Management 428
Univo Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?
$200
Which of the following is a feature of a consolidated industry?
A consolidated industry has the potential to be highly profitable.
Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of more political than economic considerations?
Airbus was created by a number of European governments through direct subsidies in order to provide a countervailing power to Boeing.
In the financial year 2012, Apple's return on revenue was 26.70% and BlackBerry's return on revenue was 6.30%. This implies that:
Apple's return on revenue was higher than that of BlackBerry.
Which of the following statements with regard to determining firm performance is true?
External analysis will help understand the industry effects that determine a firm's performance.
ChatRoom is an instant messaging mobile application. Initially, users were not charged. However, after a period of six months, the users had to pay for a fee to use the upgraded version of the application with advanced features. Which of the following business models does this best illustrate?
Freemium
Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained?
GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.
Hovizen Inc. and Opexo Inc are two competitors in the consumer electronics market. The cost incurred by each company to manufacture laptops is $400 per unit. Although both the companies sell their laptops at the same price, Hovizen has a larger market share in the laptop industry. What does this imply?
Hovizen has been able to offer more perceived value than Opexo.
Which of the following questions does the values espoused by a company primarily answer?
How do we accomplish our goals?
Which of the following questions would a firm's business strategy ideally answer?
How to compete?
Which of the following is NOT a disadvantage of the balanced scorecard approach?
It fails to allow managers to prepare the company for future growth.
Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance?
It provides only limited guidance about which performance metrics to choose.
_____ describe the positive externality that one user of a product or service has on the value of that product or service for other users.
Network effects
Which of the following financial ratios typically indicates a company's efficiency in extending credit, as well as collecting debts?
Receivables turnover
According to the value chain analysis, which of the following is a support activity?
Research and development
_____ is best described as the behaviors and styles of executives that influence others to achieve an organization's vision and mission.
Strategic leadership
Which of the following groups will NOT be considered a company's internal stakeholder?
Suppliers
Which of the following statements about the five forces in the U.S. airline industry is true?
The combination of the competitive forces leads to intense rivalry among existing airlines.
If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication?
The company will tend to be more flexible when adapting to changing environments.
Which of the following statements will effectively guide a strategist?
The principles of strategic management can be applied universally to all organizations.
Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage?
The resource is costly to imitate.
Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?
They can demand better terms from their suppliers.
How do complements affect a primary product or service?
They increase the demand for the primary product.
Evaluating the data collected from environmental analysis, the corporate executives of F&S Pharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate?
Top-down strategic planning
While Cadzia Electronics Inc. incurs $450 to manufacture a laptop, its competitor, Virtue Electronics Inc., incurs $400. However, laptops of both the companies have been able to create the same value among customers. From the given scenario, it can be inferred that:
Virtue Electronics and Cadzia Electronics. share a differentiation parity.
Which of the following statements related to a firm's stakeholders is NOT true?
While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.
A firm's _____ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers.
activities
In the context of the VRIO framework, a resource is said to be valuable if it:
allows a firm to take advantage of an external opportunity.
In a perfectly competitive industry structure:
any competitive advantage that one firm has will be short-lived.
Costs being equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm:
can charge a premium price for its products and services.
There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is:
combining experience based learning and process innovation to move onto a steeper learning curve.
Strategic group mapping establishes that:
competitive rivalry is strongest between firms that are within the same strategic group.
Due to the trade-off between value creation and production cost, the productivity frontier function is:
concave, bulging outward
Given its unique strategic position as an upscale grocer offering natural, organic, and luxury food items, Whole Foods enjoyed a competitive advantage during the economic boom through early 2008. However, the company's financial performance deteriorated during the recession of 2008-2009 as:
consumers became more budget conscious
According to the Level-5 leadership pyramid, the Level 2 manager is a(n):
contributing team member.
Leather Love Inc. manufactures shoes. From procuring the leather to servicing the customer at the store, the cost incurred by the company per pair of shoes is estimated to be approximately $100. However, with each step in the value chain, the value of the product also increases. Thus, Leather Love can sell a pair of shoes costing $100 at $130. In this scenario, the difference between the value and the cost is best termed as the _____.
economic contribution
The sum of consumer surplus and producer surplus for a good or service equals the:
economic value created.
The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the _____.
efficient-market hypothesis
In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by:
eliminating an internal weakness to mitigate an external threat.
The metaphor of a black swan best applies to:
events that are considered highly unexpected and highly impactful when they do occur.
Motors Inc. is a vendor who supplies auto parts to an automobile manufacturing company. In return, Motors Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Motors Inc. is a(n) _____ for the automobile manufacturing company.
external stakeholder
Passion Coffee Inc. is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Just Coffee Inc., in contrast, is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Coffee Cult Inc. has found a balance between these two strategic groups by offering acceptable levels of customer service at a price slightly above that of Just Coffee. In this scenario, Coffee Cult is following a(n) _____.
integration strategy
An experience curve attempts to capture both:
learning effects and process improvements.
The greater the difference between value creation and cost, the:
less likely that a firm's strategic position will be competitive.
If a company has 25 million shares outstanding, and each share is traded at $400, the _____ is $10 billion.
market capitalization
An organization's _____ describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete.
mission
According to the upper-echelons theory, _____.
organizational outcomes reflect the values of the top management team.
Owners of coffee plantations in the country of Zatvia grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from each other. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Zatvia best illustrates a(n) _____ structure.
perfectly competitive
A firm that follows the differentiation strategy is protected from the threat of new entrants primarily due to its:
reputation for quality.
The black swan events in the past have demonstrated that:
stakeholders can affect or be affected by a firm's actions.
A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through _____.
strategy analysis
A consolidated industry turns into a fragmented industry when:
technological advances lead to industry convergence.
While most of Couture Inc.'s competitors were moving toward developing and emerging markets, Couture Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Couture Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing and it could not compete against the already established brands. In this scenario, the failure of Couture Inc. can be best attributed to _____.
time compression diseconomies
Using the _____, managers can see how competitive advantage flows from a firm's distinct set of activities.
value chain analysis
A company's vision primarily states:
what the company wants to accomplish ultimately.
Which of the following statements does the upper-echelons theory support?
Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.
Rite Shoes competes against the global leaders in the athletic shoes industry by developing and selling acceptable quality shoes at a lower price. This has been possible due to the company's large-scale production that reduces its manufacturing expenses. Which of the following generic business strategies is Rite Shoes applying in this scenario?
Cost-leadership strategy
In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm? Increasing productivity of the employees
Decreasing government interference in the target market
eliminating an internal weakness to mitigate an external threat.
Decreasing government interference in the target market
Which of the following statements is true of strategy?
Actions that allow a firm to address a competitive challenge are strategy.
_____ is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it.
Consumer surplus