BUS 479 Quizzes
The more attractive the price/performance ratio of substitute products, the more tightly it constraints an industry's ability to charge high prices.
**True False
As markets mature, the magnitude of differentiation and cost leadership advantages among competitors decrease.
**True False
Discussing what strategy is, Michael Porter argues that: "Constant improvement in operational effectiveness is necessary to achieve superior profitability. However, it is not usually sufficient."
**True False
The same environmental trend can often have very different effects on firms within the same industry.
**True False
With a focus strategy, creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders.
**True False
Example of limitation of a global strategy
- Limited ability to local adaptation - Other limitations (concentration of activity may increase dependence on a single facility, a single location may lead to high tariffs and transportation costs)
Vertical integration is attractive when
Transaction cost are higher than internal admin costs
High pressures for local adaptation with high pressure to lower costs suggests
Transnational strategy
The power of a buyer group is increased if the buyer group has less concentration than the supplier group.
True **False - more buyers and less sellers
A successful differentiation strategy lowers entry barriers because of customer loyalty and the firm's ability to provide uniqueness in its products and services.
True **False
Focus, by itself, often constitutes a competitive advantage.
True **False
Supplier power tends to be highest in industries with all of the following attributes: (1) the supplier's product is vital to buyers; (2) switching from one supplier to another is very costly, and; (3) there are many suppliers.
True **False
The concept of "shared value" redefines the purpose of the corporation as creating shared value in order to create a more even distribution of the profits to all employees, not just top-level executives.
True **False
Buyer group is powerful when:
Tt is concentrated or purchases large volumes relative to seller sales.
Disadvantages of transnational strategy
Unique managerial challenges in fostering knowledge transfer
Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with ___________.
Vertical integration
Which statement regarding competitive advantages is true?
With an overall cost leadership strategy, firms need not be concerned with parity on differentiation. Attaining multiple types of competitive advantage is a recipe for failure. In the long run, a business with one or more competitive advantages is probably destined to earn normal profits. **If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.
If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is a(n)
Worldwide matrix
If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is?
Worldwide product division
The four key attributes of strategic management include all of the following EXCEPT:
Recognizing the trade-offs between effectiveness and efficiency Including multiple stakeholder interests in decision making Incorporating both short-term and long-term perspectives **Emphasis on the attainment of short-term objectives
All of the following are guidelines for managing strategic alliances EXCEPT
Relying primarily on a contract to make the joint venture work
Example of a primary activity
Repairing product for consumer (because under service)
Pressures to reduce costs
Require company to pursue what is economically beneficial to the company → increased economies of scale and learning curve effects
_____ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestitures, and new ventures.
Restructuring
When management uses common production facilities or purchasing procedures to distribute different but related products, they are
Sharing activities
Variety of firm resources including interpersonal relationships, organizational culture, reputation with suppliers/customers - type of competitive advantage
Social complexity
A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of
Strategic alliance
An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organizational structure?
Strategic business unit (SBU)
The income (salary plus bonus) of a recent CSU COB graduate employed by Firm XYZ is higher than her/his colleagues; i.e., s/he captures a proportionately high level of the Firm XYZ's profits. Which of the following factors is the best explanation for why this might be?
Suppliers are loyal to the firm. The firm's resources are path dependent. Her/his expertise is firm-specific. **The cost to the firm of replacing her/him is high.
Barriers in which the design of the organization's structure, information processing, and reporting relationship, impede the proper flow and evaluation of information are known as
Systemic barriers
Organizational change capacity depends on proper organization infrastructure. ____ - the rules, structural arrangements, and budgetary procedures that facilitate or hinder an organization-wide (as opposed to a "segmentalist") approach to organizational change - is one of the key infrastructure issues that influence or retard an organizational change initiative
Systems Thinking
Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that
The similarity required for sharing core competencies must be in the value chain, not in the product
All of the following are disadvantages of a divisional type of organizational structure EXCEPT
There is separation of strategic and operating control
An important potential pitfall of integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become "stuck-in-the-middle."
**True False
__________ such as trust and effective work teams are typically embedded in unique routines and practices that have evolved and accumulated over time.
**Intangible resources Repetitional resources Organizational capabilities Tangible resources
Which of these statements regarding the industry life cycle is correct?
**It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives. Trends suggested by the market life cycle model are generally not reversible or repeatable. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device.
The four key attributes of strategic management include the idea that
**Strategy must be directed toward overall organizational goals and objectives Strategy must be focused on long-term objectives (only) Strategy must focus on competitor strengths Strategy must be focused on one specific area of an organization
Definition of strategic groups
A set of firms within a specific industry that pursue a similar strategy in quest for competitive advantage
The source of referent power is
A subordinates identification with the leader
Transaction costs include all of the following costs EXCEPT
Agency costs
Which of the following statements regarding internal development as a means of diversification is FALSE?
An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.
As markets mature, _________________
Application for patents increase. Differentiation opportunities increase. Costs continue to increase. **There is increasing emphasis on efficiency
The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. This is an example of
Attaining the benefits of parenting through unrelated diversification.
Which of the following is not a boundaryless organizational design?
Matrix, - Boundaryless include: modular, virtual and barrier-free
The three primary means by which a firm can diversify are:
Mergers and acquisitions; joint ventures and strategic alliances; internal development.
A domestic corporation considering expanding into international markets for the first time typically
Consider implementing a low risk-low control strategy such as exporting
Phillip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as
Capitalizing on core competencies
Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
Cost leadership focus. Differentiation focus. **Overall cost leadership. Differentiation.
All of the following are guidelines an org can use to promote the challenging of the status quo EXCEPT
Creating a results-based reward system
"A well-crafted corporate theory identifies complementarity that the company is singularly able to assemble or pursue by acquiring assets that can be combined with existing ones to create value."
Cross-sight
When an organization with a functional structure diversifies into related product-markets, it generally
Develops a divisional structure
Which of the following is a disadvantage of a functional type of organizational structure?
Differences in functional orientation may impede communication and coordination.
Strategic business unit (SBU) and holding company structures result from extensive
Diversification
A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to a(n)
Divisional structure
Many organizations have a large number of functional areas with very diverse, and sometimes competing, interests. Such organizations will be most effective if:
Each functional area focuses on achieving their own goals Management and employees have separate goals Goals are defined at the bottom and implemented at the top **Functional areas work together to attain overall goals
Optimizing the location of every activity of the value chain yields the following strategic advantage except:
Extending the life cycle of a product or service
Threat of substitute products comes from
Foreign companies which can use cheap labor in their countries to produce products or services that satisfy the same customer need Other companies in the same industry that produce products or services that satisfy the same customer need Suppliers to the industry with the resources and capabilities necessary to forward integrate effectively **Firms in other industries that produce products or services that satisfy the same customer need
A new firm with simple structure typically increases its sales revenue and volume of outputs over time.
Functional Structure
At ABC Corporation, work is divided into units that specialize in production, marketing, research and development, and other management tasks. This is an example of a
Functional structure
In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low.
Growth **Introduction Decline Maturity
The experience curve suggests that cutting prices is a good strategy ____________
If it can induce greater demand and thereby help a firm capture a higher share of the overall market In the maturity stage of the industry life cycle. In the decline stage of the industry life cycle. **If it can induce greater demand and thereby help a firm progress down the experience curve faster.
A firm can achieve differentiation through all of the following means EXCEPT
Improving brand image. Better customer service. Adding additional product features. **Offering lower prices to frequent customers.
All of the following are important elements of the political/legal segment of the general environment EXCEPT:
Increases in the federally mandated minimum wage The Americans with Disabilities Act (ADA) The deregulation of utilities **The increased use of Internet technology
"Identifies assets and activities that are rare, distinctive, and valuable" describes which of the following concepts?
Insight
____ is the process of reconciling opposing thoughts by generating new alternatives and creative solutions rather than rejecting one thought in favor of another
Integrative thinking
In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.
Introduction Decline **Maturity Growth
A simple structure is characterized by
Low specialization and high centralization.
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 (__________).
Macroeconomic, global, economic Macroeconomic, technological, economic **Macroeconomic, political/legal, economic Macroeconomic, sociocultural, political/legal
Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of which type of organizational structure?
Matrix , (because sometimes can have more than one manager)
A firm following a focus strategy ______________________
Must focus on governmental regulations. **Must focus on a market segment or group of segments. Must focus on the rising cost of inputs. Must avoid entering international markets.
Examples of tangible resources (in the resource-based view of the firm) include:
Outstanding customer service, innovativeness of products, and reputation. **Financial resources, physical resources, and technological resources. Financial resources, human resources, and firm competencies. Financial resources, physical resources, and the capacity to combine intangible resources.
With Porter's Diamond of National Advantage, all factors affect a nation's competitive advantage except:
Policies that protect nation's domestic competition
The resource-based view (RBV) of the firm combines two perspectives:
The internal analysis of the firm as well as the external analysis of the industry and competitive environment.
Coercive power is
The power exercised by use of fear and punishment for errors of omission or commission by employees
Buyer power will be greater when:
The products purchased are highly differentiated There are high switching costs The industry's product is very important to the quality of the buyer's end products or services **It is concentrated or purchases large volumes relative to seller sales
