MAN 4720- Exam #3

The four aspects of Porter's model of national competitive advantage include all of the following EXCEPT the: 1. Factor condition. 2. Demand condition. 3. Economic institutions. 4. Supporting industry.

3. Economic institutions.

The four best strategic choices available to management during the decline stage of an industry include all of the following EXCEPT: 1. Exit the industry. 2. Consolidate by buying rivals. 3. Persist by increasing investments in the product. 4. Harvest by reducing investments and maximizing cash flow.

3. Persist by increasing investments in the product.

In high uncertainty-avoidance cultures, the values will lean more toward ______. 1. Tolerance of ambiguity 2. Less emotional resistance to change 3. Structured career patterns 4. A greater willingness to take risks

3. Structured career patterns

Which of the following is NOT a factor pressuring companies for local responsiveness? 1. Differences in employment laws 2. Customization due to cultural differences 3. Government pressure for firms to use local sources for procurement 4. Availability of low labor costs

4. Availability of low labor costs

Innovation used as a sustained competitive weapon must be: 1. Radical and low cost. 2. Architectural and high cost. 3. Short-term and efficient. 4. Continuous and commercialized.

4. Continuous and commercialized.

When costs per unit fall as output increases, _________________ occur. 1. Economies of scope 2. Diseconomies of scale 3. Economies of efficiency 4. Economies of scale

4. Economies of scale

When competing on the basis of low-cost leadership, a primary objective is to: 1. Lower manufacturing costs. 2. Lower production costs. 3. Lower supplier costs. 4. Lower overall costs.

4. Lower overall costs.

_______ refers to the political and legal factors of a foreign market. 1. National culture 2. Core competence 3. Competitiveness 4. National institutions

4. National institutions

A(n) ____________ is the dominant design established during the growth stage of an industry life cycle once the market comes to agreement about the prevailing set of engineering features and design choices. 1. Compliment 2. Trial design 3. Prototype 4. Standard

4. Standard

Digital photography replacing film photography is an example of which type of innovation? 1. Disruptive 2. Incremental 3. Progressive 4. Alternative

1. Disruptive

IBM still offers typewriters even though it does not invest much in future innovations of its typewriter line. Instead, it has chosen a _________ strategy to maximize cash flow from the remaining demand for typewriters. 1. Harvest 2. Divest 3. Exit 4. Consolidate

1. Harvest

The vast majority of innovations in an industry are ____________ because they build on a firm's existing knowledge base and reinforce the existing organizational structure and network relationships. 1. Incremental 2. Radical 3. Relational 4. Moderate

1. Incremental

When a firm faces high pressure for local responsiveness and high pressure for cost reduction, is it likely to adopt a(n) ________. 1. Transnational strategy 2. Localization strategy 3. Global-standardization strategy 4. International strategy

1. Transnational strategy

Under the five forces model, a risk to a firm with a differentiation strategy is: 1. When the focus of competition switches to price rather than features and new acceptable levels of quality have emerged due to innovation. 2. When the focus of competition switches to price rather than features and the substitute products are considered below acceptable levels of quality. 3. When the focus of competition switches to features rather than price, the substitute products are considered below acceptable levels of quality. 4. When the focus of competition switches to features rather than price and new acceptable levels of quality have emerged due to innovation.

1. When the focus of competition switches to price rather than features and new acceptable levels of quality have emerged due to innovation.

A firm's strategic position reflect: 1. Whether it is competing on differentiation or cost. 2. Whether it is competing within a targeted strategic group or not. 3. Whether it has a competitive advantage or not. 4. Whether it has a first-mover advantages or not.

1. Whether it is competing on differentiation or cost.

During the growth phase of an industry life cycle, demand is strong and: 1.Both inefficient and efficient firms thrive 2. A firm should "harvest" its products 3. Only a cost leadership strategy should be pursued 4. Market demand starts to decrease

1.Both inefficient and efficient firms thrive

When a firm offers products with unique features and higher value for customers than that of the competition, it is implementing a: 1. Product-broad strategy. 2. Differentiation strategy. 3. Cost-leadership strategy. 4. Product-focused strategy.

2. Differentiation strategy.

A global standardization strategy emphasizes _____________. 1. Differentiated products 2. Economy of scale 3. Decentralizing control 4. Adapting to new cultures

2. Economy of scale

Which of the following strategies do firms typically employ as competitive intensity increases and the market matures? 1. Turning to radical innovation in order to introduce a new product. 2. Employing manufacturing and process engineering capabilities to drive costs down. 3. Charging high prices in order to capture as much revenue as possible. 4. Adding additional features to the offering to increase perceived value.

2. Employing manufacturing and process engineering capabilities to drive costs down.

All of the following are questions that managers answer when selecting a business-level strategy EXCEPT: 1. Who will we serve? 2. How many product markets will we be in? 3. What customer needs and desires will we satisfy? 4. Why do we want to satisfy these needs?

2. How many product markets will we be in?

The Wright Brothers creating the airplane is a(n) ______________; Boeing commercializing the airplane is a(n) _____________. 1. Breakthrough; invention 2. Invention; innovation 3. Innovation; invention 4. Product; process

2. Invention; innovation

A company that uses a differentiation strategy achieves a competitive advantage as long as: 1. The economic value that the firm creates is equal to that of the competition. 2. The economic value that the firm creates is greater than that of the competition. 3. The economic value that is created is less than that of the competition. 4. The economic value that is created is dependent on strategic parity.

2. The economic value that the firm creates is greater than that of the competition.

Each of the following are important reasons to understand the strategic implications of an industry life cycle EXCEPT: 1. Each state attracts different customer groups with unique hands 2. The firm should copy the industry leader in each distinct stage 3. Different competencies are required in each state that must be created if not existent 4. The firm needs to know when changes in demand require changes in strategy

2. The firm should copy the industry leader in each distinct stage

When a firm is able to achieve higher economic value creation than its competition through differentiation, the competitive advantage is reflected by: 1. The firm's ability to move into a new strategic group. 2. The firm's ability to charge higher prices. 3. The firm's ability to charge lower prices. 4. The firm's ability to leverage complements.

2. The firm's ability to charge higher prices.

Under the five forces model, a risk to a business with a cost-leadership strategy is: 1. Competition switches from customer service to pricing. 2. When technological innovations open up cost reductions for substitutes or competitors. 3. New entrants are all start-up firms with low volumes. 4. Suppliers request a 2% price increase across the industry.

2. When technological innovations open up cost reductions for substitutes or competitors.

Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? A) Factor condition B) Demand condition C) Supporting industry D) Firm strategy and structure

A) Factor condition

When management modifies strategic objectives based on which stage an industry is in they are responding to a(n): A) Industry life cycle. B) Growth life cycle. C) Economic life cycle. D) Entrepreneurial life cycle.

A) Industry life cycle.

Harley Davidson offers similar products in many different global markets by using a(n) ____________. A) International strategy B) Localization strategy C) Global standardization strategy D) Transnational strategy

A) International strategy

The major benefit of having established national institutions is _____________. A) Reduced uncertainty and cost B) Higher entry barrier C) Cultural compatibility D) Less competitive dynamics

A) Reduced uncertainty and cost

A generic business strategy is more likely to help a cost-leadership firm achieve competitive advantage when it does which one of the following? A) When it allows a firm to perform similar activities differently than its rivals with resulting lower costs. B) When it allows a firm to perform different activities than its rivals with greater value creation. C) When it allows a firm to perform similar activities than its rivals with greater costs or lower value creation. D) When it helps a firm create a large value created at whatever the cost required.

A) When it allows a firm to perform similar activities differently than its rivals with resulting lower costs.

Global strategy is a firm's strategy to gain ________ when competing against foreign companies around the world. A) competitive advantage B) home based market C) high quality labor D) shareholder value

A) competitive advantage

According to Michael Porter, firms face hypercompetition because they rely too much on _______________ which leads to a failure of distinct strategic positioning for the individual firm. A) imitating one another B) reaching technological limitations C) joint destruction D) creative competition

A) imitating one another

The vast majority of innovations in an industry are ____________ because they build on a firms existing knowledge base and reinforce the existing organizational structure and network relationships. A) incremental B) radical C) relational D) moderate

A) incremental

As noted in Chapter Case 7, the success of Wikipedia is attributed to all of the following EXCEPT: A) Leveraging innovations enabled by the Internet. B) Utilizing crowdsourcing. C) Ignoring the "long tail". D) Maintaining a reputation for accuracy.

C.) Ignoring the "long tail"

In 2010, Levi Strauss & Co. introduced a new line of jeans called Levi's Curve ID. Levi's launched this product based on research that found that 80 percent of women fall into three distinct body shapes. Customers can now go to Levi's website and use a product configurator in order to determine their "Curve ID" and purchase jeans most appropriate for their body type. Levi's is using what tool to improve their strategic position? A) A product differentiation strategy with complements as a value driver. B) A product differentiation strategy with customization as a value driver. C) A focused cost leadership with economies of scale as a cost driver. D) A focused cost leadership with economies of learning as a cost driver.

B) A product differentiation strategy with customization as a value driver.

After Jeff Bezos read about how the internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and created Amazon which is now the world's largest online retailer. This is clearly an example of: A) A firm with a strong core competency in R&D. B) An entrepreneur who transformed invention into an innovation. C) An entrepreneur who tried to harvest the remaining demand on the internet. D) Someone who focused on the "short head" of the internet.

B) An entrepreneur who transformed invention into an innovation.

The likelihood of a discontinuity occurring in an industry: A) Is very strong if the industry produces simplified products. B) Is very strong if the existing technology is close to its physical limit. C) Is very weak unless the new technology is cheaper. D) Cannot be predicted.

B) Is very strong if the existing technology is close to its physical limit.

Why might going global be necessary to achieve growth in smaller economies, such as South Korea? A) High intensity of local competition B) Limited domestic market C) Abundant local suppliers D) Plentiful natural resources

B) Limited domestic market

The commercialization of new ideas and inventions often does all of the following EXCEPT: A) Creates value for society. B) Protects older industries. C) Disrupts an industry. D) Creates employment opportunities.

B) Protects older industries.

A core competency which is capital-intensive but critical for a firm creating and launching a new innovation is: A) Process improvement. B) Research and Development (R&D). C) Supply-chain management. D) Customer relation management.

B) Research and Development (R&D).

Absorptive capacity is important for a firm to have because: A) It must be able to absorb losses during the growth stage. B) Without new knowledge the firm could face a "technological lock-out". C) Profits will increase if there is excess capacity in the industry. D) Lean manufacturing is no longer a strategic weapon.

B) Without new knowledge the firm could face a "technological lock-out".

Under the five forces model, a risk to a business with a cost-leadership strategy is: A) competition switches from customer service to pricing. B) technological innovations will open up cost reductions for substitutes or competitors. C) new entrants are all start-up firms with low volumes. D) suppliers request a 2% price increase across the industry.

B) technological innovations will open up cost reductions for substitutes or competitors.

All of the following are tools typically used to achieve cost-leadership EXCEPT: A) controlling the cost of inputs. B) leveraging economies of scale. C) offering products that have superior value. D) learning by doing.

C) offering products that have superior value.

Which of the following modes of entering a foreign market has the highest level of investment and control? A) Franchising B) Licensing C) Acquisition D) Exporting

C) Acquisition

When a firm faces low pressure for local responsiveness and high pressure for cost reduction, it is likely to adopt a _________. A) International strategy B) Localization strategy C) Global Standardization strategy D) Transnational strategy

C) Global Standardization strategy

Interface is a leader in sustainable and innovative carpeting as evidenced by its Cool Carpet product; the world's first carbon-neutral floor covering. Its product is unique and has appealing customer attributes. If Interface raw material costs increased by 12% this year what would be the likely outcome? A) Interface would lower profit margins to absorb this cost increase. B) The company would launch an all-out effort to reduce other costs by 12%. C) Interface would pass a major portion of this increase along as a price increase to its customers. D) Interface would seek to find other materials with lower costs even if it meant losing the carbon-neutral label on the product.

C) Interface would pass a major portion of this increase along as a price increase to its customers.

A ________ is a group of interconnected companies and institutions in a specific industry, located near each other and otherwise linked by common characteristics. A) National institution B) National culture C) Regional cluster D) National competitive advantage

C) Regional cluster

Essentially, a successful integration strategy: A) gives customers more perceived value while exceeding their price expectation. B) allows a firm to make strategic trade-offs effectively. C) enables a firm to increase value creation while keeping costs in check. D) All of these.

D) All of these.

Under the "long tail" phenomenon the short head represents: A) The smallest segment of the market. B) Where customer demand levels off. C) The maturity stage of the industry life cycle. D) The largest segment of the market.

D) The largest segment of the market.

Foreign direct investment (FDI) is a firm's investment in _________ abroad. A) Political funds B) Outsourcing C) Emerging economies D) Value-chain activities

D) Value-chain activities