Strategic Management: exam 1 chapter 1-6 MC

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. Globalization has led to a. lower operational efficiency as firms must transport raw materials and finished goods farther. b. increasing loyalty of customers for products made domestically. c. declining returns from investment in research and development. d. higher product quality.

131. The strategic management process is a. a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm. b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment. c. a process directed by top management with input from other stakeholders that seeks to achieve above- average returns for investors through effective use of the organization's resources. d. the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.

A company competing in a single product market has a. one corporate-level strategy. b. one business-level strategy. c. one business-level strategy for failure. It should seek to diversify. d. one business-level strategy and one corporate-level strategy.

Above-average returns are a. higher profits than the firm earned the previous year. b. higher profits than the industry averaged over the last 10 years. c. profits in excess of what an investor expects to earn from a historical pattern of performance of the firm. d. returns in excess of what an investor expects to earn from other investments with a similar level of risk.

Analysis of the industry's profit pool enables strategic managers to a. predict future revenue streams for the organization. b. predict growth in sales over the medium to long range. c. determine whether an industry will be viable in the long term. d. locate the most promising areas of an industry's value chain.

Dissatisfied capital market stakeholders may a. sell their stock. b. tighten loan covenants. c. seek to increase their power. d. All of these options are correct.

Firms use the five forces model to identify the of the industry as measured by its a. size; number of competitors. b. globalization; exports. c. hypercompetition; technology diffusion. d. attractiveness; profitability.

Greenleaf Property Management has been earning below-average returns for the last three years. Which of the following statements are true? a. Greenleaf will be able to satisfy its multiple stakeholders easily as long as the stakeholders are committed to the strategic mission of the firm. b. Greenleaf will be able to at least minimally satisfy the demands of each stakeholder. c. Greenleaf will need to prioritize the demands of its stakeholders based on the political influence each wields. d. Greenleaf will not be able to minimally satisfy all stakeholders.

If McDonald's were to map the profit pool in the quick-service restaurant industry, it would do all of the following EXCEPT a. define the industry's boundaries and size. b. estimate the profit potential in each part of the value chain. c. focus on unattractive industries ignored by competitors. d. select the strategy to use where the largest profit pools are located.

In smaller, new venture firms, returns are sometimes measured in terms of a. return on assets. b. return on equity. c. return on sales. d. the amount and speed of growth.

In the resource-based model, which of the following factors would be considered a key to organizational success? a. unique market niche b. weak competition c. economies of scale d. skilled employees

Managers must adopt a new mind-set that values conditions. a. flexibility b. innovation c. speed d. All of these options are correct.

McDonald's has been able to a. earn above-average returns. b. achieve strategic competitiveness. c. use the strategic management process. d. All of these options are correct.

Organizational culture refers to a. the social energy that drives, or fails to drive, the organization. b. the complex set of ideologies, symbols, and core values that are shared throughout the firm. c. what people do when no one else is looking. d. All of these options are correct.

Research shows that approximately percent of a firm's profitability is explained by the industry in which it competes, whereas a. 90; 10 b. 60; 40 c. 36; 20 d. 20; 36

SWOT stands for a. strategy, wealth, organization, and threats. b. success, weakness, opportunities, and taxes. c. strength, wealth, organization, and taxes. d. strengths, weaknesses, opportunities, and threats.

Successful strategic leaders are a. committed to helping the firm create value for all stakeholder groups. b. committed to nurturing those around them. c. decisive. d. All of these options are correct.

The economic interdependence among countries as reflected in the flow of goods, services, financial capital, and knowledge across country borders is defined as a. hypercompetition. b. boundaryless retailing. c. strategic intensity. d. globalization.

The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the U.S. market? a. telephone b. television c. personal computer d. Internet

The resource-based model of the firm argues that a. all resources have the potential to be the basis of sustainable competitive advantage. b. resources alone can be a source of sustainable competitive advantage. c. the key to competitive success is the structure of the industry in which the firm competes. d. resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm's core competencies.

The strategic management process is a. a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm. b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment. c. a process directed by top-management with input from other stakeholders that seeks to achieve above- average returns for investors through effective use of the organization's resources. d. the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.

Which of the following statements about organizational knowledge is correct? a. Knowledge is an intangible resource. b. The importance of knowledge is increasing. c. The value of knowledge as a proportion of shareholder value is increasing. d. All of these options are correct.

___________ has become the second-largest economy in the world. a. The United States b. The European Union c. Japan d. China

A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statements is most likely to be true? a. The cost of the marble will be expensive because of the bargaining power of the supplier. b. The cost of the marble will be moderate because of the bargaining power of the buyer. c. The cost of the marble will be moderate because of economies of scale. d. The cost of the marble will be expensive because of the high strategic stakes involved.

A company pursuing vertical integration can gain market power over its competitors through all of the following EXCEPT a. improved adjustment to technological changes. b. savings on operations costs. c. improved product quality. d. avoidance of market costs.

A cost leadership strategy provides goods or services with features that are a. acceptable. b. unique. c. substandard. d. mediocre.

A cost leadership strategy targets the industry's ____ customers. a. most typical b. poorest c. least educated d. most frugal

A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT a. the attack is by a price predator. b. the attack makes the firm's market position less defensible. c. the attack damages the firm's ability to use its capabilities. d. the attack improves the competitor's market position.

A firm's mission a. is a statement of a firm's business in which it intends to compete and the customers it intends to serve. b. is an internally-focused affirmation of the organization's financial, social, and ethical goals. c. is mainly intended to emotionally inspire employees and other stakeholders. d. is developed by a firm before the firm develops its vision.

A general environmental analysis can be expected to produce all of the following EXCEPT a. objective answers. b. recognition of environmental trends. c. identification of organizational opportunities. d. identification of organizational threats.

A nationwide chain of pet stores wishes to identify the tradeoffs that its customers are willing to make between low-cost products such as generic pet foods and differentiated features such as pick-up and delivery of pets for grooming. The best technique for this firm to learn this information would be to use a. information networks. b. a flexible manufacturing system. c. differentiation development planning. d. Enterprise Resource Planning.

A noted professional art academy has founded an "artists and friends" travel company specializing in tours for artists to scenic locales, using its faculty as traveling teachers. In addition, the art academy has purchased a framing company to both make frames for academy art works, but also to sell museum-quality framing services to the public. The art academy is engaging in diversification based on ____ relatedness. a. operational b. corporate c. intellectual d. constrained

A prominent national accounting firm runs television advertisements showing an accountant working alone late in the office on a client's project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that this firm's accountants love their work. This ad seeks to convey a sense of the organization's ____ to the viewers. a. culture b. mission c. vision d. personality

According to the Chapter 2 Opening Case on BP, in response to the Deepwater Horozon oil spill, the company should expect increased scrutiny coming from which of the following segments of the general environment? a. Political/legal. b. Global. c. Technological. d. Sociocultural.

According to the five forces model, an attractive industry would have all of the following characteristics EXCEPT a. low barriers to entry. b. suppliers and buyers with little bargaining power. c. a moderate degree of rivalry among competitors. d. few good product substitutes.

All of the following are considered generic business-level strategies EXCEPT a. product diversification. b. cost leadership. c. focused differentiation. d. integrated cost leadership/differentiation.

Although a ________________ firm, GE (discussed in the Chapter 6 Opening Case) has done an exceptional job of _____________________ its four major strategic business units. a. related linked; allocate capital across b. related constrained; restructuring c. unrelated; share activities across d. unrelated; transfer core competencies across

An ability to efficiently allocate capital through an internal market may help the firm protect the competitive advantages it develops a. through reduced disclosure to outside parties. b. by the ability to not report losses to investors. c. by the ability to increase pay to managers without shareholders being aware. d. through the ability to reinvest cash in dividends to shareholders.

An analysis of society's attitudes and values would be conducted when studying the ____ segment of the general environment. a. sociocultural b. global c. demographic d. economic

An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his spouse's company transferred her to St. Paul. The decorator is distressed because the customers in his target market have, in his words, "banal and bourgeois taste." What is the decorator's problem? a. The decorator does not understand that customer needs are neither right nor wrong, good nor bad. b. The decorator has no core competencies that will transfer to his new geographic market. c. The decorator should choose a strategy of cost-leadership in this environment. d. The decorator is highly affiliated with the new target market and understands how he can create value for it.

An office management firm has developed a system for efficiently organizing small medical and dental practices both through proprietary software and through unique training programs for staff. It has recently acquired a firm specializing in providing management services for veterinary practices. The office management firm is hoping to a. achieve economies of scope. b. implement vertical integration. c. achieve financial economies through an unrelated acquisition. d. acquire specialized talent from the veterinary management company.

An owner of a stable of racehorses has been earning below-average returns for over 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of a. high barriers to exit. b. high switching costs. c. high fixed costs. d. low levels of competitive rivalry.

Backward integration occurs when a company a. produces its own inputs. b. owns its own source of distribution of outputs. c. is concentrated in a single industry. d. is divesting unrelated businesses.

Before liquidating, Circuit City took several actions to try to satisfy its __________ stakeholders. a. capital market b. product market c. organizational d. governmental

Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of a. the perception of perceived prestige and status as a means of differentiating a product. b. the importance of high-quality raw materials when using the differentiation strategy. c. the risk of product imitation by competitors. d. the danger counterfeiting holds for firms pursuing the differentiation strategy.

Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement of donors is accurate? a. Blood donors are suppliers and are powerful due to the critical nature of what they provide to the blood bank. b. Blood donors are suppliers and are powerful due to their concentration relative to the blood bank. c. Blood donors are buyers and are not due to low switching costs needed to change to alternative inputs. d. Blood donors are buyers and are powerful due to the volume of blood needed.

Business-level strategies are concerned specifically with a. creating differences between the firm's position and its competitors. b. selecting the industries in which the firm will compete. c. how functional areas will be organized within the firm. d. how a business with multiple physical locations will operate one of those locations.

By examining the ____ of Southwest Airlines, one can identify the strategic themes around which it has developed its business strategy. These themes include limited passenger service, high aircraft utilization, highly productive ground and gate crews, and so forth. a. activity map b. profit pool c. value diagram d. five forces model

Capabilities that other firms cannot develop easily are classified as a. costly to imitate. b. rare. c. valuable. d. nonsubstitutable.

Chico's is a clothing retailer that targets middle-aged women who want stylish and appealing clothes that are suitable for the mature figure. Chico's has an extensive customer list, a frequent-buyer discount card, and frequent sales promotions to Chico's customers based on their spending levels. Chico's uses a ____ strategy. a. focused differentiation based on a buyer group b. focused differentiation based on a product line segment c. generic differentiation d. integrated cost leadership/differentiation

Compared to tangible resources, intangible resources are ____ and ____. a. less visible; more difficult to copy. b. less visible; less difficult to copy. c. more visible; more difficult to copy. d. more visible; less difficult to copy.

Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies. a. business-level b. corporate-level c. acquisition d. international

Competitor analysis focuses on a. firms with which the company competes directly. b. firms that produce products that are substitutes. c. all firms in the industry. d. companies that might enter the industry.

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT a. lack of scientific transference. b. social complexity. c. unique historical conditions. d. causal ambiguity.

Dragonfly Publishers of children's books has purchased White Rabbit, another publisher of children's books. Both companies' books are sold to the same retail stores and schools. Their content is different, since Dragonfly produces children's literature, whereas White Rabbit focuses on child-level scientific and nature topics. Which of the following statements is probably TRUE about this acquisition? a. This is a horizontal acquisition. b. This is an example of virtual integration. c. Dragonfly is beginning to build a conglomerate. d. Economies of scope are unlikely to result from this acquisition.

Essentially, the _________ has become one of the world's largest markets with 700 million potential consumers. a. European Union b. The United States c. China d. Japan

Even for companies capable of succeeding in global markets, it is critical that they a. remain committed to and strategically competitive in their domestic market. b. introduce many new products immediately after entering a new market. c. acquire a local competitor in each significant foreign market. d. develop good negotiating skills in order to take advantage of local suppliers in the international market.

Ever improving levels of efficiency enhance profit margins for a cost leader. This effects which of the five forces of industry structure most directly? a. Potential entrants b. Substitutes c. Buyer power d. Supplier power

Exit barriers to a firm include all of the following EXCEPT a. generic assets. b. loyalty to employees. c. governmental concern about job loss. d. restrictive labor agreements.

Free cash flows are a. liquid financial assets for which investments in current businesses are no longer economically viable. b. liquid financial assets that for tax purposes must be reinvested in the firm if not distributed as dividends to shareholders. c. the profits resulting after a restructured firm has been sold. d. dividends that have been distributed to shareholders that are taxed as capital gains.

Generally speaking, product market stakeholders are satisfied when a. a firm's profit margin yields the lowest return to capital market stakeholders that is acceptable to them. b. a firm's profit margin yields an above-average return to its capital market stakeholders. c. the interests of the firm's organizational stakeholders have been maximized. d. the interests of all stakeholders have been at least minimally satisfied.

Goods or services in standard-cycle markets reflect a. organizations that serve a mass market. b. numerous first mover advantages. c. an inability to sustain a competitive advantage except for brief periods of time. d. competitive advantages that are shielded from imitation.

In a suburban community outside a city in Alabama, a retail store opened that specialized in dancewear for children and adults. It was moderately successful for five years until the local newspaper published an exposé that scanty lingerie stocked in the back of the store's showroom was selling briskly to a certain clientele. Afterward, the store lost most of its customers and nearly closed. Which segment of the environment did the store owner fail to take into account when she began selling the lingerie? a. the sociocultural segment b. the economic segment c. the demographic segment d. the political/legal segment

In making a decision to diversify, managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs. Which of the following is a value-creating reason to diversify? a. economies of scope b. desire for increased compensation c. reduced managerial risk d. low performance

In the animal food products business, food-product needs of owners of companion animals pets (e.g., dogs and cats) differ from the needs for food and health-related products of those owning production animals (e.g., livestock). Which of the following aspects of managing customer relationships does this choice refer to? a. Who: Determining the Customers to Serve b. What: Determining Which Customer Needs to Satisfy c. How: Determining Core Competencies Necessary to satisfy Customer Needs d. When: Determining When to Satisfy Customer Needs

In the case of a retail business dependent on drive-in customers, the major cost disadvantage independent of scale would be a. favorable locations are not available. b. other competitors have proprietary product technology. c. access to raw materials is difficult. d. other competitors have government subsidies.

Internal analysis enables a firm to determine what the firm a. can do. b. should do. c. will do. d. might do.

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and a. the rapid development of the Internet's capabilities. b. extensive use of outsourcing within the borders of the U.S. c. the declining number of inventions and patents developed by U.S. citizens. d. the simultaneous erosion of the U.S. work ethic and the U.S. education system.

It is well-known that the elected school board of a large city engages in unethical and illegal activities involving the awarding of major contracts. This behavior has existed for decades, even as the membership in the school board has changed over time. This behavior reflects a. the core values of the school board as an organization. b. a functional, although unethical, culture of the school board. c. the lack of an organizational mission for the school board. d. a school board lacking in core competencies.

Knowledge is composed of all the following EXCEPT a. insight. b. expertise. c. information. d. intelligence.

Late movers are those firms that a. respond to a competitive action a significant amount of time after the first mover's action and the second mover's response. b. respond to a first mover's competitive action often through imitation or a move designed to counter the effects of the action. c. take an initial competitive action (either strategic or tactical). d. typically achieve higher-than-average returns because they can imitate the most efficient actor.

Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green a. is likely to raise the level of competitive rivalry in the industry. b. probably has top management who are affected by emotional barriers to exit. c. has decided that long-run above-average returns are not important. d. will probably embark on an acquisition strategy.

New markets created by iPods, PDAs, and WiFi are a result of a. disruptive technologies. b. global competition. c. knowledge intensity. d. hypercompetition.

One reason executive judgment can be a particularly important source of competitive advantage is that judgment a. allows a firm to build a strong reputation. b. gains the loyalty of shareholders. c. increases human intellectual capacity. d. allows for superior bundling of resources.

Procter & Gamble (P&G) has a paper towel and baby diaper business, both of which use paper products. The firm's paper production plant produces inputs for both businesses. P&G most likely uses the _______________diversification strategy to create ____________. a. related constrained; operational relatedness. b. related linked; corporate relatedness. c. related constrained; corporate relatedness d. related linked; operational relatedness

Product market stakeholders include a. suppliers. b. shareholders. c. employees. d. the firm's chief executive officer.

Quality is a. meeting or exceeding customer expectations in the goods and/or services offered. b. only a major factor in the production of luxury goods, such as BMW cars. c. an assured way to gain competitive advantage. d. a viable trade-off with product cost in gaining a competitive advantage.

Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant just for the appetizer and it was at the center of a recent highly positive review by a food critic. Preparation involves common ingredients and average culinary skills levels, but requires a very high oven temperature which significantly increases utility costs. Several competing restaurants have since added their own version of the appetizer to their menu. Which criteria for assessing capabilities/core competencies is met? a. The restaurant has the capability to develop something that is valuable. b. The restaurant has the capability to develop something that is rare. c. The restaurant has the capability to develop something that is costly to imitate. d. All of the these are met.

Specialty Steel, Inc., needs a particular type of brick to line its kilns in order to safely achieve the high temperatures needed for the unusually strong steel it produces. The clay to make this brick is very rare and only two brick plants in the U.S. make this type of brick. Specialty Steel owns one of these brick plants and buys all of its production. The other brick manufacturer has recently developed an inexpensive new technology whereby ordinary clay can be used to make this fire brick. This significantly reduces the production cost of this type of brick. a. Specialty Steel has less flexibility now than if it were not vertically integrated. b. This is an example of a capacity balance problem. c. This is a result of conflicts of interest between the managers of the brick plant and the executives of Specialty Steel. d. The market power of Specialty Steel has been de-integrated.

Successful unrelated diversification through restructuring is typically accomplished by a. focusing on mature, low-technology businesses. b. a "random walk" of good luck in picking firms to buy. c. seeking out high technology firms in high growth industries. d. a top management team that is not constrained by pre-established ideas of how the firm's portfolio should be developed.

Sustained competitive advantage is most achievable in a ____ market. a. slow-cycle b. medium-cycle c. standard-cycle d. fast-cycle

The Chapter 2 Strategic Focus case on firm's efforts to take care of the physical environment noted that one popular approach was a. producing and selling additional green products. b. lobbying the government to reduce environmental regulations. c. making donations to the Sierra Club and other environmental organizations. d. increasing health benefit for employees.

The ____ environment is composed of dimensions in the broader society that can influence an industry and the firms within it. a. general b. competitor c. sociocultural d. industry

The ________dimension of relationships with customers is particularly important for social networking sites such as Facebook and MySpace. a. reach b. richness c. affiliation d. social

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry? a. It will make the airline industry more attractive because of decreased supplier power. b. It will make the airline industry less attractive because of decreased supplier power. c. It will make the airline industry more attractive because of increased supplier power. d. It will make the airline industry more attractive because of a new entrant.

The benefit of a flexible manufacturing system is that a. the lot size needed to manufacture a firm's product efficiently is reduced. b. the necessary skill levels of workers are reduced, allowing the firm to reduce costs. c. it lends itself to empowerment of employees. d. it captures the cost savings of economies of scale.

The chief disadvantage of being a first mover is the a. high degree of risk. b. high level of competition in the new marketplace. c. inability to earn above-average returns unless the production process is very efficient. d. difficulty of obtaining new customers.

The competition within each strategic group is a. more intense than is the competition between strategic groups. b. less intense than is the competition between strategic groups. c. typically very low. d. an unknown factor in the analysis of competitive practices within a firm's strategic group.

The competitive actions and responses in __________ markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm's operations in order to consistently provide the same positive experience for customers. a. standard-cycle b. fast-cycle c. slow-cycle d. intermediate-cycle

The economic environment refers to a. the nature and direction of the economy in which a firm competes or may compete. b. the economic outlook of the world provided by the World Bank. c. an analysis of how the environmental movement and world economy interact. d. an analysis of how new environmental regulations will affect the U.S. economy.

The final responsibility for forming the organization's mission lies with the a. CEO. b. top-management team. c. employees. d. organization's stakeholders.

The flat-panel television market where prices have come down and competition has become more stable is best characterized as a. standard-cycle. b. fast-cycle. c. slow-cycle. d. competitive rivalry.

The global economy, globalization, rapid technological change, and the increasing importance of knowledge are creating the need to a. delegate strategic responsibilities to employees "closer to the action." b. split responsibilities between the CEO and the board of directors as a result of corporate scandals triggered by unethical CEOs. c. re-centralize the responsibility for strategy to the CEO. d. expand the strategic responsibilities to all organizational stakeholders.

The goal of the organization's ____ is to capture the hearts and minds of employees, challenge them, and give shape to its intended future. a. vision b. mission c. culture d. strategy

The industrial organization (I/O) model argues that a. the key factor in success is choosing the correct industry in which to compete. b. the firm's internal resources and capabilities represent the foundation for development of a value creating strategy. c. the key to earning above-average returns is strategic flexibility. d. the internal structure of the organization must match the industry in which it competes in order to earn above-average returns on investment.

The integration of a cost leadership and a differentiation strategy a. is challenging because it increases the number of value chain activities and support functions in which the firm must become competent. b. forces a firm to adapt more slowly to changes in its environment. c. allows the firm to avoid being "stuck in the middle." d. requires such a large customer base that it is most practical for firms in the global marketplace.

The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders if it cannot satisfy them all. The ____ is the most critical criterion in prioritizing stakeholders. a. power of each stakeholder b. urgency of satisfying each stakeholder c. vulnerability of organizational stakeholders d. social value of each stakeholder

The likelihood of entry of new competitors is affected by ____ and ____. a. barriers to entry, expected retaliation of current industry organizations b. the power of existing suppliers, buyers c. the profitability of the industry, the market share of its leading firm d. the demand for the product, the profitability of the competitors

The lowest level of diversification is the ____ level. a. single business b. dominant business c. related constrained d. unrelated

The most numerous of the following organizational characteristics are a. resources. b. capacities. c. capabilities. d. core competencies.

The products or services that are differentiated from others have qualities that are a. perceived by the customer to add value for which they will pay a premium. b. valued by the typical industry customer. c. perceived as standardized by the customer. d. seen as classic attributes rather than passing fads.

The resource-based view of the firm a. emphasizes that it is difficult to develop and sustain a competitive advantage based on resources alone. b. argues that the industry environment has a stronger influence on firms' ability to implement strategies successfully than does the competitor environment. c. calls for firms to focus on their homogeneous capabilities to compete against their rivals. d. suggests that vision and mission are closely linked to sustainable competitive advantage.

The risks of a focus strategy include a. a competitor's ability to use its core competencies to outfocus the focuser by serving an even more narrowly defined segment. b. a competitor's ability to use its core competencies to outfocus the focuser by serving an even more broadly defined segment. c. decisions by industry-wide competitors to use their resources to serve a wider range of customers' needs than the focuser has been serving. d. decisions by focused competitors to use their resources to serve a wider range of customers' needs.

The strategic leader's work is characterized by a. ambiguous decision situations which make effective decisions difficult to determine. b. a willingness to unify stakeholders through skillful manipulation. c. an ability to identify the correct solutions to long-range problems. d. concentration on the practical day-to-day aspects of the organization's operations.

The technological segment of environmental analysis includes a. institutions and activities involved with creating new knowledge and translating that knowledge into new outputs. b. the determination of when machinery will need to be replaced in a given firm. c. the need for new technology in order for a firm to gain a competitive advantage. d. places where a firm's technology will allow that firm to dominate a given market.

The term "conglomerates" refers to firms using the ____ diversification strategy. a. unrelated b. related constrained c. related linked d. global

The three dimensions of a firm's relationships with customers include all the following EXCEPT a. exclusiveness. b. affiliation. c. richness. d. reach.

The use of a differentiation strategy would be expected to be LEAST effective in which of the following markets? a. Commodity goods b. Motion pictures c. Popular music d. Writing instruments

The value of the assets of a firm using a diversification strategy to create both operational and corporate relatedness tend to be a. discounted by investors. b. inflated by investors. c. completely ignored by investors. d. highly valued by investors.

To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT a. be technologically innovative. b. be hard for competing firms to duplicate. c. be without good substitutes. d. be valuable to customers.

What is the similarity between high-technology firms and service-based firms that makes them risky as restructuring candidates? a. They are human-resource dependent. b. They have few tangible assets. c. Both types of firm rely on financial economies. d. The demand for their products is highly sensitive to economic downturns.

When a firm is able to produce nonstandardized (that is, distinctive) products for customers who value differentiated features more than they value low cost, the firm is successfully implementing a. a differentiation strategy. b. a cost leadership strategy. c. an integrated cost leadership/differentiation strategy. d. a single-product strategy.

When a firm simultaneously practices operational relatedness and corporate relatedness, a. it is difficult for investors to observe the value created by the firm. b. the firm is likely to be overvalued by investors. c. the firm will suffer from diseconomies of scope which outweigh cost savings generated. d. the firm is seeking to create value through financial economies.

Which of the following identified in an analysis of the general environment is an opportunity for an entrepreneur who wishes to open a business doing "Fitness for Life" physical conditioning services (strength, balance, and flexibility training) in a city of 100,000 people? a. the average age of the population in his community is high b. the level of unemployment in his community is high c. a chiropractor and two independent physical therapists are located in his community d. the average education level of the population in his community is low

Which of the following is NOT a value-creating activity associated with the differentiation strategy? a. develop policies to ensure efficient hiring and retention to keep costs low and implement traing to ensure high employee efficiency. b. provide accurate and timely delivery of goods to customers. c. ensure receipt of of high quality supplies (raw materials and other goods). d. develop flexible systems that allow rapid response to to customers' changing needs.

Which of the following is TRUE of Wal-Mart? a. Wal-Mart has an unusual amount of flexibility for a large firm. b. Wal-Mart's success is largely due to the fact it has little market commonality with other industry firms. c. Decision-making responsibility is centered at its Arkansas headquarters which allows the firm to respond quickly to competitive attacks. d. Wal-Mart's advantage lies in its ability to "think big."

Which of the following is a true statement about capabilities? a. Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.. b. Valuable capabilities are based almost entirely on tangible resources. c. Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated. d. The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources.

Which pair of firms has the LEAST resource similarity? a. Small, family-owned Italian restaurant; Olive Garden b. Target; Wal-Mart c. HP; Dell d. FedEx; UPS

Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from all-natural ingredients and organically-raised lamb. This brand has a strong following and is recommended by veterinarians who practice in affluent neighborhoods. Wholesome's main supplier of lamb has announced that the price for lamb will be 15 percent higher next year. a. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer. b. Companies pursuing Wholesome's business strategy are especially vulnerable to this risk. c. If Wholesome raises its pet food prices, customers will turn to less expensive brands such as Purina. d. Wholesome probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns.

Wm. Wrigley Jr. Company once made only chewing gum. When Wrigley bought Life Savers (a line of candy mints) and Altoids (a line of breadth mints) from Kraft, chewing gum then constituted less than 95 percent of revenues. Thus, Wrigley a. was moving away from its traditional single-business strategy toward a dominant strategy. b. was moving away from its traditional dominant strategy toward a related linked strategy. c. became a conglomerate since Life Savers and Altoids are unrelated businesses. d. probably planned to restructure these companies and sell them off.

Xanadu, a U.S. manufacturer of pharmaceuticals, has acquired a firm in the same industry in Ireland. It plans to transfer one of its key managers from its plant in St. Louis to Ireland. What is the major threat to Xanadu's plan to transfer competencies from itself to the Irish firm? a. The St. Louis manager may quit Xanadu in order to remain in St. Louis. b. American pharmaceutical manufacturing techniques may not transfer to Ireland. c. Irish managers will refuse to take direction from a foreign executive. d. The cost of transferring U.S. managers overseas is usually not cost-effective.

____ and ____ describe the situation in which organizations are direct competitors and are fully aware of the competition. a. High market commonality, high resource similarity b. High market commonality, low resource similarity c. Low market commonality, high resource similarity d. Low market commonality, low resource similarity

____ is a capacity for a set of resources to perform a task or an activity in an integrative manner. a. A capability b. A core competence c. Sustainable competitive advantage d. Organizational intelligence

____ is an example of a capability that is based in the functional area of distribution. a. Effective use of logistics management techniques b. Effective control of inventories through point-of-purchase data collection c. Effective organizational structure d. Product and design quality

____ is/are the source of a firm's ____, which is/are the source of the firm's ____. a. Resources, capabilities, core competencies b. Capabilities, resources, core competencies c. Capabilities, resources, above average returns d. Core competencies, resources, competitive advantage

____ relates to the gains or losses a firm will experience if it attacks a rival or responds to an attack by a rival. a. Motivation b. Awareness c. Responsiveness d. Ability

A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of A. backward integration. B. economies of scale. C. forward integration. D. product differentiation.

A. backward integration. - An example of forward integration in the text is an automobile manufacturer acquiring a rental car company, or a firm in an entirely new industry introducing a similar product that uses a more efficient technology. Backward integration is the opposite, purchasing an upstream activity, such as that of a supplier in this question.

In general, the threat of substitutes is heightened because the Internet A. introduces new ways to accomplish the same task. B. lowers switching costs. C. lowers barriers to entry. D. increases output per unit of cost.

A. introduces new ways to accomplish the same task. - Along with traditional marketplaces, the Internet has created a new marketplace and a new channel. In general, therefore, the threat of substitutes is heightened because the Internet introduces new ways to accomplish the same tasks.

Gathering "competitive intelligence" A. is good business practice. B. is illegal. C. is considered unethical. D. minimizes the need to obtain information in the public domain.

A. is good business practice. - Competitive intelligence (CI) helps firms define and understand their industry and identify rivals' strengths and weaknesses. This includes the intelligence gathering associated with collecting data on competitors and interpreting such data.

Which of the following would be an entry barrier? A. large economies of scale B. low switching costs C. easy access to raw materials D. low capital requirements

A. large economies of scale - Among the major sources of entry barriers are economies of scale, product differentiation, capital requirements, switching costs, and access to raw materials and distribution channels.

The threat of new entrants is high when there are A. low economies of scale. B. high capital requirements. C. high switching costs. D. high differentiation among competitors' products and services.

A. low economies of scale. - High entry barriers discourage new competitors. Among the major sources of entry barriers are economies of scale, product differentiation, capital requirements, and switching costs.

The most intense rivalry results from A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs. B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs. C. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers. D. a high level of differentiation.

A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs. - Intense rivalry is the result of several interacting factors, including the following: numerous or equally balanced competitors, slow industry growth, high fixed or storage costs, lack of differentiation or switching costs, capacity augmented in large increments, or high exit barriers.

A firm successfully implementing a differentiation strategy would expect a. customers to be sensitive to price increases. b. to charge premium prices. c. customers to perceive the product as standard. d. to have high levels of power over suppliers.

A firm that earns less than 70% of revenue from its dominant business and has direct connections between its businesses is engaging in ____ diversification. a. unrelated b. related constrained c. related linked d. dominant business

A firm's core strategy is its ____ strategy. a. corporate b. business c. pricing d. international

A flexible manufacturing system is a. based on the use of temporary and part-time employees as well as outsourcing. b. a computer-controlled process that is used to produce a variety of products in moderate, flexible quantities with minimal human intervention. c. based on a 360-degree view of the company's relationships with customers. d. a system that identifies "the one best way" to produce each product in the company's line.

A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is a. operations. b. research and development. c. supply-chain management. d. distribution.

A major reason outsourcing is effective is that a. it increases the innovative potential of the firm. b. few firms possess superior capability in all primary and support activities. c. it permits unlimited access to capital resources. d. competitors do not have access to the same external sources.

A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised a. foresight. b. judgment. c. effective strategic thinking. d. decisiveness.

A second mover a. is typically ineffective in its response to the first mover. b. attempts to provide a product with greater customer value than the first mover's product. c. usually incurs higher expenses than the first mover since it must engage in reverse engineering. d. typically has a higher survival rate than first movers which typically take greater risks.

A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive a. advantage. b. parity. c. disadvantage. d. neutrality.

According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT a. low economies of scale needed for new firms to enter. b. low supplier power due to commodity inputs. c. high threat of substitute products due to a large number of low cost alternatives. d. high bargaining power of buyers due to low switching costs.

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should a. concentrate on maintaining Acme's present core competencies. b. focus on developing Acme's future competitive advantages. c. place more emphasis on tangible resources which are less vulnerable to obsolescence than intangible resources. d. recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resources.

Acquisitions to increase market power require that the firm have a ____ diversification strategy. a. unrelated b. related c. dominant business d. single business

All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms is that they a. are more likely to have organizational slack. b. can launch competitive actions more quickly. c. have more loyal and diverse workforces. d. can wait for larger firms to make mistakes in introducing innovative products.

All of the following are aspects of the political/legal segment of the general environment EXCEPT a. antitrust laws. b. attitudes and values. c. taxation laws. d. industries chosen for deregulation.

All of the following are assumptions of the industrial organization (I/O) model EXCEPT a. organizational decision makers are rational and committed to acting in the firm's best interests. b. resources to implement strategies are firm-specific and attached to firms over the long-term. c. the external environment is assumed to impose pressures and constraints that determine the strategies that result in above-average returns. d. firms in given industries, or given industry segments, are assumed to control similar strategically relevant resources.

All of the following are implications of strategic groups EXCEPT a. the strength of the five forces differ across strategic groups. b. the strength of the five forces is the same across strategic groups. c. competitive rivalry within strategic groups is greater than between strategic groups. d. the closer the strategic groups are in terms of strategies, the greater is the likelihood of rivalry.

Although McDonald's is competing in an unattractive industry, it has improved its performance by focusing on product innovations and by enhancing existing facilities. This improved performance is best explained by a. globalization. b. the resource-based model. c. the I/O model. d. hypercompetition.

Although it closed stores, changed the top management team, and sought potential buyers, none of these actions resulted in outcomes that allowed Circuit City to meet the expectations of its ____________ stakeholders. a. product market b. capital market c. organizational d. governmental

Amazon has built capabilities around Internet technology and e-commerce to facilitate information exchanges with its customers in a cost effective manner. This represents which of the three service dimension? a. Reach b. Richness c. Affiliation d. None of the these

An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must a. analyze the reach, richness, and affiliation the company must have with its customers. b. provide tax advice either in a different manner or provide a different kind of tax service than competitors. c. offer tax advice at a price lower than the cheapest competitor. d. offer tax advice at a higher quality than the best competitor.

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly-reputed chef, and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. a. The success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. b. The investor will find that the restaurant's financial statements will undervalue the true value of its resources. c. The investor should be aware that intangible assets are difficult to leverage into additional business. d. The investor should search for a firm which has competitive advantages based on tangible resources.

An investor is considering in which of two start-up companies she should invest. The investor has faith in the industrial organizational model of above-average returns, and she is using its concepts to make her decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization? a. Green Pastures Foods b. RexRich Foods c. Both firms are consistent with the I/O approach. d. At the entrepreneurial stage, the model which companies follow is not important.

As the television industry has changed in the last few decades from just three major networks to a multiplicity of networks, one of the major aspects of business strategy for the newer networks is ____ than the traditional networks. a. broader target market b. narrower target market c. increased use of primary activities to capture value d. increased use of support activities to capture value

As the threat of corporate failure increases due to relatedness between a firm's business units, firms may decide to a. increase the firm's level of retained resources. b. diversify into less risky environments. c. reduce the level of diversity in its investments. d. pursue unproven product lines.

Because Coca-Cola, Nestle, and PepsiCo all sell a product (bottled water) that is essentially the same and all three giant companies are engaged in battles for market share using incremental changes in their products and seeking loyalty to brand names, it is most likely that the bottled water market is a(an) a. slow-cycle market b. standard cycle market. c. fast-cycle market. d. intermediate-cycle market.

Because of the tax laws of the 1960s and 1970s, when dividends were taxed more heavily than capital gains, shareholders preferred that corporations a. pay dividends annually. b. keep free cash flows for investment in acquisitions. c. distribute capital gains regularly. d. increase managerial salaries.

Because the firm combines tangible and intangible resources to create capabilities, a. these capabilities are fragile and subject to sudden loss of value. b. they are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital. c. they are easily transferred from one firm to another as employees change jobs. d. these types of capabilities are considered primary activities in the value chain.

Before the firm decides what products to offer and what benefits and features they will have, the firm must decide all the following questions EXCEPT a. who the firm should serve. b. when the customer's needs should be satisfied. c. what needs the firm should satisfy. d. what core competencies are needed to satisfy customer needs.

Both ____ and ____ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages, corporate size b. market commonality, resource similarity c. management capabilities, competitive analysis d. speed of management decisions, management actions

Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in a. the selection of industries in which the firm will compete. b. specific product markets. c. primary value chain activities. d. particular geographic locations.

By linking companies with their suppliers, distributors, and customers, ____ provide a company with flexibility. a. Flexible manufacturing systems b. Information networks c. Total quality management systems d. Capabilities

Capital market stakeholders include a. industry competitors. b. shareholders. c. employees. d. government regulators.

Characteristics of the current economic segment include all of the following EXCEPT a. general uncertainty. b. a clear understanding of future economic opportunities and threats. c. inability of economists to provide valid and reliable predictions. d. an expanding economy in Vietnam.

Circuit Corp. is a manufacturer of a broad range of consumer electronics products. These consumer products are all highly profitable. The firm also manufactures a low-cost component which is an essential differentiating feature for most of their consumer products. The costs to manufacture this component have risen sharply in recent months. Internal cost accounting estimates now indicate the company is breaking even on the manufacture of this component. Which of the following is most likely? a. Circuit will likely continue to manufacture the component, even at a loss, due to low supplier power. b. Circuit will likely continue to manufacture the component, even at a loss, due to high strategic stakes. c. Circuit will likely discontinue manufacture the component due to low strategic stakes. d. Circuit will likely discontinue manufacture the component due to high supplier stakes.

Companies in fast-cycle markets need to profit quickly from an innovative product for all of the following reasons EXCEPT a. the technology used is not proprietary. b. the prices of component parts tends to rise rapidly. c. product prices fall quickly in fast-cycle markets. d. counterattacks from rivals come quickly.

Compared with diversification based on intangible resources, diversification based on financial resources is a. less imitable and less likely to create value on a long-term basis. b. more imitable and less likely to create value on a long-term basis. c. less imitable and more likely to create value on a long-term basis. d. more imitable and more likely to create value on a long-term basis.

Competition between candy makers (e.g., Hershey, Mars, Cadbury, Nestle, and Godiva) where firms package design (including package downsizing) and ease of availability is characteristic of a a. slow-cycle market b. standard cycle market. c. fast-cycle market. d. intermediate-cycle market.

Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of a. fast-cycle markets. b. standard-cycle markets. c. incremental-cycle markets. d. slow-cycle markets.

Corporate-level strategy is concerned with ____ and how to manage these businesses. a. whether the firm should invest in global or domestic businesses b. what product markets and businesses the firm should be in c. whether the portfolio of businesses should generate immediate above-average returns or should be troubled businesses which will create above-average returns only after restructuring d. whether to integrate backward or forward.

DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey. Although DWK is selling some of the products over the Internet, in order to gain economies of scale, the products must be sold in retail outlets. The main barrier to entry DWK is likely to encounter here is a. government licensing and permits. b. access to distribution channels. c. consumers' switching costs. d. cost disadvantages independent of scale.

Denver-based Kazoo Toys uses the __________ strategy to create value for parents and children interested in purchasing unique toys while simultaneously having access to unique services. a. cost leadership b. focused differentiation c. integrated cost leadership differentiation d. differentiation

During the 1990s top executives of Titanic, Inc., followed a pattern of aggressive acquisitions and diversification. Now, Titanic is performing poorly and earning below average returns. Lusitania, a large conglomerate firm, is in the final stages of purchasing Titanic. Lusitania has announced that it will fire Titanic's current top executives. The Titanic executives may not be worried about their impending job loss if they a. plan to take poison pills. b. have golden parachutes. c. have silver handcuffs. d. have ironclad contracts.

Environmental scanning would be most important for which of the following organizations? a. a provider of hospice services for the terminally ill b. a web design company catering to small businesses c. a neighborhood sewer and water utility d. a manufacturer of household linens

Firms that achieve competitive parity can expect to a. earn below-average returns. b. earn average returns. c. earn above-average returns. d. initially earn above-average returns, declining to average returns.

Firms that have selected a related diversification corporate-level strategy seek to exploit a. control shared among business-unit managers. b. economies of scope between business units. c. the favorable demand of buyers. d. market power.

Firms that have strong positive relationships with suppliers and customers are said to have _________________, an essential ingredient to creating value. a. customer value b. social capital c. effective marketing d. an attractive industry

Firms within strategic groups a. follow dissimilar strategies. b. follow similar strategies across certain dimensions. c. typically engage in greater amounts of intergroup rivalry than intragroup rivalry. d. exist almost exclusively in the manufacturing sector.

From a customer's point of view, for an organization's capability to be a core competence it must be a. inimitable and unique. b. valuable and unique. c. inimitable and nonsubstitutable. d. valuable and nonsubstitutable.

Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent's success is a. impregnable. b. causally ambiguous. c. rationally obscure. d. elusive.

Global warming and energy consumption trends are aspects of the _____________ segment of the general environment that firms should monitor. a. technological b. physical c. sociocultural d. economic

Hyundai allows customers to return their cars if they lose their job within 12 months of purchase. Which of the following aspects of managing customer relationships is Hyundai engaged in? a. Who: Determining the Customers to Serve b. What: Determining Which Customer Needs to Satisfy c. How: Determining Core Competencies Necessary to satisfy Customer Needs d. When: Determining When to Satisfy Customer Needs

Ikea offers young customers a selection of home furnishings featuring good design, function, and acceptable quality at low prices. Ikea is using which business level strategy? a. Cost leadership b. Focused cost leadership c. Differentiation d. Focused differentiation

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is a. similar competitive rivalry. b. less competitive rivalry. c. more competitive rivalry. d. no competitive rivalry.

In order to cope with hypercompetition, firms need to develop ____ through continuous learning. a. competitive resilience b. strategic flexibility c. strategic power d. competitive dominance

In the Chapter 4 Strategic Focus, Walmart made changes to attract upscale customers. These changes had which of the following results? a. It strengthened Walmart's position against rivals such as Dollar Stores and Amazon. b. It made Walmart vulnerable to Dollar Store and Amazon. c. It attracted significant numbers of new customers. d. Family Dollar, Dollar Tree, and Dollar General all experienced losses in sales as many of their customers went to Walmart.

In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are ____ but no longer ____. a. rare; valuable b. valuable; rare c. socially complex; rare d. valuable; causally ambiguous

Judgment is the capacity for making a successful decision when a. there are multiple decision criteria. b. no obviously correct model or rule is available. c. cognitive biases create barriers to rationality. d. there are contradictions between the firm's vision and its implemented strategy.

Knowledge transfer and access to resources within the value chain are enhanced by ________. a. guidelines for sharing knowledge and resources b. social capital c. penalties for not sharing knowledge and resources d. training employees on how to cooperate

Large diversified businesses often face what is known as the "conglomerate discount." This discount means that investors a. understand that the financial efficiencies of this strategy automatically make these stocks worth more than their current market valuation. b. believe that the value of conglomerates is less than the value of the sum of their parts. c. increase the expected future earnings of conglomerates. d. have found that over time, conglomerates earn more than the component companies would have earned independently.

New Balance Athletic Shoes target Baby Boomers' needs for well-fitting shoes. The company is unique in that it offers a very broad range of shoe widths. A realistic potential risk New Balance runs in this focused differentiation strategy includes the possibility that: a. Baby Boomers may find that they do not need well-fitting shoes, since they will become increasingly sedentary as they age. b. A competitor may be able to better use flexible manufacturing systems to make shoes with an individualized fit. c. Athletic shoes may go out of style. d. New Balance shoes may begin to appeal to a wider market, thus losing New Balance's focus advantage.

On the whole there are more competitive responses to a. strategic actions than to tactical actions. b. tactical actions than to strategic actions. c. buyer pressures than to supplier pressures. d. the demands of the top management team than to industry structural pressures.

One method of facilitating the transfer of competencies between firms is to a. virtually integrate the two firms. b. transfer key people into new management positions. c. share support activities, such as purchasing practices. d. restructure the weaker firm to mirror the structure of the more successful firm.

Operational relatedness is created by ___________of___________. a. sharing; core competencies b. sharing; activities c. transferring; core competencies d. transferring; activities

Organizational culture is a. amorphous and changeable. b. not easily imitable. c. so difficult to analyze that most firms should choose to ignore it. d. typically fragile in the face of changes in the external environment.

PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision a. should be based solely on the results of profit pool mapping. b. has ethical implications for organizational stakeholders. c. need not be socially responsible if the firm is making below-average returns from the mine. d. all of these choices are important to consider.

PorkPride Foods produces hams and other meat products. It owns hog raising operations. This is an example of a ____ business. a. de-integrated b. vertically integrated c. totally integrated d. horizontally integrated

Quality affects competitive rivalry because a competitor whose products suffer from poor quality likely will _____________ until ________________. a. initiate more competitive actions; the firm returns to profitability b. initiate fewer competitive actions; the quality problems are corrected c. initiate more competitive actions; the quality problems are corrected d. advertise more; customers believe the quality had improved

Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors returns in excess of direct competitors. RNH has a reputation for providing high-paying managerial and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and inadequate patient-care staffing. Which statement best describes the situation? a. RNH has been earning below-average returns, so it has had to prioritize the demands of its various stakeholders. b. RNH has prioritized the demands of capital market stakeholders over the demands of product market stakeholders. c. RNH has earned above-average returns and so has satisfied the needs of all relevant stakeholders. d. RNH has been attempting to minimally satisfy the demands of all of its stakeholders.

Research suggests that a firm with greater multimarket contact is _______ likely to initiate and attack, and _____ likely to respond aggressively when attacked. a. more; more b. less; more c. less; less d. more; less

Revenues for United Parcel Service (UPS) come from the following business segments: 60 percent from U.S. package delivery operations, 22 percent from international package delivery, and 18 percent from non-packaging operations. Which best describes the corporate level strategy of UPS? a. Single business b. Dominant business c. Related constrained d. Related linked

Reverse engineering is characteristic of a. first movers. b. fast-cycle markets. c. market leaders. d. price predators.

Suppose another firm found a way to offer IKEA's customers (young buyers interested in stylish furniture at low cost) additional sources of differentiation while charging the same price or to provide the same service with the same sources of differentiation at a lower price. What category of competitive risk to a focus strategy would this be? a. An industry-wide competitor decides that the market segment served by IKEA is worth entering. b. Focusing on a more narrowly defined segment and "outfocusing" the focuser. c. The needs of the customers in this narrow segment have become more similar to those of industry-wide competitors. d. Experience can narrow customer's perceptions of value of the firm's differentiated features.

TQM is most helpful to firms following the ____ business strategy. a. cost-leadership b. integrated cost-leadership/differentiation c. focused cost-leadership d. focused differentiation

Tangible resources include a. assets that are people-dependent such as know-how. b. assets that can be observed and quantified. c. organizational culture. d. a firm's reputation.

The Annandale Academy of Fine Arts states in its brochure that "The Academy intends to become the dominant institution in the nation teaching traditional aesthetic values in traditional artistic media targeting both traditional and non-traditional students." This pronouncement is most precisely a statement of organizational a. values. b. mission. c. vision. d. culture.

The CEO of Ridgeway, Inc., realizes that the company's survival depends on developing and acquiring knowledge. Which of the following actions by the CEO would be most consistent with this need? a. ensuring that all current unique knowledge of the firm is protected by patents b. planning extensive employee training and hiring educated and experienced employees. c. investing in sophisticated databases in relevant knowledge areas d. establishing a system of organizational intelligence gathering

The Chapter 2 Strategic Focus discussed the movement of media content from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which force is most relevant here? a. buyers b. substitutes c. entry barriers d. suppliers

The Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing. This excess capacity will be useful in a. unrelated diversification. b. related diversification projects. c. corporate restructuring. d. multipoint competition

The Monteleone Company pays large fees to a highly-recognizable, prestigious individual to be the spokesperson for the company's products, luxury private jets. Monteleone is probably following the a. focused cost-leadership strategy. b. focused differentiation strategy. c. integrated cost leadership/differentiation strategy. d. total quality strategy.

The ability to effectively and efficiently access and use information is a. vitally important at the point where a domestic firm enters the global market. b. an important source of competitive advantage in virtually all industries. c. the minimum required for survival in virtually any industry. d. critically important mainly in high technology industries.

The capabilities used to create the sustainability/green initiatives at Walmart and Target are ____ but less likely to be ____. a. rare; valuable b. valuable; rare c. socially complex; rare d. valuable; causally ambiguous

The concepts of Guanxi, Wa, and Inhwa all convey the general idea of a. entrepreneurial risk-taking. b. interpersonal relationships. c. the value of hard work. d. personal achievement.

The critical executive skill of the current business age is the ability to a. manage technological innovation. b. manage human intellect. c. initiate change and overcome inertia. d. coordinate tangible and intangible resources.

The curvilinear relationship of corporate performance and diversification indicates that a. dominant-business corporate strategies tend to be higher performing than related constrained or unrelated business strategies. b. the highest performing business strategy is related constrained diversification. c. the less related the businesses acquired, the higher performing the organization. d. none of the strategies consistently outperforms the others.

The drawbacks to transferring competencies by moving key people into new management positions include all EXCEPT a. the people involved may not want to move. b. managerial competencies are not easily transferable to different organizational cultures. c. managers with these skills are expensive. d. top-level managers may resist having these key people transferred.

The effectiveness of any of the generic business-level strategies is contingent upon a. customer needs and competitors' strategies. b. the match between the opportunities and threats in its external market and the strengths of its internal environment. c. the trends in the general consumer base and the robustness of the global and industry economy. d. the firm's competitive scope and its competitive advantage.

The highest amount a firm can charge for its products is most directly affected by a. expected retaliation from competitors. b. the cost of substitute products. c. variable costs of production. d. customers' high switching costs.

The key to achieving competitiveness, earning above-average returns, and remaining ahead of competitors in the long run is to manage current core competencies a. in a way that uniquely bundles and leverages the firm's existing resources. b. while simultaneously developing new ones. c. and imitate the core competencies of successful competitors. d. in order to preserve and enhance them against the firm's competitors.

The larger the resources of a firm taking a competitive action compared with the resources of the other firms in the industry, the ____ the response will be of these other firms. a. more fragmented b. slower c. larger d. more tactical

The main difference between the related constrained level of diversification and the related linked level of diversification is a. the percentage of total organizational profitability that comes from the dominant business. b. the level of resources and activities shared among the businesses. c. whether the diversification is vertical or horizontal. d. whether the diversification is value-creating or value-neutral.

The more sharing of resources and activities among businesses, the more ____ is the relatedness of the diversification. a. linked b. constrained c. integrated d. intense

The new generation of lunch trucks serving high-end fare in cities such as New York, San Francisco, and Los Angeles share which of the following a business strategies? a. cost leadership. b. focused differentiation. c. integrated cost leadership/differentiation. d. differentiation.

The observation that in China, even though car sales surged 37% in 2010, it is expected that by 2015 they will reach production overcapacity and have a glut of extra cars is an aspect of the ____ segment of the general environment. a. demographic b. global c. physical d. technological

The primary drivers of hypercompetition are a. rising global socio-economic instability and increased inflation. b. the emergence of a global economy and rapid technological change. c. increased global competition and decreasing tariffs. d. increased availability of capital and increased competition.

The profit pool is the a. pool of assets that is distributed to investors. b. total profits earned in an industry along all points of the value chain. c. profits that are accrued when a firm earns above-average returns. d. total profits that can be divided up among the competitors within an industry.

The threat from substitutes is high when a. switching costs are high. b. the substitute product's price is lower than the industry product's price. c. the quality of the substitute product is lower than the quality of the industry's product. d. the substitute product stimulates new process innovations within the industry.

The three conditions that characterize difficult managerial decisions concerning resources, capabilities, and core competencies are a. complexity, rarity, and human intellectual capital. b. uncertainty, complexity, and intraorganizational conflicts. c. imitability, complexity, and interorganizational conflicts. d. imitability, comparability, and human intellectual capital.

The three parts of the external environment which affect a firms strategic actions are a. economic, political, and legal b. general, industry, and competitor c. industry, business, and product d. local, national, and global

The typical risks of a cost leadership strategy include a. the inability to balance high differentiation and low price. b. production and distribution processes becoming obsolete. c. excessive differentiation to the point where the customer base is too small. d. loss of customer loyalty.

Usually a company is classified as a single business firm when revenues generated by the dominant business are greater than ____ percent. a. 99 b. 95 c. 90 d. 70

Value chain activities are a. the activities most likely to be imitated by competitors. b. activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers. c. the core competencies of the organization. d. the activities most crucial to implementing the firm's business strategy.

Value consists of a. A product's proprietary characteristics and by its attributes for which customers are willing to pay. b. A product's performance characteristics and by its attributes for which customers are willing to pay. c. A product's proprietary characteristics and by its attributes for which customers consider paying for. d. A product's performance characteristics and by its attributes for which customers consider paying for.

Wal-Mart initially used a focused cost leadership strategy to compete only in small communities by using sophisticated logistics systems and efficient purchasing practices to gain a competitive advantage. The response of local competitors was _______ because they __________. a. rapid; were nimble and flexible b. slow; lacked the ability to marshal resources c. rapid; perceived gains from responding to Wal-Mart's attack d. rapid; had the resources and flexibility compete against Wal-Mart

Walt Disney Company has successfully used related diversification to create value by ________________. a. sharing activities b. sharing activities and transferring core competencies c. transferring core competencies d. efficient internal capital allocation and restructuring

Which company below committed significant resources to enter the information services market and, given its success, was imitated by other competitors? a. Compaq b. IBM c. HP d. Dell

Which of the following is NOT a reputational resource? a. Customer opinion that the firm's product are high quality. b. Employees viewing the firm as a terrible place to work. c. Suppliers' opinion that the firm pays its bills in a timely manner. d. Customer opinion that using the firm's product makes them attractive.

Which of the following is NOT an activity used in the external environmental analysis process? a. Scanning b. Decrypting c. Monitoring d. Assessing

Which of the following is TRUE about outsourcing? a. Outsourcing allows firms to be more flexible, and requires minimal coordination. b. Outsourcing allows firms to concentrate on those areas in which they can create value. c. Outsourcing strengthens the creative and innovative functions within the firm. d. Outsourcing is only effective when it includes all support activities.

Which of the following is TRUE? a. As customer loyalty increases, customers are more sensitive to price increases. b. Customer loyalty has a positive relationship with firm profitability. c. Customer loyalty is fragile and cannot reliably be considered a factor in firm success. d. Customer loyalty is of importance only to firms using the differentiation strategy.

Which of the following is a value-reducing reason for diversification? a. enhancing the strategic competitiveness of the entire company b. expanding the business portfolio in order to diversify managerial employment risk c. gaining market power relative to competitors d. conforming to antitrust regulation

Which of the following is not a component of internal analysis leading to competitive advantage? a. Tangible and intangible resources. b. Analysis of supplier power. c. Capabilities. d. Core competencies.

Which of the following reasons for diversification is most likely to increase the firm's value? a. increasing managerial compensation b. reducing costs through business restructuring c. taking advantage of changes in tax laws d. conforming to antitrust regulation

Which of the following represents a competitive intelligence practice that is both legal and ethical? a. A firm hires a competitor's employee and asks that employee to share the names and addresses of business contacts from his/her previous job. b. An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and ask questions about the competitor's products. c. A city council member shares information about the decision process for selecting a contractor to build a new library wing with his wife, an executive with a construction firm bidding on the contract. d. A marketing manager at Smith-Phillips, Inc., sells confidential plans for the company's expansion into the Far East to a firm that is not a direct competitor.

Which of the following resources are more likely to create value in the diversification process? a. Plant and equipment. b. Tacit knowledge. c. Excess capacity. d. Financial resources.

Which of the following would NOT be identified in an analysis of the economic portion of the general environment? a. The willingness of Chrysler's buyers to purchase large vehicles due to an increase in oil prices. b. The ability of Ford to issue new debt due to their recent financial performance. c. The ability of BMW's buyers to finance car purchases due to a change in interest rates. d. The willingness of GM buyers to purchase new vehicles due to the threat of recession.

Without quality, the firm's products a. can compete effectively on the basis of low price. b. lack credibility among customers. c. must be exported to developing countries, because they are not competitive in the U.S. or developed countries. d. are associated with predatory competition.

____ markets are often described as volatile and innovative. a. Slow-cycle b. Fast-cycle c. Standard-cycle d. Sheltered

_____________ tracks the evolution of environmental trends, sequences of events, or streams of activities. A. Environmental scanning B. Environmental monitoring C. Environmental surveying D. Competitive intelligence

B. Environmental monitoring - Environmental monitoring tracks the evolution of environmental trends, sequences of events, or streams of activities. Monitoring enables firms to evaluate how dramatically environmental trends are changing the competitive landscape.

Which of the following would be considered part of a firm's general environment? A. Decreased entry barriers. B. Higher unemployment rates. C. Increased bargaining power of the firm's suppliers. D. Increased competitive intensity.

B. Higher unemployment rates. - The general environment is divided into six segments: demographic, sociocultural, political/legal, technological, economic, and global. Exhibit 2.3 provides examples of key trends and events in each of the six segments of the general environment.

Which of the following statements about strategic groups is FALSE? A. Two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same. B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups. C. Strategic groups help chart the future directions of firms' strategies. D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole.

B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups. - In an industry analysis, two assumptions are unassailable: (1) No two firms are totally different, and (2) no two firms are exactly the same. What value is the strategic groups concept as an analytical tool? First, strategic groupings help a firm identify barriers to mobility that protect a group from attacks by other groups. They also help chart the future directions of firms' strategies and are helpful in thinking through the implications of each industry trend for the strategic group as a whole.

Strategic groups consist of A. a group of top executives who make strategies for a company. B. a group of firms within an industry that follow similar strategies. C. a group of executives drawn from different companies within an industry that makes decisions on industry standards. D. a group of firms within an industry that decide to collude rather than compete with each other so that they can increase their profits.

B. a group of firms within an industry that follow similar strategies. - Strategic groups are clusters of firms that share similar strategies. Rivalry tends to be greater among firms that are alike.

The aging of the population, changes in ethnic composition, and effects of the baby boom are A. macroeconomic changes. B. demographic changes. C. global changes. D. sociocultural changes.

B. demographic changes. - Demographics are genetic and observable characteristics of a population, including elements such as the aging population, rising or declining affluence, changes in ethnic composition, geographic distribution of the population, and disparities in income level.

Incumbent firms may enjoy increased bargaining power because the Internet A. focuses marketing efforts on end users. B. diminishes the power of many distribution channel intermediaries. C. increases channel conflict. D. has reduced the number of wholesalers and distributors.

B. diminishes the power of many distribution channel intermediaries. - In some industries, buyer channel intermediaries are dominated by powerful players that control who gains access to the latest goods or the best merchandise. The Internet and wireless communications, however, make it much easier and less expensive for businesses to reach customers directly. Thus, the Internet may increase the power of incumbent firms relative to that of traditional buyer channels.

Two of the key inputs to developing forecasts discussed in the text are A. environmental scanning and stakeholder identification. B. environmental scanning and competitor intelligence. C. assessing internal strengths and environmental scanning. D. environmental scanning and a SWOT analysis.

B. environmental scanning and competitor intelligence. - Three important processes (scanning, monitoring, and gathering competitive intelligence) are used to develop forecasts. Exhibit 2.1 illustrates relationships among these important activities.

A supplier group would be most powerful when there is/are A. many suppliers. B. few substitute products. C. low differentiation of products supplied. D. high threat of backward integration by the buyers.

B. few substitute products. - A supplier group will be powerful when the supplier group is dominated by a few companies and is more concentrated (few firms dominate the industry) than the industry it sells to, the supplier group is not obliged to contend with substitute products for sale to the industry, the supplier group's products are differentiated or it has built up switching costs for the buyer, or the supplier group poses a credible threat of forward integration.

Because the Internet lowers barriers to entry in most industries, it A. decreases the threat of new entrants. B. increases the threat of new entrants. C. makes it easier to build customer loyalty. D. increases supplier power.

B. increases the threat of new entrants. - In most industries, the threat of new entrants has increased because digital and Internet-based technologies lower barriers to entry. Internet businesses may enjoy savings on traditional expenses which may encourage more entrants who see an opportunity to capture market share by offering a product or performing a service more efficiently than existing competitors.

The value net is a game-theoretic approach that A. extends the value chain analysis. B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to generate and appropriate value. C. helps us to understand the evolution of the five forces over time. D. uses network analysis to understand the relationships among different companies.

B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to generate and appropriate value. - Based on game-theoretic considerations, Brandenburger and Nalebuff recently introduced the concept of the value net, which in many ways is an extension of the five-forces analysis. It is illustrated in Exhibit 2.10. The value net represents all the players in the game and analyzes how their interactions affect a firm's ability to generate and appropriate value. Refer to Exhibit 2.10.

To illustrate interrelationships among different segments of the general environment: The persistence of large U.S. trade deficits (__________) has led to greater demand for protectionist measures, such as trade barriers and quotas (__________). These measures lead to higher prices for U.S. consumers and fuel inflation (__________). A. macroeconomic, sociocultural, political/legal B. macroeconomic, political/legal, economic C. macroeconomic, technological, economic D. macroeconomic, global, economic

B. macroeconomic, political/legal, economic - The general environment is divided into six segments: demographic, sociocultural, political/legal, technological, economic, and global. Exhibit 2.3 provides examples of key trends and events in each of the six segments of the general environment.

Interest-rate increases have a __________ impact on the residential home construction industry and a __________ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items. A. positive; negligible B. negative; negligible C. negative; positive D. positive; negative

B. negative; negligible - Interest-rate increases have a negative impact on the residential home construction industry but a negligible (or neutral) effect on industries that produce consumer necessities such as prescription drugs or common grocery items.

Supplier power has increased because of the Internet for all of the following reasons EXCEPT A. the growth of new Web-based businesses has created more outlets for suppliers to sell to. B. some suppliers have created Web-based purchasing systems that encourage switching. C. the process of disintermediation makes it possible for some suppliers to reach end users directly. D. software that links buyers to a supplier's website has created rapid, low-cost order capabilities.

B. some suppliers have created Web-based purchasing systems that encourage switching. - Several factors contribute to stronger supplier power. First, Web-based business may create more downstream outlets for suppliers to sell to. Second, Web-based purchasing arrangements make purchasing easier and discourage customers from switching. Online procurement systems directly link suppliers and customers, reducing transaction costs and paperwork. Third, the use of proprietary software that links buyers to a supplier's website may create a rapid, low-cost ordering capability that discourages the buyer from seeking other sources of supply. Finally, suppliers will have greater power to the extent that they can reach end users directly without intermediaries.

Scanning the general environment would identify information on A. substitute goods. B. the aging population and ethnic shifts. C. customer and firm bargaining power. D. competitive rivalry.

B. the aging population and ethnic shifts. - Environmental scanning involves surveillance of a firm's external environment to predict environmental changes and detect changes already under way. This alerts the organization to critical trends and events before changes develop a discernible pattern and before competitors recognize them.

Emerging sociocultural changes in the environment include A. changes in the ethnic composition. B. the increasing educational attainment of women in the past decade. C. progressively less disposable income by consumers. D. changes in the geographic distribution of the population.

B. the increasing educational attainment of women in the past decade. - Sociocultural forces influence the values, beliefs, and lifestyles of a society. Examples include an increased educational attainment by women in the workplace.

A business-level strategy describes a. the businesses in which the company intends to compete. b. all policies and procedures used in functional departments. c. the firm's actions to exploit its competitive advantage over rivals. d. a firm's resources, intent, and mission.

A company pursuing the differentiation or focused differentiation strategy would tend to a. build economies of scale and efficient operations. b. develop and maintain cost-effective MIS operations. c. develop flexible systems that allow rapid response to customers changing needs. d. have relationships with suppliers to maintain efficient flow of supplies for operations.

A company using a narrow target market in its business strategy is a. following a cost leadership business strategy. b. focusing on a broad array of geographic markets. c. limiting the group of customer segments served. d. decreasing the number of activities on its value chain.

A competitive action can be one of two types, either ____ or ____. a. aggressive, defensive b. quality-based, cost-based c. strategic, tactical d. market-based, resource-based

A competitive advantage a. can be permanent if the firm has successfully implemented the strategic management process. b. entails reducing investors' risk to near zero. c. can be identified only if it has been unsuccessfully challenged by competitors. d. exists when competing firms are unable to find investors.

A financial management firm has existed for over 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its a. access to large amounts of financial capital. b. possession of causally ambiguous core competencies. c. social complexity. d. unique historical conditions.

A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons EXCEPT a. corporate headquarters can allocate capital according to more specific criteria than is possible with external market allocations. b. corporate headquarters has more complete information about the subsidiary businesses than the external capital market. c. the firm can acquire other firms with innovative products instead of allocating capital to research and development. d. corporate headquarters can more effectively discipline underperforming management teams through resource allocation than can the external market.

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu based solely on organically-raised chicken, beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be a. permanent. b. sustainable. c. temporary. d. defensible.

A major assumption about the strategic management process is that it is a. inspired. b. team-based. c. rational. d. inclusive.

A major department store chain has a strict policy of banning photographs or videos of its sales floor or back room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are a. causally ambiguous. b. unobservable. c. imitable. d. common.

A river barge company can offer cheaper, although slower, per pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use a. the integrated cost leadership/differentiation strategy. b. either of the focus strategies. c. the cost-leadership strategy. d. any of the strategies except the focused differentiation strategy.

ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit board technology. ACME has protected its market leadership with continued advancements in this technology which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based solution instead of circuit boards. ACME's technology leadership fails which capability test? a. The value test b. The rareness test c. The substitutability test d. It fails all three of these tests

According to the Chapter 3 Opening Case, all of the following are core competencies of Subway EXCEPT a. Providing continuous training for its franchisees and those working within those units. b. Offering healthy and nutritious products to consumers. c. The challenging economic environment in which even affluent consumers are choosing to dine at quick-service restaurants such as Subway. d. Use of nontraditional locations such as appliance stores, automobile showrooms, and zoos.

According to the Chapter 4 Strategic Focus, The Li Ning Company entered the Chinese sportswear market using a __________________ strategy. As it seeks to expand into new market segments, however, its strategy has changed to ____________________. a. differentiation; integrated cost leadership/differentiation b. focused differentiation; differentiation c. cost leadership; integrated cost leadership/differentiation d. focused cost leadership; cost leadership

Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15 years. Acme maintained its traditional strategy and product characteristics over this time period. But, Acme has experienced declines in sales and profits over the last four quarters. The CEO of Acme should a. continue with the proven strategy because its returns over the long run are important. b. focus on improving efficiency of production and cost control. c. conduct an analysis of the external environment. d. immediately begin making incremental adjustments to the traditional business strategy in an effort to improve sales.

All of the following are assumptions of the resource-based model EXCEPT a. Each firm is a unique collection of resources and capabilities. b. The industry's structural characteristics have little impact on a firm's performance over time. c. Capabilities are highly mobile across firms. d. Differences in resources and capabilities are the basis of competitive advantage.

All of the following are characteristic of the global economy EXCEPT a. the increasing importance of developing countries as sources of revenue growth. b. the free movement of goods, services, people, skills, and ideas across geographic borders. c. the increased use of tariffs to protect industries. d. higher levels of opportunities and challenges.

All of the following are examples of differentiated products EXCEPT a. Toyota's Lexus. b. Caterpillar's heavy duty earth moving equipment. c. store brand beef and pork. d. McKinsey & Company.

All of the following are forces that create high rivalry within an industry EXCEPT a. numerous or equally balanced competitors. b. high fixed costs. c. fast industry growth. d. high storage costs.

All of the following are resources of an organization EXCEPT a. an hourly production employee's ability to catch subtle quality defects in products. b. oil drilling rights in a promising region. c. weak competitors in the industry. d. a charity's endowment of $400 million.

All of the following are tangible resources EXCEPT a. production equipment. b. distribution centers. c. firm's reputation. d. formal reporting structures.

All of the following are ways that a good or service can be differentiated EXCEPT a. Responsive customer service b. Perceived prestige and status c. Economies of scale and efficient operations d. Engineering design and performance

Among the value-neutral incentives to diversify, some come from the firm's external environment while others are internal to the firm. External incentives to diversify include a. the fact that other firms in an industry are diversifying. b. pressure from stockholders who are demanding that the firm diversify. c. changes in antitrust regulations and tax laws. d. a firm's low performance.

Analyzing income distribution would include all of the following EXCEPT a. the purchasing power of various age groups. b. the discretionary income of various ethnic groups. c. wage differentials between male and female employees working for a large manufacturer. d. how income is distributed among regions of the U.S.

As discussed in the Chapter 3 Strategic Focus, CEOs of companies such as Viacom, the Oprah Winfrey Network, the Gap, and Cisco frequently had to make decisions about __________________ and the success of those decisions affected the tenure of those CEOs. a. how to please customers b. how to best rivals c. use of the firm's resources d. their method of compensation

As noted in the Chapter 2 Opening Case, gas drilling and fracturing have dramatically increased gas reserves and may provide a substitute for other carbon dioxide producing products such as coal. This change illustrates the effect of the _____________segment of the general environment. a. economic b. political/legal c. technological d. industry

Because of threats and risks in the global environment, some firms choose to take a more cautious approach by a. avoiding global markets altogether. b. expanding only to developed countries. c. focusing on global niche markets. d. acquiring already established firms in foreign markets.

Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a wide-spread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of these statements is most likely TRUE? a. The owners of Bubble-Up are unconcerned about Mega-Toy's entry to the market because of the resource dissimilarity between the firms. b. Bubble-Up's greater organizational slack will allow it to aggressively attack Mega-Toy. c. Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy. d. Competitive rivalry will not increase for Bubble-Up because Mega-Toy is not dependent on the educational toy market.

Buyers are powerful when a. there is a threat of forward integration. b. they purchase a small proportion of the supplier's output. c. switching costs are low. d. the buyers' industry is fragmented.

By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of a. intangible resources. b. their primary activities. c. firm-specific differences. d. efficiency of production.

Certain regulatory changes (such as antitrust regulation and tax laws) create incentives or disincentives for diversification that _________________. a. create value b. reduce value c. are value-neutral d. are managerial motives to diversify

Clarissa is a sales representative for a large pharmaceutical firm. While calling on one of her major clients, the purchasing director of a hospital, the client told her confidential information that a sales representative from a competing firm had passed on to him. The information completely contradicts Clarissa's firm's understanding of the competitor's business strategy, and would allow Clarissa's employer to gain many of the competitor's clients. a. There is no ethical or legal concern here for Clarissa. b. The ethical dilemma is not Clarissa's but her client's, since he passed on confidential information to her voluntarily. c. The ethical dilemma here is the right of competitors not to reveal certain information. d. This is an example of ethical competitor intelligence obtained as eavesdropping.

Compared to tangible resources, intangible resources are a. of less strategic value to the firm. b. not the focus of strategic analysis. c. a superior source of capabilities. d. more likely to be reflected on the firm's balance sheet.

Competitive dynamics refers to the a. circumstances in which competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity. b. set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position. c. total set of actions and responses taken by all firms competing within a market. d. ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.

Competitor intelligence is a. legally or illegally-gained data about competitors' internal strategic processes and competitive decisions. b. strategic information gained from industrial espionage targeting international competitors. c. the data that the firm gathers to understand competitors' objectives, strategies, assumptions, and capabilities. d. illegal to gather under the Sarbanes-Oxley Act.

Complete the following about the difference between tangible and intangible resources. Tangible resources are ____ constrained because they are _____ to leverage. a. less; easier b. less; easier c. more; harder d. more; harder

Customer loyalty programs such as airline frequent flyer miles are an attempt to a. decrease competitors' access to distribution channels. b. develop a cost advantage independent of scale. c. increase customers' switching costs. d. overcome the perishability of the hotel "product."

Demographic changes include variations in income distribution. Which of the following statements is true? a. Firms are most interested in the consumers comprising the top ten percent of the household income. b. In general, living standards have deteriorated over time. c. The general loss in real income has been somewhat offset by the increase in dual-career couples. d. Workforce diversity is making the concept of average income obsolete.

Economies of scale refer to the fact that as the a. quantity of product produced in a given time period increases, the cost of manufacturing each unit increases. b. quantity of product produced in a given time period increases, the cost of manufacturing each unit remains constant. c. quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases. d. quantity of product produced in a given time period decreases, the cost of manufacturing each unit decreases.

Examples of support activities include all of the following EXCEPT a. Finance. b. Human Resources. c. Follow-up Service. d. Management Information Systems.

Firms use the integrated cost leadership/differentiation strategy because a. other firms have established unassailable market dominance with the other four strategies. b. global markets allow for much broader competitive scope. c. most consumers want to pay a low price for products with somewhat highly differentiated features. d. one strategy is not enough for most large firms.

Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors. a. low; high b. low; low c. high; high d. high; low

Firms with few competitive resources are more likely to a. not respond to competitive actions. b. respond quickly to competitive actions. c. delay responding to competitive actions. d. respond to strategic actions, but not to tactical actions.

First movers are a. entrepreneurs who lead in the establishment of new industries. b. firms that are first to exit a declining industry. c. firms that take an initial competitive action. d. individuals who move frequently as employment opportunities change in a locale.

Focus strategies are a. sheltered from the risks associated with industry-wide strategies because of their niche focus. b. able to avoid global risk by focusing on niches in national or regional markets. c. faced with additional types of risks than are industry-wide strategies. d. more subject to failure than industry-wide strategies.

Hilliard Pharmaceuticals and Ahrens Vitamins, Inc., have high market commonality, both geographically and in the market segments in which they compete. Hilliard, the number two firm in the industry, has undertaken a major strategic attack upon Ahrens, the market leader. Which of the following statements is most likely to be TRUE? a. Ahrens will not respond aggressively since this is a strategic move and not a tactical action. b. As the market leader, Ahrens has little to fear from an attack by Hilliard and will not expend organizational slack on a major response. c. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens. d. Ahrens will respond after a long delay as the nutrition supplement industry is a slow-cycle industry.

If a firm has a service that is valuable, rare, and costly-to-imitate, but a substitute exists for the service, the firm will a. achieve competitive parity. b. have a competitive disadvantage. c. have a temporary competitive advantage. d. gain a sustainable competitive advantage.

In a diversified firm, corporate-level strategy is concerned with a. operating each individual business under the corporate umbrella. b. determining how each functional department of the firm will operate. c. determining in which businesses to compete and how resources will be allocated between businesses. d. coordinating the vision and mission of each subsidiary firm.

In order to meet and exceed customer's expectations, firms must a. constantly manipulate customers' perceptions of their needs. b. answer the questions: who, what, when, where, how, and why as they apply to customers. c. continuously improve, innovate, and upgrade their core competencies. d. successfully defend their established core competencies from imitation by competitors.

In the airline industry, consolidation among fuel providers serving airport facilities would be considered as ____ factor in the five forces model of competition. a. a reduction of the airlines' abilities to enjoy economies of scale b. an increase in switching costs because the airlines have no choice but to use jet fuel and other oil products c. an increase in the bargaining power of suppliers of a critical input d. an increase in the intensity of rivalry among airlines for scarce resources

Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G (Chapter 3 Strategic Focus) performs well and are examples of the company's __________ . a. tangible resources b. intangible resources c. core competencies d. capabilities

Intensified rivalry within an industry results in a. increased hiring across the industry. b. increased total revenues across the industry. c. decreased average profitability across the industry. d. increased entries into the industry.

Isidore Crocker, CEO of Gotham Engines, is strongly in favor of acquiring Carolina Textiles, a firm in an unrelated industry. Some members of the board of directors are questioning Crocker's motives for the acquisition. They argue that it is not uncommon for CEOs to push for acquisitions because a. a successful acquisition will increase the CEO's power over the board of directors. b. making an acquisition is an easier route to increased firm value than is improving the firm's core competencies. c. higher CEO pay is related to larger organization size. d. CEOs nearing retirement seek to create empires to continue their legacy.

It is possible that Borders' core competencies of store locations and a desirable physical environment for customers became core rigidities eventually leading to the filing of bankruptcy as a result of a. changing political events. b. changing social events. c. a new technology emerging and changing customer shopping patterns . d. failure to accurately analyze the value chain.

Lawsuits over patent and copyright infringements are more common and intense in a. fast-cycle markets because the market is innovation-driven. b. standard-cycle markets because the firm's brand name is such an important competitive advantage. c. slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage. d. standard-cycle markets because innovation is rare, and so gives the innovating firm a significant competitive advantage.

Lobelia's Nursery and Garden Resource Center has long provided high quality, typical types of seasonal bedding plants to customers in the Mobile, Alabama, metropolitan area. It has traditionally competed with the other plant nurseries within a 50-mile radius of Mobile. Recently, Lobelia has opened a branch in Fairfax, Virginia. Lobelia's research shows that most Fairfax nurseries have only one location. Lobelia can expect the local Fairfax nurseries to a. be unmotivated to respond because their market position is not threatened by a new competitor from out-of-town. b. respond with fierce attacks because of resource dissimilarity. c. respond aggressively because of high market dependence. d. take no competitive response because of the lack of mutual interdependence among the nurseries.

McDonald's culture with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics illustrates which of the following criteria for sustainable competitive advantage? a. valuable. b. rare. c. costly to imitate. d. nonsubstitutable.

Multipoint competition occurs when a. firms have multiple retail outlets. b. firms have multiple products in their primary industry. c. diversified firms compete against each other in several markets. d. firms have diversified portfolios of companies.

New entrants to an industry are more likely when a. it is difficult to gain access to distribution channels. b. economies of scale in the industry are high. c. product differentiation in the industry is low. d. capital requirements in the industry are high.

Of the value-neutral incentives to diversify, all of the following are internal firm incentives EXCEPT a. overall firm risk reduction. b. uncertain future cash flows. c. stricter interpretation of antitrust laws. d. low performance.

Once a firm has determined its competitor's future objectives, current strategy, assumptions, and strengths and weaknesses, its next step is to develop a. an environmental assessment. b. a marketing plan. c. a response profile. d. a task force to implement the plan.

Organizational stakeholders are usually satisfied when a. their return on investment has been maximized. b. customers pay the highest sustainable price for the goods and services they receive. c. companies provide a dynamic, stimulating, and rewarding work environment. d. companies are paying the highest prices to suppliers.

Organizational stakeholders include a. unions. b. host communities. c. employees. d. suppliers of capital.

Outsourcing is the a. spinning off of a value-creating activity to create a new firm. b. selling of a value-creating activity to other firms. c. purchase of a value-creating activity from an external supplier. d. use of computers to obtain value-creating data from the Internet.

Product differentiation refers to the a. ability of the buyers of a product to negotiate a lower price. b. response of incumbent firms to new entrants. c. belief by customers that a product is unique. d. fact that as more of a product is produced the cheaper it becomes per unit.

Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is: a. maximizing the firm's return on investment. b. receiving the highest quality products and services in the industry. c. obtaining reliable products at the lowest possible price. d. increasing the profitability of the firm.

Recently, the only type of car available for Anthony to rent on a business trip was a compact, fuel-efficient Japanese import. Anthony was surprised at the comfort and performance of the car. He is in the market for a new car and had previously considered only buying another luxury SUV. Now, he is thinking about the significant cost savings he would have if he bought the compact vehicle rather than a new SUV. This is an example of the competitive risk that a. a competitor's products can convey a product's differentiated features to a customer at a significantly reduced price. b. a product imitation can cause customers to perceive that competitors offer essentially the same good. c. experience can narrow a customer's perceptions of the value of a product's differentiated features. d. brand loyalty insulates a company from rivalry with competitors.

Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than it does in the differentiation strategy. a. marketing and sales b. technology development c. logistics d. human resource management

Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot (such as jokes on flights or the cooperation between gate personnel and pilots). These examples illustrate which of the following criteria for sustainable competitive advantage? a. valuable. b. rare. c. costly to imitate. d. nonsubstitutable.

Starbuck's determined that all of the following customer needs were important EXCEPT a. fast service. b. the experience associated with drinking coffee, not just the coffee. c. the actual product of service (e.g., a cup of coffee), not the experience. d. allowing customer to design their own drinks.

Strategic fit among many activities (in an activity map) is fundamental to a. the development of core competencies for a firm. b. the breadth of competitive scope for a firm. c. sustainability of a firm's competitive advantage. d. the integrity of the firm's value chain.

Suppliers are powerful when a. satisfactory substitutes are available. b. they sell a commodity product. c. they offer a credible threat of forward integration. d. they are in a highly fragmented industry.

The "liability of foreignness" is the a. inability of most U.S. managers to truly comprehend foreign cultures. b. political disadvantage that U.S. firms have when doing business abroad. c. overall risks of participating outside a firm's domestic country when entering global competition. d. strong cultural preference for "buying local," which puts foreign firms at a disadvantage when competing in the U.S. market.

The CEO of the Wholesome Food retail grocery chain, which specializes in organic and natural produce and meat, has stated, "The key to success is to find your niche and focus on it, regardless of what anyone else does." The CEO a. realizes that he must understand competitors in order to predict their competitive actions and responses. b. understands that he is the market leader in his niche and thus has a sustainable competitive advantage. c. believes he has placed his firm in a slow-cycle industry where concerns about protecting unique competencies dominate concerns about market share. d. realizes his firm has such lower resources than other competitors that his chain is "competitively invisible" to them.

The Chapter 3 Strategic Focus on P&G illustrates that the company uses its capabilities and core competencies to grow a. through mergers. b. organically. c. through cooperative relationships. d. through acquisitions.

The Mars acquisition of the Wrigley assets was part of its related constrained diversification and added market share to the Mars/Wrigley integrated firm. It allowed Mars to gain _______because it could sell its products above the market level or reduce its costs below the market level. a. multipoint competition b. virtual integration c. market power d. vertical integration.

The _________________ diversification strategy creates value in two ways. First, since the core competence has already been developed in one business, the firm does not have to allocate resources to develop it. Second, since the resource is intangible, competitors cannot easily imitate it. a. related constrained b. unrelated c. related linked d. dominant business

The analysis of the activity map of a successful company such as Southwest Airlines emphasizes how a. the organizational culture of Southwest Airlines is the key to the success of the organization. b. understanding of the profit pool in an industry indicates to companies where above-average returns can be earned. c. it is hard for rivals to match a configuration of integrated activities than to imitate a single activity. d. the primary and support activities of a successful company capture value all along the value chain.

The basic types of operational economies through which firms seek value from economies of scope are a. synergies between internal and external capital markets. b. the leveraging of individual tangible resources. c. the sharing of value chain activities and support functions. d. joint ventures and outsourcing.

The development of a firm's mission typically involves which of the following? a. Only the CEO. b. Only top managers. c. The CEO and top managers. d. None of the these.

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because a. customers will seek out the lowest cost product. b. customers of non-differentiated products are sensitive to price increases. c. customers are loyal to brands that are differentiated in meaningful ways. d. the differentiation strategy benefits from rivalry because it forces the firm to innovate.

The environmental segments that comprise the general environment typically will NOT include a. demographic factors. b. sociocultural factors. c. substitute products or services. d. technological factors.

The existence of high exit barriers such as ownership of specialized assets (e.g., large aircraft) in the airline industry indicates that a. customers are relatively weak because of the high switching costs created by frequent flyer programs. b. the industry is moving toward differentiation of services. c. the competitive rivalry in the industry is severe. d. the economic segment of the external environment has shifted, but airline strategies have not changed.

The focused differentiation strategy differs from the differentiation strategy in that a. the focused differentiators have a broader competitive scope. b. the value-creating activities of focused differentiators are more constrained. c. focused differentiators target a narrower customer market. d. there are fewer risks with the focused differentiation strategy.

The more "constrained" the relatedness of diversification, a. the fewer the linkages between the businesses within the portfolio owned by the firm. b. the wider the variation in the portfolio of businesses owned by the firm. c. the more links there are among the businesses owned by an organization. d. the lower the proportion of total organizational revenue derived from the dominant-business.

The organization's role as a taxpayer is most important to ____ as stakeholders. a. major suppliers of capital b. shareholders c. host communities d. unions

The overall lesson from the Chapter 3 Strategic Focus about decision-making at several companies was the importance of _________ a. CEO compensation. b. the effect of unattractive industries on firm performance. c. making decisions about use of the firm's resources under conditions of uncertainty. d. competing against innovative rivals.

The political/legal segment of an environment represents a. the political preferences of different ethnic groups in the society. b. the technological values of different political entities in society. c. how organizations and governments mutually try to influence each other. d. the system of regulations governments at all levels place on businesses.

The proper matching of what a firm can do with what it might do a. balances the internal characteristics of the firm with the characteristics of the external environment. b. overcomes the rigidity and inertia resulting from a history of success. c. yields insights the firm requires to select its strategy. d. develops core competencies based on human knowledge.

The steps for identifying the profit pools in an industry include of all of the following except: a. Defining the boundaries of the pool. b. Estimating the overall size of the pool. c. Defining the competitors in the pool. d. Estimating the size of the value-chain activity in the pool.

The ultimate test of the value of a corporate-level strategy is whether the a. corporation earns a great deal of money. b. top management team is satisfied with the corporation's performance. c. businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership. d. businesses in the portfolio increase the firm's financial returns.

To have the potential to become sources of competitive advantage, resources and capabilities must be non-substitutable, valuable, ____, and ____. a. unique, easy to imitate. b. easy to imitate, difficult to implement. c. rare, costly to imitate. d. easy to implement, unique.

To overcome the conglomerate discount, many conglomerates have sought to establish ____________ for the parent company. a. a lobbying group b. organizational slack c. a brand d. a strong CEO

Today, a substantially slimmed-down Polaroid is introducing a number of new products including GL20 Camera Glasses which have a built-in camera and LCDs. This wave of new product development is explained by a. the funds provided by a patent infringement lawsuit won by Poloroid. b. weaker competitors in its industry. c. the learning that occurred from making earlier mistakes. d. an easing of regulations governing Intellectual Property Protection.

Understanding how new knowledge can develop new products, processes, or materials is a result of analyzing the ____ segment of the general environment. a. economic b. political/legal c. technological d. global

Valuable capabilities a. allow the firm to exploit opportunities in its external environment. b. allow the firm to neutralize threats in its internal environment. c. allow the firm to exploit opportunities or neutralize threats in its external environment. d. none of the these are correct.

Value chain activities include all of the following EXCEPT a. Supply-Chain Management b. Operations c. Management Information Systems d. Distribution

Value chain analysis is a tool used to a. analyze a firm's external environment for value-creating opportunities. b. analyze a firm's value chain activities and support functions in isolation from its competitors' value chain. c. understand the parts of the firm's operation that create value and those that do not. d. identify the firm's core competencies in each of the primary activities of the firm.

Virgin Group successfully transfers its marketing core competence across airlines, cosmetics, music, drinks, mobile phones, health clubs and a number of other businesses. Virgin follows a ____ diversification corporate strategy. a. dominant business b. related constrained c. related linked d. unrelated

Walt Disney's focus on ____ is typical of a slow-cycle market. a. innovation b. total quality c. proprietary rights d. economies of scale

When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are engaged in a. scanning. b. monitoring. c. forecasting. d. assessing.

When diversification results in two companies, such as UPS and FedEx, simultaneously competing in the same product areas or geographic markets, this is called ____ competition. a. multiple b. multiportal c. multipoint d. multiplicit

When firms lay off employees they are a. treating employees as an intangible resource. b. recognizing the reduced value of labor in the value chain. c. eroding the organization's knowledge resources. d. temporarily sacrificing a tangible asset that is easily replace.

When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n) a. strategic mission. b. inspiring vision. c. core competence. d. sustainable market niche.

When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of a. an industry with low exit barriers. b. increasing economies of scale. c. slow industry growth. d. high bargaining power among buyers.

Which industry can be LEAST described as a slow cycle market? a. Freight railroads b. Pharmaceuticals c. Cell phone provider d. Private ownership of highways and bridges

Which of the following are central to implementing value-creating strategies and thereby satisfying customers'needs? a. Firm resources b. Capabilities c. Core competencies d. None of the these.

Which of the following firms would be the most likely to be a successful candidate for acquisition and restructuring? a. a medical practice b. a management consulting firm that has a tradition of long term client-consultant relationships c. a tire manufacturer established in 1910 d. a start-up communications technology firm

Which of the following is NOT a governance mechanism that may limit managerial tendencies to over-diversify? a. the market for corporate control b. the Board of Directors c. surveillance technologies d. executive compensation practices

Which of the following is NOT an external event that reveals the "dark side" of core capabilities? a. A new competitor figures out a better way to serve the firm's customers. b. New technologies emerge and replace those used by the firm. c. A firm changes its focus to a new core competence. d. Political or social events shift the foundation of current core capabilities.

Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies? a. Core competencies must be acquired. b. Core competencies must be bundled. c. Core competencies must be internationalized. d. Core competencies must be leveraged.

Which of the following is an example of a strategic action? a. a "two movies for the price of one" campaign by Blockbuster Video b. use of product coupons by a local grocer c. entry into the European market by Home Depot d. fare increases by Southwest Airlines

Which of the following is an example of a tactical action? a. Wal-Mart's launch of Sam's Club stores. b. Continental Airlines exit from a hub airport in Denver. c. Netflix beginning to offer music DVDs in addition to movies. d. Dell's launch of a new line of high performance, custom-made PCs.

Which of the following pairs of companies would be least likely to be examined together as part of competitive analysis? a. Home Depot and Lowe's b. Boeing and Airbus c. IBM and Microsoft d. Coca Cola and PepsiCo

Which of the following statements is FALSE? a. First movers tend to take higher risks than second and later movers. b. First movers tend to have significantly higher revenues than second movers. c. First movers have lower survival rates than second and late movers. d. First movers tend to have more organizational slack than later movers.

Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to a. the power of the financial market stakeholders. b. the resources the firm possesses. c. the profitability of the industry the firm competes in. d. hypercompetition within the industry.

Which type of diversification is most likely to create value through financial economies? a. related constrained b. operational and corporate relatedness c. unrelated d. related linked.

Zara has pioneered "cheap chic" in clothing apparel. Zara offers current and desirable fashion goods at relatively low prices. To implement the strategy, Zara uses sophisticated designers and effective means of managing costs. These are all characteristics of which business level strategy? a. Cost leadership b. Differentiation c. Integrated Cost Leadership/Differentiation d. Stuck-in-the-middle

____ can be viewed as the capacity to take action. a. Strategic assets b. Human capital c. Core competencies d. Functional capabilities

____ of organizational decisions fail. a. Few b. About one-quarter c. About half d. Most

Which of the following firms would likely pose the least competitive threat? A. A firm in the same industry and in the same strategic group. B. A firm that produces substitute goods to your product line. C. A competitor to your product where a high switching cost exists. D. A firm in the same industry and in the nearest strategic group looking to join your group.

C. A competitor to your product where a high switching cost exists. - The competitive threat of intense rivalry can result from lack of differentiation or switching costs. When switching costs are high, this threat is lowered.

Which is considered a force in the "Five-Forces" model? A. Increased deregulation in an industry. B. The threat of government intervention. C. Rivalry among competing firms. D. Recent technological innovation.

C. Rivalry among competing firms. - The "five-forces" model describes the competitive environment in terms of five basic competitive forces: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and the intensity of rivalry among competitors in an industry.

How do infomediaries and consumer information websites increase the intensity of competitive rivalry? A. by shifting customers away from issues of price B. by making competitors in cyberspace seem less equally balanced C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over D. by highlighting a firm's unique selling advantages

C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over - Some shopping infomediaries, such as BizRate and CNET, not only search for the lowest prices on many different products but also rank the customer service quality of different sites that sell similarly priced items. They increase rivalry by consolidating the marketing message that consumers use to make a purchase decision into a few key pieces of information over which the selling company has little control.

Threat of substitute products comes from A. other companies in the same industry. B. foreign companies which can use cheap labor in their countries. C. firms in other industries that produce products or services that satisfy the same customer need. D. all of these.

C. firms in other industries that produce products or services that satisfy the same customer need. - Substitute products are those products or services that can perform the same function as the industry's offerings. They may be offered by businesses seemingly far removed from the industry.

In the value net analysis, complementors are A. firms that produce substitute products. B. customers who compliment the company for their good products and services. C. firms that produce products or services that have a positive impact on the value of a firm's products or services. D. firms that supply critical inputs to a company.

C. firms that produce products or services that have a positive impact on the value of a firm's products or services. - Complements typically are products or services that have a potential impact on the value of a firm's own products or services. Those who produce complements are usually referred to as complementors. Powerful hardware is of no value to a user unless there is a software that runs on it.

An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of A. threat of entry. B. backward integration. C. forward integration. D. threat of substitute products.

C. forward integration. - An example of forward integration in the text is an automobile manufacturer acquiring a rental car company, or a firm in an entirely new industry introducing a similar product that uses a more efficient technology.

Firms would be most likely to face intense rivalry with competitors when they A. are in a high growth industry with low fixed costs. B. are in a protected market. C. have high fixed costs, in a slow growth industry with high exit barriers. D. have low exit barriers for easy transition to another industry.

C. have high fixed costs, in a slow growth industry with high exit barriers. - Intense rivalry is the result of several interacting factors, including the following: numerous or equally balanced competitors, slow industry growth, high fixed or storage costs, lack of differentiation or switching costs, capacity augmented in large increments, or high exit barriers.

A danger of forecasting discussed in the text is that A. in most cases, the expense of collecting the necessary data exceeds the benefit. B. forecasting's retrospective nature provides little information about the future. C. managers may view uncertainty as "black and white" while ignoring important "gray areas." D. it can create legal problems for the firm if regulators discover the company is making forecasts.

C. managers may view uncertainty as "black and white" while ignoring important "gray areas." - A danger of forecasting is that managers may view uncertainty as black and white and ignore important gray areas. The problem is that underestimating uncertainty can lead to strategies that neither defend against threats nor take advantage of opportunities.

Product differentiation by incumbents act as an entry barrier because A. new entrants cannot differentiate their products. B. incumbents will take legal action if new entrants do not differentiate their products. C. new entrants will have to spend heavily to overcome existing customer loyalties. D. it helps a firm to derive greater economies of scale.

C. new entrants will have to spend heavily to overcome existing customer loyalties. - When existing competitors have strong brand identification and customer loyalty, differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome existing customer loyalties.

Increasingly larger numbers of women entering the work force since the early 1970s is an example of A. demographic changes. B. political and legal environmental changes. C. sociocultural changes. D. technological developments.

C. sociocultural changes. - Sociocultural forces influence the values, beliefs, and lifestyles of a society. Examples include a higher percentage of women in the workforce.

All of the following are important elements of the political/legal segment of the general environment EXCEPT A. the deregulation of utilities. B. the Americans with Disabilities Act (ADA). C. the increased use of Internet technology. D. increases in the federally mandated minimum wage.

C. the increased use of Internet technology. - Political processes and legislation influence environmental regulations with which industries must comply. Some elements of the political/legal arena include the Americans with Disabilities Act (ADA) of 1990, deregulation of utilities, and increases in the federally mandated minimum wage.

A company in a ____ industry is LEAST likely to make heavy use of patents and copyrights. a. slow-cycle b. medium-cycle c. standard-cycle d. fast-cycle

A competitor analysis includes all of the following about competitors EXCEPT a. future objectives. b. current strategy. c. assumptions. d. traditions.

A decision that results in failure a. is a career-ending event because it is so unusual. b. often results from lack of accountability. c. fosters organizational inertia. d. allows for learning.

A differentiation strategy can be effective in controlling the power of substitutes in an industry because a. customers have low switching costs. b. substitute products are lower quality. c. a differentiating firm can always lower prices. d. customers develop brand loyalty.

A firm has achieved ____ when it successfully formulates and implements a value-creating strategy. a. strategic competitiveness b. a permanently sustainable competitive advantage c. substantial returns d. legal and ethical core values

A firm that is LEAST likely to launch competitive actions is one that has a. organizational slack. b. advanced research and development. c. recently improved the quality of its products. d. large size.

A manufacturer of jewelry imitates the style of a popular and expensive brand using manufactured stones rather than real gemstones and lesser grade metals rather than silver and gold. The manufacturer packages the jewelry in boxes of the same color imprinted with an almost identical logo. About 85 percent of the company's sales are through Internet sales. This example illustrates the competitive risk of ____ that threatens companies that use the differentiation strategy. a. customer sensitive to price differentials b. threat by the cost leader c. customer experience d. counterfeiting

A manufacturer of washing machines has expanded its plant and has created excess capacity, just as the general economy has taken a downturn. The company is likely to a. raise prices on washing machines to offset lost sales. b. be vulnerable to new entrants to an attractive market. c. suffer from intense rivalry from international manufacturers. d. offer rebates and incentives for customers who purchase washing machines.

Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one third of sales. With profitability far above the industry average, this product is responsible for one half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark? a. The company should monitor the general environment for changes that might effect the revenue of all products. b. The company should monitor the general environment for changes that might effect the profitability of the most profitable products. c. The company should monitor the general environment for changes that might effect the profitability of all products. d. The company should monitor the general environment for changes that might effect the revenue and profitability of all products.

Above-average returns are a. higher profits than the firm earned last year. b. higher profits than the industry averaged over the last 10 years. c. profits in excess of what an investor expects to earn from a historical pattern of performance of the firm. d. returns in excess of what an investor expects to earn from other investments with a similar level of risk.

Akamai Technologies is a dominant player in the content delivery network (CDN) market. Akamai is not very diversified (i.e., is dependent on the CDN market). If rival CDN providers such as Limelight Networks and Level 3 Communications lower their basic CDN service prices, what would be Akamai's likely response? a. raise its prices b. do nothing since it is the market leader c. exit the industry d. lower its prices

All of the following are examples of efforts by firms to address the physical segment of the general environment in the Chapter 2 Strategic Focus case EXCEPT a. Sustainable packaging by McDonald's. b. Reduction in carbon dioxide emissions by Procter & Gamble. c. Reduction in water usage in plants by Unilever. d. Hiring more women and minorities at Microsoft.

All the following are ethical sources of data for external analysis EXCEPT a. trade shows. b. competitor's annual reports. c. competitor's help wanted advertisements d. a competitor's confidential memos.

An analysis of the economic segment of the external environment would include all of the following EXCEPT a. interest rates. b. trade deficits or surpluses. c. inflation rates. d. the move toward a contingent workforce.

An industry is defined as a. a group of firms producing the same products or services. b. firms producing items that sell through the same distribution channels. c. firms that sell the same products or services to the same customer base. d. a group of firms producing products that are close substitutes.

An organization's loyalty to its own product is a competitive disadvantage in a ____ market. a. slow-cycle b. standard cycle c. intermediate cycle d. fast-cycle

As customers come to believe that a firm's product is unique, this allows the firm to a. decrease its advertising expenditures. b. customize its product. c. force other companies out of the market by lowering prices. d. obtain loyal customers.

Capabilities a. tend to be developed through firm-wide interactions and reside in the firm as a whole. b. tend to be concentrated in the support activities of the value chain. c. tend to be concentrated in the primary activities of the value chain. d. are often developed in specific functional areas.

Capabilities typically come from a. individual resources. b. one unique resource. c. several outstanding resources used independently. d. combining resources.

Competitor intelligence could ethically come from all the following EXCEPT a. court records. b. financial reports. c. trade show discussions. d. eavesdropping.

Competitors are more likely to respond to competitive actions that are taken by a. differentiators. b. larger companies. c. first movers. d. market leaders.

Dissatisfied capital market stakeholders may: a. Sell their stock. b. Tighten loan covenants. c. Seek to increase their power. d. All of the these.

Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as schools, prisons, and public administration buildings. It has always competed on a cost leadership basis. Most of its products are purchased by a few commercial construction firms, so it is fairly dependent on these construction firms for selling its product. Durable Ceramic's next most-efficient competitor, Cost-Less Ceramics, Inc., earns average returns, while Durable earns above-average returns. The commercial construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its prices below those of Cost-Less's prices, it is likely that a. both Durable and Cost-Less will devise additional ways to become more efficient in their production processes. b. Durable will be unable to absorb the lower cost, and will go out of business. c. both Cost-Less and Durable will go out of business, leaving the customers with fewer alternative sources of low-cost tile. d. Cost-Less will go out of business, and Durable will gain higher power over its customers.

Firms seek to create value from economies of scope through all of the following EXCEPT a. activity sharing. b. skill transfers. c. transfers of corporate core competencies. d. de-integration.

Firms use corporate-level diversification strategies for all the following reasons EXCEPT a. value-creating b. value-neutral c. value-reducing d. value-diversifying

Firms use the five forces model to identify the ___________ of the industry as measured by its ____________. a. size, number of competitors b. globalization, exports c. hypercompetition, technology diffusion d. attractiveness, profitability

Globalization has led to a. lower operational efficiency as firms must transport raw materials and finished goods farther. b. increasing loyalty of customers for products made domestically. c. declining returns from investment in research and development. d. higher product quality.

Golden Lotus, an exercise club targeting healthy individuals over 50, is located in a fast-growing city in the Southwest. Which of the following factors that may have an effect on the success of Golden Lotus is the most directly controllable by the company? a. the socio-cultural environment b. the demographics of the environment c. the economy of the local area d. the power of the customers/buyers

Green restaurant design, sustainable packaging, waste management, and energy efficiency are aspects of the ______________ segment of the general environment that McDonald's has sought to address (Chapter 2 Strategic Focus). a. technological b. political/legal c. global d. physical

Hutchison Whampoa Limited (HWL) has businesses in ports and related services, telecommunications, property and hotels, retail and manufacturing, and energy and infrastructure. HWL makes no efforts to share activities or transfer core competencies among the businesses. HWL is following a strategy of__________diversification. a. dominant business b. related constrained c. related linked d. unrelated

If McDonald's were to map the profit pool in the quick-service restaurant industry, it would do all of the following EXCEPT a. Define the industry's boundaries and size. b. Estimate the profit potential in each part of the value chain. c. Focus on unattractive industries ignored by competitors. d. Select the strategy to use where the largest profit pools are located.

If Southwest Airlines employees lost their high enthusiasm and commitment to the company, a. the airline could continue without problems because its cost-leadership strategy is dependent on its efficient internal procedures. b. replacement employees could be hired from rival airlines that are laying off employees easily merged into the Southwest culture. c. there would be no impact on Southwest's profitability because Southwest's customers value the low fares rather than being "entertained" by the employees. d. Southwest would have lost one of its competitive advantages and its performance would be threatened.

In analyzing the demographic segment of the general environment, one typically examines all of the following factors EXCEPT a. age structure. b. ethnic mix. c. distribution of income. d. cultural values.

In general, firms are more aware of competitors who have similar resources and who a. have low market dependence. b. are late movers. c. have low market commonality. d. compete against the firm in multiple markets.

In order to compete effectively, standard-cycle firms need all of the following EXCEPT a. large market share. b. customer loyalty through brand name. c. careful control of operations to preserve consistency for customers. d. rapid and continuous product introductions.

In the Chapter 4 Strategic Focus, Walmart's same store sales have been declining and those of rivals Family Dollar and Amazon have been increasing. What explains this recent change? a. Walmart was too aggressive with its low-cost position and lost customers who wanted more upscale products. b. Walmart changed its strategy to focused dirrerentation. c. Amazon and Family Dollar changed their strategies to attract more upscale customers. d. Walmart changed its strategy to attract more upscale customers.

In the chapter discussion of the political legal segment of the general environment, it was noted that President Obama's administration has sought to pursue policies that would a. remove the U.S. from NAFTA. b. abolish antitrust laws. c. increase the amount of work U.S. companies outsource to firms in other nations. d. reduce the amount of work U.S. companies outsource to firms in other nations.

In the resource-based model, which of the following factors would be considered a key to organizational success? a. unique market niche b. weak competition c. economies of scale d. skilled employees

Large diversified businesses often face a _______________ which results from analysts not knowing how to value a vast array of large businesses with complex financial reports. a. threat of regulation by the Securities and Exchange Commission b. high CEO turnover c. threat of takeover d. conglomerate discount

Managerial motives to seek diversification include a desire to a. improve their marketability to other firms. b. effectively use corporate resources. c. provide higher returns to corporate stakeholders. d. increase their compensation.

Multimarket competition occurs when firms a. sell different products to the same customer. b. have a high level of awareness of their competitors' strategic intent. c. simultaneously enter into an attack strategy. d. compete against each other in several geographic or product markets.

Rapid-Built Homes specializes in low-cost prefabricated, modular homes that can be erected in a matter of days anywhere in the country. Rapid-Built focuses on entire subdivisions of homes developed by real estate speculators. ModernModular Homes (ModMod) specializes in modular homes designed by architects which can be built anywhere in the country. The buyers usually build the home themselves from kits on their own lots. ModMod sells fewer than 100 house kits per year. ModMod is run by two professors of architecture as a sideline business. According to the "Framework of Competitive Analysis," we can say that Rapid-Built and ModMod a. are direct mutually-acknowledged competitors. b. have high resource similarity. c. have high market commonality. d. are probably not engaged in intense competitive rivalry.

Research has shown that horizontal acquisitions a. tend to have disappointing financial results in the long run. b. are being replaced by virtual acquisitions. c. result in lower levels of performance than unrelated acquisitions. d. are able to use activity sharing to successfully create economies of scope.

Research shows that approximately_____ percent of a firm's profitability is explained by the industry in which it competes, whereas ______ percent is explained by the firm's characteristics and actions. a. 90, 10 b. 60, 40 c. 36, 20 d. 20, 36

Research suggests that _______________ has decreased while ___________ has increased possibly due to the restructuring that took place in the 1990s and early twenty-first century. a. forward vertical integration; backward vertical integration b. backward vertical integration; forward vertical integration c. related diversification; unrelated diversification d. unrelated diversification; related diversification

Rivalry between Dell, Hewlett-Packard, and other computer manufacturers is intense in part because a. low geographic saturation of the market. b. the high differentiation among competing products. c. the low threat of supplier forward integration. d. these companies are trying to find ways to differentiate their products.

Switching costs refer to the a. cost to a producer to exchange equipment in a facility when new technologies emerge. b. cost of changing the firm's strategic group. c. one-time costs suppliers incur when selling to a different customer. d. one-time costs customers incur when buying from a different supplier.

Synergy exists when a. cost savings are realized through improved allocations of financial resources based on investments inside or outside the firm. b. two units create value by utilizing market power in their respective industries. c. firms utilize constrained related diversification to build an attractive portfolio of businesses. d. the value created by business units working together exceeds the value the units create when working independently.

Target's brand promise "Expect More. Pay Less" and appeal to higher-income, fashion conscious discount shoppers illustrates the ________________strategy a. cost leadership b. differentiation c. focused differentiation d. integrated cost leadership/differentiation

The ability of Disney to maintain its competitive advantage through proprietary rights to its characters would be severely weakened if a. theme parks with alternative cartoon characters were built in large numbers. b. numerous lawsuits against copyright thieves tainted the reputation of the company. c. Disney attempted to move beyond its traditional industry. d. Disney's cartoon characters became widely perceived as old-fashioned and unappealing.

The downside of synergy in a diversified firm is a. increasing independence of businesses. b. the reduction of activity sharing. c. excessive focus on risky innovation. d. the loss of flexibility.

The economic interdependence among countries as reflected in the flow of goods, services, financial capital and knowledge across country borders is defined as a. hypercompetition. b. boundaryless retailing. c. strategic intensity. d. globalization.

The large expenditures on advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example of what kind of barrier to entry? a. Access to distribution channels. b. Capital requirements. c. Economies of scale. d. Product differentiation.

The next critical technological opportunity for organizations is predicted to be a. the Internet. b. multiphasic interventions. c. biological engineering. d. wireless communications.

The owner of a store retailing fine quality fabrics for home-sewers bewails the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics available and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of a. the hazard of competitors being able to imitate a firm's core competency. b. the need for firms to stick to their core competencies through temporary downturns in market demand. c. the lack of intangible resources undermining the core competencies of the firm. d. core competencies that have become core rigidities.

The purchasing of firms in the same industry is called: a. unrelated diversification. b. vertical integration. c. networking the organization. d. horizontal acquisition.

The rate of technological diffusion is increasing. Which of the following was fastest in penetrating 25 percent of homes in the United States market? a. Telephone b. Television c. Personal computer d. Internet

The recent joint ventures formed by BP with Russian and Indian partners show the importance of the ___________segment of the general environment that BP and other integrated oil firms have to deal when contending with scarce resources (Chapter 2 Opening Case). a. political/legal b. physical c. demographic d. global

The risk for firms that follow the unrelated diversification strategy in developed economies is that a. external investors tend to dump the stocks of conglomerates during economic downturns. b. conglomerates are typically owned by one powerful entrepreneur and do not survive his/her retirement or death. c. government regulations, especially in Europe, have periodically forced the dissolution of conglomerates. d. competitors can imitate financial economies more easily than they imitate economies of scope.

The strategic management process is a. a set of activities that will assure a sustainable competitive advantage and above-average returns for the firm. b. a decision-making activity concerned with a firm's internal resources, capabilities, and competencies, independent of the conditions in its external environment. c. a process directed by top-management with input from other stakeholders that seeks to achieve above-average returns for investors through effective use of the organization's resources. d. the full set of commitments, decisions, and actions required for the firm to achieve above-average returns and strategic competitiveness.

The term "stuck in the middle" a. means adhering to a middle of the road strategy in the face of negative outcomes. b. indicates that the customers of the firm are willing to pay only a mid-range price for the product. c. reflects the fact that the customers of the firm have only moderate expectations regarding product quality. d. means that the firm's cost structure is not low enough to allow it to attractively price its products and that its products are not sufficiently differentiated to create value for its target customer.

The typical risks of a differentiation strategy do NOT include which of the following? a. Customers may find the price differential between the low-cost product and the differentiated product too large. b. Customers' experience with other products may narrow customers' perception of the value of a product's differentiated features. c. Counterfeit goods are widely available and acceptable to customers. d. Suppliers of raw materials erode the firm's profit margin with price increases.

The use of the Internet by Netflix to collect data on customer preferences is an example of a. assessing. b. monitoring. c. forecasting. d. scanning.

Three sources of flexibility in completing primary and support activities are particularly useful for firms using the integrated strategy. These are a. Flexible Manufacturing Systems, Reengineering, and Total Quality Management. b. Outsourcing, Reengineering, and Flexible Manufacturing Systems. c. Outsourcing, Total Quality Management, and Information Networks. d. Flexible Manufacturing Systems, Total Quality Management, and Information Networks.

To build social capital whereby resources such as knowledge are transferred across organizations requires _________between the parties. a. a contract b. determination c. confidence d. trust

Traditionally, the music industry signed multi-year contracts with artists and sold copyright protected music through established distribution channels. A shift to the digital format and the rise of Internet technology has resulted in the sharing of music over peer-to-peer networks, a practice the industry called "piracy." In recent years, the music industry has seen a rapid decline in the number of CDs sold. At the same time, the ownership of the distribution rights of musical content under copyright laws remains clear. Attempts at innovation by individual record labels to offer music as direct downloads to consumer are quickly copied by other labels. Based on these factors, the best assessment is that the music industry has shifted from a ____ to a ____ cycle market. a. slow; fast b. slow; standard c. standard; slow d. standard; fast

Viewing the world through the customer's eyes and constantly seeking ways to create more value for the company enhances a. the reach of the company toward the customer. b. the ability to identify the customer. c. the richness of the relationship with the customer. d. affiliation with the customer.

When implementing a focus strategy, the firm seeks to a. offer products that are both differentiated and low cost. b. move into the global market. c. target the typical customer in an industry. d. serve the specialized needs of a market segment.

When selecting a business level strategy, the firm must determine all of the following EXCEPT a. How will the customer's needs be satisfied? b. Who is the customer? c. What are the customers' needs? d. Why should these customers' needs be satisfied?

When the costs of supplies increase in an industry, the low-cost leader a. may continue competing with rivals on the basis of product features. b. will lose customers as a result of price increases. c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins. d. may be the only firm able to pay the higher prices and continue to earn average or above- average returns.

Which acquisition would be considered the LEAST related? a. a candy manufacturer purchases a chemical laboratory specializing in food flavorings b. a chain of garden centers acquires a landscape architecture firm c. a hospital acquires a long-term care nursing home d. an upscale "white-tablecloth" restaurant chain acquires a travel agency

Which of the following intelligence gathering techniques is most likely to be legal and ethical? a. hiring investigators to examine the competitor's trash b. entering a competitor's production plant without authorization c. redirecting a competitor's emails to one's own company d. attending trade show presentations given by a competitor's employees

Which of the following is NOT a factor affecting sustainability of a competitive advantage? a. The availability of substitutes for a firm's core competence. b. The rate at which obsolescence of the core competence occurs because of environmental changes. c. The imitability of a core competence. d. The length of time the core competence has existed.

Which of the following is NOT a limitation directly relating to vertical integration? a. bureaucratic costs b. the loss of flexibility through investment in specific technologies c. capacity balance and coordination problems from changes in demand d. imitation of core technology by potential competitors

Which of the following is NOT an entry barrier to an industry? a. expected competitor retaliation b. economies of scale c. customer product loyalty d. bargaining power of suppliers

Which of the following is TRUE of Southwest Airlines? a. Southwest has an unusually low amount of flexibility for a large firm. b. Southwest's success is largely due to the fact it has little market commonality with other airlines. c. Decision-making responsibility is centered at its Dallas headquarters, which allows the firm to respond quickly to competitive attacks. d. Southwest's advantage lies in its ability to "think small."

Which of the following is TRUE? a. Conglomerates no longer exist in the U.S. business scene, but are common in emerging markets. b. Unrelated diversified firms seek to create value through economies of scope. c. The sharing of intangible resources, such as know-how, between firms is a type of operational sharing in related diversifications. d. Related constrained firms share more tangible resources and activities between businesses than do related linked firms.

Which of the following is the most strategic action by Wal-Mart? a. Aggressive pricing to ensure they are a price leader b. Aggressively pricing toys and electronics during the holiday season c. Aggressively pricing school-related items in the back-to-school season d. Entering a new foreign market

Which of the following would be an example of the application of next major technological opportunity for organizations? a. Boeing's Dreamliner. b. Toyota's hybrid vehicles. c. Philip Morris International's smokeless tobacco. d. Amazon's Kindle.

Which organization has the highest market dependence? a. a chain of rapid-service oil change shops b. a manufacturer of chemicals for the international pharmaceutical industry c. a regional department store having 26 locations in the Northwest d. a company that specializes in making replacement tiles for the space shuttle

____ is measured by a product's performance characteristics and its attributes for which customers are willing to pay. a. Competitive advantage b. Profit potential c. Contribution d. Value

Environmental forecasting involves developing plausible projections about the ________ of environmental change. A. direction B. scope C. speed D. all of these

D. all of these - Environmental forecasting involves the development of plausible projections about the direction, scope, speed, and intensity of environmental change. Its purpose is to predict change.

End users are A. the final consumers in a distribution channel. B. usually the C in B2C. C. likely to have greater bargaining power because of the Internet. D. all of these.

D. all of these. - End users are the final customers in a distribution channel. Sales activity that is labeled "B2C" (that is, business-to-consumer) is concerned with end users. The Internet is likely to increase the power of these buyers, in part because the Internet provides large amounts of consumer information.

Exit barriers arise from A. specialized assets with no alternative use. B. governmental and social pressures. C. strategic interrelationships with other business units within the same company. D. all of these.

D. all of these. - Exit barriers are economic, strategic, and emotional factors that keep firms competing even though they may be earning low or negative returns on their investments. Some exit barriers are specialized assets, fixed costs of exit, strategic interrelationships (e.g., relationships between the business units and others within a company in terms of image, marketing, shared facilities, and so on), emotional barriers, and government and social pressures (e.g., governmental discouragement of exit out of concern for job loss).

The bargaining power of suppliers is enhanced under the following market condition: A. no threat of forward integration. B. low differentiation of the suppliers' products. C. greater availability of substitute products. D. dominance by a few suppliers.

D. dominance by a few suppliers. - A supplier group will be powerful when the supplier group is dominated by a few companies and is more concentrated (few firms dominate the industry) than the industry it sells to, the supplier group is not obliged to contend with substitute products for sale to the industry, the supplier group's products are differentiated or it has built up switching costs for the buyer, or the supplier group poses a credible threat of forward integration.

Buyer power will be greater when A. the products purchased are highly differentiated. B. there are high switching costs. C. the industry's product is very important to the quality of the buyer's end products or services. D. it is concentrated or purchases large volumes relative to seller sales.

D. it is concentrated or purchases large volumes relative to seller sales. - A buyer group is powerful when it is concentrated or purchases large volumes relative to seller sales, the products it purchases from the industry are standard or undifferentiated, the buyer faces few switching costs, or the industry's product is unimportant to the quality of the buyer's products or services.

In Porter's Five-Forces model, conditions under which a supplier group can be powerful include all the following EXCEPT A. lack of importance of the buyer to the supplier group. B. high differentiation by the supplier. C. dominance by a few suppliers. D. readily available substitute products.

D. readily available substitute products. - A supplier group will be powerful when the supplier group is dominated by a few companies and is more concentrated (few firms dominate the industry) than the industry it sells to, the supplier group is not obliged to contend with substitute products for sale to the industry, the supplier group's products are differentiated or it has built up switching costs for the buyer, or the industry is not an important customer of the supplier group.

The bargaining power of the buyer is greater than that of the supplier when A. volume of purchase is low. B. threat of backward integration by buyers is low. C. cost savings from the supplier's product are minimal. D. the buyer's profit margin is low.

D. the buyer's profit margin is low. - A buyer group is powerful when it is concentrated or purchases large volumes relative to seller sales, it earns low profits, or the buyers pose a credible threat of backward integration.

The bargaining power of suppliers increases as A. more suppliers enter the market. B. importance of buyers to supplier group increases. C. switching costs for buyers decrease. D. threat of forward integration by suppliers increases.

D. threat of forward integration by suppliers increases. - A supplier group will be powerful when the supplier group is dominated by a few companies and is more concentrated (few firms dominate the industry) than the industry it sells to, the industry is not an important customer of the supplier group, the supplier group's products are differentiated or it has built up switching costs for the buyer, or the supplier group poses a credible threat of forward integration.

"Competitive dynamics" indicates that firms and their strategic actions are independent.

A firm with a reputation as a price predator (an actor that frequently reduces prices to gain or maintain market share) generates few responses to its pricing tactical actions.

A lack of awareness leads to a reduction in competition.

A tactical competitive action involves a significant commitment of specific and distinctive organizational resources.

Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has a loyal following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and PepsiCo do, Bayou Belle has high resource similarity with these international firms.

Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action.

Competitive rivalry is the contest to be the first mover in an international market.

Even if the effects of a competitor's strategic action on the focal firm are significant (e.g., loss of market share), little response is likely from that firm.

Extensive market commonality guarantees intense competition in an industry.

Firms are likely to imitate the actions of a competitor that is noted for risky, complex, and unpredictable behavior because this is a way to imitate unobservable core competencies.

First movers can gain a sustained competitive advantage when they reduce their costs through reverse engineering.

It is much easier for a competitor to implement strategic actions than tactical actions.

Quality affects the degree of rivalry in that firms lacking quality are likely to me more aggressive in their competitive actions until the quality problems are corrected.

Quality begins at the bottom of the organization where employees must create values for quality that permeate the entire organization.

The need for quality products and services is so high that quality alone can assure a firm that it will achieve strategic competitiveness and earn above-average returns.

Two firms, such as a small local, family-owned Italian restaurant and Olive Garden share few markets and have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors.

Under the framework of competitive action and response, "ability" refers to an attacking or responding firm's knowledge of the competitive market characteristics.

Unlike fast-cycle markets, the struggle for market share in standard-cycle markets is moderate.

Wal-Mart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided that choosing not to respond to Wal-Mart's competitive actions is a viable long-term option, because although the companies have high market commonality they have little resource similarity. These small retailers are correct in their decision.

Wal-Mart's aggressive pricing strategy is a strategic action that plays a major role in how it competes.

The power of a buyer group is increased if the buyer group has less concentration than the supplier group. T/F

False - A buyer group is powerful when it is concentrated or purchases large volumes relative to seller sales. If a large percentage of a supplier's sales are purchased by a single buyer, the importance of the buyer's business to the supplier increases.

Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers. T/F

False - A supplier group will be powerful when the supplier group is dominated by a few companies, the supplier's product is an important input to the buyer's business, or the supplier has built up switching costs for the buyer.

An end user's switching costs are potentially much higher because of the Internet. T/F

False - An end user's switching costs are also potentially much lower because of the Internet. Switching may involve only a few clicks of the mouse to find and view a competing product or service online.

Competitive intelligence generally does not benefit very much from gathering informations on competitors fro sources in the public domain. T/F

False - Competitive intelligence is frequently done effectively through public sources of information. Examples are evident in daily newspapers and periodicals such as The Wall Street Journal, BusinessWeek, and Fortune. For example, banks continually track home loan, auto loan, and certificate of deposit (CD) interest rates charged by rivals. Major airlines change hundreds of fares daily in response to competitors' tactics.

Complementary products are products that typically have a negative impact on the value of a firm's own products or services. T/F

False - Complements typically are products or services that have a potential impact on the value of a firm's own products or services. Powerful hardware is of no value to a user unless there is a software that runs on it.

There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators. T/F

False - Economic indicators are associated with equity markets. When stock market indexes increase, consumers' discretionary income rises and there is often an increased demand for luxury items such as jewelry and automobiles

Even with all of the advances in recent years, forecasting is typically considered more of an art than a science and it is of little use in generating accurate predictions. T/F

False - Environmental forecasting involves the development of plausible projections about the direction, scope, speed, and intensity of environmental change. Its purpose is to predict change.

Rivalry is most intense when there are high exit barriers and high industry growth. T/F

False - Intense rivalry may result from slow industry growth (slow industry growth turns competition into a fight for market share, since firms seek to expand their sales) and high exit barriers (factors that keep firms competing though they may be earning low returns on their investments).

Reintermediation is responsible for an overall reduction in business opportunities. T/F

False - Just as the Internet is eliminating some business functions, it is creating an opening for new functions. These new activities are entering the value chain by a process known as reintermediation—the introduction of new types of intermediaries.

Scenario planning is usually concerned with short-term forecasts. T/F

False - Scenario analysis is an in-depth approach to environmental forecasting that involves experts' detailed assessments of societal trends, economics, politics, technology, or other dimensions of the external environment.

The use of the strategic groups concept is generally not helpful in charting the future directions of firms' strategies. T/F

False - Strategic groupings help chart the future directions of firms' strategies. Arrows emanating from each strategic group can represent the direction in which the group (or a firm within the group) seems to be moving. If all strategic groups are moving in a similar direction, this could indicate a high degree of future volatility and intensity of competition.

Because of the Internet and digital technologies, it is very difficult for suppliers to create purchasing techniques that lower switching costs. T/F

False - Suppliers may be able to create Web-based purchasing arrangements that make purchasing easier and discourage their customers from switching.

Porter's Five-Forces model is designed to help us understand how social attitudes and cultural values impact U.S. businesses. T/F

False - The "five-forces" model developed by Michael E. Porter has been the most commonly used analytical tool for examining the competitive environment. It describes the competitive environment in terms of five basic competitive forces.

The Internet and digital technologies suppress the bargaining power of buyers by providing them with more information to make buying decisions. T/F

False - The Internet and wireless technologies may increase buyer power by providing consumers with more information to make buying decisions and by lowering switching costs.

The strategic groups in the world-wide automobile industry have been very stable and unchanging in recent years. T/F

False - The auto market has been very dynamic and competition has intensified in recent years. Many firms in different strategic groups compete in the same product markets.

Michael Porter's Five-Forces Analysis is a dynamic tool for analyzing industry attractiveness. T/F

False - The five-forces analysis also has been criticized for being essentially a static analysis. External forces as well as strategies of individual firms are continually changing the structure of all industries.

Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry. T/F

False - The general environment is composed of factors that can have dramatic effects on firm strategy. Typically, a firm has little ability to predict trends and events in the general environment and even less ability to control them. When listening to CNBC, for example, you can hear many experts espouse different perspectives on what action the Federal Reserve Board may take on short-term interest rates—an action that can have huge effects on the valuation of entire economic sectors.

A competitive action is a strategic or tactical action taken by a firm to gain or defend a competitive advantage or improve its market position.

A firm can expect that every launch of a successful new product will be followed by a counterattack by competitors, even in a slow-cycle market.

A firm can predict that a competitor whose products suffer from poor quality is likely to be less aggressive in its competitive actions until those quality problems are corrected.

A strategy's success is determined not only by the firm's initial competitive actions but also by how well it anticipates competitors' responses to them and by how well the firm anticipates and responds to its competitors initial actions.

Among the drivers of competitive actions and responses, motivation refers to the perceived gains that will result from a firm which initiates an attack. If a firm perceives that its position will improve, it is more likely to attack.

An organization with high profitability, such as Wal-Mart, will be able to develop high organizational slack.

Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.

Carl has just graduated with a management degree. He has a good understanding of his personal strengths and weaknesses and knows he would fit best in a stable organizational environment. In his job search, Carl should target firms in slow-cycle markets.

Coca Cola and PepsiCo compete across a number of products (e.g., soft drinks, bottled water) and geographic markets (U.S. and foreign markets) indicating that both companies have market commonality.

Competitive dynamics refers to the total set of actions and responses taken by all firms competing within a market.

Competitive rivalry is the set of competitive actions and responses that occur among firms as they maneuver for an advantageous market position.

Competitors are more likely to respond to strategic or tactical actions when they are taken by a market leader

Disney is an example of a firm in a slow-cycle market because its animated characters are shielded from imitation by copyrights and trademarks.

Fast-cycle markets are characterized by "generational products" which start out with a substantial technological advance in the performance of a product category followed by incremental technological advances as new generations of products are introduced.

Firms in a slow-cycle market are shielded from imitators for long periods of time.

Firms operating in the same market, offering similar products and targeting similar customers are competitors.

Firms that are typically late movers usually have little organizational slack.

Firms with high market commonality and highly similar resources are direct and mutually acknowledged competitors.

In general, small firms are more likely than large firms to launch competitive actions and tend to do it more quickly.

In general, strategic actions elicit fewer competitive responses than do tactical actions.

Intensified rivalry within an industry results in decreased average profitability for the firms within it.

It is more likely that locally-owned, one-location cafes in a small town will respond more rapidly to tactical actions by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town.

Large firms are likely to initiate more competitive actions along with more strategic actions during a given period.

Large firms with significant slack resources (i.e., are able to launch a greater number of competitive actions) but who remain flexible and act like small firms (i.e., are able to launch a variety of actions) will be more successful against rivals.

Market commonality is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each.

Mighty Mike's, a manufacturer of power tools for the home hobbyist, has seen its main competitor, MyTools, bring out a line of power tools that are smaller sized, lighter weight, and suitable for women and older hobbyists who have weaker hands than the typical male workshop hobbyist. Mighty Mike is waiting to see whether MyTool's new line is a success. Mighty Mike could be classified as a second mover.

Often, successful imitation of the first mover's innovations allows the second mover to avoid the mistakes and major investments of the first mover.

Patent laws and regulatory requirements such as required FDA (Food and Drug Administration) approval to launch new products shield pharmaceutical companies' positions in this slow-cycle market.

Quality is a universal theme and is a necessary, but not a sufficient, condition for competitive success.

Research suggests that a firm with greater multimarket contact is less likely to initiate an attack, but more likely to respond aggressively when attacked.

The benefits of being a first mover are most substantial in fast cycle markets.

The drivers of competitive behavior are awareness of the competitor, motivation to take action or respond, and the organization's ability in terms of resources and flexibility.

The more dependent a firm is on its market, the more aggressively it will defend it from another competitor.

The satellite dish at Faye's weekend home has malfunctioned. When she calls to have the dish repaired, the service representative tells her that the dish is obsolete and that parts for it are no longer made. Faye must replace the old dish with a new dish. This is an example of lack of firm loyalty to a product in a fast-cycle market.

To be a first mover, the firm must have readily available resources to invest in R&D as well as to rapidly and successfully produce and market a stream of innovative products.

Two firms that have similar resources, but do not share markets would not be direct and mutually acknowledged competitors.

Two firms, such as Fed Ex and UPS that have similar resources and common markets would be direct and mutually acknowledged competitors.

Without available resources (such as financial capital and people), the firm lacks the ability to attack a competitor or respond to its actions.

In some industries, high switching costs can act as an important barrier to entry. T/F

True - A barrier to entry is created by the existence of one-time costs that the buyer faces when switching from one supplier's product or service to another.

Buyer power tends to be higher if suppliers provide undifferentiated or standard products. T/F

True - A buyer group is powerful when the products it purchases from the industry are standard or undifferentiated. Confident they can always find alternative suppliers, buyers play one company against the other, as in commodity grain products.

The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration. T/F

True - A supplier group will be powerful when the supplier group poses a credible threat of forward integration. This provides a check against the industry's ability to improve the terms by which it purchases.

The Internet heightens the threat of substitutes because it creates new ways to accomplish the same task. T/F

True - Along with traditional marketplaces, the Internet has created a new marketplace and a new channel. In general, therefore, the threat of substitutes is heightened because the Internet introduces new ways to accomplish the same tasks.

The same environmental trend can often have very different effects on firms within the same industry. T/F

True - An example would be the rising levels of affluence in many developed countries. This bodes well for brokerage services as well as for upscale pets and supplies. However, this trend may adversely affect fast-food restaurants because people can afford to dine at higher-priced restaurants.

Competitor Intelligence (CI) is a tool that can provide management with "early warnings" about both threats and opportunities. True/False

True - Competitive intelligence (CI) helps firms define and understand their industry and identify rivals' strengths and weaknesses. Done properly, competitive intelligence helps a company avoid surprises by anticipating competitors' moves and decreasing response time.

Technological innovations can create entirely new industries and alter the boundaries of industries. T/F

True - Developments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries.

Industries characterized by high economies of scale typically attract fewer new entrants. T/F

True - Economies of scale refers to spreading the costs of production over the number of units produced. The cost of a product per unit declines as the absolute volume per period increases. This deters entry by forcing the entrant to come in at a large scale and risk strong reaction from existing firms or come in at a small scale and accept a cost disadvantage. Both are undesirable options.

Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process. True/False

True - Environmental monitoring tracks the evolution of environmental trends, sequences of events, or streams of activities.

Five-Forces analysis implicitly assumes a zero-sum game, a perspective that can be short-sighted. T/F

True - Five-forces analysis implicitly assumes a zero-sum game, determining how a firm can enhance its position relative to the forces. Yet such an approach can often be short-sighted; that is, it can overlook the many potential benefits of developing constructive win-win relationships with suppliers and customers.

In most industries, new entrants will be a bigger threat because the Internet lowers entry barriers. T/F

True - In most industries, the threat of new entrants has increased because digital and Internet-based technologies lower barriers to entry. For example, Internet businesses may enjoy savings on expenses such as office rent, sales-force salaries, printing, and postage. This may encourage more entrants who see an opportunity to capture market share by offering a product more efficiently.

A major sociocultural trend in the United States is the increased educational attainment by women. T/F

True - Increased educational attainment by women in the workplace has led to more women in upper management positions. Given such educational attainment, it is hardly surprising that companies owned by women have been one of the driving forces of the U.S. economy.

Rivalry will be most intense when there is a lack of differentiation or switching costs. T/F

True - Intense rivalry may result from lack of differentiation or switching costs. Where the product is perceived as a commodity, the buyer's choice is typically based on price and service, resulting in intense price and service competition. Lack of switching costs has the same effect.

Competition tends to be more intense among firms within a strategic group than between strategic groups. T/F

True - Strategic groups are clusters of firms that share similar strategies. Rivalry tends to be greater among firms that are alike.

The same environmental trend or event may have a very different impact on different strategic groups within the same industry. T/F

True - Strategic groups are helpful in thinking through the implications of each industry trend for the strategic group as a whole. Such analysis can help in making predictions about industry evolution. A sharp increase in interest rates, for example, tends to have less impact on providers of higher-priced goods (e.g., Porsches) than on providers of lower-priced goods (e.g., Chevrolet Cobalt) whose customer base is much more price sensitive.

The more attractive the price/performance ratio of substitute products, the more tightly it constraints an industry's ability to charge high prices. T/F

True - Substitutes limit the potential returns of an industry by placing a ceiling on the prices that firms in that industry can profitably charge. The more attractive the price/performance ratio of substitute products, the tighter the lid on an industry's profits.

Porter's Five-Forces model helps to determine both the nature of competition in an industry and the industry's profit potential. T/F

True - The "five-forces" model developed by Michael E. Porter describes the competitive environment in terms of five basic competitive forces that affect a firm's ability to compete in a given market. Together, they determine the profit potential for a particular industry.

The Internet provides an electronic "staging area" for several forms of digital communications. T/F

True - The Internet provides a platform or staging area for the application of numerous technologies, rapid advances in knowledge, and unprecedented levels of global communication and commerce. Even technologies that don't require the Internet to function, such as wireless phones and GPS, rely on the Internet for data transfer and communications.

Environmental Scanning and competitor intelligence provide important inputs for forecasting activities. True/False

True - Three important processes (scanning, monitoring, and gathering competitive intelligence) are used to develop forecasts. Exhibit 2.1 illustrates relationships among these important activities.

. Knowledge is composed of all the following EXCEPT a. insight. b. expertise. c. information. d. intelligence.

. The culmination of the strategic management process is a. performance. b. strategy implementation. c. strategy formulation. d. analysis.

. The goal of the organization's come. a. vision b. mission c. culture d. strategy

. William Ackman is a hedge fund manager who owned a large share of J.C. Penney stock. He was also a member of the Penney board. He tried to get the CEO fired, but the board and top management said he breached his boardroom duties when he publicly disclosed information on the CEO search and financial condition of the company. He resigned from the board of directors. This is an example of a contentious relationship between a. the capital market stakeholders and the organizational stakeholders. b. the organizational stakeholders and the product market stakeholders. c. the capital market stakeholders and the product market stakeholders. d. all the stakeholders.

. ______ innovation is a term used to describe how rapidly and consistently new, information-intensive technologies replace older ones. a. Perpetual b. Disruptive c. Global d. Diffusion

A firm has achieved when it successfully formulates and implements a value-creating strategy. a. strategic competitiveness b. a permanently sustainable competitive advantage c. substantial returns d. legal and ethical core values

A firm's mission a. is a statement of a firm's business in which it intends to compete and the customers it intends to serve. b. is an internally focused affirmation of the organization's financial, social, and ethical goals. c. is mainly intended to emotionally inspire employees and other stakeholders. d. is developed by a firm before the firm develops its vision.

A prominent national accounting firm runs television advertisements showing an accountant working alone late in the office on a client's project, while clenching a long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that this firm's accountants love their work. This ad seeks to convey a sense of the organization's to the viewers. a. culture b. mission c. vision d. personality

Before liquidating, Circuit City took several actions to try to satisfy its stakeholders. a. capital market b. product market c. organizational d. governmental

Effective strategic leaders a. are willing to be brutally honest. b. focus on strategy formation. c. focus on strategy implementation. d. focus on innovation.

Essentially, has become one of the world's largest markets with 700 million potential consumers. a. the European Union b. the United States c. China d. Japan

If Southwest Airlines is considering the consequences of videoconferencing on business travel, it is in the profit pool analysis step known as a. defining the pool's boundaries. b. estimating the pool's overall size. c. estimating the size of the value-chain activity in the pool. d. reconciling the calculations.

It is important to emphasize that, primarily because they are related to how a firm interacts with its stakeholders, almost all strategic management process decisions have a. ethical dimensions. b. local dimensions. c. political dimensions. d. global dimensions.

It is well known that the elected school board of a large city engages in unethical and illegal activities involving the awarding of major contracts. This behavior has existed for decades, even as the membership in the school board has changed over time. This behavior reflects a. the core values of the school board as an organization. b. a functional, although unethical, culture of the school board. c. the lack of an organizational mission for the school board. d. a school board lacking in core competencies.

New markets created by iPods, PDAs, and Wi-Fi are a result of a. disruptive technologies. b. global competition. c. knowledge intensity. d. hypercompetition.

Product market stakeholders include a. suppliers. b. shareholders. c. employees. d. the firm's chief executive officer.

The final responsibility for forming the organization's mission lies with the a. CEO. b. top-management team. c. employees. d. organization's stakeholders.

The industrial organization (I/O) model argues that a. the key factor in success is choosing the correct industry in which to compete. b. the firm's internal resources and capabilities represent the foundation for development of a value-creating strategy. c. the key to earning above-average returns is strategic flexibility. d. the internal structure of the organization must match the industry in which it competes in order to earn above-average returns on investment.

The interests of an organization's stakeholders often conflict, and the organization must prioritize its stakeholders if it cannot satisfy them all. The is the most critical criterion in prioritizing stakeholders. a. power of each stakeholder b. urgency of satisfying each stakeholder c. vulnerability of organizational stakeholders d. social value of each stakeholder

is a capacity for a set of resources to perform a task or an activity in an integrative manner. a. A capability b. A core competence c. Sustainable competitive advantage d. Organizational intelligence

. Firms use both the and models. In fact, these models complement each other in that one focuses outside the firm while the other focuses inside the firm. a. industry; capability b. I/O; resource-based c. competition; competency d. industry; competency

. In the strategic management process ASP stands for a. analyses, successes, and purposes. b. analyses, strategies, and performance. c. ability, strategies, and purposes. d. ability, successes, and performance.

. Strategic leaders, , often work long hours, and their work is filled with ambiguous decision situations. a. at the top of the organization b. regardless of their location in the organization c. in the finance area d. in the operations area

. The profit pool is the a. pool of assets that is distributed to investors. b. total profits earned in an industry along all points of the value chain. c. profits that are accrued when a firm earns above-average returns. d. total profits that can be divided among the competitors within an industry.

A ______ is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. a. goal b. strategy c. tactic d. mission

Although it closed stores, changed the top management team, and sought potential buyers, none of these actions resulted in outcomes that allowed Circuit City to meet the expectations of its stakeholders. a. product market b. capital market c. organizational d. governmental

An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using its concepts to make a decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization? a. Green Pastures Foods b. RexRich Foods c. Both firms are consistent with the I/O approach. d. At the entrepreneurial stage, the model which companies follow is not important.

Capital market stakeholders include a. industry competitors. b. shareholders. c. employees. d. government regulators.

In order to cope with hypercompetition, firms need to develop through continuous learning. a. competitive resilience b. strategic flexibility c. strategic power d. competitive dominance

PGG Mining is making a strategic decision whether to shut down a coal mine in Pennsylvania. It is important to consider that the decision a. should be based solely on the results of profit-pool mapping. b. has ethical implications for organizational stakeholders. c. need not be socially responsible if the firm is making below-average returns from the mine. d. All of these choices are important to consider.

Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years, providing its investors higher returns than those earned by its direct competitors' investors. RNH has a reputation for providing high-paying managerial and hourly-employee jobs. However, recent investigations have revealed that the nursing home residents have been provided substandard care, including non-nutritious and unappetizing meals, non-functional medical equipment, and inadequate patient-care staffing. Which statement best describes the situation? a. RNH has been earning below-average returns, so it has had to prioritize the demands of its various stakeholders. b. RNH has prioritized the demands of capital market stakeholders over the demands of product market stakeholders. c. RNH has earned above-average returns and so has satisfied the needs of all relevant stakeholders. d. RNH has been attempting to minimally satisfy the demands of all of its stakeholders.

Strategic leaders are a. located only at the executive level. b. located in different areas and levels. c. the CEO, COO, and CFO only. d. located at different levels, but only in the operating area of the organization.

The CEO of Ridgeway, Inc., realizes that the company's survival depends on developing and acquiring knowledge. Which of the following actions by the CEO would be most consistent with this need? a. ensuring that all current unique knowledge of the firm is protected by patents b. planning extensive employee training and hiring educated and experienced employees c. investing in sophisticated databases in relevant knowledge areas d. establishing a system of organizational intelligence gathering

The primary drivers of hypercompetition are a. rising global socio-economic instability and increased inflation. b. the emergence of a global economy and rapid technological change. c. increased global competition and decreased tariffs. d. increased availability of capital and increased competition.

provides the firm with new and up-to-date skill sets, which allow it to adapt to its environment as it encounters changes. a. Strategic flexibility b. Continuous learning c. Knowledge d. The Internet

. Product market stakeholders include the firm's customers, and the principal concern of this stakeholder group is a. maximizing the firm's return on investment. b. receiving the highest-quality products and services in the industry. c. obtaining reliable products at the lowest possible price. d. increasing the profitability of the firm.

. To have the potential to become sources of competitive advantage, resources and capabilities must be non- substitutable, valuable, , and a. unique; easy to imitate. b. easy to imitate; difficult to implement. c. rare; costly to imitate. d. easy to implement; unique.

. Which of the following statements is most consistent under the I/O view? Performance of the firm is most directly attributable to a. the power of the financial market stakeholders. b. the resources the firm possesses. c. the profitability of the industry in which the firm competes. d. hypercompetition within the industry.

. is an investor's uncertainty about the economic gains or losses that will result from a particular investment. a. Return b. Reward c. Risk d. Revenue

A major assumption about the strategic management process is that it is a. inspired. b. team-based. c. rational. d. inclusive.

All of the following are assumptions of the resource-based model EXCEPT a. each firm is a unique collection of resources and capabilities. b. the industry's structural characteristics have little impact on a firm's performance over time. c. capabilities are highly mobile across firms. d. differences in resources and capabilities are the basis of competitive advantage.

Apple's iPod and iPad are examples of a. the march of globalization. b. rapid technological diffusion. c. disruptive technologies. d. products that were not imitated by competitors.

If McDonald's is considering growing potatoes, the step of the profit pool analysis is the one that a. defines the pool's boundaries. b. estimates the pool's overall size. c. estimates the size of the value-chain activity in the pool. d. reconciles the calculations.

Organizational stakeholders include a. unions. b. host communities. c. employees. d. suppliers of capital.

Strategic delegation helps a. overload middle managers. b. executives control strategy implementation. c. avoid too much managerial hubris. d. emphasize profit maximization.

The "liability of foreignness" is the a. inability of most U.S. managers to truly comprehend foreign cultures. b. political disadvantage that U.S. firms have when doing business abroad. c. overall risk of participating outside a firm's domestic country when entering global competition. d. strong cultural preference for "buying local," which puts foreign firms at a disadvantage when competing in the U.S. market.

The Chambers of Commerce of cities and towns often implore citizens to buy from local businesses. This is because the organization's role as a taxpayer is most important to as stakeholders. a. major suppliers of capital b. shareholders c. host communities d. unions

The I/O model is grounded in a. anthropology. b. psychology. c. economics. d. accounting.

The Princeton Alliance Church states in its website that "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope." This pronouncement is most precisely a statement of organizational a. values. b. mission. c. vision. d. culture.

The firm's provide the foundation for choosing one or more ______ and deciding how to implement them. a. analyses; strengths b. abilities; strengths c. analyses; strategies d. abilities; strategies

The steps for identifying the profit pools in an industry include all of the following EXCEPT a. defining the boundaries of the pool. b. estimating the overall size of the pool. c. defining the competitors in the pool. d. estimating the size of the value-chain activity in the pool.

Who typically develops a firm's mission statement? a. only the CEO b. only top managers c. the CEO and top managers d. the CEO, COO, and CFO only

should establish a firm's individuality and should be inspiring and relevant to all stakeholders. a. A strategy b. A vision c. A mission d. A goal

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