GM105 Test 1 chap 1-5
Global Reach Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?
$200
By selling a television at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario?
$600
Which of the following firms most likely has the lowest bargaining power as a buyer?
A cell phone company that requires highly customized software for their phones
The video refers to strategic actions. Select the best definition of a strategic action with respect to SWOT.
A coherent set of goal oriented decisions that addresses the environment the firm competes within by utilizing firm resources and capabilities
The tenet behind the triple bottom line is that
A firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable energy.
The example of investment in Starbucks' Frappuccino in the text give interesting insights into the process of getting an emergent strategy approved by an existing firm. Which of the following characterize the individual skills needed for a passionate employee to get a new product or investment approved when it lies well outside the firm's core business?
A large amount of self confidence and perseverance
Whole Food's choice to develop strict standards and labeling for seafood can best be categorized as
A mission component
In the context of the VRIO framework, a resource is said to be valuable if it
Allows the firm to take advantage of an external opportunity
In a perfectly competitive industry structure
Any competitive advantage that one firm will be short lived
Mr. Albanese says there are two areas of competitive advantage from the Rio Tinto focus on water management. One is enabling easier permitting. What is the other and which dimension of triple bottom line does it build upon?
Attracting motivated employees and this is primarily social
Great Companies- from the book "Good to Great
Book writted by Jim Collins, analyzed 1000 companies Great companies sustained competitive advantage, stock returns 7x general market, consistent patterns of leadership (leadership pyramid)
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 _____ emerged as a consequence of the firm's resource allocation process.
Bottom up strategy
In keeping with its vision and values, Whole Foods could have
Bought their own shipping vessels and processing capacity
Level: Business Strategy. Question: How to compete?
Bruce Harreld- Senior VP
In the dynamic capabilities perspective, for an asset or a capability to be included in a firm's resource stock, it should be
Built through investments over time
How to compete? Cost leadership, differentation, or value innovation
Business strategy
Core competencies derive from the combination of resources and
Capabilities
Level: Functional Strategy. Question: How to implement?
Carol Kovac- Life Sciences Director
Strategic group mapping establishes that
Competitive rivalry is strongest between firms that are within the same strategic group
Rey estimated that a pair of NuFit jeans would be worth $60 for its brand and durability. However, at the NuFit store, the pair of jeans he wanted was available for $45. The difference of $15 in this scenario is referred to as the
Consumer Surplus
Resources fall broadly into two categories: tangible and intangible. Tangible resources have physical attributes and are visible. Intangible resources have no physical attributes and thus are invisible. Examples of intangible resources are a firm's culture, its knowledge, brand equity, and reputation. Which of the following is an example of an intangible resource?
Copyright
Design and manufacture of small, reliable, and powerful internal combustion engines
Core competencies
The board of directors of Best Digital 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?
Corporate strategy
Where to compete? Focus on industry, markets, and geography
Corporate strategy
In the past several decades, over 80 percent of the forests of Madagascar have been degraded creating a loss of biodiversity. What is Rio Tinto doing as they open new business in this region and with which element of the triple bottom line is it most closely aligned?
Creating a seed bank of unique varieties and it is ecological
Allow companies to adapt to changing environments Focus employees on problem solving for the customer
Customer oriented vision statements
In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?
Decreasing government interference in the target market
Which of the following statements is true of the Level-5 leadership pyramid?
Each level builds on the previous one in the pyramid
Mr. Albanese notes that his firm initiated corporate principles for water conservation more than ten years ago. Which one of the components of the triple bottom line does this best represent?
Ecological- due to concerns of water availability
The sum of consumer surplus and producer surplus for a good or service equals the
Economic value created
Mr. Albanese turns to spending hundreds of millions of dollars for water management systems. These systems are to address more intense rains. Which component of triple bottom line is he primarily addressing now?
Economic- as enabling the business to run
In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by
Eliminating an internal weakness to mitigate an external threat
Unplanned strategic initiative, bubbles up from bottom, influence firm's overall strategy
Emergent strategy
Though the microwaves manufactured by Emergo Inc. and Sensation Electronics Inc. sell at the same price of $600 per unit, the economic value created by Emergo Inc. is more than that of Sensation Electronics Inc. In the context of this scenario, which of the following statements is true?
Emergo has a relative cost advantage over Sensation Electronics Inc.
The metaphor of a black swan best applies to
Events considered highly unexpected and highly impactful
When managers envision different "what-if" future alternatives and develop strategic plans to address them, they are engaging in scenario planning. The process of planning scenarios can be considered a microcosm of the overarching framework of this textbook. Analysis is identifying a variety of future scenarios. Formulation is developing strategic plans to address many of those future scenarios. What is the final Implementation phase of scenario planning?
Executing a dominant strategic plan. Strategy is meaningless if not actionable.
As demonstrated in both the 3M example here and the Starbucks example in the textbook, senior managers have a vital role in the planned emergence process. Which of the following best describes that role?
Executive decide which projects to shut down and which to continue
Which of the following statements does the upper-echelons theory support?
Executives interpret situations through the lens of their unique perspectives, shaped by personal experiences & values
Widgets Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Widgets Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Widgets Inc. is a(n) _____ for the appliance manufacturing company.
External stakeholder
FL Systems Inc. and Oryxo Systems Inc. are two competing firms. FL Systems Inc. has $300,000 in tangible assets and $200,000 in intangible assets. Oryxo Systems Inc. has $150,000 in tangible assets and $347,000 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?
FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage.
Total costs include fixed and variable costs. ________________________ costs are independent of consumer demand, whereas __________________ costs change with the level of consumer demand.
Fixed; Variable
Qwik Process Inc. is a company that supplies microprocessors to Nuevono Inc., a computer hardware company. When Nuevono Inc. demands lower prices for the microprocessors, Qwik Process Inc. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from Qwik Process Inc., Nuevono Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, Qwik Process Inc., as a supplier, has exercised its bargaining power by threatening to
Forward Integrate
Implementing the strategy is often overlooked by senior managers especially in large organizations. What level of manager is often responsible for making sure the strategy gets implemented in alignment with the corporate goals?
Functional manager
How to implement our chosen business strategy?
Functional strategy
The video explains the military origins of the term strategy, but then goes on to explain how Michael Porter closed the gap between military and business thinking with his definition of business strategy. Select the option that best defines strategy in the context of business
Generals win wars by degrading the enemy's ability and willingness to fight. Businesses win market share by degrading a competitor's ability and willingness to compete.
Honda Motor Company used its competitive advantage in small engines for lawnmowers to ___________ in resources and capabilities to build automobiles.
Generate a feedback loop and invest
Genie Software 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 Genie Software Inc.?
Genie 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?
According to the text, superior performance within the strategic business unit (SBU) is sought by asking which major question?
How to compete?
In SWOT analysis it is important to clearly differentiate between "internal" and "external" issues. Select the response that most accurately defines "internal" and "external" issues.
If a firm no longer exists, but the issues remain, then the issues are external. However, if the issues also no longer exist, then they are internal.
Industry competitive forces are not permanent, changing as firms evolve to compete more effectively. So, why has the profitability of the soft drink industry declined?
Increased health concerns have led consumers to substitute healthier products
outcome of rational/structured top down plan)
Intended strategy
Rio Tinto has major operations in South America. In the example he gives about operating in a dry region of Chile, what is the relationship between conserving water and desalinizing seawater?
It creates a high price for water
Disadvantages of balanced scorecard approach:
It fails to provide much insight into how metrics that deviate from the set goals can be put back on track. It is a tool merely for strategy implementation, not strategy formulation. It provides only limited guidance about which metrics to use to measure competitive advantage.
Advantage of accounting data:
Its easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.
Non-market strategies employed by a firm may be used to exert some level of influence by the firm on the general environment. These may best fit in the political or legal factor categories of the PESTEL framework. Which of the following is an example of a non-market strategy?
Lobbying to extend electric car credits
How external factors impact the firm
Managers have little control (ma
In the financial year 2016, for every $100 in revenues, Microsoft earned $21.5 in profit, while Apple earned $20.6 in profit. This demonstrates that
Microsoft's return on revenue is higher than that of Apple's.
In the restaurant industry, a large number of restaurants cater to similar customer needs. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, organic ingredients, or different services like home delivery. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)
Monopolistically competitive structure
In the video, McDonald's introduction of all-day breakfast was said to be an "adjust" strategy as well as a "turnaround" strategy. How is this strategic action a "turnaround" strategy?
Offering all day breakfast was expected to stem McDonald's revenue decline
________costs capture the value of the _______ alternative use of the resources employed.
Opportunity; Best
Owners of coffee plantations in the country of Jabatina grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Jabatina best illustrates a(n)___ structure.
Perfectly competitive
In the case of Post-it Notes, the primary strategic process described came from which of the following?
Planned Emergence
Restrictions imposed by the government, such as export quotas on certain products, are a part of the _______ environment of the PESTEL framework.
Political
The importance of Porter's Five Forces varies by industry. According to the video, which element would lead to positive profitability for the air travel industry?
Power of suppliers and power of buyers
Constrain ability to adapt to changing environments Focus employees on improving existing products & services
Product oriented vision statements
Honda R & D as a separate company
R&D centers created worldwide Managerial Actions
intended and emergent strategy
Realized strategy
Red Hot Inc. and Maverick Cycles Inc. are two competing motorcycle companies. While Red Hot's Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Maverick Cycles is 54.2 percent. What do you infer from this financial data?
Red Hot Inc. is less efficient than Maverick Cycles Inc. in producing goods.
A consolidated industry turns into a fragmented industry when
Restrictive government policies are introduced to the industry
Level: Corporate Strategy. Question: Where to compete?
Sam Palmisano - CEO
Small engine innovation and engineering
Scale manufacturing Capabilities
The most "top down" of the three approaches to making strategy is strategic planning. Often, these plans will run in three- to five-year cycles. What happens once the plan has initially identified the strategic needs of the corporation?
Senior management allocates resources for the plan
Dr. Arthur Fry's idea about a method to hold the bookmark in his hymnal is best described as which of the following?
Serendipity
Which of the following is an example of a firm's capabilities?
Skills involved in training and maintaining a workforce
Powerful and reliable small engines
Sport boats, marine engines, ATVs, and power equipment Core products
A mission represents
Strategic actions a firm takes
Relies on data, plus: Personal experience Deep domain expertise Front line employee insights
Strategy as planned emergence
Top down and bottom up Bottom up strategic initiatives emerge Evaluated & coordinated by management
Strategy as planned emergence
Asks "what if" questions Envisions different scenarios Derive strategic responses
Strategy planning
New laws Demographic shifts Changing economic conditions Technological advances
Strategy planning
Obtain input from different levels and functions R&D, manufacturing, marketing, and sales
Strategy planning
Engineers
Strong R & D Culture Resources
What is strategic leadership?
Successful use of power and influence Directing activities of others Pursuing an organization's goals Enabling organizational competitive advantage
Which of the following groups will not be considered a company's internal stakeholder?
Suppliers
In the case discussing the electric car industry, which PESTEL factor is highlighted as the most important factor favoring a startup firm such as Tesla, Inc.?
Technological factors
Innovations in process efficiencies such as Six Sigma quality, and service innovations such as social media are primarily elements of which macro environmental force?
Technological factors
In the video, business strategy was identified as a decision to choose "a different set of activities to deliver a unique mix of value." Which of the automotive firms follows this proposition most closely?
Tesla
In the 'Art of War' Sun Tzu emphasized the fluid nature of competitive situations and the need for the strategist to recognize and incorporate that reality into their strategic planning. Which of the following has created the greatest uncertainty in the business environment across industries over the last 20 years?
The Internet
A vision represents:
The future the firm is trying to create
Values represent:
The guardrails to keep business from making bad decisions
What are strategic commitments?
They are actions that are costly, long term oriented, and difficult to reverse
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
Why are black swan events such as accounting scandals and the global financial crisis perceived as caused by cheap credit and subprime mortgages offered by financial institutions, bad for business?
They erode implicit trust between corporate world and society.
How do complements affect a primary product or service?
They increase the demand for a primary product
While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing, so it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to
Time compression diseconomies
Evaluating the data collected from environmental analysis, the corporate executives of F&S Pharma 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
The textbook discusses demographic trends as a component of sociocultural factors. Which of the following is specifically highlighted as a demographic trend that can be an opportunity for business growth in the coming years?
US hispanic population is younger with quick growing incomes
_________ denotes the dollar amount a consumer would attach to a good or service (that is, willingness to pay).
Value
Which of the following questions are managers likely to ask when beginning the strategic management process?
What do we ultimately hope to achieve? How can we achieve our goals? What are our values?
Developing smooth transaction between hosts and guests Presenting well designed website Fortuitous timing that led to growing demand
Which of the following helped Airbnb develop a successful business of peer to peer rental space?
Which of the following statements accurately brings out the distinction between a firm's resources and capabilities?
While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.
A diagnosis of competitive challenge
analysis
be profitable, the foundation upon which others rest
economic responsibilities
be ethical
ethical responsibilities
Guiding policy to address competitive challenge
formulation
Set of coherent actions to implement the firm's guiding policy
implementation
obey the law
legal responsibilities
be a good corporate citizen
philanthropic responsibilities
