Strategic Management and Business Policy Exam One

Blaze Corp., a car company, shared its costs of producing cars. It did so by introducing the production of car accessories that are used by customers to upgrade or customize their cars. Blaze Corp. started selling car accessories such as engine oils, wheels, and music player and thus shared its market research costs between cars and car accessories. This led to a definite decrease in the overall cost of production. This scenario best illustrates _____.

economies of scope

The board of directors of White Corp. meets to analyze the company's competencies and scope for improvement. It also examines whether White Corp. has been able to meet its potential customers' requirements. The board of directors of White Corp. is involved in a(n) ________.

internal analysis

Indigo Inc experienced a drop in the price of each product as the overall volume of production increased) This relationship or method caused an increase in profits accrued by the company. This is an example of the _____.

law of experience

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**End of Chapter 3 Animated Executive Summary Quiz: Internal Analysis**

**End of Chapter 3 Animated Executive Summary Quiz: Internal Analysis**

**End of Chapter 3 Animated Executive Summary Quiz: Resource Based View**

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**End of Defining Industry Video Quiz**

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**End of Porter's Five Forces Video Quiz**

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*End of Chapter 5 Animated Executive Summary Quiz: Differentiation Advantage*

*End of Chapter 5 Animated Executive Summary Quiz: Differentiation Advantage*

What sixth force have some strategists suggested adding?

Complements

McDonald's can be found on many street corners in cities across the world. Because of its many locations, McDonald's is differentiated through _________.

Convenience

During the process of mapping the consumption chain of a product, Nina looks at the methods followed by companies which send their engineers to check laptops when they detect that a possible bug could be affecting a system. Which of the following questions does this example address?

How is your product repaired, serviced, or disposed of?

A higher threat of new entrants is good for industry incumbents.

False

Porter's five forces have no limitations when conducting an industry analysis.

False

When a company chooses a low cost strategy, it will be successful by keeping its focus on cost to the exclusion of everything else.

False

Being in the best industry guarantees outstanding profits.

False!

According to Porter and McGahan's study, external factors have a bigger impact on firm performance than internal factors.

False.

Which of the following is true about economies of scale?

Fixed costs of production are spread from a higher volume of sales

For a luxury high-end product, which of three "job" dimensions is not as important?

Functional.

A visual description of the steps required to turn raw materials into finished products and/or services most accurately defines the term __________.

value chain

The process it takes to transform raw inputs into finished outputs is called the __________.

value chain

Which of the following statements best describes forward integration?

A firm goes into the business of its former buyers, rather than continuing to sell products to them.

Which of the following statements regarding product differentiation is incorrect? The actual products of two different companies may be similar in terms of technical features, but if one product is perceived as being different in a way that is valued by customers, then product differentiation exists. When the perceived value of a product increases in the mind of the customer, it also increases the customer's willingness to pay a higher price. When customers go to purchase a product to get a job done, they tend to consider two factors: the way a product is differentiated from other products to perform the job they want done and the price of the product. A lower price is typically necessary because attempts to differentiate products usually require companies to invest resources that decrease the cost of their offering.

A lower price is typically necessary because attempts to differentiate products usually require companies to invest resources that decrease the cost of their offering.

The employees at Voyage Ink Corp. were asked to draw a chart that explains the elements which go into making one of their products. They were asked to create a diagram showing the different types of materials that help create the whole product. Which of the following are the employees at Voyage Ink Corp. creating in this scenario?

A value chain

Which of the following products best exemplifies reliability? A washing machine that works optimally for many years. An air conditioner that detects movement automatically. A phone that offers the unique function of face recognition. A computer that has greater processing speed than others in the market.

A washing machine that works optimally for many years.

Every "job" has three dimensions. Which of the following is NOT one of those three dimensions? Functional Aesthetical Social Emotional

Aesthetical.

What is meant by diseconomies of scale?

An increase in marginal cost when output is increased

Which of the following describes when a firm purchases one or more of its suppliers in order to make a product itself rather than buying it from another firm?

Backward integration

Which one of the following is not a way to lower input costs? Buying in large volume (greater supplier power) Working cooperatively with suppliers Building a new business model To source inputs from the lowest cost locations

Building a new business model

SliderPage Inc., a furniture company, has been trying hard to keep its profits going. SliderPage asked its suppliers to reduce the cost of the raw materials that would be needed to create its products and also tried to buy supplies that are less expensive. Which of the following buyer price sensitivity factors is best illustrated in this scenario?

Buyers struggling financially

Identify a primary way in which companies achieve cost advantage through lower-cost inputs.

By cooperating especially well with suppliers

Identify a true statement about competition among firms within an industry.

Each move by a firm provokes countermoves among competitors, resulting in a constantly shifting competitive landscape.

Why should we care about internal analysis?

External analysis is often incomplete and Some research suggests internal factors explain more of the variance in company profitability than external factors

Identify a true statement about the Net Promoter Score.

It is a useful tool for assessing customer satisfaction.

"Practice makes perfect" applies to which cost advantage?

Learning and experience

Which of the following is the most relevant direct competitor that BMW should pay attention to? Hyundai Ferrari Lamborghini Lexus

Lexus

Which one of the following is NOT an internal factor? Land Better Serve Processes to lower cost Brand Patents Market trends

Market trends

The customers, investors, and employees of Pisces Inc. are invariably satisfied with the services and culture of the company. Pisces Inc. has delivered on all its promises and has continued to create a sense of worth among its varied audiences. Which of the following terms best categorizes the elements of Pisces Inc. described in this scenario explaining?

Operating capabilities

What barriers make it costly for competitors to imitate?

Path dependence Causal ambiguity Social complexity All of the choices are correct.

How did Amazon create a different business model?

Performing different activities altogether

The marketing department of Flashy Cosmetics brand conducts customer research. They find that 40% of its customers said they prefer the brand because they do not need to reapply the product often, while 30% said they chose the brand because the products are organic. If the Flashy Cosmetics segments the customers by the features of the cosmetics they prefer, the segmentation is primarily based on __________.

Product attributes

Substitutes are:

Products/services that perform a similar function as an industry's products/services by different means

A patent makes a product:

Rare

Katherine is the CEO of a car dealership company called Red Cars. When looking for new investors for the company, she usually says that Red Cars wants to "Be the best automotive retailer in the eyes of its customers, employees, and shareholders." Which of the following does this statement best reflect?

Red Cars' mission

What exactly are internal factors?

Resources and capabilities that allow companies to deliver unique value to customers.

How does high growth in demand affect rivalry?

Rivalry decreases

Which correctly lists Porter's five forces?

Rivalry, Buyer Power, Supplier Power, Entrants, Substitutes

Sasha, the marketing head of a firm, believes that customers hire products to do jobs for them and that these jobs should be the basis for market segmentation. In this case, which of the following is Sasha likely to approve?

Segmentation based on features such as durability and quality.

Internal analysis sheds light on which parts of SWOT?

Strengths and Weaknesses

To a strategist, what does the logic of the experience curve suggest?

The company with the highest volume in an industry will also be the lowest-cost producer.

Juan, the manager of Pvari, a chain of jewelry stores, claims that mass customization is the best way to create value for their products. Nate, the senior designer, believes that every product must be customized from the pre-production stage. Which of the following statements will strengthen Juan's claim?

The production costs will reduce to half if products are made in large scale.

If a resource is the tool, then a capability is ___________.

The skill to use the tool that brings unique value to customers

Which of the following statements is true of strategic leaders? They are responsible only for formulating a business strategy. They are responsible for explaining strategy in a way that employees will understand. They are usually the owners of a company. They are involved in investing in stable firms with a long history of profitability.

They are responsible for explaining strategy in a way that employees will understand.

What is VRIO used for?

To assess whether a resource or capability is likely to create a competitive advantage.

What "job(s)" did the morning customers buy milkshakes for in the Clayton Christenson example?

To be able to use one hand for the commute to work and keep them busy and full for a longer period.

Which of the following is NOT a way to differentiate with product features? To have products that do a "better job". To have products that do more jobs. To have products that do a "unique job". To have products that do less-expensive job.

To have products that do less-expensive job.

Historically, which company has differentiated through quality or reliability? Walmart BMW Toyota Lamborghini

Toyota

A firm may employ valuable, rare, and difficult-to-imitate resources and yet still lack a sustainable competitive advantage because the firm may not be organized to exploit or have the contracts and systems in place to capture the profits that resources create.

True

Hyundai is more of potential entrant rather than a direct competitor to BMW.

True

Intangible assets are resources.

True

Microsoft (supplier) has more power than PC makers (buyer)?

True

Tata Nano represents how a company can be the low-cost producer through proprietary knowledge.

True

Two products with the exact same technical features can be differentiated because of customer perception.

True.

What does VRIO stand for?

Valuable, Rare, Imitate, Organized

What key question can you use to help define an industry and determine your direct competitors?

What job are customers hiring our product/service to do?

Generally, how does the number of buyers affect buyer power?

When there are few buyers, buyer power is high.

Corporate strategy focuses on which of the 4 strategic choices? Where to compete How to compete How to implement strategy How to develop a unique strategy for each business unit

Where to compete

Clearly defining your industry tells you where you _______.

compete

Lynx Inc., a startup firm, has been trying to sell its product to customers. However, the customers do not perceive any value in the product and neither do they find it unique in any way. Lynx Inc. also does not have proper systems and processes that can help in auditing and retaining the profits created by their employees. The company has drained its funds in the process, but it has not been able to successfully establish itself in the market. As a result, the firm has not been able to successful to its stakeholders. Ultimately, the board of directors at Lynx Inc. decides to shut it down completely. This scenario best exemplifies __________.

competitive failure

The household appliance industry has few major manufacturers like Nebula Corp., Cook Well Inc., and Mercury Corp. and a few smaller manufacturers. There is not much competition in this industry because the smaller companies cannot afford to compete aggressively with the large firms which do not engage in price wars. This scenario best illustrates a ________.

concentrated industry

The executives at Purple Inc. hold a meeting where they decide the best way to showcase their products. They have a brainstorming session to identify the best geographical areas to conduct business that will bring them maximum profits. They also identify their competitors and decide whether they would be able to withstand top companies selling similar products. The executives at Purple Inc. are discussing a(n) ________.

corporate strategy

A group of students studying a firm named Sanders & Collins Corp. found that the workers initially learned their task-related activities very fast. In turn, this helped the firm reduce the labor cost incurred in producing each product. However, their rate of learning these tasks reduced over time. This scenario best illustrates the _____.

learning curve

Firms use convenience as a source of differentiation advantage by __________.

making a product easier to find and purchase

Ochre Inc. manufactures accessories such as belts, bags, and shoes. It produces the basic models of all these items on large scale. However, customers can customize these products by choosing embellishments of their choice, such as zippers, straps, and buckles. Ochre's manufacturing process best exemplifies __________.

mass customization

The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term ________.

opportunities

The learning curve is the idea that

practice makes perfect.

JGaines Inc., an interior design company, offers its clients unique design solutions. Clients can choose from JGaines' in-house products, customize them to meet their needs, and see how their home would appear using a 3D visualization software in a mini-theatre at JGaine's office. This gives JGaines a competitive advantage over its rivals since none of them offer this unique combination of services. JGaine's advantage is due to its __________.

product differentiation strategy

Femi, the founder of Pluto Inc., feels that the company has been able to continuously maintain competitive advantage due to the plans of action she initiated years ago. The plan involved establishing and maintaining contacts with influential business personnel, amicably taking over small companies that would help bringing in profits for Pluto Inc., and creating raw materials from scratch rather than buying from other companies. This type of planning is an example of ________.

strategic vehicles

ZipTag Inc. is an online company that allows venders of varied products to display their products to prospective buyers. This company has been providing service to both customers and sellers and has established itself in the market as a credible company to conduct business with. This has caused more dealers to display their products in ZipTag as they trust that the company will provide the necessary advertising to pull in prospective customers. This is an example of a __________.

virtuous circle