MGMT 495 Final Nordin

Medetect Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Medetect?

Serial acquisitions

Which of the following firms is most prone to experiencing a diversification discount?

a company that pursues unrelated diversification

A firm's business strategy will lead to a competitive advantage if it allows the firm to

perform different activities than its rivals.

Researchers at Games First Inc. spent several months coming up with a fun game for toddlers that incorporates a new idea in preschool education. This scenario describes step _____ of the innovation process.

2

Neon Electronics Inc. sourced touch screens required for its tablet computers, cell phones, and televisions from a manufacturer in China. But the demand for such components was high globally, and the supplier could not meet the quality standards of Neon Electronics. Thus, Neon Electronics decided to set up its own unit to develop and manufacture the required touch screens. What does this scenario best illustrate?

Backward vertical integration

In a successful _____ strategy, the trade-offs between differentiation and low cost are reconciled.

Blue ocean

A _____ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

Business-level strategy

In emerging economies, the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity within the industry is high, and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost-leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD television industry currently in?

Shakeout stage

Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer

higher quality for lower costs for international routes.

Liability of Foreignness

Working in unfamiliar cultural and economic enviroment, can result in additional costs

Architectural innovation

A new product, with known components, used in a novel way

Why did W. L. Gore reorganize itself into a functional structure from a simple structure?

A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.

AccuroDisk Inc. manufactures external hard disks for $32 per unit, and the maximum price customers are willing to pay is $47 per unit. TD Storage Inc. is a competitor of AccuroDisk Inc. that produces external hard disks for $37 per unit, and customers are willing to pay a maximum price of $50 per unit. What does this imply?

AccuroDisk creates a greater economic value than TD storage

How is the early majority section of consumers different from the late majority section?

Although the early majority is confident in their ability to master a new technology, the late majority is not.

Value Curve

Horizontal connection points on the strategy canvas that helps to determine courses of action

Which of the following is a result of horizontal integration in terms of Porter's five forces model?

There is a reduction of excess capacity in the market.

Which of the following statements is true of strategic alliances?

They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?

They reduce a firm's exposure to loss of reputation

The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called

Value innovation

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

Vertical integration

_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs.

Vertical integration

Strategic Alliance

Voluntary arrangement between firms to share knowledge, resources, and capabilities

Alliance Management Capability

1. Partner selection, alliance formation 2. Alliance design and governance 3. Post-formation alliance mgmt

Which of the following best illustrates forward vertical integration?

A firm that manufactures and sells car engines to major automobile companies launches its own line of cars.

W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity?

An extremely formalized organizational structure

DigitalHealth Electronics Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which of the following types of innovations does this scenario best illustrate?

Architectural innovation

Companies that pursue related diversification are able to create a diversification premium because they

Are able to increase value due to economies of scope

Which of the following is an observable feature in the Globalization 3.0 stage?

Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

Blue ocean strategy

Combination of differentiation and cost leadership Uses value innovation to reconcile trade-offs

Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate?

Horizontal integration

Business level strategies

Differentiation (creating higher value than comp, offering unique products, keeps cost structure low, charges high prices) Cost Leadership (create similar value to competititors, delivered at a lower cost and price)

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?

Each stage of the industry life cycle is dominated by a different customer group

A cost-leader is protected from the threat of new entrants primarily due to its

Economies of scale

_____ is best described as decreases in cost per unit as output increases.

Economies of scale

Focused Differentiation/Cost Leadership

F Diff: Exquisite pens at several hundred dollars F CL: Disposible pens and lighters at a low cost)

Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.?

Greenfield operation

Industry life cycle

Introduction, growth, shakeout, maturity, decline

How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010?

It has access to convenience stores and a new distribution channel

Global Frontier Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Global Frontier wants to maintain some control in the foreign market. Which of the following would be the best entry mode for this firm?

Joint ventures

Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of

Location economies

Horizontal integration

Merging with competitors to lead to industry consolidation. Reduces competitive intensity, lowers costs, and increases differentiation

Which of the following is a feature of the Globalization 2.0 stage?

Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

Which of the following sources of differential appeal is least effective in helping a firm sustain its advantage?

Observable product features

Equity alliance

One partner takes partial ownership in the other

Which of the following statements is true of strategy in an organization?

Organizational structure must follow strategy in order for firms to achieve superior performance.

Non-equity alliance

Partnership based on contracts such as supply,distribution, or licensing agreements

RoboToys, Inc. is involved in the production of robotic toys. This firm produces the raw materials, including metals and oils for plastic; creates the integrated circuits, displays, and batteries; and assembles the toys. Which of the following stages of the industry value chain is RoboToys involved in?

Stages 1, 2, and 3

Joint Venture

Standalone organization created and jointly owned by 2 or more parent companies

When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in

Strategic trade-offs

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?

The CEO

How was Netflix able to outperform both Hulu and Amazon?

by focusing its resources on producing high-quality content for content streaming

A successfully implemented blue ocean strategy allows a firm to

charge a higher price than the cost-leader in the industry.

When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to

consider an outright acquisition.

As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?

disruptive innovation

What is a value gap?

economic value creation

Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because

it underestimates its liability of foreignness when entering the Zevar market.

Decisions relating to the range of products and services a firm will offer determine the firm's

level of diversification.

To initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy. These questions focus on

lowering cost and increasing perceived customer benefits.

When a firm diversifies into different product lines and geographies, a _____ structure is preferred.

multidivisional

Adidas acquired Reebok primarily to

overcome its competitive disadvantage against Nike.

Which of the following is an unintended side effect of a high degree of specialization in an organization?

reduced employee satisfaction due to repetition of tasks

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are

similar to those that need to be developed and superior to those of competitors in the targeted area.

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because

the U.S. population was growing slowly and becoming more health conscious.

It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because

the horizontal integration activity has the potential to reduce competitive intensity in an industry.

Value drivers contribute to a firm's competitive advantage only if

the increase in value creation exceeds the increase in costs.

The administrative and political distance between two trading countries reduces when

there is a well-functioning capital market in the host country.

Which of the following is not a reason why firms enter alliances?

to replace competitive advantage with competitive parity

When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement?

when extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge