MGT 449
If TC(Q)=1000Q2+100Q+10, what is the formula for AC(Q)? a) 2000Q+100 b) 2000Q2+100Q c) 1000Q2+100Q+10 d) 1000Q+100+10/Q e) 100Q+10+1/Q
1000Q+100+10/Q
Which of the following statements is true of corporate strategy? A) A corporate strategy must be able to create synergies across business units that are quite different. B) The objective of corporate-level strategy is to ensure that the sum of the values of individual business units is greater than the overall corporate value. C) Formulating a corporate strategy involves general managers answering questions relating to how to compete in order to achieve superior performance. D) Deciding whether to adopt a differentiation or a cost-leadership strategy is part of formulating the corporate strategy.
A corporate strategy must be able to create synergies across business units that are quite different
Orange Synergy Inc. is a company that manufactures a variety of products that run on solar power. The company wants to ensure that solar technology replaces all forms of exhaustible energy sources in the near future. Which of the following statements will make an accurate vision for Orange Synergy? A) All nations around the globe should have access to a sustainable energy source. B) We provide energy-efficient sources and services by investing in research and innovation. C) We make products that run on solar energy. D) The company aims to make working fun and pleasurable for its employees.
All nations around the globe should have access to a sustainable energy source
How can a firm change its industry structure from monopolistically competitive or oligopolistic to a near monopoly? A) By implementing frequent price-cuts B) By developing proprietary technology C) By decreasing its pricing power D) By reducing the entry barriers in its industry
By developing proprietary technology
Which of the following factors best contributes to the U.S. automotive industry being characterized by high entry barriers? A) New entrants in the automotive industry expect that incumbents will not or cannot retaliate. B) Few industrial products are as easy to build as cars powered by internal combustion engines. C) Car manufacturers require large-scale production in order to be cost-competitive. D) New auto companies create electric cars powered by simpler motors and gearboxes.
Car manufacturers require large-scale production in order to be cost-competitive
If SA Pharmaceuticals obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies? A) Assessing the value based on the shareholders' expectations of return on their capital B) Comparing the return to the return on invested capital obtained by other firms in the industry C) Evaluating the liquidity ratios for other pharmaceutical companies D) Comparing the value to the history of the firm's return of investment over a number of years
Comparing the return to the return on invested capital obtained by other firms in the industry
Which of the following strategies will be most detrimental to firms that are close rivals operating in an oligopolistic industry structure? A) Competing against each other through lifestyle advertisements B) Competing against each other through new-product introductions C) Competing against each other through price-cutting D) Competing against each other through product differentiation
Competing against each other through price-cutting
Which of the following is an implication of low interest rates? A) Consumer demand will increase. B) Economic growth rate will fall. C) Firms will invest less in future growth. D) Cost of capital for firms will be high.
Consumer demand will increase
The CEO of True West Products Inc. (TWC) is a company that sells a wide range of products. It has decided to enter the markets of emerging nations like China andBrazil. This means that the cars, consumer electronics, and services such as hotels included under the TWC banner would be made available in these nations. Which of the following strategies does this scenario best illustrate? A) Divisional strategy B) Corporate strategy C) Business strategy D) Functional strategy
Corporate strategy
Which of the following statements is true of customer-oriented visions? A) Customer-oriented visions identify how a customer need will be met. B) Customer-oriented visions reduce a company's ability to adapt to a changing environment. C) Customer-oriented vision statements are not the same as listening to your customer. D) Customer-oriented visions define a business in terms of goods or services provided.
Customer-oriented vision statements are not the same as listening to your customer.
Which of the following is a feature of a monopolistically competitive industry? A) A single firm B) High entry barriers C) Differentiated products D) No pricing power
Differentiated products
True Cinemas Inc. and Digi Future Inc. are two companies that own and run movie theaters in malls and other commercial areas. While True Cinemas Inc. pursues a cost-leadership strategy, Digi Future Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario? A) Digi Future and True Cinemas will not be direct competitors to each other and their customer segments will overlap very little. B) True Cinemas and Digi Future will use a similar approach to create value for customers by attempting to offer everything to everybody. C) True Cinemas will charge a premium price for its customers while Digi Future will implement everyday low pricing. D) Digi Future will keep its customer service at an acceptable level while True Cinemas will provide superior customer service.
Digi Future and True Cinemas will not be direct competitors to each other and their customer segments will overlap very little
Pioneer Pharma Inc. and GH Medicines Corp. are two competing firms in the pharmaceutical industry. While Pioneer Pharma Inc.'s vision is "to be a preeminent drug manufacturer in the industry," GH Medicines Corp.'s vision is "to make good health a reality for everyone around the world." Which of the following is an implication of these different visions? A) GH Medicines will be more flexible than Pioneer Pharma when adapting to changing environments. B) Pioneer Pharma's vision is more long-term and futuristic than GH Medicines' vision. C) GH Medicines' vision is more product-oriented than the vision of Pioneer Pharma. D) Pioneer Pharma is more likely to have a positive relationship between its vision and firm performance than GH Medicines.
GH Medicines will be more flexible than Pioneer Pharma when adapting to changing environments
Which of the following is a feature of an oligopolistic industry structure? A) Standardized or undifferentiated products B) Limited pricing power C) High entry barriers D) Many small sellers
High entry barriers
Keeping in mind Apple's competitive advantage, which of the following products was introduced by Apple in 2007? A) iPhone B) iTunes C) iPod D) iPad
IPhone
In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry? A) If the capital requirements in the industry are high B) If the industry has recently become deregulated C) If the company is able to put up a credible threat of retaliation D) If the customer switching costs in the industry are high
If the industry has recently become deregulated
The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year. This has ensured that all firms in the country pay their employees at least $8,000 per year, which has brought about a higher standard of living for the people of Filvia. Which of the following factors in a firm's general environment does this mandate best indicate? A) Legal factors B) Sociocultural factors C) Technological factors D) Ecological factors
Legal factors
Which of the following is a drawback of Porter's five forces model? A) The model describes competition narrowly as a firm's closest competitors. B) Managers cannot determine the changing speed of an industry or the rate of innovation. C) The model fails to consider that threat of substitutes can come from outside a given industry. D) It fails to provide a basis for deriving implications for a firm's strategic position within an industry.
Managers cannot determine the changing speed of an industry or the rate of innovation
Balmia Ammunition Inc., a firm controlled and managed by the government of Balmia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate? A) Monopoly B) Oligopoly C) Perfect competition D) Monopolistic competition
Monopoly
In Galvania Republic, the federal government owns and manages all the nuclear power plants. This is because the business would not be profitable if there was more than one supplier in the nuclear power industry. Which of the following industry competitive structures does the scenario best illustrate? A) Perfect competition B) Oligopoly C) Natural monopoly D) Monopolistic competition
Natural Monopoly
3T Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all 3T users are free. When a person switches to a 3T network, his or her entire network of family and friends is likely to switch to the same network to avail the benefit of free calls and messages. In addition, an existing user who gets a new user to register with 3T Inc. is given a free wireless connection. This has helped to keep competition away from 3T. In this scenario, which of the following factors is acting as an entry barrier for 3T Inc.? A) Network effects B) Economies of scale C) High capital requirement D) High fixed costs
Network effects
Which of the following forces tends to be more important in determining a firm's performance? A) The entry barriers in the industry B) The underlying economic structure C) The number and size of other firms in the industry D) The actions of managers within the firm
The actions of managers within the firm
Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? A) Oligopoly B) Perfect competition C) Monopolistic competition D) Monopoly
Oligopoly
The telecommunication industry of United Canava is primarily dominated by three large firms, AD Telecom Inc., Mystic Telecom Corp., and Total Talk Inc. Instead of cutting prices competitively, these firms have resorted to non-price competition through branding and product differentiation. Which of the following industry competitive structures are these companies most likely in? A) Monopolistic competition B) Oligopoly C) Monopoly D) Perfect competition
Oligopoly
Which of the following statements about strategy is NOT true? A) Grandiose statements of desire, on their own, are not strategy. B) Strategy is as much about deciding what not to do, as it is about deciding what to do. C) Operational effectiveness and competitive benchmarking should be treated as strategy. D) Strategy is about creating superior value, while containing the cost to create it
Operational effectiveness and competitive benchmarking should be treated as strategy.
The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment. A) VRIO framework B) PESTEL framework C) BCG matrix D) SWOT analysis
PESTEL framework
In which of the following industry competitive structures do selling firms have the lowest pricing power? A) Perfect competition B) Monopoly C) Oligopoly D) Monopolistic competition
Perfect competition
When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate? A) Perfect competition B) Oligopoly C) Monopoly D) Monopolistic competition
Perfect competition
Which of the following is NOT an example of a software company's external stakeholder? A) Alliance partners B) Creditors C) Project managers D) Customers
Project managers
How are the two approaches namely strategic planning and scenario planning different from strategy-as-planned-emergence approach? A) Unlike strategic planning and scenario planning, strategy as a planned emergence model does not begin with a strategic plan. B) Unlike strategic planning and scenario planning, strategy as a planned emergence model is a rational top-down planning approach. C) Strategy as a planned emergence model was introduced before strategic planning and scenario planning. D) Relative to strategic planning and scenario planning, strategy as a planned emergence model is a less formal and less stylized approach to the development of strategy.
Relative to strategic planning and scenario planning, strategy as a planned emergence model is a less formal and less stylized approach to the development of strategy
In the smartphone industry, Google is a complementor to Samsung. Which of the following statements best explains why this is true? A) Google accounts for a large quantity of Samsung's overall sales. B) Samsung apps are tailored exclusively for Google smartphones and tablets. C) Samsung's smartphones increase in value when they are pre-installed with Google's Android system. D) Google's smartphones increase in value because they face strong buying power from Samsung.
Samsung's smartphones increase in value when they are pre-installed with Google's Android system
In Strategy Highlight 2.2, what type of strategy did Diana, the Starbucks store manager in southern California, use to develop the new iced beverage for her store? A) She used scenario planning. B) She created a dominant strategy plan. C) She used an emergent strategy. D) She used a rational planning approach to strategy planning
She used an emergent strategy
While industry forces have been favorable for a long time in the U.S. automotive industry, recent dynamics have lowered the profit potential of competing in this industry and thus reduced its attractiveness. The continued success of Tesla Motors in the industry will depend on other firm and industry factors. Which of the following represents one such factor that directly affects Tesla Motors? A) There is a lack of balance in demand and supply: demand far exceeds capacity within the industry. B) Since suppliers of its key sources are few, the bargaining power of suppliers is high. C) Since individual buyers do not have many choices, their bargaining power is low. D) There is a noticeable absence of complementary products and services for the industry.
Since suppliers of its key sources are few, the bargaining power of suppliers is high
________ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. A) Credo B) Competency management C) Strategy D) Behavior modification
Strategy
Keeping in mind the five forces in the airline industry, which of the following best explains the situation in the industry? A) Entry barriers in the industry are high resulting in hardly any new airlines popping up. B) Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry. C) Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry. D) Suppliers have weak bargaining power because they offer products that are not differentiated.
Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry
In which of the following situations is the power of suppliers high in an industry? A) Suppliers offer products that are undifferentiated. B) Suppliers can credibly threaten to backward integrate into the industry. C) Suppliers' industry is more concentrated than the industry it sells to. D) Suppliers depend heavily on the industry for their revenues.
Suppliers' industry is more concentrated than the industry it sells to
In a large company, who is most responsible for devising the corporate strategy? A) The lower-level employees in the company B) The head of the production department in the company C) The human resource manager in the company D) The CEO of the company
The CEO of the company
Which of the following do the sociocultural forces in a firm's external environment best represent? A) The family size of the firm's target market B) The laws protecting small enterprises in a nation C) The rate of employee attrition within the firm D) The interest rates prevalent in an economy
The family size of the firm's target market
Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services? A) The firms can differentiate their product offerings. B) The competition in the industry is insignificant. C) The number of buyers in the industry is small. D) The entry barriers in the industry are extremely high.
The firms can differentiate their product offerings
Which of the following best describes marginal cost? a) The per-unit-of-output cost for a product b) The incremental cost of producing one more unit of output c) A cost invariant to the firm's output d) The sum of all costs associate with the production of a product e) The cost of fixed items such as general and administrative expenses
The incremental cost of producing one more unit of output
Which of the following is most likely an implication of new firms entering an industry? A) The incumbent firms will spend more to satisfy their existing customers. B) The rivalry among existing competitors will reduce. C) The industry's overall profit potential and sales will increase. D) The bargaining power of buyers will reduce.
The incumbent firms will spend more to satisfy their existing customers
Which of the following methods of developing a strategy best illustrates scenario planning? A) The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future. B) The CEO of DHP Inc., a large conglomerate, has decided to enter the Asian market based on the competitor's success in the same market. C) A sales personnel of GL Foods Inc. suggested that the company should introduce a baked version of its potato wafers to cater to the needs of the increasing health-conscious population. D) Based on the previous year's profits, the CEO of Kelvon Inc. decided to adopt an expansion strategy in its home market.
The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future
Which of the following represents an economic factor in a firm's external general environment? A) The bargaining power of the firm's suppliers and buyers B) The government regulations and laws in the country in which the firm exists C) The values and norms prevalent in the society in which the firm operates D) The stage of the business cycle that the country is in
The stage of the business cycle that the country is in
Which of the following statements is NOT true about the five forces in Porter's competitive analysis model? A) The relative strengths of the five forces that shape competition are context-dependent. B) Competition in the model is described as the tug-of-war between the five forces to capture as much as possible of the economic value created in an industry. C) An analysis of the five forces provides the basis for how a firm should position itself to gain and sustain a competitive advantage. D) The stronger the five forces in an industry, the greater the industry's profit potential.
The stronger the five forces in an industry, the greater the industry's profit potential
When fashion magazines face competition from fashion blogs on the web, which of the following forces in Michael Porter's five forces model primarily gets stronger? A) The availability of complements B) The threat of substitutes C) The emergence of entry barriers D) The bargaining power of suppliers
The threat of substitutes
Which of the following statements accurately describes firm effects? A) They attribute firm performance to the actions managers take within a chosen industry. B) They refer to the external circumstances surrounding all the firms in an industry. C) They attribute firm performance to the industry in which the firm competes. D) They refer to the value-creation potential of a large, diversified enterprise.
They attribute firm performance to the actions managers take within a chosen industry.
Cuisine Pro Inc. is a company that manufactures consumer electronics like refrigerators, washing machines, and dishwashers. Which of the following best illustrates a product-oriented vision for Cuisine Pro? A) To be the pioneering manufacturer of home and kitchen appliances B) To allow everyone to have the luxury of domestic technology C) To help people save time and energy spent on household chores D) To make people's life simple and easy
To be the pioneering manufacturer of home and kitchen appliances
Which of the following scenarios illustrates a firm that has a sustainable competitive advantage? A) SM Inc. almost doubled its sales to 8500 units this year compared to its previous year's sales of 5000 units, though the industry average is 10,000 units. B) Newon Inc. generated a revenue of $300,000 this financial year, which is close to the industrial revenue average of $320,000. C) TrueLink Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years. D) Max Electrova Inc. was able to outperform its competitors with its new production system, in terms of revenue, for a brief period of four months.
TrueLink Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years
For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance? A) Trying to be everything to everybody by combining different competitive strategies B) Choosing a distinct but different strategic position in the industry C) Working toward increasing the difference between value creation and cost D) Focusing on creating value for customers rather than destroying rivals
Trying to be everything to everybody by combining different competitive strategies
If a firm is producing as efficiently as it knows how, then how will the total cost function slope? a) Upward b) Downward c) No Slope d) Downward until an output threshold value, then upward e) Upward until an output threshold value, then downward
Upward
True Help is a non-profit organization that works toward rehabilitating the homeless. The Credo of the organization is "help us help you." For an organization like TrueHelp, which of the following statements would make an appropriate mission? A) One day, everyone in this nation will have a home to protect themselves. B) We help the homeless gain and sustain financial independence by providing employment opportunities. C) Help us help you find a home. D) Our mission is to turn this not-for-profit organization into a for-profit organization so that the stakeholders are benefited.
We help the homeless gain and sustain financial independence by providing employment opportunities
Which of the following features about a buyer indicates that the buyer has high bargaining power? A) When the buyer cannot credibly threaten to backwardly integrate into the industry. B) When the buyer operates in an industry where products are undifferentiated. C) When the buyer faces high switching costs. D) When the buyer cannot purchase specific products from other sellers.
When the buyer operates in an industry where products are undifferentiated
Beans Inc. operates in a perfectly competitive agricultural industry. Classica Apparel Inc., in contrast, operates in a monopolistically competitive industry. Keeping this information in mind, which of the following statements is true? A) While Beans Inc. will communicate the degree of product differentiation through advertising, Classica Apparel Inc. will need no advertising. B) Beans Inc. will face competition from many sellers, whereas Classica Apparel Inc. will be the only seller in the market. C) While Classica Apparel Inc. will have the power to set the prices for its products, Beans Inc. will have little or no ability to do so. D) Beans Inc. will have many buyers for its products, whereas Classica Apparel Inc. will have very few buyers for its products.
While Classica Apparel Inc. will have the power to set the prices for its products, Beans Inc. will have little or no ability to do so
Economies of scale are cost advantages that accrue for firms with: A) larger output. B) low employee turnover. C) high capital risks. D) high fixed costs.
larger output
To be effective, firms need to: A) isolate top managers from the organizational values. B) back up their visions with strategic commitments that are costly and difficult to reverse. C) pursue visions that are exclusively financial and not aspirational. D) increase their strategic flexibility by developing product-oriented vision statements.
back up their visions with strategic commitments that are costly and difficult to reverse
Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a supermarket chain. It demands that All Needs create more shelf space in its stores for Soapsuds' products. However, All Needs Inc. refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash." In this scenario, All Needs Inc. has exercised its bargaining power as a buyer through ________. A) crowdsourcing B) product differentiation C) backward integration D) forward integration
backward integration
Scenario planning typically begins with managers: A) building a portfolio of future strategic options. B) executing a dominant strategic plan. C) developing different strategic plans to address possible future scenarios. D) brainstorming to identify multiple plausible futures.
brainstorming to identify multiple plausible futures
T & R Autos Inc. is a large conglomerate that operates in 12 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity. Based on this guideline received from the top management team, the product leader of the home appliances division has decided to adopt a cost leadership strategy in all his 12 units. Thus, the decision made by the product leader best illustrates a A) functional strategy B) corporate strategy C) business strategy D) grand strategy
business strategy
The regional head for First Electronics Inc. in New Dalvia has decided to sell the company's products directly through company-owned stores because the distribution system in the market is primitive. In six other markets, however, the company will continue to operate through a franchise system. Thus, this decision made by the regional head at New Dalvia will be considered as a A) functional strategy B) business strategy C) tactical strategy D) corporate strategy
business strategy
In an industry, the threat of entry is high when: A) expected returns are high. B) capital requirements are low. C) technological know-how is industry specific. D) switching costs are high.
capital requirements are low
In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the A) chief executive officer B) functional managers C) external stakeholders D) general manager
chief executive officer
Samsung and Google cooperate as complementors to compete against Apple's strong position in the mobile device industry, while at the same time Samsung and Google are increasingly becoming competitive with one another. This scenario best illustrates the process of: A) monopolization B) co-opetition C) perfect competition D) conglomeration
co-opetition
________ is best described as cooperation by competitors to achieve a strategic objective. A) Liquidation B) Amalgamation C) Conglomeration D) Co-opetition
co-opetition
A firm that achieves superior performance relative to other firms in the same industry or the industry average has a(n) ________. A) equity leverage B) power position C) competitive advantage D) balanced scorecard
competitive advantage
Underperformance relative to other firms in the same industry or the industry average results in a(n) ________ for a firm. A) competitive disadvantage B) sustainable competitive advantage C) increased power distance D) diseconomies of scope
competitive disadvantage
Exis Inc. and Stelma 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, Exis Inc. and Stelma Inc. most likely have: A) economies of scope instead of economies of scale. B) competitive advantage over other firms in their industry. C) strategic alliance with each other. D) competitive parity with each other
competitive parity with each other
A company is best described as a ________ to an existing company if customers value the existing company's product or service offering more when they are able to combine it with the other company's product or service. A) complementor B) shareholder C) competitor D) strategic equivalent
complementor
Carrvour Inc. is a company that manufactures steel, cement, cars, and consumer electronics under a single brand. The top management at Carrvour has decided to enter the banking and insurance industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate? A) Divisional strategy B) Business strategy C) Corporate strategy D) Functional strategy
corporate strategy
Due to political instability in the country of United Mapa, the strategic leaders at the headquarters of FT Supplies Inc. have decided to divest the company's business from the foreign market in United Mapa. This decision would be applicable to all the business units of FT Supplies Inc. operating in United Mapa. Thus, this is a: A) divisional strategy B) corporate strategy C) business strategy D) functional strategy
corporate strategy
Demand for traditional fast-food providers such as McDonald's, Burger King, and Wendy's has been on a decline in recent years. Consumers have become more health conscious and demand has shifted to alternative restaurants like Subway, Chick-fil-A, and Chipotle. Attempts by McDonald's and Wendy's to steal customers from one another include frequent discounting tactics such as dollar menus. Such competitive actions are indicative of ________. A) profitability increases B) perfect competition C) cut-throat competition D) natural monopolies
cut-throat competition
The first step in the strategic management process is to: A) develop functional and business level strategies. B) put the guiding policies of a firm into practice. C) define a firm's vision, mission, and values. D) understand the strategies of the competitors
define a firm's vision, mission, and values
When applying the five forces model, the first step should ideally be: A) assessing the overall industry structure. B) drawing a strategic group map. C) identify the underlying drivers of each force. D) defining the relevant industry
defining the relevant industry
In a firm's external environment, ________ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class. A) ecological trends B) economic trends C) political trends D) demographic trends
demographic trends
Industry effects describe the underlying ________ structure of the industry. A) economic B) ethnographic C) psychographic D) demographic
economic
In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because: A) entering the aircraft manufacturing industry requires huge capital investments. B) there is expected to be a huge return on investment within this industry. C) entering the aircraft manufacturing industry means violating government policies. D) there is no credible threat of retaliation from the incumbents.
entering the aircraft manufacturing industry requires huge capital investments
Top-down strategic planning works best when the: A) events in the future are highly unpredictable. B) lower-level employees in an organization are highly empowered. C) past cannot be used to predict the future. D) environment does not change much.
environment does not change much
Pure Food Inc., a multinational company, relies on its media partner Radio Ex to regularly advertise its offers, sales, and new products. Radio Ex is invested in this relationship because it generates most of its revenue from advertising Pure Food's products. In this scenario, Radio Ex is Pure Food Inc.'s ________. A) stockholder B) internal stakeholder C) external stakeholder D) workforce
external stakeholder
In the ________ developed by Michael Porter, competition is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes. A) VRIO framework B) five forces model C) value chain analysis D) PESTEL framework
five forces model
Stakeholder strategy is an integrative approach to managing a diverse set of stakeholders effectively in order to ________. A) single-mindedly focus on the stockholders alone B) minimize the difference between value creation and cost C) gain and sustain competitive advantage D) minimize the joint value created
gain and sustain competitive advantage
As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to: A) where to compete. B) how to enter target markets. C) how to implement business strategy. D) when to compete.
how to implement business strategy.
Teddiez Inc. is a company that manufactures and sells stuffed toys. It sources its materials from another country to keep costs low. A sales personnel in one of its retail stores noticed that there was increasing concern regarding the potential toxicity of the materials in the dolls. In response, she found an economical, organic, and non-toxic cloth filling that the company could use. When her manager learned about this, he presented the prospect and got it approved from the top management team. This is an example of the: A) reverse engineering process. B) top-down strategic planning approach. C) planned emergence approach. D) scenario planning process.
planned emergence approach
During periods of high industry growth: A) rivals are focused on taking market share away from one another. B) firms indulge in intense promotional campaigns. C) new product releases with minor modifications become common. D) price competition among firms frequently decreases
price competition among firms frequently decreases
Competitive rivalry based solely on ________ is destructive to firms as it transfers most of the value created in the industry to the customers. A) price-cutting B) promotional campaigns C) new product releases D) product differentiation
price-cutting
The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be wellprepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing as the approach to the development of strategy. A) top-down strategic planning B) reverse engineering C) scenario planning D) pattern recognition
scenario planning
Top-down strategic planning as an approach to the strategic management process will be most effective when the: A) environment is constantly changing. B) probability of black swan events is high. C) top management wants to decentralize decision making. D) size of the firm is large.
size of the firm is large
Derek, a retired CEO, invests capital in a start-up company that creates mobile applications. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Derek is the start-up company's ________. A) headhunter B) stakeholder C) employee D) category captain
stakeholder
A traditional top-down strategic planning process typically begins with: A) functional managers formulating functional strategies for their respective departments. B) strategic leaders adjusting a company's vision and mission based on environmental analysis. C) employees who have close contact with customers taking autonomous actions. D) employees at the operational level identifying problems within an organization.
strategic leaders adjusting a company's vision and mission based on environmental analysis
A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so A) incumbency B) threat of entry C) strategic position D) attrition rate
strategic position
In ________, a firm frames a guiding policy to address the competitive challenge. A) strategy implementation B) strategy control C) strategy formulation D) strategy analysis
strategy formulation
Lower-level employees focus mainly on when a firm is using top-down or scenario planning as an approach to the strategic management process. A) strategy analysis B) strategy initiation C) strategy formulation D) strategy implementation
strategy implementation
Through ________, a firm puts its guiding policy into practice by employing a set of coherent actions. A) strategy formulation B) strategy analysis C) strategy control D) strategy implementation
strategy implementation
The relative bargaining power of suppliers is high when: A) suppliers depend heavily on the industry for a large portion of their revenues. B) suppliers provide products that are differentiated. C) incumbent firms can credibly threaten to backward integrate into the industry. D) incumbent firms face low supplier switching costs.
suppliers provide products that are differentiated
Cadia Foods Inc. was the first company to start selling energy drinks in its country—a product that gained popularity among diverse groups. Soon, other companies started to sell their own brands of energy drinks, thereby giving Cadia Foods ample competition. In response, Cadia Foods decided to limit its variety of energy drinks to only two. However, it ensured that these two flavors were free of calories and low in cost. With this innovation, Cadia Foods Inc. consistently outperformed its competitors for ten years. In this scenario, Cadia Foods Inc. has maintained a ________ through its innovative strategy. A) fiduciary responsibility B) balanced scorecard C) consistent power position D) sustainable competitive advantage
sustainable competitive advantage
First Ledger Inc., an auditing company, replaced its existing accounting software with new accounting software from another supplier. Since the new software has different features and abilities, First Ledger Inc. has had to spend $10,000 on training its employees to use it. In this scenario, $10,000 represents First Ledger Inc.'s ________. A) octroi charge B) opportunity cost C) switching cost D) excise duty
switching cost
A firm's strategic position is likely to be strong when: A) the gap between the value the firm's product generates and the cost to produce it is large. B) all the five forces in Porter's model are strong. C) the entry barriers within the industry it operates in are low and the exit barriers are high. D) its suppliers and vendors can easily forward integrate and buyers can backward integrate.
the gap between the value the firm's product generates and the cost to produce it is large
The basic law of demand says that all other things being the same: a) the lower the price of the product, the less of it consumers will purchase b) the higher the price of the product, the less of it consumers will purchase c) the lower the price of the product, the more of it consumers will purchase d) the higher the price of the product, the more of it consumers will purchase e) the greater the number of units of a product sold in the past, the more of it consumers will purchase that product in the future
the lower the price of the product, the more of it consumers will purchase
Visionary companies are able to out perform their competitors because: A) their visions are exclusively financial. B) they provide more aspirational visions. C) they isolate internal stakeholders in defining their visions. D) their vision statements are more product-oriented.
they provide more aspirational visions
The telecom industry in the country of Andalus is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the telecom industry, the: A) entry barriers are most likely non-existent. B) threat of new entrants is most likely low. C) threat of substitutes is most likely high. D) bargaining power of buyers is most likely low.
threat of new entrants is most likely low
The primary objective of Porter's five forces model is to: A) break down a firm's value chain activities into primary and support. B) replace a firm's competitive advantage with competitive parity. C) reduce the gap between the value of a firm's product and its cost of production. D) understand the profit potential of different industries.
understand the profit potential of different industries
As a part of strategy formulation, corporate strategy concerns questions relating to: A) where to compete. B) how to implement the business strategy. C) why we should compete. D) how to compete.
where to compete