Business Policy Ch. 1-5 Quiz
If TechnoGeek and VarsityBlue compete in the same market for the same customer and TechnoGeek generates $900 of economic value each time it sells a product or service while VarsityBlue generates $400 of economic value each time it sells a product or service, TechnoGeek has a(n) ________ of $500.
competitive advantage
In many ways, the difference between traditional economics research and strategic management research is that the former attempts to explain why ________, while the latter attempts to explain________.
competitive advantages should not persist; when they can
List the elements of the general environment.
- technological change - demographic trends - cultural trends - economic climate - legal and political conditions - specific international events
The best example of a firm following a cost-leadership business strategy is
Ryanair
Resources in the resource based view are defined as the tangible and intangible assets that a firm controls, which it can use to conceive and implement its strategies
TRUE
According to the S-C-P model, attributes of the industry structure within which a firm operates define the range of options and constraints facing a firm.
True
The five forces framework is based on the S-C-P model and identifies the five most common threats facing firms from their local competitive environment and the conditions under which these threats are more or less likely to be present.
True
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. Given Sematechs business level strategy, which organizational structure is the most appropriate?
U-form structure
The two types of measures of competitive advantage include:
accounting measures and economic measures
If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage, this competitive advantage is said to be protected from imitation by
casual ambiguity
If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of
competitive dynamics
Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog were considering expanding beyond the cosmetics industry into pharmaceuticals in order to gain competitive advantages by operating in multiple markets and industries, this would be an example of which type of strategy?
corporate level strategy
A firm that chooses a _______ focuses on gaining advantages by reducing its cost below all of its competitors.
cost-leadership business strategy
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. Sematech is pursuing which strategy?
cost-leadership business strategy
The business level strategy Coach is pursuing is likely to
decrease the threat of new entrants due to the additional cost they would face to overcome Coach's reputation advantages
________ exists when a firm's costs rise as a function of its volume of production
dis-economies of scale
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. If Sematech were to continue seeking methods to maintain the company's cost-leadership position that would be costly to duplicate, which of the following is most likely to be a basis of cost leadership that may be costly to duplicate?
exploiting learning-curve economies
Green Frog is an environmentally friendly firm in the cosmetics industry. If during the strategic planning process Green Frog tried to determine the critical threats and opportunities in its competitive environment, it would be performing a
external analysis
The threat of direct competition tends to be high when
firms are unable to differentiate their products
The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choice.
general environment
The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of
human resources
If firms that do not possess valuable and rare resources or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed
imperfectly imitable
Economies of scale are said to exist when the ___________________________________ are associated with ________.
increases in firm size (measured in terms of volume of production) ; lower costs (measured in terms of average cost per unit of production)
Green Frog is an environmentally friendly firm in the cosmetics industry. If Green Frog undertook an analysis to help it understand which of its resources and capabilities are likely to be sources of competitive advantage and which are less likely to sources of such advantages it would be performing
internal analysis
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. By employing a lower-cost competitive strategy, Sematech has made itself:
less vulnerable to the power of suppliers
Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as
leverage ratios
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. If Sematech's efforts to increase its production capacity resulted in increased complexity and an inability of managers to control and operate the firm efficiently, this would b an example of:
managerial diseconomies
If Coach had an organizational structure that used cross-functional teams, the members of which reported not only to their functional boss (i.e. the head of production) but also to the head of the team, Coach could be said to be using which organizational structure?
matrix
Learning-curve-cost advantages are
not restricted to manufacturing
What are 2 broad categories of differences that may lead to competitive advantage?
price setting and product differentiation
Which generic business level strategy is Coach pursuing?
product differentiation
Which of the following bases of Coach's competitive advantage is likely to be the easiest to duplicate?
product features
In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered ________ and a potential source of competitive advantage
rare
Given that the leather handbag market that Coach largely competes in can be considered a mature market, Coach should focus its product differentiation efforts on
refining products as a basis of product differentiation
Which of the following bases of Coach's competitive advantage is likely to be the most difficult to duplicate?
reputation
Which of the following bases of product differentiation does Coach appear to be employing?
reputation, consumer marketing, and product features
One feature of Coach's compensation policies is likely to be
rewards for creative flair
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs. By increasing production volume in an effort to reduce costs, Sematech is pursuing which sources of cost advantage
size differences and economies of scale
resources and capabilities, such as interpersonal relations among managers and a firm's culture, that may be costly to imitate because they are beyond the ability to firms to systematically manage and influence are referred to as
socially complex
a firm's ________ is defined as its theory about how to gain competitive advantage.
strategy
Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of
sustained competitive advantage
What is the definition of Economic Value?
the difference between the perceived benefit gained by a customer that purchases a firms product or service and the full economic cost of the product or service
Overall, the average level of performance in an industry is likely to be highest when
the threat level of all five forces is low