BUS 496 Test 1
A strategy can be described as
- intended - emergent - realized
Dissatisfied capital market stakeholders may:
- sell their stock - tighten loan covenants - seek to increase their power
The relative bargaining power of buyers depends on:
- the size and concentration of buyers relative to suppliers - buyer's access to information about products and costs - the ability or threat to integrate vertically
Calculate CR4 Com. A= 40% Com. B= 20% Com. C = 20% Com. D= 10%
90%
Unplanned decisions that emerge from the complex processes in which managers adapt to changing external circumstances are
Emergent strategy
Economies of scale refers that "cost of producing a joint set of products is less than cost of producing separately in separate firms".
False
The five forces model expands the arena of competitive analysis beyond direct competitors (i.e., rivals) to include buyers and suppliers who may also be a source of competition
True
( ) is the right to buy a certain number of the corporation's shares at a specified future date for a specified price.
a stock option
________ is the elected representatives of shareholders in order to represent their interests. They have a fiduciary duty for shareholder's long-term interests.
board of directors
. ________ is the relationship among various participants in determining the direction and performance of corporations. The primary participants are (1) shareholders, (2) managers and (3) the board of directors.
corporate governance
Rended Inc., a publishing house, launches a unique initiative that involves educating children from poor economic backgrounds. For every product that a customer purchases, Rended would contribute $10 toward this cause. Which of the following best exemplifies Rended's initiative?
corporate social responsibility
Firms try to develop resources and capabilities to:
create sustainable competitive advantage
The deregulation for certain industry usually (increase / decrease) the entry barriers, so the threats of potential entrants will be (increased / decreased).
decrease, increased
Organizational stakeholders include
employees
Amelia Smith is the sole owner of the successful restaurant chain, Amelia's Café. Ms. Smith has taken a no-interest loan from the company in order to build a luxurious seaside house for herself in Carmel, California. This constitutes a classic agency problem
false
An attractive industry is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, and low rivalry among firms.
false
Bargaining power of supplier is one of the building blocks of entry barrier for potential entrants
false
Complementary products are products that typically have a negative impact on the value of a firm's own products or services.
false
Corporate level strategy is concerned with how the firm competes within a particular industry or market (i.e., how to compete?):
false
Executive compensation is considered an external corporate governance mechanism because it determined in part by market forces.
false
Generally, the board of directors can be classified as insiders, unrelated insiders, outsiders, and unrelated outsiders.
false
Generally, the stronger the competitive forces (i.e. all five forces have strong bargaining power), the higher the profit potential of an industry.
false
If the number of your buyers decreased, your firm's relative bargaining power over buyers will be increased.
false
In general, the Internet and digital technologies suppress the bargaining power of buyers (i.e. individual customers) by providing them with more information to make buying decisions.True or False?
false
In the U.S., the members of the board of directors are a firm's key stakeholders and a company's legal owners.
false
Industry analysis (5-Force Analysis) will determine the performance of the specific individual firm within the industry.
false
Low entry barrier and high exit barrier are best for incumbents (i.e., firms already operating in the industry).
false
Once established, competitive advantage tends to be sustained over time.
false
Profitable industry is always attractive for potential entrants.
false
Rivalry is most intense when there are high exit barriers and high industry growth. True or False?
false
Strategic groups are firms in different industries following the same or similar strategies (e.g. low-cost strategy).
false
Suppliers are powerful when there are satisfactory substitutes available.
false
Tangible resources are often more valuable than intangible resources in conferring competitive advantage.
false
The I/O (industrial organization) model assumes that the uniqueness of a firm's resources and capabilities are its main source of above-average returns.
false
The higher CR ratio indicates that the market is more close to perfect competition (i.e., severe competition).
false
The resource-based model assumes that if firms have resources that are rare or costly to imitate, this is sufficient to form a basis for competitive advantage.
false
The separation of ownership and control is the most effective means used by firms to prevent managerial opportunism.
false
The uniqueness of a firm's resources and capabilities is the basis for a firm's strategy and determines its ability to earn above-average returns under the I/O (industrial organization) view. True or False?
false
There are 'zero sum view' and 'symbiosis view'. Zero sum view emphasizes the responsibility over profitability.
false
If the buyers are financially strong and buy a large portion of the manufacturing firm's outputs, the bargaining power of buyers is ____.
high
If the function, availability, and cost of substitutes are better than those of the core firms, the threat of substitutes is ____.
high
If the price of complement or increases, the threat from this price effect is ____.
high
If the suppliers' CR is larger than that of buyer firms, the bargaining power of suppliers is ____.
high
Organization's role as a taxpayer is most important to ____ as stakeholders
host communities
Resources and capabilities can generate higher profits
if the competitive advantage they generate is sustained for some years
Frequent-guest rates offered by hotel chains are an attempt to
increase customer's switching costs
One party to a transaction has more or better information than the other in agency relationships. This is the idea of:
information asymmetry
Which of the following statements is true of the agency problem facing the modern public corporation?
it arises as a consequence of the separation of ownership and control in the corporation
If the CR4 (concentration ratio) of an industry is high, the level of rivalry is ____,
low
If the degree of differentiation of an industry is high, the level of rivalry among existing competitors is ____.
low
If the growth rate of an industry is high, the level of rivalry is ____.
low
If the price of substitutes increases, the threat from this price effect is ____.
low
If the capital requirement of entering an industry is low, the entry barrier is ____, and the threat from the potential entrants is____.
low, high
If the level of specialized assets or fixed cost to exit is low, the exit barrier is ____, and the level of rivalry is ____.
low, low
If the consumer loyalty of an industry is low (thus, switching cost is ____) the entry barrier is ____, and the threat of the potential entrant is____.
low, low, high
_______ are group-specific entry barriers that restrict shifting strategic position from one strategic group to another.
mobility barriers
The competition within each strategic group is:
more intense than is the competition between strategic groups
According to ( ) perspective, motivation for engaging in CSR should be ethical consideration
normative
There are several perspectives of stakeholder model. One perspective is zero-sum thinking. Zero-sum thinking means that
one can only gain at the expense of someone else
New entrants to an industry are more likely when (all other things being equal) (a) it is difficult to gain access to distribution channels.
product differentiation is low
A firm's primary customers, suppliers, host communities, and unions representing the workforce are examples of ( ) stakeholders.
product market
John, the founder of a multinational corporation, believes that his business should mainly focus on the benefit of those people who own its stock. In this scenario, he most likely follows ( ), a model of business management.
shareholder primacy
Outback Steakhouse has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of ( ).
stakeholder symbiosis
The resource-based view of the firm can be described as:
the inside-out approach
A firm can create competitive advantage by responding better than rivals to changes in its environment or by maintaining strategic differences from its rivals that customers accept. True or False?
true
A high concentration ratio (CR) is typical of oligopolistic industries, dominated by a few large players.
true
A sound strategy relies on four factors: measurable goals or targets; sound understanding of the competitive environment; objective appraisal of resources; and effective implementation of strategic decisions.
true
According to agency theory, the primary role of the board of directors is to monitor and control top-level executives to protect owners' interests.
true
According to resource-based view, the resources and capabilities of the firm are immobile across firms.
true
An agency relationship exists when one or more persons (the principal or principals) hire another person or persons (the agent or agents) as decision-making specialists to perform a service.
true
Buyers tend have greater power if suppliers provide undifferentiated or standard products. True or False?
true
Competition tends to be more intense among firms within a strategic group than between strategic groups.
true
Economies of scale, absolute cost advantages, high capital start-up costs, and access to channels of distribution are all examples of "barriers to entry".
true
Five forces analysis implicitly assumes a zero sum game.
true
High exit barriers are factors that cause a company to remain in an industry even though the profitability of doing so is questionable.
true
In modern corporations-especially those in the U.S., a primary objective of corporate governance is to ensure that the interests of top-level managers are aligned with the interests of shareholders.
true
Industries characterized by high economies of scale typically attract fewer new entrants. True or False?
true
Industry environment, rather than general environment, have more direct influences on firms.
true
Large block shareholders typically own at least 5% of a corporation's issued shares.
true
Low entry barrier and low exist barrier is good for new (or potential) entrants. True or False?
true
Organizational mission statements typically do not include statements about profitability and earning above-average returns.
true
Relative power is an important criteria for prioritizing the demands of stakeholders
true
Resources are a firm's productive assets; capabilities are what a firm can do.
true
Resources are the source of capabilities, some of which lead to the development of core competencies and competitive advantage.
true
Shareholder activism refers to actions by large shareholders, both institutions and individuals, to protect their interests when they feel that managerial actions diverge from shareholder value maximization
true
Successful social entrepreneurship usually works against market mechanism.
true
Suppliers are more powerful when there are high switching costs (i.e., moving from one supplier to another).
true
Suppliers are powerful when no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing industry, and buyer's switching costs are high. True or False?
true
The culture of an organization is a key intangible resource
true
Triple bottom line is a measure of corporate social responsibility that includes financial, social and environmental performance measures.
true
Value chain analysis separates the activities of the firm into a sequential chain and explores the linkages between activities.
true
When buyers are more price-sensitive, the buyer firms have greater bargaining power.
true
Porter's 5 Forces model is intended to be:
used in conjunction with PEST and other models
There are different ethical views. ( ) perspective suggests that a "good society creates the greatest good for the greatest number of people"
utilitarianism
