created. C. consumer surplus. D. inventory turnover.

A

If a firm wants to have more ownership of the activities closer to product inputs or design, then it should: A. Backward vertically integrate. B. Forward vertically integrate. C. Forward horizontally integrate. D. Use a single-business diversification strategy.

A

Return on risk capital primarily includes A. stock price appreciation plus dividends received over a specific period. B. consumer surplus plus firm profit. C. account receivables plus account payables. D. economic value created by a firm plus reservation price.

A

Using the _____ approach, managers audit their company's fulfillment of its social and ecological obligations to stakeholders such as employees, customers, suppliers, and communities as conscientiously as they track its financial performance. A. triple-bottom-line B. economic value creation C. accounting profitability D. shareholder value creation

A

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization? A. Market volatility makes it difficult to assess firm performance through these measures, particularly in the short-term. B. These tools fail to indicate how the stock market views all available public information about a firm's expected future performance. C. These tools measure competitive advantage in absolute terms rather than relative terms. D. Only the book value of the share prices is taken into account when applying these measures, and not the market value.

A

Which of the following is more of a value driver than a cost driver? A. superior customer service B. economies of scale C. learning-curve effects D. experience-curve effects

A

_____ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it. A. Economic value created B. Break-even point C. Consumer surplus D. Cost of capital

A

Finding a firm's competencies and thus accurately positioning it in an industry does not belong to the realm of corporate strategy.

F

When measuring competitive advantage under the economic value creation approach, it can be easy to determine what the consumer's maximum willingness to pay will be.

F

Competitive advantage and firm strategy are best assessed using a variety of approaches.

T

Intangibles such as a firm's reputation for innovation and quality increase a firm's stock market valuation.

T

When pursing a differentiation strategy, the focus of competition is to add unique features in order to create a level of value creation that competitors cannot easily imitate.

T

A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few, if any, linkages among its businesses. A. related-constrained strategy B. unrelated diversification strategy C. differentiation strategy D. dominant-business strategy

B

According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy? A. competition switching from non-price attributes to pricing B. innovation that allows competitors to emerge with more economical replacements C. new entrants with small production scale D. suppliers requesting a 2% price increase across the industry

B

After the Internet was introduced, its value increased exponentially as the number of users increased. This is the positive effect of a(n): A. Adopter force. B. Network effect. C. User effect. D. Internet force.

B

BM Goods Inc. is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate? A. process diversification B. product diversification C. geographic diversification D.market diversification

B

By selling a laptop at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the A. opportunity cost. B. economic value created. C. reservation price. D. consumer surplus.

B

Coca-Cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. However, with the success of Gatorade, Coca-Cola developed competencies in the development and marketing of its own sports drink, Powerade. Which of the following is true of Coca-Cola? A. It is leveraging existing core competencies to improve current market position. B. It is building new core competencies to protect and extend its current market position. C. It is redeploying and recombining existing core competencies to compete in markets of the future. D. It is targeting the chasm between the early adopter and early majority market segment.

B

Economic value can be viewed as the amount of the total value created that is captured and distributed between ________ and ________. A. Stakeholder; shareholder B. Consumer; producer C. Employees; consumer D. Producer; supplier

B

If a firm wants to have more ownership of activities closer to the end product or customer, it should: A. Backward vertically integrate. B. Forward vertically integrate. C. Forward horizontally integrate. D. Use a single-business diversification strategy.

B

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply? A. The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be nonprice based. B. The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation. C. The electric car industry will move to the maturity stage, whereas the industry for MP3 players will enter the growth stage next. D. The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.

B

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based? A. The number and size of competitors remain constant throughout the industry life cycle. B. Each stage of the industry life cycle is dominated by a different customer group. C. Industries tend to follow an unpredictable industry life cycle. D. The supply and demand sides of the market remain constant irrespective of the phase of the industry life cycle.

B

The key objective for firms during the growth phase is to A. invest as many resources as possible in product innovations. B. stake out a strong strategic position not easily imitated by rivals. C. pursue a harvest strategy. D. reduce their network effects.

B

The most efficient way to overcome the principal-agent problem in a firm is to A.increase the level of vertical integration within the firm. B. provide stock options to managers. C. downsize the existing workforce. D. organize economic activities within the firm.

B

The type of customers vital to a firm introducing a new innovation are the _________, who are willing to pay higher prices and like to tinker with new products. A. Late adopters B. Early adopters C. Early laggards D. Late majority

B

The typical four-step innovation process begins with A. the modification and recombination of an existing product or process. B. the presentation of an idea as findings derived from basic research. C. the commercialization of an invention by entrepreneurs. D. a competitor's attempt to imitate an innovation.

B

When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it A. loses its competitive advantage. B. gains market share from other firms. C. lowers the economic value created. D. results in diseconomies of scale.

B

When the focus of competition is on differentiation, a firm tends to use all of these levers EXCEPT: A. New product launches. B. Cost input factors. C. Marketing and promotion. D. Unique product features.

B

Which of the following best illustrates a process innovation as opposed to product innovation? A. a consumer electronics company developing a new generation of tablet computers B. an automobile company using computer-aided design in its production C. a consumer electronics company launching 3-D televisions D. an automobile company commercializing electric cars

B

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage? A. The barriers to entry increase during this stage. B. The weaker firms are forced out of the industry in this stage. C. Rivalry among competitors decreases in this stage. D. The firms in the industry yield the highest profits during this phase.

B

Economic value creation is best expressed as A. producer surplus minus consumer surplus. B. consumer surplus minus cost of production. C. consumer surplus plus firm profit. D. producer surplus plus firm profit.

C

The use of new materials with a new knowledge base to target new markets is a: A. Groundbreaking innovation. B. Trail innovation. C. Radical innovation. D. Modern innovation.

C

Wear Crush Inc. is an apparel company known for its affordable clothes that follows a cost-leadership strategy. In this scenario, Wear Crush should ideally compare its strategic position with A. a company that sells wristwatches at affordable prices. B. a luxury apparel company that sells designer clothes. C. an apparel company popular among price-conscious customers. D. an online company that sells customized pet clothing.

C

When it would cost the firm less to pursue an activity in-house than obtaining that activity from a supplier in the external market, then the firm should: A. Enter into a joint venture. B. Execute a short-term contract. C. Vertically integrate. D. Strategically outsource.

C

Which of the following acquisitions would be considered the LEAST related? A. A baking company purchasing a sugar company B. A chain of hotels acquiring a golf course C. A toy manufacturer acquiring a coffee company D. A steelmaker acquiring a kitchen utensils company

C

Which of the following is NOT one of the three critical factors used to evaluate economic value creation and competitive advantage? A. Value B. Price C. Stock price D. Cost

C

Which of the following is not a limitation of the economic value creation framework? A. The framework falls short when managers are called upon to operationalize competitive advantage. B. The framework is not as effective as accounting profitability or shareholder value creation when the need for "hard numbers" arises. C. The framework fails to provide the foundation that will help firms decide between cost-leadership or differentiation strategies. D. The framework cannot be effectively applied for assessing corporate-level performance of diversified conglomerates.

C

Which of the following situations will have greater effects from economies of scale than from learning effects? A. when conducting surgeries B. when practicing corporate law C. when mass manufacturing pens D. when making business decisions

C

Why is it easier for new entrants to involve in radical innovations when compared to incumbent firms? A.Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. B. New entrants are embedded in an innovation ecosystem, while incumbent firms are not. C. Unlike incumbent firms, new entrants do not have formal organizational structures and processes. D.Incumbent firms do not have the advantages of network effects that new entrants have.

C

_____ is best described as the commercialization of any new product, process, or the modification and recombination of existing ones. A. Direct imitation B. Mass customization C. Innovation D. Headhunting

C

Evia Cycles Inc. incurs $400 to manufacture a bicycle, and the maximum price customers are willing to pay is $550 per unit. Archer Cycles Inc., its competitor, incurs $450 to manufacture a similar bicycle, and customers are willing to pay a maximum price of $620 for it. What does this indicate? A. Both Evia Cycles and Archer Cycles have achieved differentiation parity. B. Evia Cycles has a competitive advantage over Archer Cycles. C. Archer Cycles has created a greater economic value than Evia Cycles. D. Both Evia Cycles and Archer Cycles have achieved cost parity.

C Explanation: 550-400=150(evia) 620-450=170(archer)

Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. This is an example of A.monopsony. B. geographic diversification. C. crowdsourcing. D.taper integration.

D

Equity alliances are forms of strategic alliances that do all of the following EXCEPT: A. Signal greater commitment to the partnership. B. Allow one partner to take partial ownership of the other partner's company. C. Encourage specialized investments for future performance. D. Temporarily allow one partner to use the other's trademark and business processes.

D

Hyundai's reputation for quality is an asset that: A. Will not be reflected in Hyundai's accounting information. B. Will be reflected in Hyundai's market valuation. C. Will be important to Hyundai's competitive advantage. D. All of these.

D

Innovation used as a sustained competitive weapon must be: A. Radical and low cost. B. Architectural and high cost. C. Short-term and efficient. D. Continuous and commercialized.

D

When Internet service providers offer free routers for subscriptions to their wireless Internet packs, the perceived value of the service offering increases. In this case, the value driver would be A. economies of scale. B. learning-curve effects. C. experience-curve effects. D. availability of complements.

D

Which of the following firms is least integrated? A.a firm that enters a joint venture with another company to develop a new technology B. a firm that owns production subsidiaries across the globe C. a firm that makes equity investments in its supplier's company D.a firm that buys all the required raw materials from multiple external vendors

D