3830 chapter 1
What is a standalone division of a larger conglomerate, with its own profit-and-loss responsibility? A. A strategic business element B. A strategic business unit C. A business model D. A corporate division
A strategic business unit
The U.S. cell-phone industry uses a combination of the razor-razor-blade model with which other model when it offers a two-year contract in exchange for a heavily subsidized new phone? A. A subscription-based model B. An ink cartridge model C. A bait-and-switch model D. A network effects model
A subscription-based model
Stakeholder power and influence will vary by industry. In the ________, one of the most powerful external stakeholders has historically been unions. A. Hospitality industry B. Health care industry C. Computer industry D. Automotive industry
Automotive industry
Microsoft, Google, and Facebook are three powerful companies in the emerging field of Web 2.0. How these firms choose to compete with each other and what business models they use to bring in revenues will, at least to some degree, shape the structure of this industry. The partnership in "social search" discussed between Facebook and Microsoft is an example of what? A. Crowdsourcing B. Co-opetition C. Competitive parity D. Industry effects
Co-opetition
When competitors cooperate with one another to achieve strategic objectives, this is called? A. Co-opetition B. A merger C. Functional tasks D. A strategic initiative
Co-opetition
If some stakeholder groups are able to extract significant value, the firm's competitive advantage may not be realized when compared to its rivals. This situation can place the firm in a ________________. A. Competitive advantage B. Competitive disadvantage C. Competitive position D. Competitive paralysis
Competitive disadvantage
All of the following are external stakeholders except which of the following? A. Alliance partners B. Customers C. Creditors D. Competitors
Competitors
Co-opetition seems to be on the increase. Which of the following would be a good definition of co-opetition? A. Competitors cooperating with one another to achieve strategic objectives B. Suppliers working with their customers to improve product quality C. Firms from different industries forming strategic alliances for a common goal D. Customers offering their services voluntarily on the Internet
Competitors cooperating with one another to achieve strategic objectives
Strategy is primarily about ____________. A. Maximizing firm profits B. Deriving operation effectiveness C. Creating superior value D. Competitive benchmarking
Creating superior value
JCPenney and Neiman Marcus these firms have different business strategies. They both accomplish this by providing value to their customers while controlling costs. This is known as __________. A. Co-opetition B. Complementary business models C. A competitive advantage D. Differential strategic positioning
Differential strategic positioning
The Oakland A's used new metrics to assess player potential. This gave them an ability to do what? A. Use their high-salary athletes to their best advantage B. Publish new metrics in the Oakland Tribune newspaper C. Launch a new advertising campaign for season tickets D. Field low-cost teams that were still competitive
Field low-cost teams that were still competitive
Determining firm performance is a complex interaction of firm effects and industry effects, with other factors also considered. Based on historical analysis, what do we know about firm and industry effects? A. Managerial actions rather than firm effects have a large role in firm performance. B. Macro environmental effects such as a recession have more impact than either firm or industry effects. C. Firm effects have more impact on performance than industry effects. D. Industry effects have more impact on performance than firm effects.
Firm effects have more impact on performance than industry effects.
A successful strategy details a set of goal-directed actions that managers intend to take to improve or maintain overall firm performance. To build this strategy, managers focus on three broad management tasks. Which of the following is NOT one of these management tasks? A. Analyze B. Formulate C. Implement D. Forecast technology
Forecast technology
The division director of marketing of a major consulting firm is most often making decisions at which level of strategy? A. Corporate strategy B. Functional strategy C. Business-level strategy D. Alliance strategy
Functional strategy
Gillette invented a "razor-razor-blade" model of business, whereby the razor handle is provided at a low cost and the replacement razor blades are sold relatively expensively. Which of the following is another example of this business model? A. Audible.com audiobooks B. HP laser printers C. Tom's shoe sales "1 for 1" D. The New York Times newspaper
HP laser printers
The difference in managerial theories can have a large impact on the success or failure of businesses. In the automobile industry, what effect has the difference in assumptions between U.S. and Japanese manufacturers had on the market? A. The Japanese market was so small they needed to expand to reach economies of scale. B. Lower fuel prices in the U.S. have yielded a sustained competitive advantage for U.S. firms thus far in the 21st century. C. Fuel pricing differences have pushed the market to competitive parity. D. Higher gas prices in Japan drove the market toward more fuel-efficient products sooner than in the U.S.
Higher gas prices in Japan drove the market toward more fuel-efficient products sooner than in the U.S.
Threadless is an online apparel store. Its business model is quite different from most other apparel stores. Threadless leverages Web 2.0 capabilities by using crowdsourcing. How does this benefit Threadless in their T-shirt design process? A. Only professional designs are considered. B. It both lowers the cost and ensures the popularity of selected designs. C. The quality of the submissions is high. D. It streamlines the production process.
It both lowers the cost and ensures the popularity of selected designs.
Which of the following does not support the book's definition of strategy? A. It is about being different from your rivals. B. It requires long-term commitments that are often not easily reversible. C. It is about deciding what to do and what not to do. D. It is about raising prices while containing costs.
It is about raising prices while containing costs.
Which of the following is not an aspect of the book's definition of strategy? A. It is goal-directed. B. It is profit-seeking. C. It is about competitive advantage. D. It is sustained over time.
It is profit-seeking.
If Smith Pharmaceuticals has a 15% return on invested capital (RoIC), what do you need to know to determine if it has a competitive advantage? A. It must be compared to the RoIC of the competitors and industry. B. Nothing, 15% is a terrific return for the shareholders. C. It must be evaluated for depreciation of the capital. D. It must be compared to the history of the firm's RoIC over a number of years.
It must be compared to the RoIC of the competitors and industry.
A business model is the translation of strategy into action, which details the firm's competitive tactics and initiatives. Another way to say this is ___________. A. It's reliant on co-opetition to be successful B. It's a crowdsourcing process for the firm C. It's how the firm intends to make money D. It's how network effects are taken into account
It's how the firm intends to make money
Grameen Telecom and the Nano car introduced by Tata are examples of what new business model? A. A subscription model of services available to all B. Making a small revenue but across a large base of the world's poorest C. Not-for-profit businesses trying to aid the world's poor D. A crowdsourcing model targeted at the world's most impoverished
Making a small revenue but across a large base of the world's poorest
Health care became the largest industry in the U.S. when it grew to 16% of the total economic activity. Projections are that the sector will grow to 20% of the economy by 2019. As compelling as the size and growth of the industry, what other reason does the text provide for businesses to expand into this arena? A. Much of the wealth in the U.S. is in the aging baby-boomer population. B. Medical providers like doctors can afford more services from business. C. There is a social good in improving health care. D. Government regulations provide a stable business climate in the U.S.
Much of the wealth in the U.S. is in the aging baby-boomer population.
Web 2.0 relies on the idea that the value of a product or service increases as more people use it. This concept is called what? A. Network consolidation B. Network effects C. Internet strategs D. Accelerated technological change
Network effects
in recent years, China has invested a tremendous amount of money on increasing its infrastructure with high-speed rails, state-of-the-art airports, and modern roads. China also has the largest number of Internet users of any country in the world. How will this combination of infrastructure and technology likely impact China over the next few years? A. New innovations will diffuse more quickly throughout China than in the past. B. It will not have a major impact as China's economy is too diverse. C. It will increase the income disparity between coastal and rural areas of China. D. These investments will increase the costs and therefore slow down the growth of new technologies in China.
New innovations will diffuse more quickly throughout China than in the past.
What might Microsoft have used their 1998 purchase of LinkExchange to build a competitive advantage in? A. Online search and advertising B. Cloud storage C. Business Intelligence Tools D. Server Virtualization
Online search and advertising
Given current trends, several industries promise significant potential for value creation and thus career opportunities. Which of the following is not one of them described by the text? A. Health care B. The green economy C. Web 2.0 D. Petroleum
Petroleum
Which of the following is a major decision that was generated from a change in corporate strategy? A. Changing Google's pricing model on its Google Ads products B. Providing superior customer service at Neiman Marcus retail stores C. Selling IBM's personal computer business to the Chinese firm Lenovo D. Applying for patents on Pfizer's cholesterol-lowering drug Lipitor
Selling IBM's personal computer business to the Chinese firm Lenovo
The text provides an example of stakeholder power in the investment banking industry. In 2007, the net income of the top five U.S. investment banks was roughly $10 billion. This sounds pretty good until you find out that in this same year the salary and bonuses paid to their employees was FOUR times that amount ($40B). This is an example of what? A. Strong internal stakeholders capturing the value that would otherwise go to others (such as stockholders). B. Strong external stakeholders having an undue influence on managerial decisions inside the firm. C. Weak internal stakeholders not getting inducements commensurate with their contributions to the firm. D. In the end, all stakeholder groups are rewarded well if the firm is successful.
Strong internal stakeholders capturing the value that would otherwise go to others (such as stockholders).
How does Web 2.0 help improve Google's search engine results? A. Google's algorithm is based on highly sophisticated software. B. The PageRank algorithm relies on feedback from prior search results. C. Customers using Google search will e-mail them with questions. D. It makes the results run faster on the hardware servers.
The PageRank algorithm relies on feedback from prior search results.
Business opportunities in the clean-tech economy have much potential. Production of solar panels in China has brought the prices down by 50%, while many countries are providing incentives to invest in the field. However, in strategy we must always look at both opportunities and threats. Which of the following is NOT a threat to the growth of the clean-tech economy? A. The energy sector is rapidly growing worldwide. B. It is not currently cost-competitive with coal and oil. C. The U.S. has 30% of the world's known coal reserves. D. Market externalities are not priced into current fossil fuels.
The energy sector is rapidly growing worldwide.
The term "strategy" has grown in usage in a variety of fields today. Which of the following is the best use of the term for this course? A. Competitive benchmarking to improve the firm's position B. The firm's efforts to gain and sustain competitive advantage C. Implementing a company-wide Six Sigma program to strategically lower costs D. Aligning with key corporations to form a competitive landscape of co-opetition
The firm's efforts to gain and sustain competitive advantage
Business managers test their theories in the marketplace. An accurate set of assumptions will yield enhanced strategic decisions. When the Apple Newton product failed in 1993, what feedback did Apple (and its alert competitors) collect from the experience? A. It was too early for personal mobile products. B. The price and bulkiness were not right for the PDA market then. C. The color and styling of the device were not well liked. D. It was not possible to have a competitive advantage then.
The price and bulkiness were not right for the PDA market then.
While the favorable demographics of the U.S. and most developed economies would seem to provide significant business opportunities in health care, managers must balance this with the risk from what? A. Under health care reform, the government is going to ration health care. B. The "flat world" tells us that even medical care will be sent off-shore. C. The reimbursement rates for specific procedures will likely go down. D. The weight of competition will keep profit margins low.
The reimbursement rates for specific procedures will likely go down.
The never-ending cycle of analysis, formulation, implementation, and feedback is called what? A. The strategic management process B. A sustained competitive advantage C. The cycle of the bottom of the pyramid D. The interaction of firm and industry effects
The strategic management process
Functional managers have the ability to come up with strategic initiatives that may influence the direction of the company. The reason for this is? A. Since they are responsible for executing a business strategy, how they do it impacts what actually happens. B. They are closer to products, services, and customers. C. Since strategic planning is a bottom-up process, they are responsible for developing the scenarios looked at. D. They have a better understanding of what the company's capabilities are and can discern new opportunities that match.
They are closer to products, services, and customers.
Google and Microsoft have approached the market using quite different business models. Over time, they have engaged in multi-point competition. Which of the following best describes this competition today? A. They have very divergent corporate strategies. B. They are an example of co-opetition in action. C. They are largely competing in mobile device operating systems. D. They compete for market share in several different product categories.
They compete for market share in several different product categories.
It appears that Google has a sustained competitive advantage because _________. A. They are highly profitable and growing B. They have outperformed rivals consistently over time C. They currently have the leading online search engine D. They are willing to take on the Chinese government
They have outperformed rivals consistently over time
Microsoft is partnering with Yahoo for what major purpose? A. To improve their search speeds B. To remove Yahoo as a competitor C. To build market share for its Bing search engine D. To compete with Apple
To build market share for its Bing search engine
IBM is headquartered in Armonk, New York, but more than 70% of its employees work for the company outside of the U.S. What is given as a major reason for this in the text? A. IBM is following Coca-Cola and Sony corporate strategies. B. Two-thirds of its revenue and most of its growth are occurring outside the U.S. C. Bottom-of-the-pyramid effects on technology consulting. D. High corporate tax rates in the U.S. are driving firms offshore.
Two-thirds of its revenue and most of its growth are occurring outside the U.S.
The increasing interactivity and collective intelligence available on the Internet is called what? A. The Internet strategy B. Bottom of the pyramid C. Web 2.0 D. Electronic commerce
Web 2.0
The ups and downs within industries and corporations suggest that competitive advantage __________. A. Will remain constant B. Will fail rapidly C. Will likely be transitory D. Will not be affected by industry cycles
Will likely be transitory
Duke basketball winning by two points over Butler in the 2010 NCAA championship game is an example of what? A. A competitive parity B. A sustained competitive advantage C. A temporary competitive advantage D. A competitive business model
a temporary competitive advantage
The idea of firms creating significant business opportunities for some 4 billion people on the planet who live in poverty is called ______________. A. Top of the pyramid B. Bottom of the line C. Bottom of the pyramid D. Top of the line
bottom of the pyramid
According to the text, which part of the organization seeks superior performance by asking the question "how to compete"? A. Corporate strategy B. Functional strategy C. Business level strategy D. Project strategy
business level strategy
BRIC countries have more than 40% of the world's population and occupy more than a quarter of the world's landmass. Which of these countries is not a part of BRIC? A. India B. Brazil C. Canada D. Russia
canada
Strategy formulation and implementation affect the organization at every level. What is the top level of strategy within an organization? A. Business B. Functional C. Corporate D. Production
corporate
IBM's CEO Sam Palmisano has moved the firm more into global IT services and out of its traditional hardware focus. What level of strategic decisions do these moves represent? A. Corporate strategy B. Functional strategy C. Business-level strategy D. Alliance strategy
corporate strategy
All of the following are considered an internal stakeholder within a firm except for which of the following? A. Stockholders B. Customers C. Employees D. Board members
customers
Which of the following is not an example of the razor-razor-blade business model? A. Razor blades B. Cell phones C. Inkjet printers D. Digital cameras
digital cameras
People who grew up with the Internet and need no help in adapting to new technologies have been called digital natives. Those who have not grown up with such technologies but are adapting to them are called what? A. Electronic infants B. The greatest generation C. Luddites D. Digital immigrants
digital immigrants
All of the following are considered an external stakeholder within a firm except which of the following? A. Alliance partners B. Governments C. Employees D. Creditors
employees
Stakeholder power and influence will vary by industry. In investment banking, skilled human capital is important. This means one of the key stakeholders for firms in this industry will be ________. A. Alliance partners B. Creditors C. Employees D. Communities
employees
In today's economic activity, carbon-based energy sources come with certain costs for business and consumers, some of which include, but are not limited to, CO2 emissions, air pollution, and global warming. These costs are described as ____________. A. Environmental economics B. Moral hazards C. Systematic risks D. Externalities
externalities
Which of the following is NOT a major component of the overarching integrative management field of strategic management? A. Financial investment strategy B. Implementation C. Analysis D. Formulation
financial investment strategy
Who has the responsibility for implementing business strategy within a single area? A. General managers B. The executive staff C. The Chief Executive Officer D. Functional managers
functional manager
One firm has announced a major initiative in the health care field called healthymagination. This initiative is geared to draw on existing expertise in other business units to find new emerging opportunities in health care. What firm has launched this initiative? A. International Business Machines (IBM) B. Siemens C. General Electric (GE) D. 23andMe
general electric
The General Manager of a strategic business unit (SBU) would be mostly concerned with questions of ____________. A. How to compete B. Where to compete C. How to implement a business strategy D. How to form strategic alliances
how to compete
The textbook divides the impacts explaining superior firm performance into three categories: Industries Effects, Firm Effects, and Other Effects. Which is the smallest of the effects? A. Industry Effects B. Unexplained Variance C. Other Effects D. Firm Effects
industry effects
One of the key aspects of the Threadless business strategy is the use of ____________. A. Volume discounts B. Nationwide retail locations C. Network effects D. Free shipping
network effects
Strategic __________ is staking out a unique and valuable spot that allows the firm to meet customer demands. A. Positioning B. Advantage C. Goal D. Segmentation
positioning
The idea to let consumers work for you and form a hybrid between producers and consumers is called ___________. A. Professional consumers B. Consumer employees C. Prosumers D. Consumer innovators
prosumers
Individuals or groups that can affect or be affected by the actions of a firm are called _________. A. Stakeholders B. Senators C. Associates D. Competitors
stakeholders
A strategy is a manager's theory of how to compete; however, the theory is useless if it is NOT put into action. What is the translation of strategy that details the firm's competitive tactics and initiatives? A. The business model B. The business formula C. The corporate model D. The corporate formula
the business model
Google's initial competitive advantage over AltaVista and Yahoo was what? A. Its location in Menlo Park B. The PageRank algorithm C. Brand recognition D. The Keywords product
the pagerank algorithm
Creating prosumers is the idea of allowing consumers to work for you, which forms a hybrid between consumer and producer. Which of the following companies exploits prosumers in their business model? A. eBay B. Amazon C. General Electric D. Threadless
threadless
The vast majority of today's economic activity around the globe is powered by carbon-based sources of energy. Which of the following is not considered a carbon-based source of energy? A. Oil B. Coal C. Wind D. Natural gas
wind
Microsoft is building up its share of the search engine market by partnering with which firm? A. AltaVista B. Yahoo C. Google D. LinkExchange
yahoo