Midterm Prep (Ch.s 1-6)

Which of the following describes the relationship between Intel, which makes computer processors, and Microsoft, a leading desktop software company? a. Intel and Microsoft are complementors. b. Intel and Microsoft are competitors. c. Intel is a supplier to Microsoft. d. Intel is a customer of Microsoft.

a. Intel and Microsoft are complementors.

Which of the following scenarios represents a company that has selected a differentiation strategy? a. A grocery store chain is converting its local neighborhood stores to warehouses. The chain eliminates shopping in the aisles and instead has customers select items online or through an app. The customers can then pick up their items in a drive-through without having to leave their vehicles. b. A company is developing a tablet device that sells features, such as speed and memory, as add-ons to produce a base model of its device that is below the typical market cost. c. A tool manufacturer is investing in research and development (R&D) to develop modifications to existing tools so that they can be used more effectively and safely in the oil and gas industry. d. A restaurant entrepreneur announces a new fast-food chain where every item on the menu is just $1.

a. A grocery store chain is converting its local neighborhood stores to warehouses. The chain eliminates shopping in the aisles and instead has customers select items online or through an app. The customers can then pick up their items in a drive-through without having to leave their vehicles.

Which of the following relates to a firm's resources and the flexibility they provide? a. Ability b. Awareness c. Incentive d. Motivation

a. Ability

What is a competitor analysis? a. An analysis of companies with which a firm competes directly b. A robust analysis of one specific competitor c. An internal report of what a competitor may discover if the competitor analyzed the company d. A SWOT analysis of a competitor

a. An analysis of companies with which a firm competes directly

How does diversification and firm size impact top managers of a firm? a. As a firm diversifies, its size increases, as does executive compensation. b. As a firm diversifies, its size decreases, as does executive compensation. c. As a firm diversifies, its size increases, while executive compensation decreases. d. As a firm diversifies, its size decreases, while executive compensation increases.

a. As a firm diversifies, its size increases, as does executive compensation.

Which of the following is an advantage of pursuing diversification by entering into a greenfield venture? a. By taking advantage of intangible resources, such as experience and knowledge of a firm, a new business can be established independently with instant ability to create value using those resources. b. By taking advantage of tangible resources, such as extra machinery, a new business can establish itself without paying the initial costs of machinery. c. By taking advantage of tangible resources through a greenfield venture, a business can claim to be environmentally friendly. d. By taking advantage of tangible resources, such as experience and knowledge of a firm, a new business can be established independently with instant ability to create value using those resources.

a. By taking advantage of intangible resources, such as experience and knowledge of a firm, a new business can be established independently with instant ability to create value using those resources.

General Electric (GE), the multinational conglomerate, is researching rivals in the appliance industry by analyzing the financials, current product offerings, and strategies of competitors in order to gain insight as to how to gain a competitive advantage. Which of the following is GE performing? a. Competitor analysis b. Industry analysis c. External environmental analysis d. General analysis

a. Competitor analysis

Which of the following represents a risk for companies pursuing a differentiation strategy? a. Competitors' imitation of a product at a lower price causing customers to purchase their product b. Failing to meet customers' minimal level of acceptable service c. Competitors' imitation of the value chain activities that make up the company's strategy d. Competitors' innovations resulting in their ability to drive costs lower

a. Competitors' imitation of a product at a lower price causing customers to purchase their product

Which of the following is a reason(s) that keeps managers from selfishly diversifying the firm for higher compensation? a. Concerns for their reputation and strong managerial talent market b. Concerns for their reputation and weak managerial talent market c. Fear that the firm would lose value d. To avoid the responsibility of a more highly complex firm

a. Concerns for their reputation and strong managerial talent market

Which of the following is an example of an operations activity? a. Developing employees' work schedules b. Arranging for customers' payments for delivered goods c. Developing and managing product brands d. Fully complying with a product's warranty

a. Developing employees' work schedules

A company is debating whether to enter a new industry. The first order of business is to conduct an analysis of the five forces. Why is this a crucial first step in the decision-making process of entering a new industry? a. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely fail. b. If the barrier for entry is high, and suppliers and buyers have little bargaining power, the venture will most likely fail. c. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely succeed. d. If the barrier for entry is high, and suppliers and buyers have strong bargaining positions, the venture will most likely succeed.

a. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely fail.

What type of financial economy is undertaken to reduce risk among a firm's businesses? a. Internal capital market allocation b. Restructuring of assets c. Vertical integration d. Economies of scope

a. Internal capital market allocation

External investors allocate capital by taking stakes in businesses with high growth and profitability potential. Which of the following is a disadvantage for external investors? a. Limited access to information b. Cannot estimate the performance of individual businesses c. Unlimited access to information d. Can understand the operational dynamics in large organizations

a. Limited access to information

Procter & Gamble (P&G) is a consumer products company that is consistently implementing scanning systems of the environment. The company wants to identify early signals of environmental changes and trends. P&G's competitors also frequently utilize scanning systems but are not as competitive as P&G. Which of the following could be the reason for P&G's competitiveness? a. P&G takes quick action on ambiguous, incomplete, or unconnected data. b. The competitors are less concerned with competitive advantages. c. P&G's reports are more robust and contain insider information. d. The competitors are not as educated as P&G's executives.

a. P&G takes quick action on ambiguous, incomplete, or unconnected data.

Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of the following correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company? a. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds. b. During the Great Recession, the United Auto Workers (UAW) union agreed to a pension restructuring with the three big U.S. car manufacturers. c. AIG's shareholders sued the U.S. government, arguing that the bailout the company received wasn't beneficial enough to financial investors. d. McDonald's announced wage increases for employees at its corporate-owned stores after months of protests by employees.

a. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds.

Which of the following characteristics best describes tactical actions? a. Relatively easy to implement and reverse b. Involve significant resources c. Difficult to implement and reverse d. Fully counter the effects of a competitor's actions

a. Relatively easy to implement and reverse

Research indicates that a competitive advantage in logistics is a primary strategy that creates the most value for a cost leadership strategy. Which of the following value-creating activities should be a focus for a company pursuing a cost leadership strategy? a. Supply-chain management b. Human resources c. Marketing d. Follow-up service

a. Supply-chain management

A company has just invented a piece of equipment that uses a camera to ensure that drivers do not leave a child or pet unattended in the vehicle. This new product falls under which of the following segments of the general environment? a. Technological b. Political/legal c. Global d. Sociocultural

a. Technological

What is the most likely outcome for a company if the executives never analyze competitors' possible reactions to competitive actions the firm takes? a. The company will most likely not be able to compete successfully within the industry because competitors might neutralize its competitive advantage. b. The company will most likely not be able to compete successfully within the industry due to unlawful actions that it was unaware of. c. The company will still be able to compete successfully within the industry as long as it has an efficient corporate structure. d. The company will still be able to compete successfully within the industry if it has effective marketing.

a. The company will most likely not be able to compete successfully within the industry because competitors might neutralize its competitive advantage.

DOS, a leader in the computer industry, implemented a new strategic action to offer a video streaming service to consumers. The move has proven to be successful. How are competitors likely to respond? a. They are likely to imitate the action quickly. b. They are likely to imitate the action, but only after a significant amount of time. c. They are likely to imitate the action only if other competitors take the same action. d. They are not likely to imitate the action at all.

a. They are likely to imitate the action quickly.

Which of the following is an example of a subscription business model? a. We Craft Box, which delivers monthly craft supplies and instructions for children for about $25 per month b. Mint finance tracking software, which is offered at no cost as an introduction to QuickBooks' other subscription services c. KFC, which licenses individuals to use its trademark and processes when selling its branded fried chicken and other fast-food products d. The Facebook social media platform, which is available to users at no cost and earns its income from paid advertising aimed at those users

a. We Craft Box, which delivers monthly craft supplies and instructions for children for about $25 per month

Value is measured by: a. a product's performance characteristics and by its attributes for which customers are willing to pay. b. the price of a product or service set by the manufacturer to be sold in a retail environment. c. the inputs required to produce a product or service, including human, physical, and financial capital. d. the amount of investment required to achieve a competitive advantage

a. a product's performance characteristics and by its attributes for which customers are willing to pay.

Strategic groups exist because: a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies. b. government regulators have different rules for companies based on the size of the company, geographic headquarters, and number of employees. c. customers want variety in the products and services they select, and different brands can serve customers' needs differently. d. industries are one-dimensional, and all businesses within an industry utilize the same resources and same strategies to achieve their goals.

a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies.

Slow-cycle markets are markets in which the firm's: a. competitive advantages are shielded from imitation, commonly for long periods of time, and where imitation is costly. b. capabilities that contribute to competitive advantages aren't shielded from imitation and where imitation is often rapid and inexpensive. c. competitive advantages are partially shielded from imitation and where imitation is moderately costly. d. competitive advantages are shielded from imitation, commonly for short periods of time, and where imitation is cheap.

a. competitive advantages are shielded from imitation, commonly for long periods of time, and where imitation is costly.

Awareness, motivation, and ability are drivers of: a. competitive behavior. b. a competitor analysis. c. competitive rivalry. d. competitive dynamics.

a. competitive behavior.

Organizational culture is the: a. complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business. b. structure of a company's organizational chart of strategic leaders, including their roles and responsibilities. c. attitude of a company's owners or shareholders. d. policies and procedures detailed in the company's employee handbook.

a. complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business.

A company is analyzing its value chain to discover its value-creating activities. While formulating its strategy, the firm will: a. consider the value chain activities and support functions to determine which activities contribute the greatest value in the product or service being sold to customers. b. create functional departments to manage these activities. c. expand into multiple markets to serve as many customers as possible with its value-creating activities. d. prioritize only its support functions as a source of competitive advantage.

a. consider the value chain activities and support functions to determine which activities contribute the greatest value in the product or service being sold to customers.

A core rigidity arises when a: a. core competency generates inertia and stifles innovation, often because of conditions in the external environment. b. corporation refuses to change its strategies without an action by the board of directors. c. company puts all of its strategic decisions up for a vote by the company employees. d. firm is led by a CEO with a rigid sense of mission that cannot be swayed.

a. core competency generates inertia and stifles innovation, often because of conditions in the external environment.

Intangible resources are more flexible than tangible physical assets in facilitating a. diversification. b. firm operations. c. product production. d. value creation.

a. diversification.

The strategic management process is the: a. full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns. b. analysis of the firm's external environment and internal organization to identify external opportunities and threats. c. utilization of the resource-based model of above-average returns to identify the internal resources a company should leverage to achieve strategic competitiveness. d. set of capabilities firms use to respond to various demands and opportunities existing in today's dynamic and uncertain competitive environment.

a. full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns.

Logan is an entrepreneur and president of his own company that makes a new software product that manages benefits administration for large multinational corporations. His startup company grew quickly to a team of about 25. A new federal law recently passed by Congress will cause small-business owners to invest in software like his to manage employee health care. Logan announces that the company will be investing in training for employees to better understand small-business owners and research and development (R&D) to create a small-business version of the software. This is an example of: a. having a strong strategic orientation and promoting innovation as a strategic leader. b. utilizing the industrial organization (I/O) model of above-average returns to determine the strategic direction of the firm. c. answering to demands made by capital market stakeholders for greater profitability. d. revising a company's vision statement to reflect changes in the competitive environment.

a. having a strong strategic orientation and promoting innovation as a strategic leader.

As part of its selection of a business-level strategy, a firm will decide which customers it will serve, what needs those customers have that it will satisfy, and: a. how it will satisfy those customers' needs using its core competencies to implement value-creating strategies. b. when it will implement its strategies to best optimize its exposure to customers and achieve a competitive advantage. c. where it will locate its resources and facilities to best serve its targeted customers and obtain the lowest costs of production. d. which functional teams and strategic leaders will be responsible for implementation of the business-level strategy.

a. how it will satisfy those customers' needs using its core competencies to implement value-creating strategies.

Typically, a diversification strategy is used to _____ the firm's value by _____ its overall performance. a. increase; improving b. maintain; improving c. decrease; improving d. increase; decreasing

a. increase; improving

Many companies pursue an integrated cost leadership/differentiation strategy, working to lower cost structures while also enhancing their products and services. To successfully pursue this strategy, companies could: a. invest in developing total quality management (TQM) systems and improving marketing effectiveness. b. concentrate all efforts on cost-saving projects within their production processes. c. increase exposure and brand awareness through digital and print marketing campaigns. d. develop new products every year to continue attracting customers and meet their upgrade expectations.

a. invest in developing total quality management (TQM) systems and improving marketing effectiveness.

A resource or capability can be classified as a core competency that can be a source for a sustainable competitive advantage if: a. it is different and better than the way a competitor is executing the same capability. b. it is the same as the capabilities offered by competitors. c. other companies use a different capability to accomplish the same goal. d. it can be purchased through outsourcing.

a. it is different and better than the way a competitor is executing the same capability.

The number of markets with which a firm and a competitor are jointly involved and the degree of importance of the individual markets to each is referred to as: a. market commonality. b. market analysis. c. resource similarity. d. market differentiation.

a. market commonality.

FreeForAll is an online retailer for graphic T-shirts and hats. Previously, it was the only mass retailer for such goods. Hatz, an in-store retailer that sells predominantly baseball hats, has just launched an e-commerce site that also features T-shirts for sale. FreeForAll has decided to respond quickly to Hatz's competitive action. This decision is based on FreeForAll's: a. market dependence. b. competitive dynamics. c. reputation. d. market independence.

a. market dependence.

Sports Inc. has developed a shoe to compete with Air Jordans. In order to keep up with competitors and minimize competitor market power, the firm decides to sell branded sports equipment as well. By introducing another new business so soon outside of its shoe products, the firm stands to lose value. Sports Inc.'s reason for diversifying itself is to _____ by acquiring a _____. a. neutralize another firm's advantage; similar distribution outlet b. decrease another firm's advantage; similar distribution outlet c. increase its value; similar distribution outlet as a competitor d. decrease another firm's value; different distribution outlet

a. neutralize another firm's advantage; similar distribution outlet

The industrial organization (I/O) model of above-average returns: a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns. b. concentrates on the unique resources and capabilities of a firm to direct its strategic management process. c. is a new approach to strategic management that emphasizes technological advancement. d. is critical to competing in the global economy and the information age because of its emphasis on organizational development.

a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.

A company owns a patent, with six more years of protection, on a prescription medication that is used by people around the world. This resource is: a. rare and valuable. b. nonsubstitutable and valuable. c. costly to imitate and nonsubstitutable. d. an example of outsourcing.

a. rare and valuable.

Capital market stakeholders are most satisfied when a company's: a. returns align with the amount of risk they incurred by investing in a company or lending the company money. b. product market stakeholders are dissatisfied. c. leadership team is earning performance-based compensation. d. employees have a low turnover rate and receive salaries that are higher than the labor market

a. returns align with the amount of risk they incurred by investing in a company or lending the company money.

A firm owns several businesses, including a personal loan office and a furniture store. Another standalone personal loan office is suffering financially because of the allocation of its assets. The furniture business decides to buy the standalone personal loan business, restructure its assets, and then sell it as operations resume more successfully. This is an example of: a. unrelated diversification. b. value-neutral diversification. c. value-creating related diversification. d. vertical integration.

a. unrelated diversification.

FedEx and United Parcel Service (UPS) compete in many of the same markets and have similar types of truck and airplane fleets, similar levels of financial capital, and other similarities. These tangible and intangible resources between the two firms describe the: a. resource differentiation. b. resource similarity. c. market similarity. d. market differentiation.

b. resource similarity.

How is a business model different from a business-level strategy? a. A business model focuses on capturing internal value for stakeholders while a business-level strategy focuses on creating external value for customers. b. A business model describes what a firm does while a business-level strategy describes how it does it. c. A business model defines the products or services a firm offers while a business-level strategy describes how the firm earns a profit. d. A business model is a path forward while a business-level strategy is a framework.

b. A business model describes what a firm does while a business-level strategy describes how it does it.

Which of the following capabilities meets the criteria for being a core competency, in that it is rare, valuable, costly to imitate, and nonsubstitutable? a. The human resources function b. A company's history and brand c. A manufacturing facility d. The CEO

b. A company's history and brand

Which of the following might be an alternative definition of business-level strategy? a. A picture of what the firm wants to be in broad terms and what it hopes to achieve b. A plan for how the company will compete in its industry against its rivals to achieve a competitive advantage c. The inputs into a firm's production process, including physical, human, and organizational capital d. The source of competitive advantage for a firm to deliver above-average returns

b. A plan for how the company will compete in its industry against its rivals to achieve a competitive advantage

You are starting a new business. Which of the following is the best source of information regarding gathering competitive intelligence in an ethical manner? a. State laws b. A professional association c. Employees d. Suppliers

b. A professional association

Which of the following could be a part of the analysis stage of the strategic management process? a. A mission and vision task force developing these foundational statements for the company b. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers c. The collection of financial data used to track the success of the strategic plans the company is pursuing d. The selection of strategies the company will pursue to achieve its financial goals and satisfy its shareholders

b. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers

Ishanti owns the only yoga studio in town. However, a national gym is opening in a few months. Historically, businesses like hers have closed after the national chain opened nearby. Which of the following options should Ishanti implement? a. A competitive response b. A strategic action c. A strategic response d. A tactical action

b. A strategic action

Which of the following describes a company that has delivered above-average returns to its investors? a. A biotech firm that recently announced it has received FDA approval for its new orphan drug to treat a rare heart condition and will be able to sell the treatment for $10,000 per year per patient beginning in the fall b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets c. A retail company that announced it saw growth in same-store sales from last year to this year and will open 250 new stores to capitalize on its growing popularity d. An airline that reported weaker-than-projected earnings this year because of increased maintenance costs for its aging fleet of planes

b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets

A software firm has chosen to implement a differentiation strategy, offering its product in a Software as a Service (SaaS) platform with a monthly subscription. Most of the firm's competitors are selling their products as a one-time purchase. Which of the following represents the greatest risk to the strategy? a. There's a shortage of technical workers to maintain the software platform, causing human resources to increase wages to attract quality employees. b. An established competitor has announced it will begin offering its programs in a SaaS model next quarter. c. As the number of users increases, the company will need to invest resources to scale the SaaS platform. d. The biggest competitor in this software market is slashing its prices to below the company's annual rate.

b. An established competitor has announced it will begin offering its programs in a SaaS model next quarter.

Car maker BAAS is known for its risky competitive behavior, including drastically changing its prices over short time spans. Based on this information, which of the following is the most likely competitor response? a. Competitors will be more likely to respond because of BAAS' risky behavior. b. Competitors will be less likely to respond because of BAAS' risky behavior. c. Competitors will be more likely to respond because of BAAS' stability in the market. d. Competitors will be less likely to respond because of BAAS' stability in the market.

b. Competitors will be less likely to respond because of BAAS' risky behavior.

An oil company develops an innovative refining process that reduces the time required to produce gasoline by 25 percent. The company has identified its unique process as a core competency. Which of the following strategies would be most beneficial for the company to pursue? a. Differentiation b. Cost leadership c. Focused differentiation d. Integrated cost leadership/differentiation

b. Cost leadership

What are economies of scope? a. Complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise b. Cost savings a firm creates by successfully sharing resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses. c. The abilities of a firm to sell its products above the existing competitive level or to reduce the costs below the competitive level of its primary and support activities d. The advantages achieved when a company produces its own inputs or owns its own source of output distribution.

b. Cost savings a firm creates by successfully sharing resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses.

Dan Jones, the owner of Harbor Home Remodeling, has been researching demographic information on homeowners in his area. He has learned that younger people are moving out of the region—a trend that's expected to continue—while middle-aged and older people are remaining in their homes. In order to differentiate his firm and better compete against rival, general remodeling firms in this environment, which strategy would best enable Dan to fulfill his purpose? a. Dan should "perform activities differently" and pursue a cost leadership strategy. By using less expensive materials and cheaper labor, he could reduce the cost of his remodeling services. b. Dan should "perform activities differently" and pursue a focused differentiation strategy. He could specialize in remodeling homes to meet the unique needs of aging people, such as installing wheelchair ramps and low-threshold showers. c. Dan should "perform different activities" and transition into building new, custom homes for the segment of the market that interests him—retirees and the elderly. d. Dan should "perform activities differently" and pursue a differentiation strategy. In addition to his remodeling services, he could offer other home repair services, such as plumbing and electrical repair.

b. Dan should "perform activities differently" and pursue a focused differentiation strategy. He could specialize in remodeling homes to meet the unique needs of aging people, such as installing wheelchair ramps and low-threshold showers.

Which of the following is NOT a concern of a competitor analysis? a. Information about what drives the competitor, as shown by its future objectives b. Data on what the competitor's available funds are for innovation, as shown by its balance sheet c. Information about what the competitor is doing and can do, as revealed by its current strategy d. Intelligence about what the competitor believes about the industry, as shown by its assumptions

b. Data on what the competitor's available funds are for innovation, as shown by its balance sheet

What are the two ways an unrelated diversification strategy can create value through financial economies? a. Efficient external capital allocations and the restructuring of acquired allocations b. Efficient internal capital allocations and the restructuring of acquired assets c. Efficient external capital allocations and the restructuring of acquired assets d. Inefficient internal capital allocations and the restructuring of acquired assets

b. Efficient internal capital allocations and the restructuring of acquired assets

A nonprofit organization is focused on providing mental health services to the homeless in its geographic area. It serves people by ensuring they receive the public assistance they are eligible for and then connects them with care providers that have expertise working with transient patients. The company's primary expenses are the salary and benefits for its staff of social workers, and it receives government funding to cover those. However, the organization does not have enough people to fill its open positions and has a waiting list of homeless people in need of case workers. Which of the following represents a weakness for the nonprofit organization? a. Fundraising b. Human resources c. Distribution d. Customer service

b. Human resources

Which of the following is an advantage of being part of a slow-cycle market as opposed to a fast-cycle market? a. In slow-cycle markets, firms must innovate rapidly in order to stay competitive. b. In slow-cycle markets, firms can shield themselves from imitation. c. In slow-cycle markets, firms can innovate at a slower pace, although it's often expensive. d. In slow-cycle markets, firms can innovate at a faster pace, and it's often inexpensive.

b. In slow-cycle markets, firms can shield themselves from imitation.

Which of the following is an element of the economic segment? a. Income distribution b. Interest rates c. Age structure d. Ethnic mix

b. Interest rates

Marquis is the international operations manager for an athletic clothing line. As part of his responsibilities, he regularly tours the factories of the company's suppliers. He recently took a tour of one of the most efficient plants that delivers low-cost clothing. This gives his company a greater profit margin. However, on the tour, he noticed an 8-year-old child operating one of the machines. Which of the following best describes how Marquis should report back to his CEO about the plant tour? a. Marquis should present a glowing recommendation for the supplier based on its financial performance and ability to help the company deliver above-average returns through higher profitability. b. Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values. c. Marquis should assume that the CEO is aware of the child labor practices at the supplier because the two companies have done business together for several decades. His report should focus on the operational improvements at the plant. d. Marquis should quit. He can't work for a company that employs child labor in any way. He should contact the media immediately after he leaves the company and tell them the whole story.

b. Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values.

TaylorTech, a high-quality metals finishing company, is struggling with its margins. TaylorTech has raw materials delivered to its foundry in Pittsburgh, where the company melts the metals into castings. The firm then polishes them as a value-added process before selling the custom castings to customers. Its unique polishing process is rare in the United States, is very secretive, and results in a more efficient cast that commands a premium price. Unfortunately, the casting process is becoming more expensive because of increased wage pressure from the workers specializing in casting. With these issues, TaylorTech has to make a decision. Which of the following is the most viable option for TaylorTech to increase its margins? a. Lay off team members across the company b. Outsource the casting process c. Stop offering the polishing process d. Hire less-skilled workers

b. Outsource the casting process

A local community arts nonprofit organization is seeking to expand its programming and is considering putting just one new program in place this year. It may choose painting workshops for people with disabilities, summer camps for young children, a musical performing arts series for skilled musicians, or classes for seniors. The organization's most committed volunteer is a kindergarten teacher who has offered to be the leader of whichever new program the organization implements. If the nonprofit is utilizing the resource-based model of above-average returns, in which of the following ways should it expand its programming? a. Painting workshops for people with disabilities because they are not currently being offered by any other organizations in the community b. Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage c. A musical performing arts series for skilled musicians because it has the widest appeal in the community d. Classes for seniors because they can be hosted during the day and have good attendance among those who are retired

b. Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage

A construction company is pursuing a focused differentiation strategy, and after reviewing its core competencies, the leaders have decided to specialize in hospital construction. Which of the following is an example of how that strategy is addressing the bargaining power of buyers (customers)? a. The company accepts a lower profit margin rather than raise prices after its supplier of medical regulators raises prices. b. The company participates in competitive bidding processes, and despite often submitting a higher bid than competitors, it is awarded the job based on its expertise. c. In a year where only a few hospitals are being built, the company's leaders decide to offer discounted pricing to customers to ensure that they have a steady stream of work. d. Seeing the success of the hospital construction company, other construction firms decide to narrow their focus and create business units dedicated to this customer segment.

b. The company participates in competitive bidding processes, and despite often submitting a higher bid than competitors, it is awarded the job based on its expertise.

Which of the following is a value-generating activity? a. A service the company provides to customers that they pay for b. The core competencies that a company holds that make it possible for it to serve customers in a different way from its competitors c. A new machine that reduces energy costs within a company d. A customer promotion or sale

b. The core competencies that a company holds that make it possible for it to serve customers in a different way from its competitors

A top-level executive of a tire manufacturer is considering diversifying and expanding operations into China, where labor and materials are cheaper. The firm has already diversified itself to double its original number of locations. All of its newest locations have been implemented by the same executive. So far, the return on investment for each of the newer locations is negative. Why might the executive want to open yet another location? a. The larger the firm gets, the less compensation the executive will receive because no value has been created. b. The larger the firm gets, the more compensation the executive will receive, even if no value has been created yet. c. The executive is worried about creating jobs, even if there is no value created for the manufacturer. d. The executive predicts that the return on investments will provide positive returns soon.

b. The larger the firm gets, the more compensation the executive will receive, even if no value has been created yet.

The country's largest landscape company is the result of a merger between two multistate firms, Brickman Group and ValleyCrest. Now called BrightView, the $2 billion firm was created in 2015. The company is operating in a fragmented industry dominated by small, local businesses. Which of the following identifies a relevant competitive force and a way the company might leverage it? a. Bargaining Power of Buyers: BrightView can expect customers to purchase from it because of brand loyalty. b. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-barrier industry through economies of scale, specifically discounts on bulk purchases of raw material inputs. c. Bargaining Power of Suppliers: BrightView will have difficulty leaving the landscape industry because of its investment in this merger and the cost of all of the landscape equipment included among both companies' assets. d. Complementors: BrightView will need to collaborate with other companies to develop outdoor products because there are not enough complementary products in the marketplace to make homeowners value their landscaping.

b. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-barrier industry through economies of scale, specifically discounts on bulk purchases of raw material inputs.

Often a company's business-level strategy can be easily identified by reviewing its marketing materials. Consider the marketing slogans of the following companies and identify which one is pursuing a business-level strategy of differentiation. a. Walmart - Save Money. Live Better. b. Whole Foods - America's Healthiest Grocery Store c. Days Inn - The Best Value Under the Sun d. Ross Stores - Dress for Less

b. Whole Foods - America's Healthiest Grocery Store

A cost leadership strategy is one in which: a. customers perceive a company's products to be superior to competitor products. b. a company uses process innovations, such as advanced production or distribution methods, to operate efficiently. c. a firm produces nonstandardized products that deliver superior value to customers through innovation. d. a firm must consistently upgrade its product features to keep pace with customers' expectations for value.

b. a company uses process innovations, such as advanced production or distribution methods, to operate efficiently.

Corporate-level strategy is best described as: a. strategies a firm implements to gain a competitive advantage by selecting and managing a single business competing in several product markets. b. actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets. c. actions a firm takes to gain a competitive advantage by selecting and managing one business competing in a single product market. d. strategies a firm implements to gain competitive advantage by selecting and managing a group of businesses competing in a single product market.

b. actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.

A business-level strategy is: a. a marketing and positioning program designed to explain a business to its customers. b. an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in a specific product market. c. the actions the firm takes by selecting and managing a group of different businesses competing in different product markets. d. a set of actions and commitments through which the firm sells its products outside of its domestic market.

b. an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in a specific product market.

Firms operating in the same market, offering similar products, and targeting similar customers are: a. allies. b. competitors. c. multimarket competitors. d. market commonality.

b. competitors.

Turtlecreek owns a high-end grocery chain, a high-end outdoor gear chain, and a sporting goods chain. Its retail businesses are unrelated; however, the firm hopes to gain an advantage over its competitors by associating its perceived luxury brand with each business. By selecting and managing these various businesses, Turtlecreek is implementing a _____ strategy. a. business-level b. corporate-level c. firm-level d. small-business

b. corporate-level

A differentiation strategy is one in which a firm: a. concentrates on ways to reduce cost as its primary focus. b. creates products that have features that customers value and are willing to pay a higher price for. c. has core competencies in production and distribution efficiencies to reduce required inputs. d. divides its customers into clusters of people with similar needs.

b. creates products that have features that customers value and are willing to pay a higher price for.

Cell phones and digital music files are examples of: a. hypercompetition. b. disruptive technologies. c. knowledge. d. core competencies.

b. disruptive technologies.

An assumption of the industrial organization (I/O) model of above-average returns that supports the need for a firm to find the most attractive industry in which to compete is that: a. the external environment imposes pressures and constraints that determine the strategies that would result in above-average returns. b. firms possess the same types of resources with value and those resources are mobile across companies. c. differences in resources and capabilities are the basis of competitive advantage. d. organizational decision makers are rational individuals who are committed to acting in the firm's best interests, as shown by their profit-maximizing behaviors.

b. firms possess the same types of resources with value and those resources are mobile across companies.

Firms achieve strategic competitiveness by: a. being the first to try a new business strategy. b. formulating and implementing a value-creating strategy. c. creating a vision for a company d. starting a new company.

b. formulating and implementing a value-creating strategy.

The _____ environment is the set of factors that directly influences a firm and its competitive actions and responses. a. internal b. industry c. economic d. competitor

b. industry

A secondhand computer retailer is often mistaken for an IT-help business. As a result, tech-savvy employees of the retailer are often fixing the customers' computer issues when they come into the store. The firm that owns the secondhand computer retailer has decided to diversify and open computer repair shops selling IT services. The retailer is diversifying on the basis of employee knowledge, which is considered a(n) _____ resource. a. tangible b. intangible c. nonsubstitutable d. rare

b. intangible

A capability is considered rare when: a. it helps a firm to neutralize any threats against it. b. it is possessed by few, if any, other firms. c. its cause is ambiguous. d. it has no strategic equivalents.

b. it is possessed by few, if any, other firms.

An attorney has grown his law firm, gaining new clients in two diverse areas—estate law and immigration law. He's not sure which specialty will become his focus in the long run. At the same time, he believes he has enough work to support hiring a paralegal. However, he is having trouble hiring a paralegal who can manage both types of clients. He was able to find a freelance paralegal referral service that connects attorneys to paralegals who have experience in a variety of specialties. He might consider outsourcing through the referral service because: a. it is less expensive than hiring a full-time paralegal. b. it provides him with the flexibility to gain capabilities to serve both types of clients without making a long-term investment. c. outsourced capabilities provide greater value to customers and are superior to internal capabilities. d. he has a friend that works for the paralegal referral business, and she will earn a bonus if he uses the service.

b. it provides him with the flexibility to gain capabilities to serve both types of clients without making a long-term investment.

Apple has been known to sell its products at higher rates than competitors, such as Microsoft, as it has been successful at convincing consumers that Apple products are special and more luxurious in comparison. By accomplishing this, Apple has gained: a. multipoint competition. b. market power. c. corporate-level core competencies. d. brand awareness.

b. market power.

A telecommunications company is impacted by government regulations of the wireless spectrum, cell tower locations, and Internet accessibility. The company decides to hire a lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and Congress. This is an example of a company dealing with the _____ segment of the general environment. a. social b. political/legal c. sociocultural d. economic

b. political/legal

Outsourcing is the: a. decision to manufacture in a foreign country, at a facility owned by the company, because it offers lower wages. b. purchase of a value-creating activity or a support function activity from an external supplier. c. decision to pay less for a value-creating activity through a supplier. d. decision by a company to purchase a supplier's company, bringing its capabilities into the company.

b. purchase of a value-creating activity or a support function activity from an external supplier.

Firms use corporate-level strategies for several reasons, including to: a. decrease revenues and profits. b. pursue development of a market. c. sell a supplier or customer. d. segment themselves into limited markets.

b. pursue development of a market.

Fast-cycle markets are markets in which the firms' capabilities that contribute to competitive advantages aren't shielded from imitation and where imitation is often _____ and _____. a. slow; inexpensive b. rapid; inexpensive c. rapid; expensive d. slow; expensive

b. rapid; inexpensive

Hypercompetition describes a competitive landscape in which: a. there are thousands of companies competing within the same industry for the same group of customers. b. rivalry tends to occur among global competitors who innovate regularly and successfully. c. the business is dominated by a single company, pushing all competitors to imitate its strategies and develop similar resources. d. the industry has a high cost of entry in capital investment, research and development (R&D), or hiring of talented employees.

b. rivalry tends to occur among global competitors who innovate regularly and successfully.

A pharmaceutical company has a patented antidepressant that has few side effects and dominates the market. The company has been conducting research and development (R&D) to improve this drug for several years. The pharmaceutical company would be categorized as part of a _____ market. a. fast-cycle b. slow-cycle c. standard-cycle d. no-cycle

b. slow-cycle

The effectiveness of a business-level strategy is contingent on: a. selection of the best business-level strategy—an integrated cost leadership/differentiation strategy. b. the opportunities and threats in a firm's external environment and the strengths and weaknesses of a firm's resources. c. a firm's decision to pursue a focus strategy developed through market segmentation. d. the external communication of the strategy to a company's customers.

b. the opportunities and threats in a firm's external environment and the strengths and weaknesses of a firm's resources.

According to the resource-based model of above-average returns, differences in firms' performance across time can be attributed to the: a. strength and effectiveness of managers. b. unique capabilities and resources of each company. c. industry's structural characteristics. d. effective implementation of pricing strategies.

b. unique capabilities and resources of each company.

Steeler Manufacturing uses an unrelated diversification strategy throughout its operations. For instance, Steeler has five core businesses, all of which are unrelated. Each of its businesses is large and indicates Steeler's success in implementing an unrelated diversification as a _____ firm. a. low diversified b. very highly diversified c. moderately to highly diversified d. nondiversified

b. very highly diversified

A _____ is a picture of what the firm wants to be and, in broad terms, what it wants to achieve. a. mission b. vision c. capability d. competitive advantage

b. vision

In the process of conducting an internal analysis and making decisions, a manager faces the challenge of uncertainty: a. as a result of the interrelationships among the different conditions that shape the firm. b. while gathering complete information about the characteristics of the firm's general and industry environments and customers' needs. c. if more than one manager is involved in making a particular decision. d. when those affected by decisions disagree with the conclusions reached by the manager.

b. while gathering complete information about the characteristics of the firm's general and industry environments and customers' needs.

Suppliers are most powerful when a company: a. buys from a supplier in large quantities, making up 50 percent or more of the supplier's total sales. b. would have switching costs if it went to a different supplier because the current supplier's products are unique. c. has the capability of producing the end product without the supplier. d. has multiple suppliers to choose from that produce similar components at similar quality.

b. would have switching costs if it went to a different supplier because the current supplier's products are unique.

About six months ago, a mid-sized manufacturer of athletic shoes decided to pursue an integrated cost leadership/differentiation strategy. The company reduced its internal costs by consolidating the number of colors and variations it offers to customers, savings that the company passed on to consumers. At the same time, the research and development (R&D) team added a patented sole to all of its shoes. Which of the following represents the best argument for the company to continue pursuing its current business-level strategy? a. "We're getting some complaints from long-standing customers about the fact that they can only get shoes in hot pink or lime green." b. "Our women's shoes are selling at higher volumes and at greater margins than our children's and men's shoes. However, women represent 50 percent of the population but only 25 percent of our business." c. "It's true we've seen our net sales decline, but our gross profit has increased and our volumes are up year-over-year. Our patent for the sole has been approved, and the legal department says we're good to go on our advertising claims about the new sole." d. "We're getting a lot of pressure from our suppliers. They're telling us that they're going to increase the raw materials cost for our soles. Even comparing against other suppliers, we simply can't get a better price at the volumes that we're purchasing."

c. "It's true we've seen our net sales decline, but our gross profit has increased and our volumes are up year-over-year. Our patent for the sole has been approved, and the legal department says we're good to go on our advertising claims about the new sole."

Which of the following is an intangible resource? a. The formal reporting structure in a multinational corporation b. A network of distribution centers throughout the nation c. A firm's ability to come up with new and different ideas d. A firm's capacity to borrow money to increase its production capacity

c. A firm's ability to come up with new and different ideas

In which of the following ways does the availability of tangible and intangible resources affect a firm's ability to create value through diversification? a. A resource has abundance and value. b. A resource is difficult to imitate and has abundance. c. A resource has rarity and value. d. A resource is difficult to substitute and has abundance.

c. A resource has rarity and value.

Which of the following firms is more likely to take competitive action? a. A large firm b. A medium-sized firm c. A small firm d. Size is not a good predictor of the likelihood a firm will take competitive action.

c. A small firm

A hospital system operates 22 physicians' offices, five skilled nursing facilities, and two hospitals. The system employs more than 500 people directly and is affiliated with more than 100 additional physicians. The system offers a wide breadth of medical services, including all of the major specialties. The system was recently recognized as the top cardiac hospital in the state. Which of the following represents the company's capabilities? a. The hospital buildings and facilities b. The staff of 500 people c. Its complete list of medical services d. Its cardiac services

c. Its complete list of medical services

A new family-owned organic grocery store has been successful since its grand opening nearly a year ago. With little competition in the area, the organic grocery store has been particularly successful in selling organic food to consumers. The grocer has just found out that Whole Foods will be starting construction on a new store nearby. The grocery store feels that its family ownership and locally grown food offerings give it a position in which to take action against the developing Whole Foods. However, as a small business, the organic grocery store does not have the financial means to launch a rivalry against Whole Foods. In this instance, the organic grocery store is missing which driver of competitive behavior? a. Awareness b. Motivation c. Ability d. The grocery is not missing any driver of competitive behavior.

c. Ability

Among firms utilizing a differentiation strategy, which of the following best exemplifies the typical relationship between consumers' brand loyalty and price sensitivity, and the effect it has on a brand's rivalry with competitors? a. Granny Smith's Frozen Dinners are recognized as superior products, and the brand has a dedicated, loyal following. However, the firm's customers are also extremely price sensitive, so Granny Smith must keep product prices low to compete against its rivals. b. Consumers are so devoted to Nike footwear that they are willing to pay any price for these products. Nike has so thoroughly differentiated its footwear products that it is completely insulated from competition against rivals. c. Apple's customers tend to be extremely brand loyal and are thus more tolerant of price increases. However, as Samsung creates increasingly similar products, Apple will have to respond by improving the perceived value of its products. d. All-Star Tires has an excellent reputation for quality, and car owners have demonstrated their loyalty to the brand by making it the top tire manufacturer in the nation. A recent price increase sent sales plummeting, however, so All-Star has no choice but to pursue a new integrated cost leadership/differentiation strategy.

c. Apple's customers tend to be extremely brand loyal and are thus more tolerant of price increases. However, as Samsung creates increasingly similar products, Apple will have to respond by improving the perceived value of its products.

Which of the following is an example of multimarket competition? a. Company A makes only sedans and SUVs. Company B makes semi-trailer trucks that transport products to retailers. b. Company A prints coloring books. Company B makes crayons and markers. c. Company A makes tomato sauce sold to consumers in grocery stores and to restaurants. Company B sells tomato sauce to consumers in grocery stores. d. Company A sells property insurance in Ohio. Company B sells property insurance in California.

c. Company A makes tomato sauce sold to consumers in grocery stores and to restaurants. Company B sells tomato sauce to consumers in grocery stores.

You are hired as a strategic analyst for a Fortune 500 company. Your first task is to develop a competitive intelligence report to find key insights on the rivals' latest actions, current capabilities, and potential future actions. Being new to this type of report and the ethical protocols, what should be your first action? a. Call the competitors' CEO for an interview. b. Infiltrate the competitors' headquarters and plant devices to receive information. c. Contact the Strategy and Competitive Intelligence Professionals association. d. Analyze the publicly released financial records from six months ago.

c. Contact the Strategy and Competitive Intelligence Professionals association.

Myspace, the social networking site, was a leader and innovator for modern social networking. However, not long after Myspace's peak, a new social networking site, Facebook, began gaining ground. Myspace quickly became obsolete because of Facebook's superior functionality, design, and features. Which of the following was Myspace lacking that resulted in the company losing its competitive advantage? a. A mission statement because the company lacked a clear understanding of where it was operating and who it was serving b. Valuable capabilities because Myspace didn't exploit the opportunity of people's need to connect c. Costly-to-imitate capabilities because it became less expensive to start a social networking site d. Intangible resources

c. Costly-to-imitate capabilities because it became less expensive to start a social networking site

Through research and development (R&D), a cable company has found a way to use its existing network lines to serve customers with a new product offering—home security systems. The company is offering the service with a lower monthly fee than most other security companies. However, the sales force didn't see a lot of interest among its customers who had an existing security system from a competitor until the firm ran a promotion for reduced prices on equipment and free installation. Which of the competitive forces is at play? a. Cost conditions b. Bargaining power of suppliers c. Customer switching costs d. Complementors

c. Customer switching costs

Which of the following statements about standard-cycle markets is true? a. Firms often obtain patents to protect, maintain, and extend a competitive advantage. b. There is a high velocity of change. c. Firms' competitive advantages are partially sustainable. d. Customer loyalty is less important.

c. Firms' competitive advantages are partially sustainable.

Which of the following may result if Bella's Eatery does not conduct a competitor analysis? a. Creation of a competitive advantage b. Discovery of market commonality c. Formation of competitive blind spots d. Discovery of resource similarity

c. Formation of competitive blind spots

Which of the following company statements is a vision statement? a. Nike: Just Do It. b. Disney: To be one of the world's leading producers and providers of entertainment and information. c. Habitat for Humanity: A world where everyone has a decent place to live. d. Allstate: You're in good hands with Allstate.

c. Habitat for Humanity: A world where everyone has a decent place to live.

A company is looking to diversify as a way to reduce risk and protect against uncertain future cash flow from its core business. These efforts would most likely have which of the following impacts on the firm's value? a. It would create new value. b. It would increase the firm's value. c. It would be value-neutral. d. It would decrease the firm's value.

c. It would be value-neutral.

Companies must be aware of technological advances within their industry and make strategic management decisions that take into account perpetual innovation and disruptive technologies. Which of the following is an example of a company that did not respond strategically to technological changes? a. After Google introduced the concept of pay-per-click advertising, a competing search engine, Bing, introduced a similar advertising model. b. Samsung, LG, and other cell phone manufacturers continued to innovate their products after the introduction of the Apple iPhone to keep up with customer expectations of smartphones. c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology. d. Amazon decided to enter into the online streaming video market with Amazon Prime Video to compete directly with Netflix.

c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology.

A single-business diversification strategy and a dominant-business diversification strategy are both examples of what level of diversification? a. Moderate to high level b. Very high level c. Low level d. Very low level

c. Low level

Sandra is developing a competitor analysis for two florists. Which of the following information in the analysis will be the basis for predicting the competitors' behavior in the form of their competitive actions and responses? a. Threats b. Capabilities c. Market commonality d. Weaknesses

c. Market commonality

Which of the following types of diversification strategies is characterized by less than 70 percent of revenue coming from the dominant business and limited links between businesses? a. Dominant-business b. Related constrained c. Related linked d. Unrelated

c. Related linked

What is a set of firms emphasizing similar strategic dimensions and using a similar strategy? a. Collusion group b. Business partners c. Strategic group d. Complementors

c. Strategic group

A multidivisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the industrial organization (I/O) model of above-average returns to develop its strategy. Which of the following decisions is consistent with this model? a. The company determines that it has an internal asset in a piece of software it developed for scheduling manufacturing processes and decides to make the software the centerpiece of its new business unit, selling it to transportation companies to manage their schedules. b. The company identifies a large steel tank it is currently selling to customers in the brewing industry and decides to begin selling it to customers in the transportation industry for transporting liquids. c. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand. d. The company decides to increase its investment in research and development to catch a competitor that has surpassed it in the technology it is using to produce steel tanks.

c. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand.

Which of the following is NOT a reason for a firm to respond to a competitor's action? a. The action leads to better use of the competitor's capabilities to develop a stronger competitive advantage or an improvement in its market position. b. The action damages the firm's ability to use its core competencies to create or maintain an advantage. c. The firms have resource dissimilarity. d. The firm's market position becomes harder to defend.

c. The firms have resource dissimilarity.

Which of the following statements about tangible resources is true? a. Compared to intangible resources, tangible resources are a superior source of capabilities and, subsequently, core competencies. b. Firms prefer to rely on them rather than intangible resources as the foundation for their capabilities. c. The value of tangible resources is constrained because they are hard to leverage. d. Intellectual capital is the most important tangible resource for today's leaders to develop.

c. The value of tangible resources is constrained because they are hard to leverage.

Why have PepsiCo and The Coca-Cola Company spent so much money on product differentiation? a. To ruin the reputation of the other company b. To increase flexibility c. To foster customer loyalty d. To allow economies of scale

c. To foster customer loyalty

Corporate-level strategy is concerned with which of the following key issues? a. What product markets the firm can compete in as a standalone business b. What businesses the firm should plan to acquire to increase its competitive advantage c. What product markets and businesses the firm should compete in and how corporate headquarters should manage those businesses d. What product markets and businesses the firm should compete in and how the firm should manage itself

c. What product markets and businesses the firm should compete in and how corporate headquarters should manage those businesses

Which of the following statements regarding firms following a differentiation strategy is NOT true? a. Although a firm that has successfully differentiated its products typically develops a loyal following that is less price sensitive, it must always be aware of rival products and respond by continuing to improve the value of its own products. b. A firm that has successfully differentiated its products may have to pay higher costs for high-quality components, but these costs are offset by the firm's higher margins. c. When a firm succeeds at differentiating its products, it acts as a magnet attracting potential new entrants into the market. d. When a firm has successfully differentiated its products from other competing products, it decreases the likelihood that consumers will opt for product substitutes.

c. When a firm succeeds at differentiating its products, it acts as a magnet attracting potential new entrants into the market.

A software company that is seeking a sustained competitive advantage will constantly be facing obsolescence because of environmental change. To generate a sustained competitive advantage, this company must: a. develop strategies to push competitors out of the business early so it is not faced with technological pressures. b. capture as much revenue as it can quickly, and then close the business when technology surpasses it. c. be continually building its technological capabilities to develop new skills as technology advances so that it can offer constant upgrades to meet customers' needs. d. always hire new people to bring new experience and knowledge into the firm.

c. be continually building its technological capabilities to develop new skills as technology advances so that it can offer constant upgrades to meet customers' needs.

Capabilities are the: a. advanced degrees that are held by members of the senior leadership team. b. physical attributes of the company, including its buildings, machinery, and other assets. c. combination of tangible and intangible resources used to complete the organizational tasks required to produce, distribute, and service the goods or services the firm provides to customers. d. human capital, through knowledge and experience, applied to producing products.

c. combination of tangible and intangible resources used to complete the organizational tasks required to produce, distribute, and service the goods or services the firm provides to customers.

Companies must effectively manage their relationships with customers because: a. customers are the only stakeholders that matter. b. their rivals are managing customer relationships. c. companies must satisfy customers' needs to achieve a competitive advantage. d. customer relationship management is the most effective use of companies' core competencies.

c. companies must satisfy customers' needs to achieve a competitive advantage.

A company has identified a core competency in providing telecommunications services for mid-sized businesses through a combination of simple technology and software, excellent customer service, and low-cost hardware. As competitors gain ground in competing for mid-sized companies, this core competency might become a core rigidity if the: a. company starts to target smaller businesses with its bundle of capabilities. b. company chooses to shift its focus to large-scale enterprises to offer its products and services. c. company doesn't keep up with advances in technology and customers begin to expect greater value from the technology. d. cost of hardware rises, thereby increasing the company's costs of production.

c. company doesn't keep up with advances in technology and customers begin to expect greater value from the technology.

By introducing Google Pay in response to Apple Pay, Google hopes to build and defend its competitive advantages and improve its market position through: a. competitive rivalry. b. competitive dynamics. c. competitive behavior. d. a competitor analysis.

c. competitive behavior.

The ongoing set of competitive actions and competitive responses that occurs among firms as they maneuver for an advantageous market position is: a. competitive behavior. b. competitive dynamics. c. competitive rivalry. d. multimarket competition.

c. competitive rivalry.

A sporting goods company developed an innovative material for the manufacture of baseball bats. For many years, the material and its process for manufacturing served as a rare and valuable capability, distinguishing it from competitors. Unfortunately, many of the baseball leagues have been changing their regulations to outlaw bats made of this material because they constitute an unfair advantage for players. As part of its internal analysis, its leaders might: a. examine the trends in the industry to see what materials competitors are using in their bat manufacturing. b. lobby the sports leagues to ask them not to outlaw the bat material. c. determine if the company's core competency is in research and development of different materials or only in working with this material specifically. d. research other kinds of materials to find one that is not outlawed but that could be produced at a lower cost.

c. determine if the company's core competency is in research and development of different materials or only in working with this material specifically.

An industrial fabrication firm has purchased a facility capable of housing large-scale projects—as long as 120 feet. The firm could develop this tangible resource into a capability by: a. purchasing additional buildings of similar size across the country. b. buying raw metals and shipping them to the facility. c. employing engineers who can design large projects and welders who have expertise in these projects. d. selling the building to its customers for them to use for their projects.

c. employing engineers who can design large projects and welders who have expertise in these projects.

A capability meets the criteria of being valuable when: a. it requires an investment of half of the company's financial assets. b. it is possessed by only the top tier of companies in the sector. c. it helps a firm exploit opportunities in its external environment. d. its causes and uses are unclear.

c. it helps a firm exploit opportunities in its external environment.

Strategic leaders: a. can only be people in the C-suite of a company, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO). b. answer only to the demands made by capital market stakeholders for greater profitability. c. must have tenacity and a willingness to be brutally honest in order to be successful. d. revise a company's vision statement on an annual basis.

c. must have tenacity and a willingness to be brutally honest in order to be successful.

Understanding how income is distributed within and across populations informs firms of different groups': a. social class. b. disposable income. c. purchasing power. d. family structure.

c. purchasing power.

The five competitive forces include all of the following forces that shape competition within an industry EXCEPT: a. threat of new entrants. b. bargaining power of suppliers. c. rate of innovation and change. d. threat of substitute products.

c. rate of innovation and change.

Glow Makeup is a moderately-diversified firm, as it has three main related businesses, including a skin care business, nail polish business, and facial cosmetic business. Its divisions are composed of different products, but they are all related to cosmetics. As a result, the firm maintains many of the same resources and certain activities within each of its operations. Based on this information, Glow Makeup uses a(n) _____ diversification strategy. a. unrelated b. related linked c. related constrained d. dominant-business

c. related constrained

Cost leadership strategies can be attractive to companies looking to address the competitive force of rivalry with existing competitors because: a. it is easier to cut costs than it is to generate greater differentiation among products or services. b. brand loyalty is a byproduct of this strategy, leading customers to choose the company's product over its rivals' products. c. rivals are hesitant to slash their own prices to compete with a low-cost leader. d. rivals are forced to compete using substitute products rather than with their core offering.

c. rivals are hesitant to slash their own prices to compete with a low-cost leader.

A firm that responds to the first mover's competitive action, typically through imitation, is called a: a. slow-cycle mover. b. late mover. c. second mover. d. last mover.

c. second mover.

With a focus strategy, a company: a. focuses on a broad, integrated group of customers b. produces products with features that are acceptable to customers at the lowest cost. c. selects a more narrow group, or niche, of customers on which to concentrate its efforts. d. produces products that customers perceive as being different in ways that are important to them.

c. selects a more narrow group, or niche, of customers on which to concentrate its efforts.

A vision statement differs from a mission statement in that the vision statement: a. should be completed before a company analyzes its external environment and internal organization. b. is realistic, achievable, and measurable. c. speaks in broad terms of what the company wants to achieve. d. specifies the businesses in which the firm intends to compete and the customers it intends to serve.

c. speaks in broad terms of what the company wants to achieve.

In the resource-based model of above-average returns, a capability is: a. an input into a firm's production process. b. the foundation for a firm's mission. c. the capacity for a set of resources to perform a task or an activity in an integrative manner. d. a product of a large number of firms competing against one another in an increasing number of global economies.

c. the capacity for a set of resources to perform a task or an activity in an integrative manner.

A product substitute would pose a threat to a company in all of the following situations EXCEPT: a. when customers face few, if any, switching costs. b. the substitute product's price is lower than the competing product's price. c. the substitute product's performance capabilities are lower than the competing product's performance capabilities. d. the substitute product's quality is equal to the competing product's quality.

c. the substitute product's performance capabilities are lower than the competing product's performance capabilities.

Cisco is a technology company looking to diversify its portfolio and compete in a new market. After conducting a scan and forecast, the consultants hired by Cisco provide several options. In which of the following economic segments should Cisco seek to compete? a. A very stable economy with low growth potential b. An unstable, new economy that has an attractively high growth potential c. A stable economy with a declining growth potential d. A relatively stable economy with strong growth potential

d. A relatively stable economy with strong growth potential

Which of the following would be deemed unethical when developing competitor intelligence? a. Analyzing competitors' financial reports b. Attending trade shows solely to obtain knowledge of competitors' new products c. Obtaining court records in an attempt to find statements that may not be found anywhere else d. All of these actions are ethical.

d. All of these actions are ethical.

Which of the following represents an example of an external incentive for value-neutral diversification? a. A company that is operating inefficiently and has an uncertain forecast b. A firm that has opportunities to transfer its capabilities to another profitable business area and spread its investment risk c. A company that has a predictable and steady revenue stream and is meeting its customers' needs efficiently d. An organization forced to pursue a new business unit because of changes in tax laws and regulations

d. An organization forced to pursue a new business unit because of changes in tax laws and regulations

Michelle opens a residential heating company dedicated to geothermal heating systems. She is pursuing a focused differentiation strategy, serving the needs of customers who are looking for environmentally friendly solutions to heat and cool their homes. Which of the following represents a risk to the company because Michelle is using a focus strategy rather than a broad strategy? a. Competitor residential heating and cooling companies offer mainstream options at lower prices. b. The cost of geothermal technology comes down and becomes more aligned with mainstream options, increasing the number of customers who consider geothermal options. c. New technology in the solar energy business is developed that makes efficient heating and cooling solutions based on power available to customers. d. As renewable energy continues to gain popularity, mainstream residential heating and cooling companies that are larger and have more resources decide to offer more geothermal options.

d. As renewable energy continues to gain popularity, mainstream residential heating and cooling companies that are larger and have more resources decide to offer more geothermal options.

Car manufacturers have a large lead time on new products. If an idea for a feature on a vehicle is developed, it will likely be two years before consumers know about it and can decide if they want to buy it. Consumer trends are sometimes short lived as they are always evolving. Which external environmental analysis element is a primary focus of car manufacturers? a. Scanning b. Monitoring c. Forecasting d. Assessing

d. Assessing

An industrial tool manufacturer relies on a particular distributor network. This distributor network has the largest online outlet and store network, and its product lines are aimed at construction workers. The distributor network is seeking a manufacturer to provide it with private-label products, as it has decided to offer only its own product line in this category of industrial tools. Now, the industrial tool company must decide whether to agree to this proposition or lose this network as a customer. This is an example of which of the competitive forces at play in this industry? a. Industry competitive structure b. Rivalry among competing firms c. Bargaining power of suppliers d. Bargaining power of buyers

d. Bargaining power of buyers

In the toy industry, Mattel is one of the world leaders, especially with its line of Barbie dolls. However, it has faced competition from MGA Entertainment, who has produced Bratz dolls since the 1990s. Which of the following statements is true about the strategic group in which these companies compete? a. The two companies occupy different strategic groups and will likely have very different competitive forces and different strategies. b. The companies are dealing with the same competitive forces as all of the other companies in the toy industry. c. Since they are both toy companies, they both have the ability to quickly pursue the toy truck market with minimal investment. d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.

d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.

The executive leadership team of a large corporation is analyzing a report. The report's contents have information that can be used to better understand and anticipate a competitor's objectives, strategies, assumptions, and capabilities. Which of the following is the term for the report being analyzed? a. External environmental analysis b. Internal analysis c. SWOT analysis d. Competitor intelligence

d. Competitor intelligence

Which of the following represents a risk for companies pursuing a cost leadership strategy? a. Failure to provide crisp and identifiable differentiation to customers in the form of a firm's product b. Counterfeit versions of a company's products c. Pricing that is higher than customers' perceived value of a quality product d. Competitors' innovations resulting in their ability to drive costs lower

d. Competitors' innovations resulting in their ability to drive costs lower

The senior managers of a grocery store chain have a disagreement over the direction of the company. One faction wants to leverage its capabilities and core competencies to take advantage of the opportunities provided by a stronger online presence, including online ordering with both at-store pickup and home delivery. The other faction feels that the company's strengths lie in small, convenient neighborhood stores and the customer service that accompany an in-store shopping experience. The online expansion would be a departure from what the company already knows how to do and would require a significant investment. Those in favor of the changes feel that the potential returns make the investment worthwhile. What concept are those in favor of change struggling against? a. A global mind-set b. Tangible resources c. Core capabilities d. Core rigidity

d. Core rigidity

A popular TV network, QTV, wishes to gain a competitive advantage by managing several businesses from its corporate headquarters. Among its goals, QTV hopes to acquire its competitor, RTV, in the process. In this instance, QTV is using which type of strategy? a. Business-level strategy b. Network-level strategy c. Global-level strategy d. Corporate-level strategy

d. Corporate-level strategy

Tockit is a children's toy developer that uses the resource-based model of above-average returns. Which of the following steps does it use in its business? a. Study the external environment, especially the industry environment. b. Use the firm's strengths to implement the strategy. c. Find the most attractive industry in which to compete. d. Determine the firm's capabilities.

d. Determine the firm's capabilities.

Christopher is the manager of the development department for a large company. Recently, he scheduled a meeting with a challenging objective—to discuss a failing project with one of his product development teams. The project is costing a lot of time and money but does not appear to have any return on investment in sight. Which of the following approaches would demonstrate successful strategic leadership? a. He should inform them that the project they are working on is no longer aligned with the company's vision, that he's killing it, and that all of their work has been in vain. b. He should keep the project going despite its failure because he doesn't have any better projects for them to work on. c. He should blame the markets for making the project unsuccessful and announce that the company is shifting customer targets and will work on the project in the context of a new industry. d. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.

d. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.

According to your textbook, which of the following would be considered an important step in the A-S-P strategic management process? a. Building the company's organizational chart of strategic leaders b. Acquiring a new business unit to gain access to new markets and product lines c. Utilizing an outside consultant to lead the company through the planning process d. Identifying marketplace opportunities and threats in the external environment

d. Identifying marketplace opportunities and threats in the external environment

Which of the following would be a motive for top-level executives to diversify their firm beyond value-creating and value-neutral levels? a. Decreased compensation and reduction of managerial risk b. Pursuit of a managerial challenge c. Interest in a promotion to a board position d. Increased compensation and reduced managerial risk

d. Increased compensation and reduced managerial risk

Apple, a leader in mobile technology products, wasn't always focused on mobile technology. In 2007, the company changed its name from Apple Computers to Apple Inc. This change was indicative of a shift in the industry. Apple began introducing iPods, iPhones, iPads, iTunes, and the App Store. Apple recognized its core competencies in hardware design and software engineering should serve as the foundation of its future strategy. Which of the following tools did Apple use to determine its competitive advantage? a. External environmental analysis b. Competitor analysis c. Industry analysis d. Internal analysis

d. Internal analysis

During a meeting, your client told you that a new firm had approached her and presented its products to her. The new firm has the potential to become a rival. Which of the following should you research to discover the potential rival's capabilities? a. Its future objectives b. Its assumptions c. Its current strategy d. Its strengths and weaknesses

d. Its strengths and weaknesses

Southwest Airlines' decision to "perform activities differently" has allowed the organization to differentiate itself from competitors and made it a low-cost leader. Which of the following activities is NOT contributing to the firm's ability to fulfill the purpose of this business strategy? a. Having short-haul, point-to-point routes between mid-sized cities and secondary airports b. Maintaining low ticket prices c. Training lean and productive ground and gate crews d. Offering free in-flight meals

d. Offering free in-flight meals

In an external environmental analysis, what are two important elements that need to be identified? a. Strengths and weaknesses b. Threats and strengths c. Opportunities and weaknesses d. Opportunities and threats

d. Opportunities and threats

Which of the following is the most critical criterion in prioritizing stakeholders? a. Status b. Reliability c. Degree of risk d. Power

d. Power

An industry-leading technology firm utilizing a differentiation strategy has decided to increase prices on its patented product to bolster profit margins and deliver a higher return to investors. Consider the impact of this decision in light of the forces of competition. Which of the following situations should the firm prioritize? a. Potential entrants b. Bargaining power of suppliers c. Bargaining power of buyers d. Rivalry with existing competitors

d. Rivalry with existing competitors

Which of the following strategies could be implemented to improve a company's richness in its customer relationships? a. A radio and billboard advertising campaign featuring a celebrity endorsing the company's product b. A customer loyalty program with multiple fine-print requirements c. A baby products sale announced through a mailed postcard to the company's entire database of customers d. Satisfaction surveys following the arrival of a product

d. Satisfaction surveys following the arrival of a product

Which of the following is a market-based move that firms take to fine-tune a strategy? a. Competitive action b. Strategic response c. Strategic action d. Tactical action

d. Tactical action

Which of the following is an example of the mobility of strategies and resources across firms in the mobile network industry? a. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness compared to Verizon and AT&T. b. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to achieve a broad geographic network, serving both urban and rural areas. c. A high-level engineer from AT&T is prevented from working for Verizon for five years by a non-compete agreement. d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

Which of the following is a reason why firms with a low level of diversification are often able to earn positive returns? a. They develop capabilities that are useful across many markets. b. They can transfer knowledge across businesses. c. They are able to constantly adjust the mix in their portfolio to increase profits. d. They can provide superior customer service.

d. They can provide superior customer service.

BlackBerry, a one-time leader in secure cell phones, lost its edge. Without significant upgrades or innovation, the company quickly lost market share to iPhones and Android devices. The company attempted to imitate these advances with the Blackberry Storm product, which flopped. Blackberry was criticized as trying to leverage capabilities beyond its core competencies. Which of the following tools should Blackberry use to regain a scope of its core competencies and determine potential sources of competitive advantage? a. External environmental analysis b. Competitor analysis c. Industry analysis d. Value chain analysis

d. Value chain analysis

What is the distinction between value-neutral reasons and value-creating reasons for a firm to diversify? a. Value-neutral reasons seek to help the firm establish a more competitive position, whereas value-creating reasons seek to serve the managers of the firm. b. Value-neutral reasons seek to serve the managers of the firm, whereas value-creating reasons seek to help the firm establish a more competitive position. c. Value-neutral reasons seek to improve the firm overall, whereas value-creating reasons seek to help the firm establish a more competitive position. d. Value-neutral reasons seek to help the firm establish a more competitive position, whereas value-creating reasons seek to improve the firm overall.

d. Value-neutral reasons seek to help the firm establish a more competitive position, whereas value-creating reasons seek to improve the firm overall.

Michael is the CEO of a manufacturer with plants in three countries. He currently has a product line that is manufactured only in the company's U.S. plant. That product has experienced a steady increase in its export sales to Europe over the last three years. The international sales director is recommending that the company expand manufacturing capabilities at the European plant to include this product line. Michael and his management team must consider whether to pursue this strategy. This is: a. a decision driven by the industrial organization (I/O) model of above-average returns. b. a conflict between two of the company's stakeholder groups. c. the diffusion of technology and perpetual innovation to help the company achieve its goals. d. a decision that would benefit from using the entire strategic management process.

d. a decision that would benefit from using the entire strategic management process.

A fast-food chain, Bob's Bigger Burgers, has just launched a campaign to market its new pound-and-a-half burger against its competitor, Lou's Burgers, who previously sold the biggest burger at a pound and a quarter. Bob's Bigger Burgers' strategic move against Lou's Burgers is a: a. competitive response. b. strategic response. c. tactical response. d. competitive action.

d. competitive action.

Awareness affects the extent to which the firm understands the consequences of its: a. product quality. b. competitive rivalry and dynamics. c. competitive motivation and ability. d. competitive actions and responses.

d. competitive actions and responses.

One constant improvement among smartphones of all brands is camera quality. As soon as Samsung, Google, or Apple introduces an updated phone, the others respond with equal or better quality in their next update. These competitive moves can be encompassed as the _____ of that market. a. market commonality b. competitor analysis c. resource similarity d. competitive dynamics

d. competitive dynamics

Rumor has it a new restaurant is coming to town called Italia Noodles. However, the owners are waiting to compare market commonalities and resource similarities to other local Italian restaurants. Italia Noodles is conducting a: a. tactical action plan. b. competitive action. c. strategic action. d. competitor analysis.

d. competitor analysis.

Capabilities develop into core competencies that can serve as the source of competitive advantage when: a. a company invests a lot of financial capital into them. b. a firm copies the way other firms perform them. c. the leadership team chooses to highlight them as part of the company's core values. d. employees, or human capital, integrate them and deploy them to deliver value to customers.

d. employees, or human capital, integrate them and deploy them to deliver value to customers.

Apple quickly launches its next wave of innovative iPhones in order to keep up with competitors, such as Samsung and Microsoft. Imitation is rapid and inexpensive in the smartphone industry. Apple is a part of a _____ market. a. standard-cycle b. slow-cycle c. medium-cycle d. fast-cycle

d. fast-cycle

To be successful, a firm utilizing an integrated cost leadership/differentiation strategy must: a. focus exclusively on improving its competence in all value chain activities. b. focus exclusively on innovative product design. c. reduce the number of customer segments it is trying to serve. d. increase the number of primary value chain activities and support functions in which it becomes competent.

d. increase the number of primary value chain activities and support functions in which it becomes competent.

A firm should analyze its internal organization as part of the strategic management process because: a. the firm is required to report its results to the government. b. it is the only method for identifying threats and opportunities to the business. c. without this study, strategic leaders do not have a working understanding of how their business operates. d. it provides the insights the firm requires to match what the firm can do with what the firm might do when formulating strategies.

d. it provides the insights the firm requires to match what the firm can do with what the firm might do when formulating strategies.

As soon as United Parcel Service (UPS) moved into overnight delivery, FedEx's strong point, FedEx bought trucking and ground shipping assets to gain advantage over UPS's strong point. These activities between UPS and FedEx are referred to as: a. market power. b. economies of scope. c. vertical integration. d. multipoint competition.

d. multipoint competition.

All of the following are analyzed during a SWOT analysis EXCEPT: a. weaknesses. b. threats. c. strengths. d. objectives.

d. objectives.

If a U.S.-based automobile parts supplier were to apply a global mind-set to its internal analysis, it would: a. review sales data of its North American dealerships to determine its most popular vehicles. b. research the history of the invention of the car and the evolution of the automobile industry. c. find information about the transportation infrastructure in emerging automobile markets around the world, including Asia and Africa. d. study all of its internal resources with an understanding of which capabilities offer value to meet the needs of U.S., Japanese, European, and Korean automakers.

d. study all of its internal resources with an understanding of which capabilities offer value to meet the needs of U.S., Japanese, European, and Korean automakers.

Differentiation strategies are successful in addressing the competitive force of the bargaining power of suppliers because: a. the company is operating at such high volumes that it can leverage its buying position to receive lower prices. b. they prevent new companies from entering into the industry through economies of scale. c. brand loyalty is a byproduct of this strategy, leading customers to choose the company's product over its rivals' products. d. the higher margins of the firm can reduce the influence of increases in supplier costs.

d. the higher margins of the firm can reduce the influence of increases in supplier costs.