ch. 3 policy

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A key skill for managers involved in outsourcing is: a. partnership governance. b. financial expertise. c. cultural sensitivity. d. technical skills.

a. partnership governance

In the past, the most "forbidden" area of outsourcing was: a. research and development. b. marketing. c. manufacturing. d. human resources.

a. research and developement

Which of the following organizational characteristics are most numerous? a. resources b. capacities c. capabilities d. core competencies

a. resources

In a(n) ________, one firm buys a controlling, or 100%, interest in another firm. a. merger b. acquisition c. takeover d. restructuring

b. acquisition

In comparison to large firms, a major advantage of smaller firms is that they: a. are more likely to have organizational slack. b. can launch competitive actions more quickly. c. have more loyal and diverse workforces. d. can wait for larger firms to make mistakes in introducing innovative products.

b. can launch competitive actions more quickly

In the context of this chapter, Leslie Wexner's observation that "success begets failure" means that: a. overconfidence leads to poor strategic decisions and hubris. b. core competencies can become weaknesses. c. successful firms tend to expand into areas where their core competences do not apply. d. successful firms often neglect the human capital that is the key to their success.

b. core competencies can become weaknesses

All core competencies have the potential to become: a. sustainable. b. core rigidities. c. observable. d. permanent.

b. core rigidities

Firms that achieve competitive parity can expect to: a. earn below-average levels of returns. b. earn an average level of average returns. c. earn an above-average level of returns. d. see returns decline to average returns.

b. earn an average level of average returns

Firms that achieve competitive parity can expect to: a. earn below-average levels of returns. b. earn an average level of average returns. c. earn an above-average level of returns. d. see returns decline to average returns.

b. earn an average level of average returns

Firms within strategic groups: a. follow dissimilar strategies. b. have similar strategies. c. typically engage in higher levels of inter-group rivalry than intra-group rivalry. d. exist almost exclusively in the manufacturing sector.

b. have similar strategies

The type of strategic alliance that is best at facilitating the transfer of tacit knowledge between firms is the: a. primary cooperative strategic alliance. b. joint venture. c. equity strategic alliance. d. non-equity strategic alliance.

b. joint ventures

________ is the capability of making successful decisions when no obviously correct model or rule is available. a. Luck b. Judgment c. Perception d. Insight

b. judgment

A service that is effectively differentiated from that offered by rivals has qualities that are: a. perceived as standardized by the customer. b. perceived by the customer to add value for which they are willing to pay a premium. c. valued by the typical industry customer. d. seen as essential attributes.

b. perceived by the customer to add to value for which they are willing to pay a premium

Of the following reasons for diversification, which one is MOST likely to increase the firm's value? a. Increasing managerial compensation. b. Reducing costs through business restructuring. c. Taking advantage of changes in tax laws. d. Conforming to antitrust regulation.

b. reducing costs through business restructuring

Human resource management, technological development, and procurement are examples of: a. intangible resources. b. support activities on the value chain. c. non-value-creating functions. d. activities not vulnerable to value-stripping by the Internet.

b. support activities on the value chain

According to Carol Bartz, CEO of Autodesk, if young girls are not encouraged to study math and engineering: a. the level of innovation in the U.S. will decline. b. the U.S. will underutilize its human capital. c. the core competencies of U.S. organizations will lie in the area of the arts. d. China, and other non-sexist cultures, will surpass the U.S. economically.

b. the U.S. will underutilize its human capital

________ is the ultimate root of all competitive advantages. a. The technological resources of the firm b. The knowledge possessed by human capital c. The financial resources of the firm d. The culture and interpersonal relationships within the firm and between it and its stakeholders

b. the knowledge possessed by human capital

A profit pool is: a. the pool of assets that is distributed to investors. b. the total profits earned in an industry along all points of the value chain. c. the profits available to firms which earn above-average returns. d. the total profits available to be divided up among the competitors within an industry.

b. the total profits earned in an industry along all points of the value chain

Three conditions characterize difficult managerial decisions concerning resources, capabilities, and core competencies. What are those conditions? a. rarity, complexity, and human intellectual capital b. uncertainty, complexity, and intraorganizational conflicts c. complexity, imitability, and interorganizational conflicts d. comparability, imitability, and human intellectual capital

b. uncertainty, complexity, and intraorganizational conflicts

Human resources include all of the following EXCEPT: a. formal planning systems. b. organizational routines. c. knowledge. d. trust.

a. formal planning systems

Research indicates the trend in diversification is toward: a. greater use of related diversification. b. decreased reliance on restructuring. c. increased use of unrelated diversification. d. an overall increase in firms using a dominant-business strategy.

a. greater use of related diversification

The purchase of a value-creating activity from an external supplier is called: a. outsourcing. b. shortening the value chain. c. joint venturing. d. value stripping.

a. outsourcing

A firm that possesses core competencies that can be exploited across international markets is able to: a. achieve synergies and produce high quality goods at lower costs. b. enter new markets more quickly. c. enhance their market image and brand loyalty among local consumers. d. meet local government requirements more quickly than their international competitors.

a. achieve synergies and produce high quality goods at lower costs

________ are the capacity to take action. a. Core competencies b. Intangible resources c. Capabilities d. Competitive advantages

a. core competencies

A capability that another firm cannot easily develop would be classified as: a. costly to imitate. b. rare. c. valuable. d. non-substitutable.

a. costly to imitate

The goal of investing in human capital is to: a. develop a workforce capable of continuous learning. b. increase the number of employees in the firm. c. increase the total pay of all employees in the firm. d. maximize pay per employee, but not overall pay within the firm.

a. develop a workforce capable of continuous learning

An organization's structure: a. specifies a firm's formal reporting relationships, procedures, controls, and authority and decision-making processes. b. specifies a firm's informal reporting relationships, procedures, controls, and authority and decision-making processes. c. specifies a firm's formal value proposition, the markets it will serve, and how the firm will provide value in those markets. d. specifies a firm's formal reporting relationships, procedures, and controls, but not authority and decision-making processes.

a. specifies a firm's formal reporting relationships, procedures, controls, and authority and decision-making processes

When a firm's top management team is homogeneous and a new CEO is selected from inside the firm, it is: a. unlikely that there will be significant changes in the firm's strategy. b. likely that R&D spending will be greatly increased. c. unlikely that the current strategy will remain unchanged. d. unlikely that the new CEO will have a long tenure.

a. unlikely that there will be significant changes in the firm's strategy

________ is measured by a product's performance characteristics and by its attributes for which customers are willing to pay. a. Value b. Contribution c. Profitability d. Desirability

a. value

The company that functions as the strategic center firm is most easily identified in: a. vertical complementary strategic alliances. b. horizontal complementary strategic alliances. c. international corporate level strategies. d. alliances involving international and domestic partners.

a. vertical complementary strategic alliances

The criticism of 3M's reduced spending on research and development best reflects concerns over which of the following? a. A decline in the firm's capability to produce profits. b. A reduction in the firm's capability for innovation. c. The substitution of invention for innovation. d. The increase in expenses for downsizing resulting from this decision.

b. a reduction in the firm's capability for innovation

An international strategy consists of: a. action plans pursued by American companies to compete against foreign companies operating in the United States. b. a strategy whereby a firm sells products in markets outside its domestic market. c. the political and economic action plan developed by businesses and governments to cope with global competition. d. the strategy American firms use to dominate international markets.

b. a strategy whereby a firm sells products in markets outside its domestic market

Financial statements: a. do not accurately value the firm's tangible assets. b. reflect resources that contribute to the firm's value creating abilities. c. disregard some tangible resources. d. account for all organizational resources, tangible and intangible.

c. disregard some tangible resources

Matching what a firm "can do" with what it "________" is the basis for the firm's development of its vision, pursuit of its vision, and selection and implementation of its strategies. a. will do b. has done c. might do d. should do

c. might do

Executives of German firms are not dedicated to the maximization of shareholder value largely because: a. the roles of CEO and chairperson of the board of directors are combined. b. large institutional investors control large blocks of stock. c. private shareholders rarely have large ownership positions in the firm. d. the focus in German firms is on satisfying customer needs.

c. private shareholders rarely have ownership positions in the firm

When FedEx was created, it used outbound logistics in an innovative manner. This is an example of ________ the value chain. a. adhering to b. subverting c. reconfiguring d. ignoring

c. reconfiguring

Research by Deloitte Consulting found that: a. most companies save about 40 percent over their internal costs when they outsource an activity. b. firms that outsource research and development activities have lower profits after five years. c. about one-third of firms do not achieve cost savings they expect from outsourcing. d. outsourcing of primary activities is significantly more likely to achieve cost savings than the outsourcing of support activities.

c. about one-third of firms do not achieve cost savings they expect from outsourcing

If a firm's capability, such as its customer service, is weaker than that of its competitors, this capability is a: a. source of competitive parity. b. generator of average returns. c. competitive incompetence. d. unsustainable competitive advantage.

c. competitive incompetence

It is important for firms to: a. develop as many core competencies as possible. b. focus all their efforts on one predominant core competency. c. concentrate on three or four core competencies. d. plan to change all their core competencies every five years in formal review process.

c. concentrate on three or four core competencies

Which of the following can be accurately viewed as a firm's ability to take action? a. resources b. human capital c. core competencies d. dynamic capabilities

c. core competencies

A company using a business strategy with a narrow scope: a. is following a cost leadership business strategy. b. is focusing on a broad array of geographic markets. c. seeks to limit the group of customer segments served. d. faces a decreasing number of activities on its value chain.

c. seeks to limit the group of customer segments served

In the fast food industry, a drive-up window can be viewed as a: a. core rigidity. b. resource providing competitive advantage. c. source of competitive parity. d. a valuable and costly-to-imitate resource.

c. source of competitive parity

Ultimately, the cause of all core rigidities can be traced to what? a. Changes in the external and internal environment. b. Inertia and employee resistance to change. c. Strategic myopia and managerial inflexibility. d. Failure to accurately analyze the value chain.

c. strategic myopia and managerial inflexibility

Internal corporate venturing involves each of the following EXCEPT: a. autonomous strategic behavior. b. induced strategic behavior. c. strategic networks positioning. d. product champions.

c. strategic networks positioning

The term competitive dynamics refers to: a. specific circumstances in which competitors are aware of the degree of their mutual interdependence resulting from market commonality and resource similarity. b. the set of competitive actions and competitive responses a firm takes to build or defend its competitive advantages and to improve its market position. c. the total set of actions and responses taken by all firms competing within a market. d. an ongoing set of competitive actions and competitive responses between competitors as they maneuver for advantageous market position.

c. the total set of actions and responses taken by all firms competing within a market

Competitive advantage typically comes from: a. several outstanding resources acting independently. b. the firm's tangible resources, especially financial assets. c. the unique bundling of several resources. d. one key core competency.

c. the unique bundling of several resources

From the firm's customers' point of view, for a firm's capability to be a core competency, it must be: a. unique and inimitable. b. inimitable and nonsubstitutable. c. valuable and unique. d. valuable and nonsubstitutable.

c. valuable and unique

Which of the following is NOT an attribute of a successful acquisition? a. The acquiring firm has financial slack. b. Both firms have complementary assets and/or resources. c. Innovation and R&D investments will be continued. d. Marketing investments to advertise and build the image of the acquired firm are made quickly.

d. Marketing investments to advertise and build the image of the acquired firm are made quickly

Offshore outsourcing: a. has little effect on U.S. employment because the jobs outsourced are low-wage. b. is reliably associated with significant cost savings. c. does not impact highly-skilled and professional employees. d. allows the firm to focus on core competencies.

d. allows the firm to focus on core competencies

Within a firm, capabilities: a. tend to be developed through firm-wide interactions and reside in the firm as a whole. b. tend to be concentrated in the support activities of the value chain. c. tend to be concentrated in the primary activities of the value chain. d. are often developed in specific functional areas.

d. are often developed in specific functional areas

Strategic alliances: a. are unlikely to yield success if partnering firms are headquartered in the same country. b. are too restrictive to facilitate entry into new markets. c. usually increase the investment necessary to introduce new products. d. are used with greater frequency than other types of cooperative strategies.

d. are used with greater frequency than other types of cooperative strategies

Tangible assets: a. can be leveraged into additional business or value. b. tend to emerge from unique historical circumstances. c. are more valuable to the firm than intangible assets. d. can be seen and quantified.

d. can be seen and quantified

Value chain analysis: a. is useful only for manufacturing firms because it focuses on the path from raw-materials to finished product. b. is an engineering-based and formulaic assessment of the path of raw materials to finished product. c. focuses mainly on reducing the cost of each stage of production. d. helps firms identify the multiple means of implementing the firm's strategy.

d. helps firms identify the multiple means of implementing the firm's strategy

An engineering consultant who is remarkably adept in the use of the slide rule to do complex calculations has a skill that has all the following characteristics EXCEPT: a. rareness. b. causal ambiguity. c. unsustainability. d. nonsubstitutability.

d. nonsubstitutability

Rhino Tech, Inc., has conducted a value chain analysis and it has identified several primary and support activities that are not sources of core competence. Rhino Tech should consider: a. outsourcing any of these activities that do not have a human capital component. b. outsourcing the support activities and retaining the primary activities internally. c. outsourcing the primary activities and retaining the support activities internally. d. outsourcing all these activities.

d. outsourcing all these activities

________ is/are the source of a firm's ________, which is/are the source of the firm's ________. a. Resources, competitive advantage, core competencies b. Capabilities, resources, competitive advantage c. Capabilities, competitive advantage, core competencies d. Resources, capabilities, core competencies

d. resources, capabilities, core competencies

Interpersonal relationships, trust, friendships among managers, friendships between managers and employees, and a firm's reputation with suppliers and customers is an example of a capability that is: a. based on tangible assets. b. a result of certain historical conditions. c. causally ambiguous. d. socially complex.

d. socially complex

Increasingly, ________ strip(s) value and margin from physical processes on the value chain. a. technological advances b. failure of functional areas within the firm c. lack of human capital d. the Internet

d. the Internet

Which of the following does not affect the sustainability of a competitive advantage? a. The availability of substitutes for a firm's core competence. b. The rate at which obsolescence of the core competence occurs because of environmental changes. c. The imitability of a core competence. d. The durability of the capability over rival technologies.

d. the durability of the capability over rival technologies

The number of patents held by an organization is a rough guide to: a. the firm's strategic value and current stock price. b. the appeal of a firm for a private equity buyer. c. the amount of venture capital a firm will be able to attract. d. the level of innovation in a firm.

d. the level of innovation in a firm

Value for shareholders is best reflected in: a. a firm's free cash flow. b. the total revenue of a firm. c. the number of firm employees. d. the price of stock.

d. the price of stock

Which of the following would be classified as a value chain support activity? a. The conversion of raw inputs into products. b. The development of advertising and promotional campaigns. c. The distribution of the product to customers. d. The recruiting, hiring, and training of personnel.

d. the recruiting, hiring, and training of personnel

A museum of art which frequently receives large legacies upon the death of members of its extensive and massively wealthy founding family has a capability that is the result of: a. environmental change. b. unobservability. c. causal ambiguity. d. unique historical conditions.

d. unique historical conditions

Competitor intelligence could ethically come from all the following EXCEPT: a. Web searches. b. SEC filings. c. product displays at trade shows. d. wiretapping.

d. wiretapping


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