BAMG 456
In 2014, Apple had a return on revenue of 29.3 percent, and Microsoft had a return on revenue of 32 percent. Even so, Apple had a higher return on invested capital than Microsoft. Why did this happen?
Apple was able to charge a much higher margin for its products and services than Microsoft
Dollar Shave Club is an ecommerce start-up that delivers razors by mail. By doing this, Dollar Shave Club is using a(n) to disrupt an existing market.
Architectural innovation
Which of the following perspectives best supports the shared value creation framework?
Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.
Which of the following terms or phrases bet characterizes Zappos' organizational structure?
Extremely flat
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because
The horizontal integration activity has the potential to reduce competitive intensity in an industry.
The typical four-step innovation process begins with
The presentation of an idea as findings derived from basic research.
What is horizontal integration?
The process of merging with a competitor at the same stage of the value chain.
Which of the following is the source of the principal-agent problem in publicly traded companies?
The separation of ownership and control.
Which of the following approaches to assess competitive advantage is based on the view that noneconomic factors can have a significant impact on a firm's financial performance?
The triple-bottom -line approach
Which of the following is a firm effect that has an impact on the competitive advantage of a firm?
The value and the cost position of the firm relative to its competitors.
What are poison pills?
They are defensive provisions that kick in should a buyer reach a certain level of share ownership.
Which of the following statements is true of shareholders in a public stock company?
They are granted a charter of incorporation by the state and legally own company shares.
Which of the following statements is true of strategic alliances?
They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles
Outside directors are more likely to watch out for the interests of shareholders of their firm because.
They have more independence than inside directors.
Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario?
Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc.
During the process of formulation an effective business model, a firm's managers should first,
Transform their strategy of how to compete into a blue print of actions and initiatives.
The primary objective of Porter's five forces model is to
Understand the profit potential of different industries.
In the context of SWOT analysis, a firm can develop an offensive strategic option primarily by
Using its internal strengths to exploit external opportunities
How do firms benefit from vertical integration?
Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.
Decisions relating to "what stages of the industry value chain to participate in" determine a firm's
Vertical integration.
When is the rivalry among existing competitors in an industry likely to be more intense?
When firms make strategic commitments to compete in an industry
Which of the following situations will have greater effects from economies of scale than from learning effects?
When mass manufacturing pens.
While the domestic airline industry is in the maturity stage of the industry life cycle, the pet clothing industry is in its growth stage. Which of the following can be inferred from the given data?
While the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants.
While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true?
While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation.
As a result of globalization, the
World's market economies are becoming more integrated.
Why must managers use a mechanistic structure to implement a cost-leadership strategy?
a) A mechanistic structure offers a centralized structure with well-defined lines of authority.
Which of the following best illustrates a process innovation as opposed to product innovation?
An automobile company using computer-aided design in its production
Which of the following firms is most prone to experiencing a diversification discount?
A company that pursues unrelated diversification.
Which of the following firms is least integrated?
A firm that buys all the required raw materials from multiple external vendors.
What is a unicorn?
A private start-up company valued at a billion dollars or more.
Which of the following statements is true of accounting data?
Accounting data are historical data and thus backward-looking.
Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.?
Acquisition
When large, incumbent firms buy start-up companies the transaction is generally described as a(n)
Acquisition.
The perfectly competitive industry structure differs from the resource-based model in its view that
All firms have access to the same resources
Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company?
Based on a tip-off by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement.
Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage?
Benefits from lower labor costs in manufacturing and services.
The balanced scorecard can accommodate
Both short-and long-term metrics
Which of the following is true of business ethics?
Certain notions such as fairness, honesty, and reciprocity are universal norms.
Economic value creation is best expressed as
Consumer surplus plus firm profit
____________________ are best described as unique strengths, embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost.
Core competencies
When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high _____________distance.
Cultural
Which of the following is a disadvantage of the balanced-scorecard approach?
It provides limited guidance about which metrics to choose.
In a focused cost-leadership strategy, a firm
Delivers low-cost products and services to a specific, narrow part of the market
Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify?
Demand conditions
Home Smart Inc. is a chain of supermarkets that sells its products at higher prices than its competitors. Yet, the supermarket chain has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Home Smart adopted in this scenario?
Differentiation
Companies in the same strategic group are _____ to each other.
Direct competitors
________________ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.
Diversification
According to the ______________ competitive advantage is the outflow of a firm's ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment.
Dynamic capabilities perspective
On which of the following tenets is the crossing-the -chasm framework, suggested by Geoffrey Moore, based?
Each stage of the industry life cycle is dominated by a different customer group.
With regard to the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were
Easy to imitate
Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as its:
Economic value creation exceeds that of its competitors.
In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus are the only competitors. There is not a significant threat of entry because
Entering the aircraft manufacturing industry requires huge capital investments
Janet is CEO of Far Sight Inc., which uses a triple-bottom-line approach. As a result, Janet will tend to:
Expect her company to be socially responsible.
During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved
Exporting goods.
A firm pursuing a differentiation strategy as opposed to a low-cost strategy will:
Focus its research and development on product technologies to add uniqueness.
McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of
Formalization
Silver Weave Inc., an apparel company, operates through a business model in which individuals can buy the rights to set up Silver Weave stores and sell the company's merchandise in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to stock the collection approved from the company's headquarters and also maintain consistent customer service as expected in tis flagship store. Which of the following alternatives to integration does this best illustrate?
Franchising
Each stage of the vertical value chain typically represents a distinct_________________ in which a number of different firms are competing.
Industry
Adverse selection in a public stock company occurs when
Information asymmetry increases the likelihood of selecting inferior alternatives.
An intrapreneur is described as a person who
Innovates within existing companies.
According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?
Innovation that allows competitors to emerge with more economical replacements.
Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through
Input controls.
Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization?
It allows a high level of integration.
Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy?
It allows the firm to constantly upgrade core competencies in R&D, innovation and marketing.
Which of the following is a disadvantage of a functional structure?
It cannot effectively address a higher level of diversification.
A firm is said to be pursuing a polycentric innovation strategy when
It draws from multiple equally important research facilities located throughout the world.
Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the best reason for this development?
It failed to refine its strategic position over time.
Which of the following expressions accurately describes market cap?
It is the product of the number of outstanding shares and the share price.
Evening Star Inc. and The Luxur Group have together established The Luxur Star Group of hotels. Evening Star owns 49% and the Luxur Group has a 51% share in the Luxur Star Group of hotels. However, the management of The Luxur Start Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate?
Joint venture
Which of the following types of strategic alliances is the least common in terms of frequency?
Joint ventures
The government of Filvia has mandated that the standard minimum wage in the country be increased to $8000 per year. This has ensured that all firms in the country pay their employees at least $8000 per year, which has brought about a higher standard of living for the people of Filvia. Which of the following factors ina firm's general environment does this mandate best indicate?
Legal factors
In knowledge-intensive industries, the marginal costs after initial invention are
Low
For a multinational enterprise (MNE), applying the globalization hypothesis would mean
Manufacturing products on international platforms and slightly modifying them to meet local tastes and standards.
According to Michael Porter, which of the following is a problem with many publicly traded companies?
Many publicly traded companies have defined value creation too narrowly in terms of financial performance.
According to the value chain analysis, which of the following is a primary activity?
Marketing and sales
Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a in the automobile industry.
National competitive advantage
Norce Autos Inc. allows its customers, suppliers, researchers, and the community in general to contribute their ideas toward new product developments. Customers and other interested stakeholders can let the company know what new features they want to see in their next car. If the company faces any technical complexities that its internal R&D team cannot solve, it posts the problem on its website and allows people from the external community to provide solutions. In this scenario, Norce Autos Inc. is primarily leveraging its
Open innovation model
To be cost-competitive, a firm should:
Operate at the minimum efficient scale.
_________________ organizations have a low degree of specialization and formalization as well as a flat organizational structure
Organic
Which of the following statements is true of strategy in an organization
Organizational structure must follow strategy in order for firms to achieve superior performance.
What causes the winner's curse?
Overpaying for an acquisition.
Which of the following alternatives on the Make-or-buy continuum allows for most integration?
Parent-subsidiary relationship
Airbnb rents spaces that previously would have been unused to generate revenue, while also dramatically increasing the potential amount of accommodation space in the 191 countries. This business uses a technique.
Peer-to-peer
In which of the following industry competitive structures do selling firms have the lowest pricing power?
Perfect competition
The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario this acquisition by Movo Automobile is most likely a result of
Principal-agent problems.
Which of the following is true about strategic groups?
Profitability varies between different strategic groups.
Incumbent firms favor incremental innovation over radical innovation because
Radical innovation will disturb the existing power distribution within the firms.
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of
Related-linked diversification.
The resource-based view of a firm assumes that the
Resource bundles within firms competing in the same industry are unique to some extent and thus differ from one another.
Which of the following statements accurately describes social entrepreneurs?
Social entrepreneurs are those who consider financial, ecological and social metrics to evaluate their firm's performance.
Employees learn about an organization's culture through the process of
Socialization.
The smartphone division of the large consumer electronics company, True Electra Inc., has a significant market share in the fast growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the Boston Consulting Group (BCG) growth-share matrix, the smart phone division of True Electra will be categorized under
Stars
_________________is best described as moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain.
Strategic outsourcing
Which of the following is more of a value driver than a cost driver?
Superior customer service.
The relative bargaining power of suppliers is high when
Suppliers provide products that are differentiated
Chat Zone Inc., a telecommunication company, had been drastically losing its market share due to tough competition in the industry. The management hired a reputed consulting firm to advise the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its tedious internal policies and procedures. These ineffective policies and procedures made the company operations, marketing and after-sales service inefficient. Chat Zone Inc. can best solve its problem by working on its
Support activities
The downside of equity alliances is
The amount of investment that can be involved.
Smooth Fusion Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage?
The expertise acquired by the employees in the company
A firm's strategic position is likely to be strong when
The gap between the value the firm's product generates and the cost to produce it is larger.
Which of the following represents an economic factor in a firm's external general environment?
the stage of the business cycle that the country is in