MNGT 3100 - Chapter 5 BOOK Quiz

_____ is a generic strategy developed by Porter and it refers to the strategy where a firm's competitive advantage is based on the bet that it can develop, manufacture, and distribute products more efficiently than competitors.

Cost leadership

Which of the following is a generic strategy developed by Porter that refers to the strategy where competitive advantage is based on superior products or service?

Differentiation

____ refers to the strategy where competitive advantage is based on superior products or service. Superiority arises from factors other than low cost, such as customer service, product quality, or unique style.

Differentiation

Porter's five forces model attempts to analyze the attractiveness of an industry by considering five forces within a market. Which of the following is NOT one of these five forces? Rivalry Supplier power Economic trend Buyer power Threat from substitutes

Economic trend; The five forces included in Porter's five forces model are (1) barriers to entry and the threat of potential new entrants, (2) buyer power, (3) supplier power, (4) threat from substitutes, and (5) rivalry among industry competitors.

True or False: Differentiation makes customers more sensitive to change in price.

False; Differentiation may lead to customer brand loyalty, resulting in customers being less sensitive to changes in price. Differentiation may also lead to higher profit margins.

True or False: Intended strategy refers to the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances.

False; Emergent strategy refers to the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances.

True or False: Intended strategy is the actual strategy that is implemented.

False; Realized strategy is the actual strategy that is implemented.

True or False: Strategic management tells managers how they should go about putting the desired strategy into action.

False; Strategy implementation tells managers how they should go about putting the desired strategy into action.

Which of the following statements is true regarding cost leadership strategy? -Under the cost leadership strategy an organization's competitive advantage is based on superior products or service. -Several studies have shown that a cost leadership strategy is more likely to generate higher profits than a differentiation strategy. -As compared to differentiation strategy, cost leadership strategy creates stronger entry barriers. -As compared to cost leadership strategy, differentiation strategy is more likely to generate increases in market share. -Firms pursuing the cost leadership strategy must be particularly efficient in engineering tasks, production operations, and physical distribution.

Firms pursuing the cost leadership strategy must be particularly efficient in engineering tasks, production operations, and physical distribution.

Henry Mintzberg and his colleagues at McGill University identified four different aspects of strategy. Which of these aspects refers to a strategy that is conceived by the top management team?

Intended strategy

Which of the following factors tends to increase the intensity of rivalry within an industry? High growth rate Low fixed costs High switching cost Low exit barriers Lack of differentiation

Lack of differentiation

According to the value chain concept, which of the following activities is a primary activity? Human resource management Technology development Marketing Procurement Infrastructure maintenance

Marketing; According to the value chain concept, the primary activities are logistics (inbound and outbound), marketing and sales, and service.

PESTEL stands for _____.

Political, Economic, Sociocultural, Technological, Environmental, and Legal environments

Which of the following statements is true of strategy development? -Realized strategy is strategy as conceived by the top management team. -Mintzberg defines the strategy development process as rational and systematic. -Intended strategies are the actual strategies that are implemented. -Divisional and business unit managers do not have freedom to adjust, adapt, and experiment within the strategic plans. -The strategic planning systems of most companies involve a combination of design and emergence.

The strategic planning systems of most companies involve a combination of design and emergence.

Which of the following is true of arenas, differentiators, and economic logic? -They communicate how the strategy will get an individual to where he wants to go. -They show an individual where he wants to go. -They reflect the sequence and speed of strategic moves. -They refer to how one might pursue a new arena through internal means. -They help to reconcile the designed and emergent portions of an individual's strategy.

They show an individual where he wants to go.

True or False: Core competencies are resources and capabilities that serve as a source of a firm's competitive advantage over rivals.

True

_____ diversification occurs when a firm engages in businesses in different industries that lack similarities between each other.

Unrelated diversification

According to the VRIO framework, a resource or capability is said to be valuable if it:

allows the firm to exploit opportunities or negate threats in the environment.

Jupiter Inc., an automobile manufacturer, is planning to launch a new range of sports cars. Different teams from the firm conducted surveys to find out the preferences of consumers in various countries. The company used this information to analyze in which market the new product was likely to be popular. In the context of the facets of the strategy diamond, Jupiter Inc. is working on _____.

arenas

A _____ strategy considers an organization to be a portfolio of businesses, resources, capabilities, or activities.

corporate strategy

Synergy exists when the interaction of two or more activities: -creates a combined effect equal to sum of their individual effects. -nullifies positive effects of all the activities. -creates a combined greater than the sum of their individual effects. -negatively affects one of the activities. -creates a combined effect less than the sum of their individual effects.

creates a combined effect greater than the sum of their individual effects.

According to Porter's five forces analysis, profits are likely to be low in an industry if: -the industry is difficult to enter. -the buyers in the industry are relatively weak. -it is easy to switch to alternatives. -the suppliers in the industry are relatively weak. -there is limited rivalry.

it is easy to switch to alternatives; According to Porter's five forces analysis, profits are likely to be low in an industry if (1) the industry is easy to enter (2) there is a high degree of rivalry between firms within the industry (3) buyers are strong (4) suppliers are strong and (5) it is easy to switch to alternatives.

With reference to the four different aspects of strategy, as identified by Henry Mintzberg and his colleagues at McGill University, _____ strategy is the actual strategy that is implemented and it is only partly related to intended strategy.

realized strategy

In the case of _____ diversification, a firm operates multiple businesses within the same industry.

related diversification

VRIO framework provides the foundation for internal analysis. VRIO is an acronym for _____.

valuable, rare, inimitable, and organization

If arenas and differentiators show where an individual wants to go, then ____ communicate how the strategy will get him there.

vehicles