Strategic Management
Which of the following provides an example of a firm in ared ocean?
A) Cool Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.
Peloton Interactive is a manufacturer of high-definition televisions. The industry has gone through a period of rapid growth and expansion and has started to experience a decline in the rate of growth. Several smaller firms have been bought out by larger competitors, and competition for market share is intensifying. Which of the following strategies is most likely to give Peloton Interactive a competitive advantage?
A) Implement process innovations that lower per-unit costs.
Which of the following scenarios would be characteristic of an entrepreneur?
A) John implemented a new and more efficient way to produce pottery.
Lauren is the CEO of TimeEx Inc. and is competing in an industry that is shifting due to disruptive innovation. Which of the following strategies should she consider to most appropriately respond to this disruptive innovation?
A) Lauren should guard against the disruptive innovation by protecting the low end of the market.
Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?
A) There is more strategic variety in the growth stage when compared to the introduction stage.
Power Juice is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Power Juice has decided to pursue a differentiation strategy. In this case, she should
A) focus on adding unique features to her product that customers will value.
Whole Foods focuses on a small market segment, affluent consumers who want to buy high-end, organic groceries. What is the appropriate name for Whole Foods's scope of competition?
A) focused
The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator?
A) high price, high comfort, high customer service, high concessions variety, low hours of operation
A factor favoring the success of disruptive innovation is that
A) incumbent firms are slow to change.
In order for a firm to formulate an effective business-level strategy, it is important to remember that competitive advantage is determined by
A) the characteristics of both the industry and the firm.
During the process of formulating an effective business model, a firm's managers should first
A) transform their strategy of how to compete into a blueprint of actions and initiatives.
Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?
B) In economic value perspective, analysts not only consider historical costs, but also opportunity costs.
Which of the following is an advantage of the balanced-scorecard?
B) It allows managers to translate a firm's vision into measureable operational goals.
Which of the following is an accurate statement about learning effects?
B) Learning effects occur over time as output accumulates.
How does a firm capture its producer surplus for a good or service?
B) as profit per unit sold
Jack and Jill both love hot coffee. Jack likes to keep his coffee hot during the day while Jill doesn't mind drinking room temperature coffee. Jack is willing to spend more money on a thermos than Jill is willing to spend. This example illustrates the following major limitation of employing the Economic Value Creation framework because
B) determining the value of a good/service through the perspective of a consumers is not a simple task because consumers have different spending habits.
By selling a tablet at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the
B) economic value created.
Dontechi is a file hosting service that allows users to store up to 5GB of data with no restrictions or charges. However, users have to pay a fee for advanced features on the cloud storage system and additional storage space. Which of the following business models does this best illustrate?
B) freemium
When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it
B) gains market share from other firms.
Fulcrum Feet is a manufacturer of athletic shoes. It has released an improved version of its premier running shoe in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate?
B) incremental innovation
When Monopar Therapeutics released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. However, any attempts by competitors to copy the chemical composition would result in infringement of Monopar Therapeutics' intellectual property rights. Thus, the drug is protected by a
B) patent.
Generally, as the level of ________ innovation declines, the level of ________ innovation increases.
B) product; process
Nam-zim sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Nam-zim implementing?
B) razor-razor-blade
One of the risks of pursuing a blue ocean strategy is that a firm can find itself
C) "stuck in the middle."
A wearable technology company has priced one of its wristwatches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wristwatch?
C) $170
Which of the following scenarios exemplifies a sustainable strategy under the triple-bottom-line approach?
C) Gogozoom reformulated its products to eliminate chemicals that were widely used in the industry but were being investigated for their potential negative effects on the environment.
Which of the following most accurately describes a difference between incremental innovation and radical innovation?
C) Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.
Amber is the manager of gardening supplies wholesaler DigIt Inc. The company's vision is to become the leading supplier of gardening materials in the northeast. In assessing the firm's current state, Amber has determined that the firm could differentiate itself from competitors with an easy-to-use online ordering system and a two-day delivery guarantee. To accomplish this, Amber has determined that DigIt must spend the next two quarters honing its capabilities for sourcing materials quickly and improving its web development competencies. According to the balanced-scorecard approach, what is wrong with Amber's thinking?
C) She has failed to account for external factors such as customer perceptions and shareholder perceptions.
In order to achieve a competitive advantage, the Heavenly Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?
C) Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Heavenly Hotels brand image.
When the market for standalone Global Positioning System (GPS) devices declined with the arrival of GPS-enabled mobile phones, InMode Ltd., a manufacturer of GPS devices, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has InMode Ltd. adopted in this scenario?
C) consolidation strategy
The type of customers vital to a firm introducing a new innovation are the ________, who are willing to pay higher prices and like to tinker with new products.
C) early adopters
Food Tiger Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against Food Tiger's low prices. Thus, Food Tiger has a competitive advantage due to its
C) economies of scale.
Trader Joe's differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Trader Joe's focuses on
C) increasing the perceived value created for customers, which allows it to charge a premium price.
While the personal computer industry is flooded and growing with laptops and tablets, Javier recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Javier best represent?
C) laggards
Which of the followingbest describes a strategic tradeoff?
C) the tension between value creation and the pressure to keep costs in check
The top management at Konex Vitamins, through rigorous testing, ensures that the company develops and sells vitamins that are free of harmful side effects. Also, the company ensures that the chemical waste generated in the manufacturing process is kept to a bare minimum and is disposed of according to the regulations of the Environmental Protection Agency. The management assesses its overall performance based on these dimensions. Thus, the managers at Konex Vitamins are applying the ________ approach to measure firm performance
C) triple-bottom-line
The management team for Forever Power came up with the following vision statement: "Forever Power will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment." This vision statement is most likely based on the
C) triple-bottom-line approach.
When does a firm fall into the large competitive chasm between early adopters and early majority?
C) when it fails to successfully launch a mass-market version of its product
What does it mean for a firm to have an 80 percent learning curve?
D) Every time the cumulative output is doubled, the cost per unit will decline by 20 percent.
How did Marriott use economies of scope to achieve greater economic value than its competitors?
D) Marriott lowered its cost structure by sharing its production assets over several types of hotels, which increased the diversity of its hotel line and thus its differentiated appeal.
Which of the following businesses ismost susceptible to negative network effects?
D) Rite Pics is a social media platform where users upload photos to the site and are matched with other users who have taken similar photos.
When examining all the generic strategies, which of the following below is inherently superior in every industry?
D) There is no single superior business-level strategy.
Which of the following scenarios best illustrates bundling?
D) Warephase Inc. sells seed packages, in which a person can buy a package of three types of seeds at a discounted price compared to buying the seeds individually.
FMC Corp., a chemical manufacturer, has over 5,000 employees spread across several SBUs which collectively generate over $3 billion in annual revenues. FMC's strategic leaders initially focused solely on financial metrics as their key performance measure but is failing to achieve competitive advantage in their industry. Which of the following questions below should their senior leadership not consider while implementing the balanced score card framework?
D) When should we decide to divest assets and prepare for an exit strategy?
Which of the following business models in the landscaping industry is likely to scale most efficiently?
D) a company that allows users of its website to schedule appointments with landscapers who specialize in the exact service required
Adaptive Biotechnologies Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which of the following types of innovations does this scenario best illustrate?
D) architectural innovation
In the multiplex industry, Home Again Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Movies-for-less Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is Just Right Films Inc., which offers a customer experience comparable to that of Home Again Movies at a price almost as low as that of Movies-for-less. What strategy is Just Right Films pursuing in this scenario?
D) blue ocean strategy
Diana is a recent fashion graduate. She started her own apparel store with an investment of $300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Diana's
D) opportunity cost.
When a firm uses the tools and concepts learned from strategic management in order to achieve competitive advantage by pursuing innovation, it is said to be engaging in
D) strategic entrepreneurship.
Due to its large sales volume and low-cost structure, Bunny's Lo-Cost enjoys a cost-leadership position. Which of the following scenarios might threaten Bunny's competitive advantage?
D) A new competitor is perceived to provide similar value, but in addition offers innovative self-checkout that Bunny's doesn't offer.