Final Exam
Chp 8: Decisions relating to "what stages of the industry value chain to participate in" determine a firm's A) Geographic scope B) Vertical Integration C) Absorptive capacity D) Level of diversification
B) Vertical Integration
Chp 8: Which of the following firms is least integrated? A) A firm that owns production subsidiaries across the globe B) A firm that makes equity investments in its supplier's company C) A firm that buys all the required raw materials from multiple external vendors D) A firm that enters a joint venture with another company to develop a new technology
C) A firm that buys all the required raw materials from multiple external vendors
Chp 8: 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 its flagship store. Which of the following alternatives to integration does this best illustrate? A) Outsourcing B) Credit rationing C) Franchising D) Bootstrapping
C) Franchising
Chp 8: Each stage of the vertical value chain typically represents a distinct __________ in which a number of different firms are competing. A) Functional department B) Economy C) Customer segment D) Industry
D) Industry
Chp 11: 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. b) A mechanistic structure allows for a lower degree of specialization. c) A mechanistic structure offers continuous innovation and flexibility as well as creativity. d) A mechanistic structure allows for the CEO to delegate tasks.
a) A mechanistic structure offers a centralized structure with well-defined lines of authority.
Chp 11: McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of a) Formalization b) Specialization c) Decentralization d) Hierarchy
a) Formalization
Chp 11: 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? a) It allows a high level of integration. b) It helps contain the core competencies within a strategic business unit (SBU). c) It leads to competition between SBUs d) It helps evaluate each SBU as a stand-alone profit-and-loss center.
a) It allows a high level of integration.
Chp 7: Incumbent firms favor incremental innovation over radical innovation because: a) Radical innovation will disturb the existing power distribution within the firms b) Business decisions are independent of the other parties in their innovation ecosystem. c) Incumbent firms do not have formal organizational structures and processes like the way new entrants do. d) Incremental innovations help firms sustain a permanent competitive advantage, whereas radical innovations only help gain a temporary advantage.
a) Radical innovation will disturb the existing power distribution within the firms
Chp 8: 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 BCG growth-share matrix , the smart phone division of True Electra will be categorized under a) Stars b) Cash cows c) Dogs d) Question marks
a) Stars
Chp 4: The perfectly competitive industry structure differs from the resource based model in its view that a. All firms have access to same resources b. Accessibility to bundles of resources differ across firms. c. Resources tend to be sticky d. Competencies differ across firms working in the same industry.
a. All firms have access to same resources
Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company? a. 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. b. GE knew that it could create a profitable venture out of producing green products, so it rolled out the ecomagination strategy. c. Mark Hurd, CEO of HP, was unaware of the sexual harassment allegations, and the board's demand for him to resign caught him by surprise. d. Goldman Sachs was party to the Abacus deal despite knowing its shortcoming
a. 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.
Chp 10: Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? a. Benefits from lower labor costs in manufacturing and services b. Access to low-cost raw materials such as lumber and iron ore c. Low levels of economic growth in emerging economies d. Inefficient infrastructure in countries like China, which have brought down setting-up costs
a. Benefits from lower labor costs in manufacturing and services
Chp 12: Which of the following is true of business ethics? a. Certain notions such as fairness, honesty, and reciprocity are universal norms b. Business ethics is an agreed upon code of conduct in business, based on laws c. The perception of what is ethical and what is not is similar across different cultures d. Business ethics needs to be codified into law in order to be followed
a. Certain notions such as fairness, honesty, and reciprocity are universal norms
Chp 2: The first step in the strategic management process is to a. Define a firm's vision, mission, and values b. Understand the strategies of the competitors c. Put the guiding policies of a firm into practice d. Develop functional and business-level strategies
a. Define a firm's vision, mission, and values
Chp 3: 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 a. Entering the aircraft manufacturing industry requires have capital investment. b. There is expected to be a huge return of investment within this industry c. There is no credible threat of retaliation from the incumbents d. Entering the aircraft manufacturing industry means violating government policies
a. Entering the aircraft manufacturing industry requires have capital investment.
Chp 10: During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved a. Exporting goods b. Making foreign direct investments c. Making foreign institutional investments d. Licensing production and distribution
a. Exporting goods
Chp 6: A firm pursuing a differentiation strategy as opposed to a low-cost strategy will a. Focus its research and development on product technologies to add uniqueness b. Concentrate on leveraging its economies of scale through process technologies c. Build an organization structure that relies on strict budget controls d. Create a lower economic value as compared to its competitors
a. Focus its research and development on product technologies to add uniqueness
Chp 2: _______ are primarily responsible for decisions and actions within their respective departments like finance, human resources, marketing, and production in a strategic business unit. a. Functional mangers b. Corporate executives c. Strategic leaders d. General managers
a. Functional managers
Chp 5: Which of the following expressions accurately describes market cap? a. It is the product of the number of outstanding shares and the share price b. It is the difference between the book value and the market value of a firm's assets. c. It is the ration of the firm's equity and its debt finance. d. It is the difference between a firm's account receivables and account payables.
a. It is the product of the number of outstanding shares and the share price
Chp 4: In knowledge, intensive industries, the marginal costs after initial invention are a. Low b. High c. Moderate d. Unpredictable
a. Low
Chp 9: Disney became the world's leading media company to a large extent by pursuing a corporate strategy of a. Related-linked diversification b. Cost-leadership c. Unrelated diversification d. Hostile takeovers
a. Related-linked diversification
Chp 6: Which of the following is more of a value driver than a cost driver? a. Superior customer service b. Economies of scale c. Learning-curve effects d. Experience-curve effects
a. Superior customer service
Chp 3: The relative bargaining power of suppliers is high when a. Suppliers provide products that are differentiated b. Incumbent firms face low supplier switching costs c. Incumbent firms can credibly threaten to backward integrate into the industry d. Suppliers depend heavily on the industry for a large portion of their revenues
a. Suppliers provide products that are differentiated
Chp 5: Which of the following approaches to assess competitive advantage is based on the view that non-economic factors can have a significant impact on a firm's financial performance? a. The triple-bottom-line approach b. The economic value creation framework c. The accounting profitability d. The balanced scorecard
a. The triple-bottom-line approach
Chp 12: Outside directors are more likely to watch out for the interests of shareholders of their firm because a. They are more likely to benefit from using inside information to trade stocks b. They do not have the safety of serving on the boards of other firms c. They are part-time employees of the firm d. They have more independence than inside directors
a. They are more likely to benefit from using inside information to trade stocks
Chp 5: During the process of formulation an effective business model, a firm's managers should first a. Transform their strategy of how to compete into a blue print of actions and initiatives b. Implement their strategy at corporate strategic business unit and functional levels. c. Implement their blueprint of actions and initiatives through structures, processes, culture, and procedures. d. Evaluate the firm's strategy already in effect and take corrective actions if necessary
a. Transform their strategy of how to compete into a blue print of actions and initiatives
Chp 8: Which of the following firms is most prone to experiencing a diversification discount? a) A company that derives its revenues from selling aerated drinks and health drinks. b) A company that pursues unrelated diversification c) A company that pursues related-constrained diversification. d) A company that deals in petroleum as well as natural gas.
b) A company that pursues unrelated diversification
Chp 7: Which of the following best illustrates a process innovation as opposed to product innovation? a) A consumer electronic company developing a new generation of tablet computers b) An automobile company using computer-aided design in its production. c) A consumer electronics company launching 3-D televisions. d) An automobile company commercializing electric cars.
b) An automobile company using computer-aided design in its production
Chp 8: _______ 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. a) Open innovation b) Diversification c) Differentiation d) Taper integration
b) Diversification
Chp 7: On which of the following tenets is the crossing-the-chasm framework suggested by Geoffrey-Moore based? a) The number and size of competitors remain constant throughout the industry life cycle b) Each stage of the industry life cycle is dominated by a different customer group c) Industries tend to follow an unpredictable industry life cycle d) The supply and demand side of the market remain constant, irrespective of the phase of the industry life cycle.
b) Each stage of the industry life cycle is dominated by a different customer group
Chp 7: An intrapreneur is described as a person who a) Restricts changes within an organization b) Innovates within existing companies c) Introduces new products or services by starting her or her own ventures d) Invests funds in the ideas of another person in the same organization
b) Innovates within existing companies
Chp 11: 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 a) Output controls. b) Input controls. c) Multidivisional strategy. d) Centralization.
b) Input controls.
Chp 11: Employees learn about an organization's culture through the process of a) Exploitation. b) Socialization. c) Co-opetition. d) Acculturation.
b) Socialization.
Chp 7: 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? a) The industry for cell phones with holographic keyboards will face greater competition than the tablet industry. b) While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation. c) While the industry for cell phones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits. d) The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be non-price.
b) While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation.
Chp 5: Which of the following statements is true of accounting data? a. Accounting data focus mainly on intangible assets, rather than tangible assets. b. Accounting data are historical data and thus backward-looking. c. Accounting data do not have to be adjusted in any manner to compare companies with different capital structures. d. Accounting data consider off-balance sheet items, such as pension obligations of a firm.
b. Accounting data are historical data and thus backward-looking.
Chp 5: In 2014, Apple had a return on revenue of 29.3%, and Microsoft had a return on revenue of 32%. Even so, Apple had a higher return on invested capital than Microsoft. Why did this happen? a. Apple had a higher cost structure than Microsoft b. Apple was able to charge as much higher margin for its products and services than Microsoft c. Apple spent more on research and development and marketing and sales than Microsoft d. Apple had a much higher selling, general, and administrative expense than Microsoft
b. Apple was able to charge as much higher margin for its products and services than Microsoft
Chp 4: _______________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. a. Resource leverages b. Core competencies c. Capital gains d. Equity reserves
b. Core competencies
Chp 6: 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? a. Cost-leadership b. Differentiation c. Market penetration d. Product diversification
b. Differentiation
Chp 3: Companies in the same strategic group are _____ to each other a. Complementors b. Direct competitors c. Strategic partners d. Shareholders
b. Direct competitors
Chp 4: With regard to the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because it products were a. Invaluable and common b. Easy to Imitate c. Extremely expensive d. Unpredictable
b. Easy to Imitate
Chp 5: Janet is CEO of Far Sight Inc, which uses a triple-bottom-line approach. AS a result, Janet will tend to: a. View superior financial performance as the sole objective of the firm b. Expect her company to be socially responsible c. Use fossil fuels to run her company's production plants d. Ignore the ecological dimension for her company
b. Expect her company to be socially responsible
Chp 6: According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy? a. Competition switching from non-price attributes to pricing b. Innovation that allows competitors to emerge with more economical replacements c. New entrants with small production scale d. Suppliers requesting a 2% price increase across the industry
b. Innovation that allows competitors to emerge with more economical replacements
Chp 9: The downside of equity alliances is a. the weaker ties and reduced trust between partners b. the amount of investment that can be involved c. that the alliances cannot be abandoned if not promising d. that they are not useful stepping stones toward full integration of the partner firm
b. the amount of investment that can be involved
Chp 10: A firm is said to be pursuing a polycentric innovation strategy when a. Its research facility is situated in the headquarters and all other business activities are located around the world b. It draws from multiple equally important research facilities located throughout the world c. It restricts its innovation to Western economics and production to developing markets d. Its knowledge flow takes a one-way path - from its headquarters to the subsidiaries
b. It draws from multiple equally important research facilities located throughout the world
Chp 6: 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? a. It failed to drive up the perceived customer value b. It failed to refine its strategic position over time c. It failed to move into a non-contested market space d. It failed to offer enough strategic trade-offs
b. It failed to refine its strategic position over time
Chp 12: According to Michael Porter, which of the following is a problem with many publicly traded companies? a. Shareholders of publicly traded companies do not have a legitimate claim of file. b. Many publicly traded companies have defined value creation too narrowly in terms of financial performance c. There is no transferability of stock ownership in publicly traded companies d. The legal owners of publicly traded companies also make management decisions for the company
b. Many publicly traded companies have defined value creation too narrowly in terms of financial performance
Chp 6: To be cost-competitive, a firm should a. Position itself below the productivity frontier b. Operate at the minimum efficient scale c. Attain the highest cost position d. Avoid moving on to a stepper experience curve
b. Operate at the minimum efficient scale
Chp 9: What causes the winner's curse? a. Buying a firm with principal-agent problems b. Overpaying for an acquisition c. Buying a firm with a competitive disadvantage d. Underpaying for an acquisition
b. Overpaying for an acquisition
Chp 4: Chat Zone Inc. a telecommunication company, had been drastically losing its market share due to tough competition in the industry. The management hired a reputable consulting firm to advise the company. The experts from the consulting firm pointed out 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 ales service inefficient. Chat Zone Inc. can best solve its problem by working on its a. Immobile Assets b. Support Activities c. Resource flows d. Resource stocks
b. Support Activities
Chp 2: What is strategic leadership? a. The ability to delegate authority to create an effective strategic management process b. The executives' use of power and influence to direct the activities of others when pursuing an organization's goals c. The ability to inspire mangers and other employees to create the best product possible d. The executives' use of power and influence to inspire workers to take responsibility for the final product
b. The executives' use of power and influence to direct the activities of others when pursuing an organization's goals
Chp 9: What is horizontal integration? a. The process of merging with a competitor at a different stage of the value chain b. The process of merging with a competitor at the same stage of the value chain. c. The process of acquiring a competitor at a higher stage of the value chain. d. The process of acquiring a competitor at a lower stage of the value chain
b. The process of merging with a competitor at the same stage of the value chain.
Chp 2: Top-down strategic planning as an approach to the strategic management process will be most effective when the a. The environment is constantly changing b. The size of the firm is large c. Probability of black swan events is high d. Top management wants to decentralize decision making
b. The size of the firm is large
Chp 3: Which of the following represents an economic factor in a firm's external genera environment? a. The government regulations and laws in the country in which the firm exists b. The stage of the business cycle that the country is in c. The values and norms prevalent in the society in which the firm operates d. The bargaining power of the firm's suppliers and buyers
b. The stage of the business cycle that the country is in
Chp 12: Which of the following statements is true of shareholders in a public stock company? a. They directly supervise and coordinate the manufacture of products and delivery of services b. They are granted a charter of incorporation by the state and legally own company shares c. They are the centerpiece of corporate governance d. They are appointed by a board of directors to oversee the company's management.
b. They are granted a charter of incorporation by the state and legally own company shares
Chp 10: 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? a. While Marc Works Inc.'s competitive advantage lies in its high local responsiveness, Torque Inc. will lack such capabilities. b. Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc. c. Torque Inc.'s business functions are highly centralized, whereas Marc Works Inc. organizes its activities worldwide. d. Torque Inc. is exposed to greater risks of exchange rate fluctuations.
b. Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc.
Chp 3: The primary objective of Porter's five forces model is to a. Replace a firm's competitive advantage with a competitive parity b. Understand the profit potential of different industries c. Reduce the gap between the value of a firm's product and its cost of production d. Breakdown a firm's value chain activities into primary and support
b. Understand the profit potential of different industries
Chp 3: When is the rivalry among existing competitors in an industry likely to be more intense? a. When the industry growth rate is high b. When firms make strategic commitments to compete in an industry c. When firms engage in non-price competition as opposed to price-cutting d. When the industry has low exit barriers
b. When firms make strategic commitments to compete in an industry
Chp 7: Dollar Shave Club is an e-commerce start-up that delivers razors by mail. By doing this, Dollar Shave Club is using a(n) __________ disrupt an existing market. a) Innovation ecosystem b) Architectural innovation c) Business model innovation d) Incremental innovation
c) Business model innovation
Chp 11: Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? a) It allows the firm to create incentives to foster process innovation in order to drive down cost. b) It allows the firm to reduce its cost below that of competitors while offering acceptable value. c) It allows the firm to constantly upgrade core competencies in R&D, innovation and marketing. d) It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.
c) It allows the firm to constantly upgrade core competencies in R&D, innovation and marketing.
Chp 7: 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 _______ a) Economies of scope b) Razor-razor blade business model c) Open innovation model d) Experience-curve effects
c) Open innovation model
Chp 11: .__________ organizations have a low degree of specialization and formalization as well as a flat organizational structure a) Mechanistic b) Centralized c) Organic d) Top-down
c) Organic
Chp 8: Which of the following alternatives on the Make-or-buy continuum allows for the most integration? a) Short-term contracting b) Licensing c) Parent-subsidiary relationship d) Joint ventures
c) Parent-subsidiary relationship
Chp 7: The typical four-step innovation process begins with: a) The modification and recombination of an existing product or process. b) The presentation of an idea as findings derived from basic research c) The commercialization of an invention by entrepreneurs. d) A competitor's attempt to imitative an innovation.
c) The commercialization of an invention by entrepreneurs.
Chp 8: How do firms benefit from vertical integration? a) Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. b) Firms that vertically integrate do not have to make transaction-specific investments. c) Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities d) Vertical integration allows firms to reduce organizational complexity and administrative costs
c) Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities
Chp 7: 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? a) Competitive intensity will be higher in the domestic airline industry than the pet clothing industry. b) The pet clothing industry is ahead of the domestic airline industry in the industry life cycle. c) While the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants. d) The mode of competition will be price based in the pet clothing industry and will be non-priced based.
c) While the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants.
Chp 12: What is a unicorn? a. A public stock company valued at a billion dollars or more b. A public stock company valued at a million dollars or more c. A private start-up company valued at a billion dollars or more d. A private start-up company valued at a million dollars or more
c. A private start-up company valued at a billion dollars or more
Chp 10: 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 protects 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.? a. Exporting b. Franchise Agreement c. Acquisition d. Licensing
c. Acquisition
Chp 9: When large, incumbent firms buy start-up companies the transaction is generally described as a(n) a. Joint venture b. Partnership c. Acquisition d. Alliance
c. Acquisition
Chp 5: The balanced scorecard can accommodate: a. Only short-term performance metrics b. Only long-term performance metrics c. Both long and short-term metrics d. Neither long- or sort-term metrics
c. Both long and short-term metrics
Chp 5: Economic value creation is best expressed as a. Product surplus minus consumer surplus b. Consumer surplus minus cost of production c. Consumer surplus plus firm profit d. Producer surplus plus firm profit
c. Consumer surplus plus firm profit
Chp 2: The pharmaceutical company Merck's new drug Vioxx was a blockbuster, generating revenues of $2.5 billion a year by 2002 and growing fast. When investigations began to appear in the medical community, Merck announced the voluntary withdrawal of Voixx from the market. In this example, Merck provides an example of what can happen if a company deviates from its a. Voluntary responsibilities b. Realized strategy c. Core values d. Strategic decisions
c. Core values
Chp 2: Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented? a. Customer-oriented visions tend to have a more short-range view of changing environments b. Customer-oriented visions tend to have a more myopic view of changing environments c. Customer-oriented visions tend to be more flexible when adapting to changing environments d. Customer-oriented visions tend to be more stable when dealing with changing environments.
c. Customer-oriented visions tend to be more flexible when adapting to changing environments
Chp 6: In a focused cost-leadership strategy, a firm, a. Caters to the segment of the market that is least cost-sensitive b. Provides high-priced products for many different segments of the mass market c. Delivers low-cost products and services to a specific, narrow part of the market d. Focuses on reducing the economic value created to drive down costs
c. Delivers low-cost products and services to a specific, narrow part of the market
Chp 6: Even without differentiation parity, a firm pursuing a cost-leadership strategy can still gain a competitive advantage as long as it's: a. Learning curve is not steeper than that of its competitors b. Per-unit costs are higher than that of its competitors c. Economic value creation exceeds that of its competitors d. Value gap is lower than that of its competitors
c. Economic value creation exceeds that of its competitors
Chp 2: Any unplanned strategic initiative undertaken by mid-level employees of their own volition is a (n): a. Dominant strategy plan b. Unrealized strategy c. Emergent strategy d. Intended strategy
c. Emergent strategy
Chp 12: Adverse selection in a public stock company occurs when a. A firm's work tasks, incentives, and employment contracts minimize opportunism by agents b. A principal is not aware of the context from which information from an agent is derived c. Information asymmetry increases the likelihood of selecting inferior alternatives d. An agent manipulates information to benefit stockholders
c. Information asymmetry increases the likelihood of selecting inferior alternatives
Chp 9: Which of the following types of strategic alliances is the least common in terms of frequency? a. Mergers b. Acquisitions c. Joint ventures d. Equity alliances
c. Joint ventures
Chp 10: For a multinational enterprise (MNE), applying the globalization hypothesis would mean a. Being highly responsive to the heterogeneous needs and preferences of consumers globally, without focusing on cost reduction b. Customizing each product sold by an enterprise to differentiate it from its competitors c. Manufacturing products on international platforms and slightly modifying them to meet local tastes and standards d. Pursuing a focused differentiation strategy instead of a cost-leadership strategy to gain a competitive advantage
c. Manufacturing products on international platforms and slightly modifying them to meet local tastes and standards
Chp 10: Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a ___________ in the automobile industry a. Capital gain b. Trade surplus c. National competitive advantage d. Liability of foreignness
c. National competitive advantage
Chp 5: 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. a. Offshoring b. Crowd sourcing c. Peer-to-peer d. Binge watching
c. Peer-to-peer
Chp 3: Which of the following is true about strategic groups? a. It is not possible to have two different strategic groups within the same industry b. Rivalry within the same strategic group tends to be lower than rivalry between different strategic groups. c. Profitability varies between different strategic groups d. Companies within the same strategic group are competitors
c. Profitability varies between different strategic groups
Chp 2: How are the two approaches, strategic planning and scenario planning, different from the strategy-as-planned emergence approach? a. Strategy as a planned emergence model was introduced before strategic planning and scenario planning b. Unlike strategic planning and scenario planning, strategy as a planned emergence model does not begin with a strategic plan. c. Relative to strategic planning and scenario planning, strategy as a planned emergence model is a less formal and less stylized approach to the development of strategy. d. Unlike strategic planning and scenario planning, strategy as a planned emergence model is a rational top-down planning approach.
c. Relative to strategic planning and scenario planning, strategy as a planned emergence model is a less formal and less stylized approach to the development of strategy.
Chp 4: The resource based view of a firm assumes that the a. Resources of firms are highly scarce and hence the government interferes to ensure equal distribution b. Resources of firms are highly exhaustible and hence they cannot contribute to the competitive advantage c. Resource bundles within firms competing in the same industry are unique to some extent and thus differ from one another. d. Resource bundles within firms competing in the same industry ten to be highly mobile, moving easily from firm to firm.
c. Resource bundles within firms competing in the same industry are unique to some extent and thus differ from one another.
Chp 4: 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? a. The resources of the company that are mobile b. The capital raised by the company from its shareholders c. The expertise acquired by the employees in the company d. The headquarters owned by the company
c. The expertise acquired by the employees in the company
Chp 9: 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 a. The horizontal integration activity changes the industry structure from oligolostic to monopolistically competitive b. The surviving firms will need to be protected against the increasing bargaining power of the suppliers c. The horizontal integration activity has the potential to reduce competitive intensity in an industry d. The surviving firms will need protection against the relaxed entry barriers
c. The horizontal integration activity has the potential to reduce competitive intensity in an industry
Chp 2: An intended strategy is best described as a. A combination of its top-down strategic intentions and bottom-emergent strategy b. Any unplanned strategic initiative undertaken by mid-level employees of their own volition c. The outcome of a rational and structured top-down strategic plan d. A strategy developed at lower levels of management to tackle unpredictable events
c. The outcome of a rational and structured top-down strategic plan
Chp 12: Which of the following is the source of the principal-agent problem in publicly traded companies? a. The law of legal personality b. Limited liability for investors c. The separation of ownership and control d. Transferability of investor ownership
c. The separation of ownership and control
Chp 6: Which of the following situations will have greater effects from economies of scale than from learning effects? a. When conducting surgeries b. When practicing corporate law c. When mass manufacturing pens d. When making business decisions
c. When mass manufacturing pens
Chp 11: Which of the following terms or phrases bet characterizes Zappos' organizational structure? a) Centralized b) Mechanistic c) Extremely tall d) Extremely flat
d) Extremely flat
Chp 11: Which of the following statements is true of strategy in an organization a) Strategy implementation is considered unsuccessful if it requires changes within an organization. b) To implement a strategy successfully, an organization's structure must be rigid. c) Strategy implementation does not affect resource allocation and power distribution within an organization. d) Organizational structure must follow strategy in order for firms to achieve superior performance.
d) Organizational structure must follow strategy in order for firms to achieve superior performance.
Chp 7: Which of the following statements accurately describes social entrepreneurship? a) Social entrepreneurs are individuals who invest in start-up business in order to earn huge returns b) Social entrepreneurs are individuals who rely primarily on social networking sites to generate revenues. c) Social entrepreneurs are employees within organizations who are responsible for carrying out lean production. d) Social entrepreneurs are those who consider financial, ecological, and social metrics to evaluate their firm's performance
d) Social entrepreneurs are those who consider financial, ecological, and social metrics to evaluate their firm's performance
Chp 8: _________ is best described as moving one or more internal value chain activities outside the firm's boundaries to their firms in the industry value chain. a) Reverse engineering b) Forward integration c) Horizontal integration d) Strategic outsourcing
d) Strategic outsourcing
Chp 2: T & R Autos is a large conglomerate that operates in 12 different countries. The corporate executives at the headquarters have decided that the company's objectives for the next two years will be to increase its customer equity. Based on this guideline received from the top management team, the product leader of the home appliances division has decided to adopt a cost-leadership strategy in all his 12 units. Thus, the decision made by the product leader best illustrates a ________ strategy. a. Corporate b. Functional c. Grand d. Business
d. Business
Chp 10: When two neighboring democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance a. Political b. Geographic c. Administrative d. Cultural
d. Cultural
Chp 10: 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? a. Factor conditions b. Complementor availability c. Competitive intensity d. Demand conditions
d. Demand conditions
Chp 4: 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 a. Value Chain perspective b. Two Factor theory c. Expectancy Theory d. Dynamic capabilities perspective
d. Dynamic capabilities perspective
Chp 12: Which of the following perspectives best supports the shared value creation framework? a. Markets are more often than not defined by societal needs rather than economic needs. b. Failing to create value for society almost always reflects on the short term bottom line c. A firm's competitive advantage depends on pitting economic and societal needs in a trade-off d. Externalities such as pollution, wasted energy, and costly accidents actually create internal costs
d. Externalities such as pollution, wasted energy, and costly accidents actually create internal costs
Chp 5: Which of the following is an advantage of the balanced-scorecard approach? a. It fails to link the strategic vision to responsible parties within the organizations b. It fails to translate the vision into measurable operational goals c. It provides limited guidance for designing and planning business processes d. It provides limited guidance about which metrics to choose
d. It provides limited guidance about which metrics to choose
Chp 9: 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 Star Group of hotels is separate from its parent companies. What alliances type does this best illustrate? a. Sole proprietorship b. Non-equity alliance c. Equity alliance d. Joint venture
d. Joint venture
Chp 3: The government of Filvia has mandated that the standard minimum wage in the country to be increased to $8000 per year. This has ensured that all firs 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 in a firm's general environment does the mandate best indicate? a. Ecological factors b. Sociocultural factors c. Technological factors d. Legal factors
d. Legal factors
Chp 4: According to the value chain analysis which of the following is a primary activity? a. Research and development b. Human resource management c. Accounting and Finance d. Marketing and sales
d. Marketing and sales
Cp 3: In which of the following industry competitive structures do selling firms have the lowest pricing power? a. Monopolistic competition b. Monopoly c. Oligopoly d. Perfect competition
d. Perfect competition
Chp 9: 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 a. Time compression diseconomies b. Experience-curve effects c. Resource ambiguity d. Principal-agent problems
d. Principal-agent problems
Chp 3: A firm's strategic position is likely to be strong when: a. The entry barriers within the industry it operates in are low and the exit barriers are high b. Its suppliers and vendors can easily forward integrate and buyers can backward integrate c. All the five forces in the Porter's model are strong d. The gap between the value of the firm's product generates and the cost to produce it is larger
d. The gap between the value of the firm's product generates and the cost to produce it is larger
Chp 6: Which of the following is a firm effect that has an impact on the competitive advantage of a firm? a. The exit barrier within the industry in which the firm operates b. The number of companies operating in the industry in which the firm operates c. The intensity of rivalry among existing companies in the firm's chosen industry d. The value and the cost position of the firm relative to its competitors
d. The value and the cost position of the firm relative to its competitors
Chp 12: What are poison pills? a. They are used by shareholders to prevent the founder of a company from taking the company private through a leveraged buyout. b. They are unspecified conditions in the contract between stakeholders in an organization c. They are used by companies in a bid to perform a hostile takeover of competing firms d. They are defensive provisions that kick in should a buyer reach a certain level of share ownership
d. They are defensive provisions that kick in should a buyer reach a certain level of share ownership
Chp 9: Which of the following statements is true of strategic alliances? a. They are always focused on joining the same value chain activities b. They enable firms to achieve goals faster, but at higher costs. c. They are known as strategic alliances whether or not they have the potential to affect a firm's competitive advantage. d. They are most beneficial when they join resources and knowledge in a combination that obeys the VRIA principles.
d. They are most beneficial when they join resources and knowledge in a combination that obeys the VRIA principles.
Chp 4: In the context of SWOT analysis, a firm can develop an offensive strategic option primarily by a. Combining and internal weakness with an external threat b. Leveraging its internal strengths to minimize external threats c. Leveraging an external opportunity to overcome an internal threat d. Using its internal strength to exploit external opportunities
d. Using its internal strength to exploit external opportunities
Chp 10: As a result of globalization, the a. Economies around the world are becoming more independent b. Cultural distance between countries is increasing c. Cost of doing business around the world is increasing d. World's market economies are becoming more integrated
d. World's market economies are becoming more integrated
