MGMT 481: EXAM 1

Which of the following are examples of sociocultural factors? (Check all that apply.) Multiple select question. A)an extended period of low interest rates B)the widespread adoption of smart phones C)an increased demand by consumers for gluten-free products D)the growth of the Hispanic population

B)the widespread adoption of smart phones C)an increased demand by consumers for gluten-free products D)the growth of the Hispanic population

competitive industry structure

Elements and features common to all industries, including the number and size of competitors, the firms' degree of pricing power, the type of product or service offered, and the height of entry barriers.

Which of the following are true of a firm's book value? (Check all that apply.)

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.

The Bright Bulb light bulb company produces a line of LED bulbs that customers consider very similar to competitors' LED bulbs. Which of the following conditions must be true for Bright Bulb to have a competitive advantage? The bulbs must be sold by online retailers only. The bulbs must be on the market for a longer period of time than competitors' bulbs. The bulbs must have a lower cost than competitors' bulbs. The bulbs must be more expensive than competitors' offerings

The bulbs must have a lower cost than competitors' bulbs.

To determine a product's producer surplus, what must be compared?

The cost of production and the price charged

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 of ______. Multiple choice question.

business model innovation

The external forces called technological factors ______.

capture the application of knowledge to create new process and products

triple bottom line

combination of economic, social, and ecological concerns- or profit, people, and planet- that can lead to substantial strategy

realized strategy

combination of intended and emergent strategy

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

comparative analysis of firms

If a firm underperforms its rivals or the industry average, it has a

competitive disadvantage

The intensity of rivalry among existing competitors is determined largely by the following factors:

competitive industry structure, industry growth, strategic commitments, exit barriers

Should two or more firms perform at the same level, they have a

competitive parity

A _________________ is a product, service, or competency that adds value to the original product offering when the two are used in tandem.

complement

oligopolistic industry

consolidated with a few large firms, differentiated products, high barriers to entry, and some degree of pricing power

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

ecological,social,economic

To determine the value of a good in the eyes of consumers, a firm can ______.

examine consumers' purchasing habits for their revealed preferences

Studies show that CEOs spend the majority of their time

meeting people face-to-face

Many firms of all sizes actively compete in the computer hardware industry, and there are no firms with a large market share. Product offerings tend to be similar but are differentiated in ways that enable some firms to raise or impact pricing. The computer hardware industry is an example of ______.

monopolistic competition

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

operating leases pension obligations

Effective guiding policy is supported by and stays consistent through the use of

strategic commitements

There is a(n) ______ relationship between competitive intensity and the power of the five forces.

strong

The expected competitive intensity is stronger when the other four forces are ______, and weaker when the other four forces are ______.

stronger; weaker

strategy

is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors

Stakeholder Strategy

is an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage

perfectly competitive industry

is fragmented and has many small firms, a commodity product, ease of entry, and little or no ability for each individual firm to raise its prices

A stakeholder has a ___________ when it is perceived to be legally valid or otherwise appropriate.

legitimate claim

A stakeholder has a _____________________ when it is perceived to be legally valid or otherwise appropriate.

legitimate claim

System 2 is ________, analytical, and deliberate. Because this type of thinking consumes ______ of our brains energy, this system of decision making tends to be slower.

logical, more

Which of the following are characteristics of a monopolistically competitive industry? (Check all that apply.)

obstacles to entry a differentiated product the ability to raise prices for differentiated products

True or False. Competitive advantage is never relative, always absolute.

False. It is always relative never absolute.

In the external analysis phase of the AFI strategy framework, managers should ask,

"How do external forces affect our strategy and competitive advantage?"

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

"What if?"

A successful strategy details a set of actions that managers take to gain and sustain competitive advantage. Effectively managing the strategy process is the result of

1)Analysis 2)Formulation 3)Implementation

What are the five steps in the Stakeholder Impact Analysis?

1)Who are our stakeholders? 2)What are out stakeholders' interest and claims? 3)What opportunities and threats do our stakeholders present? 4) What economic, legal, ethical, an philanthropic responsibilities do we have to out stakeholders? 5) What should we do to effectively address stockholder concerns

Stakeholder impact analysis is a decision tool that helps a company do which of the following? (Check all that apply.)

Achieve a competitive advantage Act as a good corporate citizen

What is the result of the airline industry having powerful buyers?

Airlines' profit margins are reduced.

What is the first step in the AFI strategy framework?

Analysis

Which of the following statements is likely to be true about a fragmented industry? Multiple choice question. A)It has high profitability. B)It consists of small firms. C)It consists of only a few firms. D)It has a very low competitive structure.

B)It consists of small firms.

Which statements about stock market valuations are true? Multiple select question. A)Stock market valuation is the estimated increase in a stock's value during the next fiscal year. B)Viewed over the long term, stock market valuation is a useful metric for assessing competitive advantage. C)Investors generally take a poor view of stock market valuation because it includes all shares in its calculation. D)Stock market valuation is equal to the number of outstanding shares multiplied by the share price.

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

____________________ capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

Demographic trends

economic value created

Economic value created is the difference between a buyer's willingness to pay for a product or service and the firm's total cost to produce it or (V-C). Values for both V and C are not publicly available.

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

False

True or false: Sociocultural factors tend to be fixed.

False

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

False

Cognitive biases

obstacles in thinking that lead to systematic errors in our decision making and interfere with our rational thinking

Which of the following statements is correct? A.Strategic initiatives are always the result of top-down planning. B.Strategic initiatives generally lead to financial success. C.Strategic initiatives can be the result of top-down planning or a bottom-up process. D.Strategic initiatives are always the result of a bottom-up process.

Strategic initiatives can be the result of top-down planning or a bottom-up process.

The expectations that society has toward business, in contrast to what society requires, result in which of the following elements of the pyramid of corporate social responsibility? (Check all that apply.)

philanthropic responsibilities ethical responsibilities

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? Multiple choice question. groupthink value vision power

power

Complements are used to increase demand for the __________________, thereby enhancing the product potential for the industry and the firm.

primary product

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

product-oriented

Strategic positioning allows managers to

provide customers value while controlling costs

Stakeholder Impact Analysis

provides a decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders

The economic recession that began in 2008 in the United States was the result of unwise investment in ______.

real estate

The subjectively determined maximum amount a customer would pay for a product is its ______ price.

reservation

sunk cost

resources already spent

From the view of a shareholder, the measure of competitive advantage that matters most is return on ______. Multiple choice question.

risk capital

Which of the following are three approaches that strategic leaders rely on to formulate and implement strategy? Multiple select question. scenario planning scenario emergence strategic planning strategy as planned emergence

scenario planning strategic planning strategy as planned emergence

The legal owners of publicly traded companies are called ______.

shareholders

Price discounts, frequent new product releases with minor modifications, and intense promotional campaigns are all tactics indicative of an industry with ______ growth.

slow or negative

A(n) ____________group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.

strategic

A firm that is able to outperform its competitors or the industry average over a prolonged period has a

sustainable competitive advantage

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

Strategy Implementation primarily involves which of the following?

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

Intended strategy

the outcome of a rational and structured top-down strategic plan

Both strategy formulation and strategy implementation are aspects of ______.

the strategy process

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

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

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

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

What is the overall purpose of strategic management?

to gain competitive advantage

An intended strategy is the outcome of a plan that has which of the following characteristics?

top-down structured rational

If parts of a firm's intended strategy fall by the wayside, it is referred to as

unrealized strategy.

A stakeholder has an _________ when it is requires a company's immediate attention and response.

urgent claim

In general, a firm generates ______ when its cost of capital is lower than its ROIC.

value

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

vision

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

vision

Which of the following are aims of stakeholder strategy? (Select all that apply.) Multiple select question. To reduce the number of stakeholders of a firm To gain and sustain competitive advantage To manage various stakeholders effectively To persuade internal stakeholders to cede control to external stakeholders

To gain and sustain competitive advantage To manage various stakeholders effectively

What is the typical result of cognitive limitations?

We choose the option that is "good enough" and satisfies immediate needs.

Which of the following best describes an illusion of control?

a belief that a strategic plan will address any scenario

Illusion of Control

a cognitive bias that highlights people's tendency to overestimate their ability to control events.

Burger Bomb has been outperforming other burger restaurants for a decade. This indicates that Burger Bomb has which of the following? Multiple choice question. strategic leadership a statistical advantage a competitive advantage a superior product

a competitive advantage

Behavioral economies

a field of study that blends research findings from psychology with economics to provide valuable insights showing when and why individuals do not act like rational decision makers, as assumed in neoclassic economics

How can a firm gain a competitive advantage?

a firm needs to provide a good or service consumers value more highly than those of its competitors or similar goods and services to that of the competitor at a lower cost

Corporate Social Responsibility

a framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its

accounting profitability

To which types of organizations can we apply the principles of strategic management?

all types of organizations

strategic management

an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage

product surplus

another term for profit, the difference between price charged(P) and the cost to produce(C), or (P-C)

strategic initiative

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

Emergent strategy

any unplanned strategic initiative bubbling up from the bottom of the organization

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

autonomous actions

When a firm goes bankrupt, shareholders ______.

cannot recover their risk capital

Sociocultural factors

capture a society's cultures, norms, and values

Technological factors

capture the application of knowledge to create new processes and products

philanthropic responsibilities

corporate citizenship

A firm's actual ______ minus depreciation is called the book value.

costs of assets

System 1 is the brain's ___________ mode. We like and use System 1 most of the time because it is fast, efficient, and automatic, therefore requiring little if any ________________ energy.

default, attentional

consumer surplus

difference between the value a customer attaches to a product or service(V) and what he or she paid for it(P), or (V-P)

ethical responsibilities

do what is right, just, and fair

The business enterprise is an _____________ institution.

economic

Which of the following elements of the pyramid of corporate social responsibility are required by society?

economic responsibilities legal responsibilities

Internet privacy, genetic engineering, and stem-cell research are examples of areas in which a firm's ______ responsibilities exceed its legal responsibilities.

ethical

Starbucks's commitment to fair trade and responsible growing practices indicates that the firm takes its ______ responsibilities seriously.

ethical

Stakeholder impact analysis is a _____-step process that allows managers to better understand and address stakeholders' needs.

five

The _______________allows strategic leaders to analyze all players using a wider industry lens, which in turn enables a deeper understanding of an industry's profit potential.

five forces model

In the _____ step of the stakeholder impact analysis, firms identify their various social responsibilities to stakeholders.

fourth

economic responsibilities

gain and sustain competitive advantage

For a product that has a large economic value, a firm can choose to charge the same price as competitors in order to ______.

gain market share

Monopolistically competitive industry

has many firms, a differentiated product, some obstacles to entry, and the ability to raise prices for a relatively unique product while retaining customers

Strategy ______ concerns the organization, coordination, and integration of how work gets done.

implementation

A key feature of an oligopoly is that the competing firms are

interdependent

legal responsibilities

laws and regulations are society's codified ethics; define minimum acceptable standard

Top-down strategy is derived from

military strategy

A ___________outlines what an organization does, while a vision outlines what the organization wants to do.

mission

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.

Which of the following helped Airbnb develop a successful business in the peer-to-peer rental space? (Select all that apply.) Multiple select question. A)Presenting a well-designed website B)Ensuring a smooth transaction between hosts and guests C)Following the traditional rental model offered by hotels D)Fortuitous timing that led to growing demand

A)Presenting a well-designed website B)Ensuring a smooth transaction between hosts and guests D)Fortuitous timing that led to growing demand

What conclusions can be reached about the airline industry using the five forces framework? Multiple select question. A)The supporting players, such as airports and aircraft suppliers, are quite profitable. B)The overall profitability of the airline industry is exceptionally low. C)The mega-airlines must constantly struggle to achieve consistent profitability. D)Customers derive only very limited benefits from the existence of the airline industry.

A)The supporting players, such as airports and aircraft suppliers, are quite profitable. C)The mega-airlines must constantly struggle to achieve consistent profitability.

Which of the following does the five forces model to help firms do? Multiple select question. A)determine the profit potential of different industries B)understand the strengths and weaknesses of a firm's resources C)organize co-opetition efforts with other firms D)gain and sustain a competitive advantage

A)determine the profit potential of different industries D)gain and sustain a competitive advantage

Which of the following are the four main competitive industry structures? (Check all that apply.) Multiple select question. A)monopolistic competition B)oligopoly C)monopolistic oligopoly D)perfect competition E)perfect monopoly F)monopoly

A)monopolistic competition B)oligopoly D)perfect competition F)monopoly

Which of the following contribute to consumer buying power? A)real time, accurate price comparisons B)moderately high barriers to entry C)high levels of product differentiation D)low switching costs

A)real time, accurate price comparisons D)low switching costs

Which of the following are among the most commonly used metrics for comparing the performance of different companies? (Check all that apply.) A)return on assets B)return on equity C)return on opportunity D)return on strategic intent E)return on revenue

A)return on assets B)return on equity E)return on revenue

Our decision making is governed by two different systems; System ___ and System ___

1,2

Which statement about strategies is true?

A statement of desire on its own often leads to goal conflict.

To assess competitive advantage we assess, we compare firm performance to a __________- that is either the performance of other firms in the same industry or a industry average.

benchmark

A firm that achieves superior performance relative to other competitors in the same industry or the industry average has a?

competitive advantage

A stakeholder has __________ over a company when it can get the company to do something that it would not otherwise do.

power

Which of the following are characteristics of a perfectly competitive industry?

Individual firms have little or no ability to raise prices. The industry is fragmented. Firms in the industry sell a commodity product.

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.

strategic commitments

Investments that signal an incumbent's long-term commitment to a market, or a segment of that market. such as sizeable investments or changes to an organization's incentive and reward system - big changes that cannot be easily reversed.

A company is a ___________ to your company if customers value your product or service offering more when they are able to combine it with the other company's product or service.

complementor

What are the four components of corporate social responsibility?

economic responsibilities, legal responsibilities, ethical responsibilities, and philanthropic responsibilities

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

effective leader

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

emergent

A core values statement provides information to employees regarding the company's ______.

ethics and morals

In the ______ step of a stakeholder impact analysis, firms identify those stakeholders that currently have, or potentially can have, a material effect on the company.

first

Among the various types of responsibilities a business firm has, which are specifically considered to be economic responsibilities? (Check all that apply.) Multiple select question. repaying debts to creditors giving investors a return on invested capital doing what society deems just and fair obeying consumer protection laws

giving investors a return on invested capital, repaying debts to creditors

Confirmation bias

in which individuals tend to search for and interpret information in a way that supports their prior beliefs. Regardless of facts and data presented, individuals will stick with their prior hypothesis.

The stakeholders of a firm are

individuals or groups that can affect and are affected by the actions of the firm

Name the economic responsibilities of a business institution.

obtain an adequate return for investors for their risk capital, repay debts to creditors, safe products and services at appropriate prices and quality for consumers, pay suppliers in full and on time, government expects taxes to be paid and that natural resources are managed( air and water) under a decent stewardship

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

realized; emergent

Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. This is known as Burger Bomb's

strategy

What is strategic leadership?

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

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