MGMT 485 Strategy Exam
__________ markets are often described as volatile and innovative.
Fast-cycle
When analysts develop feasible projections of future events and how quickly they will occur based on observed changes and trends, they are engaged in:
Forecasting
The observation that China reached automotive production overcapacity in 2015, and has a glut of extra cars, is an aspect of the __________ segment of the general environment.
Global
__________ and __________ describe the situation in which organizations are direct competitors and are fully aware of the competition.
High market commonality; high resource similarity
When firms use core competencies to implement value-creating strategies, they are answering the "__________" question.
How
Which of the following is NOT a limitation directly relating to vertical integration?
Imitation of core technology by potential competitors
The larger the resources of a firm taking a competitive action compared with the resources of the other firms in the industry, the __________ the response will be of these other firms.
Slower
Which pair of firms has the LEAST resource similarity?
Small, family-owned Italian restaurant; Olive Garden
An analysis of society's attitudes and values would be conducted when studying the __________ segment of the general environment.
Sociocultural
Which of the following explains, in part, why rivalry among McDonald's, Wendy's, and Burger King is intense?
These companies are trying to find ways to differentiate their products.
The likelihood of entry of new competitors is affected by __________ and __________.
barriers to entry; the expected retaliation of current industry participants
All of the following are forces that create high rivalry within an industry EXCEPT:
fast industry growth.
Reverse engineering is characteristic of:
fast-cycle markets
For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent of scale would be if:
favorable locations are not available.
The problems associated with exporting include:
high transportation costs and the expense of tariffs
The transnational strategy is becoming increasingly necessary to compete in international markets for all of the following reasons EXCEPT:
it is easy to use.
All of the following are rationales for acquisitions EXCEPT:
positioning the firm for a tactical competitive move.
Backward integration occurs when a company:
produces its own inputs.
One popular approach to taking care of the physical environment is:
producing and selling additional green products.
All of the following are considered generic business-level strategies EXCEPT:
product diversification.
The typical risks of a cost leadership strategy include
production and distribution processes becoming obsolete.
An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must:
provide tax advice either in a different manner or provide a different kind of tax service than competitors
A business-level strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in:
specific product markets.
The competitive actions and responses in __________ markets are designed to seek large market shares, to gain customer loyalty through brand names, and to carefully control the firm's operations in order to consistently provide the same positive experience for customers.
standard-cycle
Suppliers are powerful when:
they offer a credible threat of forward integration.
A competitor analysis includes all of the following about competitors EXCEPT:
traditions.
To build social capital whereby resources such as knowledge are transferred across organizations requires __________ between partners.
trust
The capabilities used to create the sustainability/green initiatives at Walmart and Target are __________ but less likely to be __________.
valuable; rare
Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n):
vertical acquisition.
When a firm acquires its supplier, it is engaging in a(n):
vertical acquisition.
Wm. Wrigley Jr. Company once made only chewing gum. When Wrigley bought Life Savers (a line of candy mints) and Altoids (a line of breath mints) from Kraft, chewing gum then constituted less than 95 percent of revenues. Thus, Wrigley:
was moving away from its traditional single-business strategy toward a dominant strategy
Which of the following is NOT an activity used in the external environmental analysis process?
Decrypting
Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable market share. There is a widespread rumor that Mega-Toy, Inc., the market leader in the broad children's toy market, has decided to target educational toys. Which of the following statements is MOST likely true?
Bubble-Up's smaller size may make it more flexible in introducing innovations than Mega-Toy.
Which of the following industries can be LEAST described as a slow-cycle market?
Cell phone providers
The use of a differentiation strategy would likely be LEAST effective in which of the following markets?
Commodity goods
Which of the following is NOT a value-creating activity associated with the differentiation strategy?
Developing policies to ensure efficient hiring and retention to keep costs low and implement training to ensure high employee efficiency
The ability of Disney to maintain its competitive advantage through proprietary rights to its characters would be severely weakened if:
Disney's cartoon characters became widely perceived as old-fashioned and unappealing
Revenues for United Parcel Service (UPS) come from the following business segments: 60 percent from U.S. package delivery operations, 22 percent from international package delivery, and 18 percent from non-packaging operations. Which of the following best describes the corporate-level strategy of UPS?
Dominant business
Compared with downsizing, __________ has (have) a more positive effect on firm performance.
Downscoping
__________ is often used when the acquiring firm paid too high a premium to acquire the target firm.
Downsizing
Zara has pioneered "cheap chic" in clothing apparel. Zara offers current and desirable fashion goods at relatively low prices. To implement the strategy, Zara uses sophisticated designers and effective means of managing costs. These are all characteristics of which of the following business-level strategies?
Integrated cost leadership/differentiation
__________ are unsecured obligations that are not tied to specific assets for collateral.
Junk bonds
Which of the following is NOT a factor affecting sustainability of a competitive advantage?
Length of time the core competence has existed
Akamai Technologies is a dominant player in the content delivery network (CDN) market. Akamai is not very diversified (i.e., is dependent on the CDN market). If rival CDN providers such as Limelight Networks and Level 3 Communications lower their basic CDN service prices, which of the following would Akamai likely do?
Lower its prices
Which of the following is NOT a result of overdiversification?
Managers emphasize strategic controls rather than financial controls.
When diversification results in two companies, such as UPS and FedEx, simultaneously competing in the same product areas or geographic markets, this is called __________ competition.
Multipoint
Tools such as __________ help the firm focus on its core competencies as the source of its competitive advantages.
Outsourcing
__________are the source of a firm's __________, which are the source of the firm's __________.
Resources; capabilities; core competencies
Amazon has built capabilities around Internet technology and e-commerce to facilitate information exchanges with its customers in a cost-effective manner. This represents which of the following service dimension?
Richness
Which of the following would be an example of the application of the next major technological opportunity for organizations?
SpaceX's reusable space vehicle
The typical risks of a differentiation strategy do NOT include which of the following?
Suppliers of raw materials erode the firm's profit margin with price increases.
Which of the following is NOT a governance mechanism that may limit managerial tendencies to over diversify?
Surveillance technologies
The corporate research division of Siemens files, on average, 25 patents a day. The patents are a(n) __________ resource.
Technological
Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT:
Technology
A firm that earns less than 70 percent of revenue from its dominant business and has direct connections between its businesses is engaging in __________ diversification.
Unrelated
__________ is measured by a product's performance characteristics and by its attributes for which customers are willing to pay.
Value
All of the following are ethical sources of data for external analysis EXCEPT:
a competitor's confidential memos.
All of the following were traditional sources of competitive advantage EXCEPT:
a highly educated labor market
If intellectual property rights in an emerging economy are not well protected, the number of firms in the industry is rapidly growing, and the need for global integration is high, __________ is the preferred entry mode.
a joint venture or wholly owned subsidiary
All competitive advantages have:
a limited life.
Firms with core competencies that can be exploited across international markets are able to:
achieve synergies and produce high-quality goods at lower costs.
By examining the __________ of Southwest Airlines, one can identify the strategic themes around which it has developed its business strategy. These themes include limited passenger service, high aircraft utilization, and highly productive ground and gate crews
activity map
In Porter's model, if a country has both __________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors.
advanced; specialized
A licensing agreement:
allows a foreign firm to purchase the right to manufacture and sell a firm's products within a host country.
The term "leveraged" in leveraged buyouts refers to the:
amount of new debt incurred in buying the firm.
Research has shown that horizontal acquisition
are able to use activity sharing to successfully create economies of scope.
Moving into international markets is a particularly attractive strategy to firms whose domestic markets:
are limited in opportunities for growth.
Specialty Steel, Inc., needs a particular type of brick to line its kilns in order to safely achieve the high temperatures needed for the unusually strong steel it produces. The clay to make this brick is very rare, and only two brick plants in the United States make this type of brick. Specialty Steel has decided to buy one of these brick plants. This is an example of:
backward integration
When a firm is overly dependent on one or more products or markets, and the intensity of rivalry in that market is intense, the firm may wish to __________ by making an acquisition.
broaden its competitive scope
Internal analysis enables a firm to determine what it:
can do.
Because firms combine tangible and intangible resources to create capabilities:
capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital
Multimarket competition occurs when firms:
compete against each other in several geographic or product markets.
The more links among businesses, the more __________ is the level of diversification.
constrained
U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of:
consumer needs and desires, industry conditions, political and legal structures, and social norms vary by country.
In order to meet and exceed customers' expectations, firms must:
continuously improve, innovate, and upgrade their core competencies.
The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of:
core competencies that have become core rigidities.
When a firm initially becomes internationally diversified, its returns:
decrease.
Intensified rivalry within an industry results in:
decreased average profitability across the industry
Firms with few competitive resources are more likely to:
delay responding to competitive actions.
Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners:
designed a poison pill to discourage a takeover
A company pursuing the differentiation or focused differentiation strategy would tend to:
develop flexible systems that allow rapid response to customers' changing needs.
Failing to __________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated.
downsize
A firm's core competencies, integrated with an understanding of the results of studying the conditions in the external environment, should:
drive the selection of strategies.
Researchers have found that shareholders of acquired firms often:
earn above-average returns.
All of the following are ways that a good or service can be differentiated EXCEPT:
economies of scale and efficient operations
Firms that have selected a related diversification corporate-level strategy seek to exploit:
economies of scope between business units. de-integration.
Problems associated with acquisitions include all of the following EXCEPT:
excessive time spent on the due diligence process
A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of:
exporting.
Focus strategies are:
faced with more additional types of risks than are industry-wide strategies.
Successful unrelated diversification through restructuring is typically accomplished by:
focusing on mature, low-technology businesses.
The means of entry into international markets that offers the greatest control is:
greenfield ventures.
An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood." This individual is probably still racing horses because of:
high barriers to exit.
As the threat of corporate failure increases due to relatedness between a firm's business units, the firm may decide to:
increase its level of retained resources.
Managerial motives to seek diversification include a desire to:
increase their compensation.
Economies of scale refers to the fact that as the quantity of product produced in a given time period __________, the cost of manufacturing each unit __________.
increases; decreases
Whole-firm LBOs tend to result in all the following negative outcomes EXCEPT:
inefficient operations.
By linking companies with their suppliers, distributors, and customers, __________ provide a company with flexibility.
information networks
Quality affects competitive rivalry because a competitor whose products suffer from poor quality likely will __________ until __________.
initiate fewer competitive actions; the quality problems are corrected
Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its industry. Mighty Green:
is likely to raise the level of competitive rivalry in the industry.
Private synergy:
is not easy for competitors to understand and imitate.
An analysis of the activity map of a successful company such as Southwest Airlines emphasizes how:
it is harder for rivals to match a configuration of integrated activities than to imitate a single activity.
A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised:
judgment.
Without quality, the firm's products:
lack credibility among customers.
A fundamental reason for a country's development of advanced and specialized factors of production is often its:
lack of basic resources.
Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of:
large or extraordinary debt.
Afirm that is LEAST likely to launch competitive actions is one that has:
large size.
Most firms enter international markets sequentially, introducing their __________ first.
largest and strongest lines of business
Firms able to standardize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to:
learn how to continuously reduce costs while increasing the value of their products
The positive results associated with increasing international diversification have been shown to:
level off and become negative as diversification increases past some point
The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are __________ and __________.
liability of foreignness; regionalization
A company using a narrow target market in its business strategy is:
limiting the group of customer segments served.
A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT when the attack:
makes the firm's market position less defensible
Competitors are more likely to respond to strategic or tactical actions when they are taken by:
market leaders.
The Mars acquisition of the Wrigley assets was part of its related constrained diversification and added market share to the Mars/Wrigley integrated firm. It allowed Mars to gain __________ because it could sell its products above the market level or reduce its costs below the market level.
market power
Compared to intangible resources, tangible resources are __________ constrained because they are __________ to leverage.
more; harder
As the television industry has changed in the last few decades from just three major networks to a multiplicity of networks, one of the major aspects of business strategy for the newer networks is a(n) __________ than the traditional networks.
narrower target market
Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT
only top managers can perform the required due diligence.
A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive:
parity.
The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT:
political and economic institutions.
One capability that can be learned from failure is when to:
quit.
Associations such as the European Union, Organization of American States, and the North American Free Trade Agreement encourage:
regional strategies.
The Publicis Groupe uses the digital technology from its digital business to enhance the advertising products in its advertising group. This sharing of activities is characteristic of the __________ diversification strategy.
related constrained
Lobelia's Nursery and Garden Resource Center has long provided high-quality, typical types of seasonal bedding plants to customers in the Mobile, Alabama, metropolitan area. It has traditionally competed with the other plant nurseries within a 50-mile radius of Mobile. Recently, Lobelia has opened a branch in Fairfax, Virginia. Lobelia's research shows that most Fairfax nurseries have only one location. Lobelia can expect the local Fairfax nurseries to:
respond aggressively because of high market dependence.
Customer ratings of products they bought online is an example of:
richness.
The use of the Internet by Netflix to collect data on customer preferences is an example of:
scanning.
Operational relatedness is created by __________ of __________.
sharing; activities
The lowest level of diversification is the __________ level.
single-business
Market power is derived primarily from the:
size of a firm and its resources and capabilities.
Consumer goods producers are innovating in terms of healthy products. This type of incremental innovation is typical of:
standard-cycle markets.
Media content has moved from paper, tape, and film to a digital world based on Internet technology. From the perspective of the five forces model, which of the following forces is MOST relevant here?
substitute
All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT:
success is guaranteed as the firm implements its chosen international business-level strategy.
To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT be:
technologically innovative.
A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT:
the acquisition of Taylor should be primarily for defensive rather than strategic reasons.
All of the following statements are correct EXCEPT:
the majority of acquisitions increase long-term value for the acquiring firm.
The economic environment refers to:
the nature and direction of the economy in which a firm competes or may compete.
It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and:
the rapid development of the Internet's capabilities.
The basic types of operational economies through which firms seek value from economies of scope are:
the sharing of value chain activities and support functions.