MGT 8803 SUPPLY CHAIN EXAM

Which of the following are useful in internal analysis to identify organizational strengths and weaknesses. Indicate all answers that are correct. - Ansoff Matrix - VRIO Analysis - Value Chain Analysis - SCP Model - Ratio Analysis - BCG Growth-Share Matrix

- VRIO Analysis - Value Chain Analysis - Ratio Analysis

Match the framework to the characteristic or purpose that best describes it: Considers market and/or product options to develop business growth ideas.

Ansoff Matrix

Match the framework to the characteristic or purpose that best describes it: When a firm purchases its own supplier

Backward integration

Using ____ in business is a way of comparing best industry practices against the organizations' processes to identify performance gaps and achieve a competitive advantage. - SWOT - VRIO analysis - benchmarking - the AFI framework - SCP Model - Porter 5 Forces Model

Benchmarking

Consider both Statements: - Statement 1: In the structure- conduct-performance (SCP) model industries with many competitors (fragmented) tend to have lower profits than industries with fewer competitors (concentrated). - Statement 2: An oligopoly is an industry where a relatively few competitors control the majority of the industry market share.

Both statements are true

Consider both statements regarding combination strategies: - Statement 1: Combination strategies are often difficult because they are inherently contradictory - Statement 2: The goals of a combination strategy is to provide unique value in an efficient manner

Both statements are true

Consider both statements: - Statement 1: Competitive rivalry is strongest between firms that are within the same strategic group. - Statement 2: Firms in the same strategic group follow the same generic model: cost leadership, differentiation, or focus-cost leadership, or focus-differentiation

Both statements are true

Consider both statements: - Statement 1: The more substitutes a product has and the greater the propensity for a buyer to substitute, the more elastic its demand curve will be. - Statement 2: A complement tends to increase the demand for an industry's product

Both statments are true

Match the Industry Characteristics to the best Porter 5 Forces Model Conclusion: High capital requirements strong brand loyalty; high exonemes of scale; differentiated products; strong brand loyalty; "civilized" (non-price related) competitive tactics.

Competitive rivalry

Match the Industry Characteristics to the best Porter 5 Forces Model Conclusion: Monopolistic competition: multiple strategic groups some that compete on cost leadership, some that complete based on differentiation; strong brand loyalty reinforced by significant marketing expenses; psychological and monetary buyer switching costs; and low supplier bargaining power.

Competitive rivalry

These strategies address which markets the organization will be in and how the capital will be allocated among the firm's strategic business units. - Corporate - Qualitative - Functional - Stability - Tactical - Business Unit

Corporate

George is the SVP of Strategy and Innovative Solutions for Georgia Lumber Company, a family owned business that offers the "finest of materials in Pine and Hardwood lumber". The firm is divided into two SBUs (Strategic Business Units). One SBU, North Georgia Mills, sells directly at wholesale prices to regional Building and Construction firms as well as to Home Improvement stores like Home Depot and Lowes. The other SBU, North Georgia Products, sells directly to the public at three retail locations located in North and Central Georgia. Lumber sold at these locations is specifically milled for barns and other out buildings one might find on a farm or a ranch. Although family owned, the business (Georgia Lumber Company) employs over 300 employees and in its most recent year, generated about $65 million in net revenues. The Georgia Lumber Company, does not own its own forest or timber production facilities and sources all of its wood from National Timber Inc. located in Cartersville, Georgia. The Georgia Lumber Company also does not have its own eCommerce site. All products, wholesale and retail, or sold through physical distribution channels. The SVP knows from market research and industry analysis that Georgia Lumber's cost is at the industry average for similar firms. The firm prices its products higher than industry average since the firm's customers value its North Georgia roots, the consistent quality of the firm's products, and the firm's reputation for customer service. The firm's "folksy" radio commercials are a big hit and entertain its rural customer base. George has been asked by Otis Thomsan, CEO and Chairman of the Georgia Lumber Company to develop a growth strategy for the firm. Mr. Thomsan has specifically set a goal of achieving 50% growth in net revenues over the next three years and become a $100 million firm by FY2025. This growth would be significantly higher than the overall market growth rate which averages about 5% per year. Based on this scenario answer the next 5 questions (including this one). Based on our class discussion of Michael Porter's generic strategies; what strategy is the North Georgia Products SBU currently pursuing? - Differentiation focus - Differentiation broad - Cost leadership focus - Cost leadership broad

Differentiation Focus

Using Ansoff's Matrix match a tactic to a Business Level growth strategy. Each net correct answer counts 1/2 point each. Some answer(s) may be used more than once. - Entering into a business alliance with a complementary firm to expand into new geographies

Diversification ?

True/False: A diversification strategy and a differentiation strategy are essentially the same.

False

True/False: All PESTEL forces except technological are outside management's ability to influence. So, at best, for these forces, management can anticipate (predict) then determine if an opportunity or threat exists.

False

True/False: the major source of planning uncertainty stems from the firm's internal environment.

False

Match the framework to the characteristic or purpose that best describes it: When a firm purchases its own distributor

Forward integration

Match the framework to the characteristic or purpose that best describes it: A measure of an industry's fragmentation

HHI Index

Which ONE of the following strategies has the benefit of reducing competitive intensity by increasing industry concentration? - Related diversification - Unrelated diversification - Forward vertical integration - Backward vertical integration - Horizontal integration - New product development

Horizontal integration

Using Ansoff's Matrix match a tactic to a Business Level growth strategy. Each net correct answer counts 1/2 point each. Some answer(s) may be used more than once. - Lowering prices below the competition

Market Penetration

Using Ansoff's Matrix match a tactic to a Business Level growth strategy. Each net correct answer counts 1/2 point each. Some answer(s) may be used more than once. - Combining complementary products together and selling as a bundle

Market penetration

Consider both statements. - Statement 1: Competitive advantage is always judged relative to other competitors in the same industry or judged relative to industry average. - Statement 2: Regardless of cost, a differentiation strategy will always result in a competitive advantage if the firm can charge a premium price for its products.

Only statement 1 is True

Consider both statements: - Statement 1: Tesla's growth strategy is far more focused on horizontal integration instead of vertical integration. - Statement 2: Tesla's efforts to have in-house capabilities to make the batteries used in their EVs would be best characterized as organic growth (rather than inorganic growth)

Only statement 2 is True

Which statement best describes how Orange, a PC maker, delivers value? Note: consider our discussion on Business Models when answering this question. - Orange's core competencies are its software development team and its connections to microchip manufacturers in China and India. It is able to use its rich capabilities of software and data, and partner with low-cost manufacturers to compete against its competitors. - Orange has great finances and strong backing by its parent company. It has low expenses due to its outsourcing and hiring part time contractors. Most costs are variable, not fixed. Orange generates revenue using the "retail" model. - Orange partners with firms like Amazon and Egghead to sell its products rather than using their own in-house capabilities. - Orange developers commit substantial resources to identifying target market customer needs and designs its products to meet those needs at a relatively low cost. Orange leverages on-line sales rather than physical retail stores and is less concerned with establishing long-term relationships than it is with economic customer acquisition.

Orange developers commit substantial resources to identifying target market customer needs and designs its products to meet those needs at a relatively low cost. Orange leverages on-line sales rather than physical retail stores and is less concerned with establishing long-term relationships than it is with economic customer acquisition.

Match the framework to the characteristic or purpose that best describes it: Focused on macro-factors that impact entire industries

PESTEL

Match the framework to the characteristic or purpose that best describes it: Derived from the SCP model this framework was developed to understand why industries can differ significantly in terms of profit potential.

Porter 5 Forces Model

Using Ansoff's Matrix match a tactic to a Business Level growth strategy. Each net correct answer counts 1/2 point each. Some answer(s) may be used more than once. - Extending a product line by adding a new version to an existing product line

Product Development

Match the framework to the characteristic or purpose that best describes it: Useful in formulating strategy and derived from both Internal and External analysis

SWOT

Match the framework to the characteristic or purpose that best describes it: The typically non-product related costs that a business or consumer incurs as a result of changing suppliers.

Switching costs

Match the Industry Characteristics to the best Porter 5 Forces Model Conclusion: Many small competitors (rivals); many substitute products; high supplier bargaining power; little investment required to start a new business or any other barrier to entry; limited ways to differentiate a product; unsophisticated buyer with some brand loyalty and moderate switching costs; and a low industry growth rate

Threat of substitutes

Which Statement below is true? - Cost leadership is the most common generic strategy for firms focused on niche markets - A firm is said to have a sustainable competitive advantage if it can consistently earn a profit every kayear for a prolonged period of time - To obtain a competitive advantage a firm must either create more value for customers while keeping its costs comparable to competitors, or it must provide value equivalent to competitors but at a lower cost. - A firm that is charging the lowest price relative to its competitors will always be pursuing a cost leadership strategy - Bogus question: All of the above statements are true statements

To obtain a competitive advantage a firm must either create more value for customers while keeping its costs comparable to competitors, or it must provide value equivalent to competitors but at a lower cost.

A Blue Ocean Strategy is a business level strategy that successfully combines differentiation and cost leadership activities using value innovation to reconcile the inherent trade-offs.

True

True/False: A criticism of the Traditional Top-Down approach to strategic planning is that management assesses the external environment in terms of fit to the firm's current capabilities rather than thinking more "outside the box" when formulating future strategies.

True

True/False: A firm in an industry with high infrastructure costs and a high minimum efficient scale (high economies of scale) will often resort to pricing and reduced margins to keep production volumes up as industry growth begins to slow.

True

True/False: Core competencies are unique strengths embedded within the firm that allow a firm to differentiate itself by creating higher value for its customers

True

True/False: In the I/O View (also called the Positioning View) creating and sustaining a competitive advantage comes directly from analyzing the competitive environment. The firm's positioning and industry characteristics determine potential profitability, and that organizational performance will be the primary determined by these industry forces.

True

True/False: In the porter 5 forces model, the stronger the force, the greater the downward pressure on the industry average profits.

True

True/False: The popularity of the Trader Joe's brand among Trader Joe's customers has resulted in a lower threat of substitutes and has reduced competitive rivalry between Trader Joe's and its competitors.

True

True/False: a business model is the end result of decisions and tradeoffs made by management in formulating prior years strategy.

True

Which of the following strategies has the greatest risk of encountering high influence costs? - Product Diversification - Unrelated Diversification - Related Diversification - Geographic Diversification - Concentration - Backward Vertical Integration

Unrelated diversification

Which term best matches the situation: When a corporation enters a new business in a different industry from that in which it currently operates and does not expect to achieve any value chain synergies through the combination. - Unrelated diversification - horizontal integration - concentration - vertical integration - corporate integration

Unrelated diversification

Match the framework to the characteristic or purpose that best describes it: Organizes the firm's activities as either Direct or Support

Value Chain Analysis

Match the framework to the characteristic or purpose that best describes it: Uses the steps: 1) Eliminate 2) Reduce 3) Raise 4) Create to rethink industry business models

Value Innovation Framework

The development of a Business Level (SBU) strategy and the resulting strategy itself is mostly concerned with all of the following except: - monitoring the external environment - identifying opportunities and threats - identifying strengths and weaknesses - developing distinct capabilities and resources - aligning with corporate level strategy - determining how common services are to be shared across business units for the entire firm - achieving a competitive advantage

aligning with corporate level strategy

Which of the following Porter "generic" strategies creates competitive advantage by creating a larger "wedge" between firm const (C) and the value (v) created for the customer than it does its direct competitors? - differentiation - cost leadership - both a and b are true - neither a or b are true

both a and b are true

George has learned that National Timber is considering selling its business to the highest bidder. National Timber is also family owned, but the younger generation of the family has little interest in continuing to run the business. Acquiring National Timber would not only help secure a source of wood, but would also open up Georgia Lumber Company to selling wood to other regional firms similar to itself and Alabama Woods. George understands the risk associated with the initiative and the likely high "price tag" for National Lumber, but this initiative alone if successful, would exceed Otis Thomsan's 50% growth objective. This initiative, if approved by Mr. Thomson, could best be described as a ________________ strategy. - related diversification - backward vertical integration - forward vertical integration - horizontal integration - both b and a are correct - both b and d are correct

both b and a are correct

According to Michael Porter the essence of strategy is ______. - leveraging operational and marketing effectiveness to create competitive advantage - choosing what not to do - maximizing ROI while driving cost of capital down - copying what works from competitors and avoiding what doesn't work - aligning the external market environment with the firm's business model

choosing what not to do

George is considering acquiring Alabama Woods. Like The North Georgia Products SBU, Alabama Woods, sells lumber specifically milled for barns and other farm related out buildings directly to its customers through a company owned store in Muscle Shoals (Alabama); near the Mississippi state line. Unlike North Georgia products, Alabama woods also sell product through its robust eCommerce website. George is considering buying Alabama Woods but running it as a separate SBU. The firm would not be consolidated into a single SBU with North Georgia Products; instead, the Georgia Lumber Company would be run as 3 SBUs with a corporate "umbrella". Alabama Woods would continue to focus its physical store on its Alabama customers while extending its eCommerce capabilities to the Georgia Lumber Company to service North Georgia Products retail customers. That said, the eCommerce capabilities are not a driver nor is it an important part of the strategy and would merely be considered a potential but uncertain benefit of the acquisition. This initiative, if approved by Otis Thomsan, could be best described as a ____ strategy. NOTE: For those of you unfamiliar with US geography, Alabama and Georgia share a common border and Muscle Shoals is approximately 130 to 140 miles west of the state of Georgia state line. - vertical integration - concentration - unrelated diversification - divestiture - both vertical integration and diversification are correct

concentration

All of the following below are drivers that can create a differentiation advantage and a greater willingness to pay except one. Select the one that does not belong on the list: - brand - existence of complements - economies of scale - customer experience - product features - product performance

economies of scale

Firms that have difficulty in differentiating their products from their competitors' products will often try to introduce loyalty programs to ___. - increase supplier switching costs - increase buyer switching costs - reduce the number of competitors - increase their products' price elasticity - reduce their operating costs

increase buyer switching costs

Intangible assets are ____ likely to drive sustainable competitive advantage than physical assets. - more - less - equally

more

Considering the two growth strategies suggested above -- the Alabama Woods and the National Timber company -- which one would be best described as an organic strategy? - Alabama Woods - National Timber - Both are organic strategies - neither are organic strategies

neither are organic strategies

Which characterization of industry structure would have the lowest HHI? - perfect competition - oligopoly - monopoly - monopolistic competition

perfect competition

In our class discussion on internal analysis, we discussed a principal theory of competitive advantage where the source of a firm's competitive advantage in the marketplace is derived from the firm's ___. - products - strategy - resources - dominant logic - organizational structure

resources

Strategy can be best described as the goal directed actions to gain and sustain ___? - high performance in advancing industry capabilities - superior performance in the markets in which the firm operates - long term financial profits and economic viability - operational improvements and product advancements - the earth's environment and the well-being of the communities in which the firm operates

superior performance in the markets in which the firm operates

Which ONE of the following is not considered to be a component of the scope of a firm. - the variety of products and services offered - the extent of control the firm chooses to exercise over the industry's value chain - the locations (geographies) in which the firm operates and sells - the firm's market share - Bogus question: all of these statements relate to the scope of the firm.

the firm's market share

Match the Industry Characteristics to the best Porter 5 Forces Model Conclusion: Concentrated, powerful supplier bargaining power; significant investment required to enter the industry; high minimum efficient scale; monopolistic (rivals) competition; no (or very low) buyer switching costs, low brand loyalty, minor product differentiation between rivals; sophisticated buyers; and lots of substitutes.

threat of new entrants

Concluding the Georgia Lumber Company, George has been approached by entrepreneur who has been successful in the business of installing solar energy panels on the roofs of rural barns in the North and Central Georgia farm belt. The entrepreneur has offered to sell a controlling interest in his company to the Georgia Lumber Company in exchange for cash and the opportunity to stay on and continue to run the solar panel installation company. The company would continue to be run autonomously as a subsidiary of the Georgia Lumber Company and the Georgia Lumber Company would be entitled to 80% of the company's profits. Although there would be no synergies between the solar SBU and the other SBUs George still likes the idea and believes that solar power could be a large growth area for the firm. If the Georgia Lumber Company decided to pursue this opportunity, this strategy would be best described as an example of __________. - concentration - vertical integration - virtual integration - unrelated diversification - horizontal integration

unrelated diversification

Which one of the following strategies creates the potential for the firm to capture additional profits from the industry value chain? Choose the best answer. - horizontal integration - unrelated diversification - vertical integration - divestiture - concentration

vertical integration