Strat 488 Chapter Quizzes

Avon has been able to raise the perceived value of its products while lowering production costs. It has also been able to create more value in relationship to its costs over rivals, Revlon and L'Oreal. It can be said that:

Avon has successfully achieved a blue ocean strategy and has a competitive advantage because it has higher value creation.

An upscale jeweler ordered several thousand ounces of gold a few years ago when gold was priced at $650 an ounce. In 2011 gold was averaging about $1,700 an ounce. This jeweler will be able to protect his competitive advantage, at least temporarily, due to which condition?

Better expectations of future resource value

After Jeff Bezos read about how the internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and created Amazon which is now the world's largest online retailer. This is clearly an example of:

An entrepreneur who transformed invention into an innovation.

The basic way that the balanced scorecard provides competitive insight to managers is through the use of:

Concise reports that track and measure chosen metrics.

The Boston Consulting Group (BCG) matrix is a tool that helps with:

Corporate portfolio planning and restructuring.

From an accounting profitability perspective, competitive advantage is achieved by the firm that does which of the following?

Delivers the most positive profitability metrics.

Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario?

Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little

____________ is created when a customer is willing to pay more for a good or service than it costs the firm to produce it.

Economic value

Visionary companies differ from their competition in that:

Employees in visionary organizations find meaning in their work and are motivated.

A generic business strategy helps a cost-leadership firm achieve competitive advantage, when it helps it create large value at whatever the cost required.

False

Creating resources that meet the VRIO criteria is strategically important to a firm because:

Firms that possess these types of resources may be able to experience a sustained competitive advantage.

___________ and ____________ are the two focused generic business strategies.

Focused differentiation; focused cost leadership

If a firm wants to have more ownership of activities closer to the end product or customer, then it should:

Forward vertically integrate.

Industry structures are not stable over time. The U.S. banking industry has seen major consolidation in recent years. We would expect the result of this dynamic change to be what?

Generally higher industry profits

Macroeconomic factors such as the unemployment rate and economic contraction:

Have a direct bearing on a firm's stock price.

As discussed in Chapter 5, the chemical manufacturer FMC Corporation overcame short-term thinking and underperforming business units by adopting a balanced scorecard approach. All of the following are true about FMC's successful implementation of a balanced scorecard EXCEPT:

Managers were able to formulate new strategies.

One way that a firm can create a sustainable competitive advantage is by:

Managing value chain activities better than its rivals.

When an organization briefly describes what its business is about and why it does it, they have articulated a:

Mission statement.

Which of the following is NOT a risk on the "make" end of the continuum ?

Organizational planning often improves when a firm integrates.

The fact that the U.S. still uses a system of measurement from the 1820's instead of the metric system and is at a disadvantage in certain cross-border transactions and negotiations demonstrates that:

Path dependence can affect the ability to remain competitive.

PepsiCo sells a wide variety of beverages and food products in 190 countries. PepsiCo is clearly engaging in ______________ to achieve continuous growth.

Product-market diversification

Many of the early U.S. railroad companies defined themselves as being in the railroad business instead of being in the transportation needs business. These companies used:

Product-oriented missions.

The commercialization of new ideas and inventions often does all of the following EXCEPT:

Protects older industries.

Suppose that a firm wanted to find profitability information about its rivals. The most likely and reliable source of this information would be:

Publicly available information including 10-K reports.

____________ is capital-intensive, but critical for a firm in creating and launching a new innovation.

R & D (Research and Development)

When a successful firm exhibits resource immobility:

Resource differences between the firm and a rival are hard to replicate.

Core competencies are built through the interplay of several firm attributes. These attributes include a firm's:

Resources, capabilities and activities.

In Strategy Highlight 2.2, what type of strategy is the store manager of Starbucks using to develop new drinks for the stores?

She is using an emergent strategy process.

Individuals or groups that can affect or are affected by the actions of a firm are called:

Stakeholders.

As part of its strategic management process, an automobile company evaluates its business model and assesses and measures its competitive advantage. Which of the following tasks in the AFI strategy framework is the company performing?

Strategy analysis

Which SWOT factors below are generated from internal resources, capabilities and competencies?

Strengths and weaknesses

Both Apple and Nike produce their products and own retail outlets. They also rely on independent distributors to sell their offerings. Apple and Nike are utilizing _________ to partially rely on outside-market firms while supporting their forward vertical integration strategy.

Taper integration

If a manager is listing out resources which can be used to drive competitive advantage, which item below would NOT be on the list?

The economy

The term "strategy" has grown in usage in a variety of fields today. Which of the following is the best use of the term for this course?

The firm's efforts to gain and sustain competitive advantage.

Which of the following statements is true of the relationship between strategic management and the role of business in society?

Value creation lays the foundation for the benefits that successful economies can provide; however, strategic mistakes can be expensive.

Industry value chains consist of all of the processes that transform raw materials into finished goods and services. These value chains are also called:

Vertical value chains.

When it comes to a firm's value chain activities and the "essence of strategy," a firm should ask itself:

Which activities should be done and more importantly, which should NOT be done

Absorptive capacity is important for a firm to have because:

Without new knowledge the firm could face a "technological lock-out".

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

architectural innovation

The objective of Porter's five forces model is to:

assess the potential for profits within an industry.

Strategic group mapping, such as Exhibit 3.5, shows us that:

competitive forces in an industry favor some strategic groups while threatening others.

A ____________ is a product or service that can help raise demand in an industry by indirectly enhancing performance or decreasing prices.

complement

The pharmaceutical company Merck's new drug Vioxx was a blockbuster, generating revenues of $2.5 billion a year by 2002 and growing fast. When allegations began to appear in the medical community, Merck announced the voluntary withdrawal of Vioxx from the market. In this example, Merck provides an example of what can happen if a company deviates from its _____.

core values

During the strategy formulation stage of the strategic management process, a firm primarily:

designs an overarching policy on how to deal with the competitive challenges.

Futura Inc. introduced an automobile that could run completely on electricity for longer periods of time than any other electronic or hybrid automobile. Also, this vehicle was less expensive than the vehicles of competitors. On the downside, it required more repairs than the competition's automobiles. However, the technology of the Futura vehicle improved rapidly, thereby improving its repair record. This example describes

disruptive innovation.

A firm's stock market valuation is based on historical accounting data and ___________.

market expectations for the future

A ____________ is created when the government believes the product or service would not be supplied by the market under free market conditions.

natural monopoly

NextDoor is an instant messaging application for smartphones. New smartphone users find it easier to connect with friends and relatives through this mobile app when compared to other similar instant messaging applications. Hence, it has the largest user base in the industry. Thus, NextDoor app's value has increased primarily due to its

network effects

All of the following are tools typically used to achieve cost-leadership EXCEPT:

offering products that have superior value.

As conveyed in exhibit 3.1, GENERAL macro-environmental PESTEL factors DIRECTLY impact _______.

the industry.

When a firm attempts to improve its economic, social and ecological performance it is taking a(n) ___________ approach to assessing competitive advantage.

triple-bottom-line

Exit barriers are obstacles that determine how easily a firm can leave the industry. When exit barriers are high, what happens to industry attractiveness?

it becomes a complement

Information asymmetries occur when:

A firm transacts in the market with a seller who has better information about the product or service.

Intangible assets add great value to a firm because:

A firm's culture, knowledge and intellectual property take time to develop and are generally difficult to imitate

In 2010, Levi Strauss & Co. introduced a new line of jeans called Levi's Curve ID. Levi's launched this product based on research that found that 80 percent of women fall into three distinct body shapes. Customers can now go to Levi's website and use a product configurator in order to determine their "Curve ID" and purchase jeans most appropriate for their body type. Levi's is using what tool to improve their strategic position?

A product differentiation strategy with an individual customization product feature as a value driver.

The 2001 collapse of Enron, resulting in one of the biggest bankruptcies in U.S. history, demonstrates that:

A. An organization may have a mission statement promoting ethical behavior, but it must have strong organizational values to guide the behavior of employees. B. Employees observe managerial behavior and tend to follow it. C. Having strong ethical values inside an organization is important for long term success. D. All of these. (correct)

Transaction costs:

A. Help to determine the scope of the firm. B. Are all costs associated with an economic exchange. C. Are both internal and external. D. Are all of these. (correct)

Essentially, a successful blue ocean strategy:

A. gives customers more perceived value while beating their price expectation. B. allows a firm to make strategic trade-offs. C. enables a firm to increase value creation while keeping costs in check. D. All of these. (correct)

When management modifies strategic objectives based on which stage an industry is in, they are responding to a(n):

Industry life cycle.

What is wrong with the following statement? "Intended strategies tend to be generated from a bottom up approach."

Intended strategies are generated from a top down approach.

Intel is provided as an example of a firm that has continuously changed its mission statement, including most recently moving to a customer-focused mission. This is an indication of what?

The mission was changed after Intel had already changed its business focus.

Corporate strategy is concerned with determining the boundaries of the firm among geographic, vertical and product/service dimensions. This is referred to as:

The scope of the firm.

The never-ending cycle of analysis, formulation, implementation and feedback is called what?

The strategic management process

Under the economic value creation framework, producer surplus is important in the quest for competitive advantage because:

This is the profit that a firm captures when producing and selling a good or service.

All of the following are reasons why a firm seeks to diversify EXCEPT:

To determine how to compete in current markets.

Under the five forces model, a risk to a business with a cost-leadership strategy is:

echnological innovations will open up cost reductions for substitutes or competitors, leading to replacement.

Experience curves attempt to capture both _______________ and learning effects.

economies of scope

The key challenge of stakeholder management is to:

effectively balance the needs of various stakeholders.

All of the following are aspects of sociocultural factors influencing industry attractiveness EXCEPT:

environmental protection laws.

As the inventor of hypertension medication, OneSure Pharmaceuticals (OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiration of OSP's patents, regular users did not want to switch because they were concerned about possible side effects. Which of the following benefits does this scenario best illustrate?

first-mover advantages

The vast majority of innovations in an industry are ____________ because they build on a firms existing knowledge base and reinforce the existing organizational structure and network relationships.

incremental