mgmt 493

Best Cut Inc. sells cutlery by having salespeople set up appointments with potential customers and give them a sales pitch for the product. When a salesperson sells cutlery, he or she gets a predetermined percentage commission. This type of business model is called A. an agency. B. bundling. C. wholesale. D. a freemium.

A- an agency

New United Motor Manufacturing, Inc. (NUMMI), formed between General Motors (GM) and Toyota in 1984 was the first _____ in the U.S. automobile industry. A. joint venture B. non-equity alliance C. hostile takeover D. equity alliance

A- joint venture

Due to path dependence A. strategic decisions have long-term consequences. B. the occurrence of time compression diseconomies becomes rare. C. competitors can easily imitate or create core competencies quickly. D. past decisions of a firm do not affect its current situation.

A- strategic decisions have long term consequences

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.

Crystal Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Crystal Tech Inc. to increase its profitability by lowering its production costs. Thus, Crystal's competency in designing and manufacturing microprocessors will be considered a(n) _____ resource in the VRIO framework. A. valuable B. inexhaustible C. tangible D. perishable

A. - Valuable

A firm's stakeholder strategy primarily allows the firm to A. analyze and manage how various external and internal stakeholders interact to jointly create and trade value. B. effectively isolate its internal stakeholders (like shareholders and employees) from its external stakeholders (like customers and media). C. transfer the contributions external stakeholders make into benefits for the internal stakeholders. D. facilitate the development of a competitive relationship between its internal and external stakeholders.

A. - analyze and manage how various external and internal........

Return on risk capital primarily includes A. stock price appreciation plus dividends received over a specific period. B. consumer surplus plus firm profit. C. account receivables plus account payables. D. economic value created by a firm plus reservation price.

A. - stock price appreciation....

which of the following shows founder imprinting?

A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture persists for decades.

which of the following examples reflects the strongest vision?

At Fuentes Electronics, all employees are motivated to make the best microwave ovens on the market.

A candy company called SweetThings Inc. forms an agreement with another candy company called Reverie Inc. Through this agreement, SweetThings owns 30 percent of Reverie. However, Reverie does not own any part of SweetThings. This type of agreement is called a(n) A. non-equity alliance. B. equity alliance. C. joint venture. D. capital venture.

B- Equity alliance

Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos. A. organizational structure B. organizational culture C. organizational strategy D. organizational controls

B. - organizational culture

By introducing Vscan, a small, wireless ultrasound device, GE Healthcare (General Electric) was primarily trying to A. cater to the healthcare needs of the developed countries over developing countries. B. invade the healthcare market from the bottom up. C. leverage existing technologies to attack new markets. D. find a market for high-end, high-price diagnostic devices.

B.-invade the healthcare market from the bottom up.

In an industry, the rivalry among existing competitors is high when: A. fixed costs are low and marginal costs are high. B. exit barriers are low. C. incumbent firms are highly committed to the business. D. industry growth is high.

C- incumbent firms are highly committed to the business

Why does a functional structure rely on a flat organizational structure? A. The work in the organization is centrally coordinated by the CEO. B. It allows for a higher degree of specialization and domain expertise. C. It allows for efficient bottom-up and top-down communication. D. It allows for the implementation of a differentiation strategy.

C.- It allows for efficient bottom-up and top-down communication.

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly A. formalized. B. specialized. C. organic. D. mechanistic.

C.- organic

it is difficult even for Apple's managers to pinpoint the underlying cause of the company's phenomenal success. The term that best applies to this difficulty is known as

Causal ambiguity

which of the following provides an example of a firm in a red ocean?

Chique Apparel offered clothing at a low price but failed to differentiate its product as being exclusive.

Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.?

GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

( ) of receivables turnover imply more efficient management in collecting accounts receivable and shorter durations of interest free loans to customers.

Higher ratios

which of the following describes an airline that is most likely stuck in the middle?

Just Right airline offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices.

intangible assets add great value to a firm primarily because the firm's

Knowledge and culture take time to develop and are generally difficult to imitate.

The ( ) allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

PESTEL framework

how do firms benefit from vertical integration?

Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.

Which of the following firms is most prone to experiencing a diversification discount?

a company that pursues unrelated diversification

which of the following is the most accurate description of stakeholder impact analysis?

a decision tool with which managers can recognize the needs of different stakeholders

which of the following best illustrates forward vertical integration?

a firm that manufactures and sells car engines to major automobile companies launches its own line of cars.

which of the following best illustrates physical-asset specificity?

a machine solely designed to give a candy its trademarked shape

Which of the following is an element of good strategy?

a set of coherent actions to implement the firms guiding policy.

Which of the following is the best characterization of sociocultural forces?

a society's culture, norms, and values

A primary advantage of organizing economic activity within firms is the

ability to coordinate highly complex tasks to allow for specialized division of labor.

( ) suggests that the firm can be viewed as a nexus of legal contracts (loosely defined) between resource holders.

agency theory

In Eli Lilly's office of alliance management, the ( ) is a senior, corporate level executive responsible for high level support and oversight.

alliance champion

which of the following is the best definition of a complementary asset?

an asset a firm needs to complete the value chain from upstream innovation to downstream commercialization.

which of the following best illustrates a process innovation as opposed to product innovation?

an automobile company using computer aided design in its production

( ) are incidents that describe highly improbable but highly impactful events.

black swan events

which of the following do NOT serve as additional external governance mechanisms?

board of directors

organizational values help individuals make choices that are

both ethical and effective in advancing a company's goals.

the balanced scorecard can accommodate

both short-and long-term performance metrics

When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because

building downstream complementary assets can be expensive and time consuming

Which of the following is regarded as the most internal control of mechanisms?

business ethics

How does horizontal integration within an industry affect the surviving firms?

by strengthening the bargaining power of the surviving firms vis-a-vis suppliers and buyers

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage. Which of the following stages of the industry life cycle will they move to next? A. growth stage B. introduction stage C. maturity stage D. decline stage

c - maturity stage

a successfully implemented blue ocean strategy allows a firm to

charge a higher price than the cost leader in the industry

which of the following is a feature of the shakeout phase of the industry lifecycle?

competitive intensity within the industry increases.

Michael porter recommends that managers use the shared value creation framework to focus on

creating new regional clusters

When applying the five forces model, the first step should ideally be

defining the relevant industry

Which of the following is a feature of a monopolistically competitive industry?

differentiated products

In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should

divest the strategic business unit.

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?

each stage of the industry life cycle is dominated by a different customer group

what is a value gap?

economic value creation

PureRinse Inc. is a brand reputed for its wide variants of body wash that introduced its range of shampoos and skin moisturizers a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is PureRinse applying?

economies of scope

which of the following is an example of a black swan event?

election of president Reagan

which of the following modes of entering a foreign market allows for the lowest level of control?

exporting

which of the following statements is true of firms pursuing a closed innovation?

firms in the closed innovation model are extremely protective of their intellectual property

according to Alfred chandler in his book "strategy and structure" implementing a successful strategy depends on having an organizational structure to accommodate the formulated strategy and future growth and expansion.

flexible

which of the following types of organizations comparatively requires the lowest levels of investment and control?

franchising

strategies developed at the departmental level, such as the accounting, human resources, production, and marketing departments within a strategic business unit are referred to as ( ) strategies.

functional

A functional structure is recommended when a firm

has a low level of diversification.

the Global standardization strategy arises out of the combination of

high pressure for cost reductions and low pressure for local responsiveness.

a greater cultural distance between two trading countries

increases the liability of foreignness

the board of directors of a public stock company consists of

individuals who formally represent the firms shareholders and oversee the work of executives.

which of the following drivers simultaneously increases value while lowering cost?

innovation

when a firm pursues a(n), ( ), it sells the same products or services in both domestic and foreign markets.

international strategy

When a firm is successful at pursuing a blue ocean strategy,

investments in differentiation are complements.

what best describes transferability of investor ownership in a public stock company?

investors are allowed to trade shares of stocks.

( ) are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

isolating mechanisms

which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?

it allows a cost leader to upgrade core competencies in manufacturing and logistics.

why should managers using the M-form organizational structure to support a related diversification strategy ideally concentrate decision making organization?

it allows a high level of integration

which of the following statements is true of an international strategy?

it enables firms to leverage their home based core competencies in foreign markets.

which of the following is a benefit of the transnational strategy?

it facilitates global learning and harnesses economies of location

What must a cost-leadership strategy accomplish to be successful?

it must reduce the firm's cost below that of its competitors while offering adequate value.

Jorge is part of a sales team. He effectively coordinates his tasks with others in the team and willingly contributes to their efforts in achieving the team's objectives. Thus, Jorge is in _____ of the Level-5 leadership pyramid.

level 2

according to the level 5 leadership pyramid, a manager turns into an executive who is capable of building lasting greatness into the organization through a combination of willpower and humility when he or she reaches ...

level 5

five years ago, palomino airline was able to get a strong foothold in the airline industry by hiring a few pilots and crew and renting two airplanes, which flew routes between Denver, Omaha, Pierre, Cheyenne, and Helena. which of the following summarizes the above factors that enable Palomino to get started?

low entry barriers

According to value-chain analysis, which of the following is a primary activity?

marketing and sales

( ) is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest cost position that is achievable through economies of scale.

minimum efficient scale

The ( ) structure consists of several distinct strategic business units (SBUs), each with its own profit and loss responsibility.

multi divisional

Which of the following global strategies best matches with a multidivisional structure?

multi domestic

a trend observed during the globalization 3.0 stage involves

multinational companies organizing as global collaboration networks.

which type of industry structure is often analyzed using game theory?

oligopolistic

which of the following statements about strategy is not true?

operational effectiveness and competitive benchmarking should be treated as strategy

( ) organizations have a low degree of specialization and formalization as well as a flat organizational structure.

organic

According to the level-5 leadership pyramid, a manager at level 3 has acquired the ability to,

organize resources effectively to accomplish predetermined goals

which of the following is typically an economic responsibility of a firm?

paying adequate returns to the firm's stockholders on the capital invested by them.

which of the following is an unintended side effect of a high degree of specialization in an organization?

reduced employee satisfaction due to repetition of tasks.

Which of the following is a top-down approach to the development of strategy that involves asking "what if" questions to anticipate plausible futures?

scenario planning

which of the following characteristics of a public stock company deals with principals and agents?

separation of legal ownership and management control

which of the following statements accurately describes social entrepreneurs?

social entrepreneurs are those who consider financial, ecological and social metrics to evaluate their firm's performance

A ( ) is best described as a stand-alone division of a larger conglomerate, with its own profit and loss responsibility.

strategic business unit

which of the following business models has been traditionally used by the magazine and newspaper industry?

subscription based

Lush Roses is a chain of premium hotels around the globe that charges higher prices for its rooms and suites when compared to the average industry standards. Yet, the hotel enjoys the largest market share in the industry. This is mainly due its highly responsive staff that has a strong commitment toward achieving a 100 percent guest satisfaction. In this scenario, which of the following is the key value driver?

superior customer service

in which of the following situations is the power of suppliers high in an industry?

suppliers' industry is more concentrated than the industry it sells to.

Which of the following best illustrates a strategic business unit? (SBU)

the consumer electronics division of a large company that also manufactures automobiles, apparel, and processed food.

which of the following is an example of an external transaction cost?

the cost of searching for a contract manufacturer

which of the following reasons motivated Facebook to acquire Instagram, a photo and video sharing social media site for $1 billion in 2012?

the desire to gain a new capability

Which of the following is not an accurate expression of the economic value created per unit of a product sold?

the difference between the price charged and the firms cost

which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?

the framework does not explain everything about changes in industries.

which of the following statements best describes local responsiveness?

the need to tailor product and service offerings to fit native consumer preferences and host country requirements.

An intended strategy is best described as

the outcome of a rational and structured top-down strategic plan

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

the overall industry profitability will increase

which of the following best describes a strategic trade-off?

the tension between value creation and the pressure to keep cost in check.

which of the following factors is the most important determinant of economic distance?

the wealth and per capita income of consumers

which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?

there is more strategic variety in the growth stage when compared to the introduction stage.

which of the following statements is true of shareholders in a public stock company?

they are granted a charter of incorporation by the state and legally own company stock

which of the following is a customer oriented vision?

to enable people throughout the globe to identify their capabilities.

which of the following is true of the process of organizing for competitive advantage?

to maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes

which of the following is not a reason why firms enter alliances?

to replace competitive advantage with competitive parity.

why is it easier for new entrants to involve in radical innovations when compared to incumbent firms?

unlike incumbent firms, new entrants do not have formal organizational structures and processes.

the cost of capital to create a product is a fixed cost because it is

unaffected by consumer demand

in the freemium business model, the

users are not charged for the basic features of a product or service, but the user must pay for premium advanced features or add-ons.

a blue ocean strategy tends to be successful only if a firm is able to rely on a ( ) that allows it to reconcile trade-offs.

value innovation

the most important yet least visible element of organizational culture is

values

which of the following situations will have greater effects from economies of scale than from learning effects?

when mass manufacturing pens

which of the following statements accurately brings out the difference between closed innovation and open innovation?

while open innovation focuses on building an effective business model to commercialize R&D, closed innovation focuses on being first to market.

is best described as a measure of how effectively capital is being used by a firm to generate revenue.

working capital turnover

As a result of Globalization, the

world's market economies are becoming more integrated

at a certain output level, the per-unit cost incurred by a firm to manufacture a product is $5. Other factors remaining constant, what will be the new per-unit cost if the cumulative output is doubled, and the firm is able to achieve an 80 percent learning curve?

$4

Shield Autos Inc. has newly launched a luxury car into the European market. Which of the following would most likely NOT be a complement to the car? A. A premium car manufactured and sold by Mova Autos Inc., a rival company B. A bank that insures cars against theft and accidents C. A car service station managed and run by Shield Autos Inc. D. A stereo system that can be used as a GPS system in cars

A. A premium car manufactured and sold by Mova Autos Inc., a rival company

While Burger Cult Inc. operates in a monopolistically competitive industry, Citizen Telecom Inc. operates in a monopoly. Keeping this information in mind, which of the following statements is most likely true? A. The threat of new entrants will be higher for Burger Cult Inc. than Citizen Telecom Inc. B. Burger Cult Inc. will have more pricing power than Citizen Telecom Inc. C. Burger Cult Inc. will have more profit potential than Citizen Telecom Inc. D. The number of buyers will be limited for both Burger Cult Inc. and Citizen Telecom Inc.

A. The threat of new entrants will be higher for Burger Cult Inc. than Citizen Telecom Inc.

Industry convergence is a process whereby: A. firms within the same industry start to satisfy different customer needs. B. formerly unrelated industries begin to satisfy the same customer need. C. excess capacity within an industry is reduced through horizontal mergers. D. firms within an industry start to target a narrow market segment.

A. firms within the same industry start to satisfy different customer needs.

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because A. the U.S. population was growing slowly and becoming more health conscious. B. its strategic position in the U.S. market was well protected through high entry barriers. C. this would help the company gain access to large cocoa plantations in China. D. Hershey's main strategic focus was on product and market diversification and not on the domestic market.

A. the U.S. population was growing slowly and becoming more health conscious.

Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A. a multidomestic strategy B. an international strategy C. a global-standardization strategy D. a one-product strategy

A.- a multi domestic strategy

Why do shareholders of public companies need to appoint a board of directors to represent their interests? A. because of the separation of ownership and control B. because employees of a company cannot be shareholders C. because the board of directors itself is made up of shareholders D. because they want tighter control over day-to-day operations of a company

A.- because of the separation of ownership and control

The final step in industry analysis is to: A. draw a strategic group map. B. identify the underlying drivers of the five forces. C. identify the key players in each of the five forces. D. define the relevant industry.

A.- draw a strategic group map

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

Chao is in an interview for a sales job that requires no experience. He is trying to portray himself as a highly enthusiastic, energetic person with high-level communication and interpersonal skills. The interviewer is convinced that Chao should be hired as a salesperson in the company. However, in his resume, Chao had not mentioned his previous work experience as he was fired from that job because he used illegal drugs. Which of the following does this scenario best illustrate? A. information asymmetry B. principal-agent problem C. experience-curve effect D. learning-curve effect

A.- information asymmetry

Hitoro Inc. developed a superior touch screen technology for tablet computers that enabled multiple users to operate the screen at the same time. The technology was leased to Revox Inc., a consumer electronics company, for five years. Which of the following alternatives to integration does this best illustrate? A. licensing B. franchising C. crowdsourcing D. bootlegging

A.- licensing

If a firm pursues only a differentiation strategy, it is most likely a(n) _____ organization. A. organic B. mechanistic C. integrated D. centralized

A.- organic

The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well-prepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing _____ as the approach to the development of strategy. A. scenario planning B. top-down strategic planning C. reverse engineering D. pattern recognition

A.- scenario planning

Earlier, the travel industry was controlled by a few large travel companies that booked holidays, air tickets, bus tickets, and hotels for their customers. However, with the emergence of the Internet, smaller travel agencies started mushrooming in the industry and customers started making their own reservations. Which of the following can be inferred from this information? A. The travel industry changed from a consolidated structure to a fragmented one. B. The pricing power of the incumbent firms in the travel industry has increased. C. The bargaining power of buyers in the travel industry has decreased. D. The structure of the travel industry changed from monopolistic competition to an oligopolistic one.

A.- the travel industry changed from a consolidated structure to a fragmented one.

PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma? A. PureSource Pharma will lower its costs through economies of scale. B. PureSource Pharma will diminish its economic value creation. C. PureSource Pharma will increase its cost of distribution. D. PureSource Pharma will reduce the size of its sales force.

A.- will lower its costs through economies of scale.

The ( ) is a model that links strategy analysis, strategy formulation, and strategy implementation, which together helps managers plan and implement a strategy that can improve performance and result in competitive advantage.

AFI strategy framework

While the industry for 3-D televisions is in the introduction stage of the industry life cycle, the CRT (cathode ray tube) television industry is in its decline stage. Which of the following statements will be true in this scenario? A. The market size for 3-D televisions is extremely large, while the market size for CRT televisions is moderate. B. While product innovation will be at its maximum for the 3-D television industry, process innovation will be more crucial for the CRT television industry. C. The focus in the 3-D television industry will be on cost-leadership, whereas in the CRT television industry, the focus will be on differentiation. D. While the strategic objective of the CRT television industry will be achieving market acceptance, the strategic objective of the 3-D television industry will be pursuing a harvest strategy.

B

EasyOpen Inc. gained a patent for an electronic corkscrew. Soon the company made a huge profit on this device. Recently, however, other firms have produced electronic corkscrews. As a result, EasyOpen lost its competitive advantage. Which of the following would most likely be the reason for this development? A. EasyOpen failed to renew the patent after 10 years. B. EasyOpen's patent expired after 20 years. C. EasyOpen failed to copyright the corkscrew. D. EasyOpen's copyright expired after 30 years.

B- expired after 20 years

Trung has been an employee with PureEnergy Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Trung has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far? A. Level 5 B. Level 4 C. Level 3 D. Level 2

B- level 4

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. open innovation model. C. razor-razor-blade business model. D. experience-curve effects.

B- open innovation model

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.

Silver Screen Cinemas Inc. and Digi Now Inc. are two companies that own and run movie theaters in malls and other commercial areas. While Silver Screen Cinemas Inc. pursues a cost-leadership strategy, Digi Now Inc. adopts a differentiation strategy. Which of the following statements is most likely true of this scenario? A. Silver Screen Cinemas will charge a premium price for its customers, while Digi Now will implement everyday low pricing. B. Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little. C. Digi Now will keep its customer service at an acceptable level, while Silver Screen Cinemas will provide superior customer service. D. Silver Screen Cinemas and Digi Now will use a similar approach to create value for customers by attempting to offer everything to everybody.

B. - Digi Now and Silver Screen Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.

The amount of xylene that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment, and considered a legal offense. Consequently, CW Paints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures xylene-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is CW Paints Corp. primarily compromising in this scenario? A. legal responsibilities toward the government B. economic responsibilities toward its shareholders C. philanthropic responsibilities toward the local community D. ethical responsibilities toward the society

B. economic responsibilities toward its shareholders

Osion Electronics Inc. incurs a cost of $350 to produce one unit of a cell phone. The company's management has priced the product at $600 in the market. Considering the technological advancement of the cell phone, customers perceive its value to be around $800. What is the economic value created in this scenario? A. $350 B. $450 C. $800 D. $200

B.- $450

Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company? A. The company's competitive advantage lies in leveraging its home-based core competencies in foreign markets. B. Each country unit owned by the company will tend to be highly autonomous. C. Majority of the value creation for the company will take place in its home country. D. The company will not face any operational inefficiency as the key business functions do not have to be duplicated.

B.- Each country unit owned by the company will tend to be highly autonomous.

StickOn Inc. is an adhesive manufacturer. After a slight dip in production numbers, it forms a team to find a quick solution to this problem, at least for the shorter term. This scenario best exemplifies A. exploration. B. exploitation. C. co-opetition. D. competition.

B.- Exploitation

Trung has been an employee with PureEnergy Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Trung has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far? A. Level 5 B. Level 4 C. Level 3 D. Level 2

B.- Level 4

At Opnic Corp., a cross-functional team is formed to work on a project for a new client. The team consists of Darius and four other members. At most of the team's presentations to senior management, Darius takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Darius is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Darius did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Opnic Corp. is a typical consequence of A. moral hazard. B. adverse selection. C. shared value creation. D. corporate governance.

B.- adverse selection

FTZ Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, television and computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as A. competition. B. co-opetition. C. exploitation. D. exploration.

B.- co-opetition

Intel's Celeron chip and Atom chip are initiatives to A. introduce a new product in a new market to extend its leadership. B. guard the company against disruptive innovation by protecting the low end of the market. C. stall its own disruption strategies and wait for its rivals to introduce disruptive forces. D. target that section of the market that is not particularly price sensitive.

B.- guard the company against disruptive innovation by protecting the low end of the market.

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate? A. diseconomies of scale B. principal-agent problem C. experience-curve effects D. information asymmetries

B.- principal agent problem

BM Goods Inc. is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate? A. process diversification B. product diversification C. geographic diversification D. market diversification

B.- product diversification

A firm is said to gain a competitive advantage when it can A. exceed its own previous performances. B. provide products similar to its competitors, but at lower prices. C. perform at the same level as that of its competitors. D. minimize the difference between value creation and cost.

B.- provide products similar to its competitors but at lower prices

According to the perspective of shareholder capitalism, A. shareholders in public stock companies are restricted from buying shares of two competing companies. B. shareholders in public stock companies have the most legitimate claim on profits. C. shareholders in public stock companies have significant decision-making power. D. shareholders in public stock companies have unlimited financial liability.

B.- shareholders in public stock companies have the most legitimate claim on profits.

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 Boston Consulting Group (BCG) growth-share matrix, the smartphone division of True Electra will be categorized under A. question marks. B. stars. C. cash cows. D. dogs.

B.- stars

Virtue Products Inc., a large conglomerate, procures a few component parts from external suppliers and also manufactures some of the key raw materials in its own subsidiaries. This apart, the company does not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to distribute its products. In this scenario, which of the following alternatives to vertical integration is Virtue Products applying? A. concentric integration B. taper integration C. horizontal integration D. conglomerate integration

B.- taper integration

Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Peerless Inc. find it most difficult to exit? A. the management consultancy industry in which the company's fixed costs are low B. the steel industry in which the company has obligations like severance pay toward employees C. the corporate training industry in which the company's commitments are mostly short-term D. the e-commerce industry where the company has no long-term contractual agreements with suppliers

B.- the steel industry in which ....

The telecom industry in the country of New Taria is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the telecom industry, the A. threat of substitutes is most likely high. B. threat of new entrants is most likely low. C. bargaining power of buyers is most likely low. D. entry barriers are most likely nonexistent.

B.- threat of new entrants is most likely low

A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few, if any, linkages among its businesses. A. related-constrained strategy B. unrelated diversification strategy C. differentiation strategy D. dominant-business strategy

B.- unrelated diversification strategy

A firm's resource is most likely to be an internal strength and a core competency when the resource is A. valuable but common. B. valuable and costly to imitate. C. easily accessible and mobile. D. easy to substitute.

B.- valuable and costly to imitate

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance? A. Choosing a distinct but different strategic position in the industry B. Working toward increasing the difference between value creation and cost C. Trying to be everything to everybody by combining different competitive strategies D. Focusing on creating value for customers rather than destroying rivals

C

For a strategist, which of the following is NOT an implication of effective strategic management? A. The difference between a firm's success and failure lies in its strategy. B. The principles of strategic management can be applied universally to all organizations. C. A firm's performance is determined by a set of independent factors, which includes firm and industry effects. D. It is necessary to maintain an awareness of key stakeholders and how they can affect or be affected by managerial actions.

C

Globe Source Inc. is a consumer electronics company that follows an open innovation model. Which of the following can be concluded about this firm? A. The firm will suffer from the not-invented-here syndrome. B. The firm is less likely to commercialize researches from other firms. C. The firm will buy others' intellectual property whenever it advances its own business model. D. The firm will equate R&D with a high likelihood of benefitting from first-mover advantages.

C - the firm will buy others intellectual property.....

In an economic context, strategy for producers is primarily about A. distributing the economic value created equally between consumers and themselves. B. reducing the difference between consumer's willingness to pay for a product and the cost to produce it. C. capturing the economic value created as much as possible. D. lowering producer surplus and increasing consumer surplus.

C- capturing the economic value .....

PepsiCo operates in many countries and sells a wide variety of aerated drinks, other beverages, different types of chips, and Quaker Oats goods to achieve continuous growth. From this data, we can conclude that PepsiCo has been involved in A. strategic outsourcing. B. lean manufacturing. C. product-market diversification. D. process diversification.

C- product market diversification

Apple paid $3 billion dollars to acquire Beats. This is the largest acquisition in Apple's history. Which of the following provides a reason for this acquisition? A. the movement in the music industry from renting works to buying works to own B. the need for Apple to create an image as a leader in technical audio research C. the change in content delivery from ownership via downloads to streaming on demand D. the demand for the extremely high-quality headphones that Beat produced

C- the change in content delivery..

When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because most of its competitors had already been in the laptop market for five years. Blue Tech Inc.'s models were inferior to the ones in the market. In this scenario, Blue Tech Inc.'s failure can be best attributed to A. causal ambiguity. B. diseconomies of scope and scale. C. time compression diseconomies. D. social complexity.

C- time compression diseconomies

The CEO of Juliet Computers was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable computers that could be bought by low-income households. Which of the following does this example demonstrate? A. dominant strategic planning B. Level-5 leadership pyramid C. upper-echelons theory D. scenario planning

C- upper echelons theory

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies? A. organic B. simple C. ambidextrous D. mechanistic

C. - ambidextrous

FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with each other. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as? A. takeover B. buyout C. co-opetition D. acquisition

C. - co-opetition

Green Rabbit Products Inc. (GRP) is a large conglomerate. The human resources department of its telecom division has decided to reduce its employee turnover by encouraging internal promotions. Which of the following strategies does this scenario best illustrate? A. corporate strategy B. business strategy C. functional strategy D. grand strategy

C. - functional strategy

When GD Inc. declared a dividend of $20,000,000, its market value increased from $8 billion to $8.5 billion. However, it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million. Thus, this $200 million is referred to as GD Inc.'s A. producer surplus. B. consumer surplus. C. opportunity cost. D. social cost.

C. - opportunity cost

How is the early majority section of consumers different from the late majority section? A. While the early majority makes up the mass market, the late majority is the smallest market segment. B. The late majority enters the market in the decline stage, whereas the early majority enters the market during the maturity stage. C. Although the early majority is confident in their ability to master a new technology, the late majority is not. D. While the late majority prefers buying from unknown new ventures, the early majority relies only on well-established brands.

C.- Although the early majority is confident in their ability to master a new technology, the late majority is not.

How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure? A. In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile. B. In perfect competition, it is extremely difficult to replicate the resource bundles of a firm, whereas in the resource-based model, it is extremely easy to imitate them. C. In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry. D. In the resource-based model, only physical assets of a firm are considered as resources, whereas in perfect competition, a firm's capabilities and competencies are also considered as resources.

C.- In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry.

GE's board has only one inside director, Jeffrey Immelt, GE's CEO, who also acts as chairman of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE? A. The CEO is likely to be more responsible because he is setting his own performance targets. B. The CEO might be able to influence the board through setting the meeting agendas. C. The CEO possesses invaluable inside information that can help chair the board effectively. D. The CEO will suggest board appointees who are friendly toward him or her.

C.- The CEO possesses invaluable.....

Trust Machines Inc. is a company that manufactures and markets consumer electronics. The unique microprocessors developed by the company contribute to its high resource immobility. According to the resource-based view of competitive advantage, which of the following is an implication of this situation? A. The competitive advantage of Trust Machines Inc. will soon be lost. B. The resource heterogeneity of Trust Machines Inc. is low within the industry. C. The resources of Trust Machines Inc. are difficult to replicate or imitate. D. The environment in which Trust Machines Inc. operates is closest to perfect competition.

C.- The resources of Trust Machines Inc. are difficult to replicate or imitate.

Fakhir is a board member at Garfield Motors Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Blixt Electronics. According to this scenario, Fakhir A. cannot serve on the board of any other organization. B. is more likely than Ernest to take care of stockholder interests. C. is an inside director of Garfield Motors. D. can use information from board meetings to trade stocks of Garfield Motors.

C.- an inside director of Garfield motors

Jade Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Jade Mobiles Inc. most likely pursue? A. international strategy B. multidomestic strategy C. global-standardization strategy D. localization strategy

C.- global standardization strategy

As the legal owners, _____ have the most legitimate claim on a company's profits. A. creditors B. employees C. shareholders D. board members

C.- shareholders

Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services? A. The competition in the industry is insignificant. B. The number of buyers in the industry is small. C. The firms can differentiate their product offerings. D. The entry barriers in the industry are extremely high.

C.- the firms can differentiate their product offerings

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.- valued at a Billion or more

Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n) A. joint venture. B. acquisition. C. non-equity alliance. D. greenfield venture.

C.-non-equality alliance

Georgia Ray is the founder of the departmental stores chain, Ether Inc. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and manufactured from recycled material. Also, her company purchases handicrafts from nonprofit organizations supporting the aged. Georgia's belief is that her company should be able to support the community at large. Which of the following terms best describes Georgia Ray? A. headhunter B. category captain C. social entrepreneur D. trade creditor

C.-social entrepreneur

Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company? A. Rosa can legally sell shares of Hoptin in the stock market. B. John is a shareholder of Hoptin but does not have any managerial duties. C. Kevin, an employee at Hoptin, is not responsible for any losses that Hoptin incurs. D. Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.

D

The critics of top-down strategic planning and scenario planning argue that: A. the strategies developed through these approaches are primarily based on an inspirational vision and not on hard data. B. these approaches do not believe that we can predict the future from the past. C. the development of strategies through these approaches is highly dependent on experience of front-line employees. D. these approaches do not allow for the necessary strategic thinking.

D- do not allow for necessary strategic thinking ....

The four-step innovation process ends with A. idea generation. B. invention. C. idea testing. D. imitation.

D- imitation

Nicki paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario? A. $900 B. $1,100 C. $550 D. $200

D. - $200

Juanita, a manager at a multinational organization, is trying to carefully scan and link the firm's internal environment to its external environment. The insights from this analysis will allow her to effectively leverage the company's internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats. In this scenario, which of the following managerial tools is Juanita employing? A. Blake Mouton managerial grid B. Ansoff's matrix C. BCG analysis D. SWOT analysis

D. - SWOT analysis

A firm's economic responsibilities are primarily directed toward A. minimizing shareholders' wealth. B. acting as a good corporate citizen. C. doing what is right, just, and fair. D. gaining and sustaining competitive advantage.

D. - gaining and sustaining competitive advantage

United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of A. food processed in Fernsland. B. movies and TV shows produced in United Nerumbia. C. iron ore extracted in Fernsland. D. luxury items manufactured in United Nerumbia.

D. - luxury items....

Larry's Auto Repair is a small business in which the founder, Larry, makes most of the important strategic decisions as well as runs the day-to-day operations. He has three mechanics and a financial secretary working for him. Based on this scenario, Larry's Auto Repair has a(n) _____ structure. A. ambidextrous B. organic C. functional D. simple

D. - simple

When parts of a firm's intended strategy fall by the wayside due to unpredictable events, it turns into a(n) _____ strategy. A. tactical B. dominant C. emergent D. unrealized

D. - unrealized

Neville and Andre are customer care employees at JPN Care. In between calls, Neville and Andre spend time on Facebook and YouTube. The relaxed guidelines at JPN allow them to do that. However, sometimes, they knowingly avoid answering calls or keep customers on hold, while they check their social networking accounts. Such behavior A. is neither unlawful nor unethical; hence, Neville and Andre cannot be reprimanded. B. typically exemplifies the agency problem of adverse selection. C. goes against the principles of shareholder capitalism. D. can be stopped by implementing performance incentives and strict control mechanisms.

D. can be stopped by ....

Dandelions Max is a consumer electronics company. It has acquired an edge over its competitors through its ability to provide breakthrough technology at the lowest price in the market. This advantage of Dandelions Max best exemplifies a A. markup. B. resource flow. C. capital gain. D. core competency.

D. core competency

De Bruyne Inc., a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company and includes the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to De Bruyne's board to achieve board independence? A. 1 B. 3 C. 5 D. 7

D.- 7

While the industry for e-book readers is in its growth stage, the industry for landline telephones is in the decline stage of the industry life cycle. Which of the following can be inferred from this? A. While firms in the e-book reader industry will focus on pursuing a harvest strategy, firms in the landline telephone industry will focus on product innovations. B. The e-book reader industry is at a more advanced stage than the landline industry of the industry life cycle. C. While firms in the e-book reader industry will attract customers categorized under late majority, firms in the landline telephone industry will attract the early majority customers. D. The number of competitors in the e-book reader industry will be larger when compared to the landline telephone industry.

D.- The number of competitors in the e-book reader industry will be larger when compared to the landline telephone industry.

Red Empire Inc., a large multinational company owned by two partners, is active in the petroleum, capital market, chemicals, steel, beverages, hospitality, airlines, education, automobiles, and consumer electronics industries. The company has multiple brands and a large product portfolio under its banner. Which of the following terms would best describe this company? A. a flagship brand B. a single-business firm C. a dominant-business firm D. a conglomerate

D.- a conglomerate

Opula Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Opula Inc. most likely pursue? A. a multidomestic strategy B. a transnational strategy C. a global-standardization strategy D. an international strategy

D.- an international strategy

Vehmo Inc. is an automobile company whose core competency lies in manufacturing petrol- and diesel-based cars. The company realizes that more of its potential customers are switching to electric cars. The R&D department of the company acquires competencies in developing electric cars and launches its first hybrid car. In this scenario, Vehmo is primarily A. leveraging new core competencies to improve current market position. B. redeploying existing core competencies to compete in future markets. C. unlearning existing core competencies to create and compete in markets of the future. D. building new core competencies to protect and extend current market position.

D.- building new core competencies to protect and extend current market position.

T & R Autos Inc. is a large conglomerate that operates in 12 different countries. The corporate executives at the headquarters have decided that the company's objective 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

Due to political instability in the country of United Mapa, the strategic leaders at the headquarters of FT Supplies Inc. have decided to divest the company's business from the foreign market in United Mapa. This decision would be applicable to all the business units of FT Supplies Inc. operating in United Mapa. Thus, this is a A. business strategy. B. divisional strategy. C. functional strategy. D. corporate strategy.

D.- corporate strategy

At the time when Kevin decided to purchase a tablet computer, the product had just become accessible to the mass market. He purchased the tablet only after he was completely convinced that the benefits it would offer him would far exceed its price. Also, he waited for his friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Kevin best represent? A. laggards B. technology enthusiasts C. early adopters D. early majority

D.- early majority

To implement specific business strategies, general managers of strategic business units rely on: A. external stakeholders. B. corporate executives. C. strategic leaders. D. functional managers.

D.- functional managers

EveningStar Inc. and The Luxur Group have together established The Luxur Star Group of hotels. EveningStar owns 49 percent and The Luxur Group has a 51 percent 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 alliance type does this scenario best illustrate? A. sole proprietorship B. non-equity alliance C. equity alliance D. joint venture

D.- joint venture

DigiGames Inc. established itself as the foremost producer of computer games. However, as the market for these games moved from laptop computers to cell phones based on cloud applications, DigiGames failed to adapt its games enough to this new environment. As result, the firm soon lost its competitive advantage. Which of the following best describes this scenario? A. movement from core rigidity to core competency B. movement from core rigidity to founder imprinting C. movement from founder imprinting to core competency D. movement from core competency to core rigidity

D.- movement from core competency to core rigidity

SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to A. reduce its geographical distance from the other countries. B. increase its administrative distance from the other countries. C. increase its economic distance from the other countries. D. reduce its cultural distance from the other countries.

D.- reduce its cultural distance from other countries

When a firm pursues a harvest strategy, it A. exits the industry by bankruptcy or liquidation. B. invests significant resources in product innovations. C. buys out its rivals to strengthen its strategic position. D. reduces investments in product support.

D.- reduces investments in product support

If a company wants to gain a competitive advantage in a highly competitive industry, it should ideally A. execute an integrated cost-leadership and differentiation position. B. copy the strategies of other firms through competitive benchmarking. C. provide goods or services similar to its competitors at higher prices. D. stake out a unique position within the industry.

D.- stake out a unique position within the industry.

Handy Pro, Inc. is a company that manufactures electric tools like drills, screwdrivers, and saws. Which of the following best illustrates a product-oriented vision for Handy Pro? A. to make people's lives simple and easy B. to allow everyone to have the luxury of electric tool technology C. to help people save time and energy spent using manual tools D. to be the pioneering manufacturer of electric tools

D.- to be the pioneering manufacturer of electric tools

which of the following is an accurate statement about the relationship between firm effects and industry effects?

Firm effects deal with a managers actions; industry effects deal with external circumstances

which of the following statements is true of a multidomestic strategy?

Firms frequently use a multi domestic strategy when entering host countries with large and/or idiosyncratic local markets.

When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?

How do we reduce the economic value created?

which of the following best explains why IBM has been able to maintain its competitive advantage?

IBM successfully transformed itself multiple times in the data information industry over a period of more than 100 years

which of the following scenarios best illustrates a good stakeholder strategy?

PA corp. distributes only 70 percent of its annual profit after taxes to shareholders, while the remaining is distributed among employees and the local community and invested for further research.

FindFor Inc. is an e-commerce retail firm that sells a variety of merchandise online. Through services like cash on delivery, easy return, and online tracking, the company has created more customer value than its competitors (brick-and-mortar businesses) at the same price. Also, the company's costs are substantially low due to minimal investment in operation and administration. In this scenario, FindFor Inc. has most likely been able to provide superior value and cost control through _____.

Strategic positioning

Value drivers contribute to a firm's competitive advantage only if

the increase in value creation exceeds the increase in costs.

what is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change?

The firm's culture can turn from a core competency into a core rigidity.

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

The value(V) the consumer attaches to the dress

Which of the following statements about product-oriented visions is true?

They tend to force managers to take a myopic view of the landscape.

Which of the following is NOT a condition that can help a firm sustain its competitive advantage?

When past decisions act as constraints for the current dynamic capabilities

Jennifer received a tip from a close friend who is an executive manager of a publicly traded company called MegaRed Inc. The manager received some inside information about how to trade MegaRed stock to get a huge profit. He shared this information with his Jennifer. This scenario is an example of A. information asymmetry. B. adverse selection. C. stakeholder strategy. D. shared value creation.

a. information asymmetry

Susan is a strategist for the firm, DigiVision Inc., which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called Tech Resources Inc. However, this material is difficult to trade for. Because of this, which of the following is most likely the best strategy for Susan to suggest? A. DigiVision should acquire Tech Resources. B. DigiVision should form a short-term agreement with Tech Resources. C. DigiVision should form a long-term agreement with Tech Resources. D. DigiVision should enter into co-opetition with Tech Resources.

a.- should acquire tech resources

which of the following is true of accounting data?

accounting data are historical data and thus backward looking.

which of the following is not included within the types of strategic alliances?

acquisitions

( ) is illustrated by a situation in which the principal cannot determine the value created by individual members of a team.

adverse selection

A ( ) organization always attempts to balance and harness different activities in trade off situations.

ambidextrous

in the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity?

an increase in its customer's disposable income

companies that pursue related diversification are able to create a diversification premium because they

are able to increase value due to economies of scope.

Body Sync Inc. is a chain of gyms. It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months. Included in the package are two health checkups and a gym kit. These add-ons by themselves are not very valuable, but as a package they can enhance the perceived value of the service offerings. In this case, Body Sync's primary value driver is

availability of complement.

firms that use integration also use ( ) when they rely on outside market firms for some of their supplies.

backward vertical integration

First movers often have several competitive benefits including A. incremental effects. B. shakeout effects. C. network effects. D. experience effects.

c- network effects.

Maurice sent in a complaint about a rude salesperson he dealt with at FirstElectronics Inc. He didn't get a response for about three months. Also, when the response finally came, it was just a formal, cursory letter. Based on this scenario, FirstElectronics most likely has an extremely _____ organizational structure. A. specialized B. formalized C. centralized D. hierarchical

c. - centralized

Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to A. imitate the actions of its competitors like Apple and Facebook. B. solve its principal-agent problems. C. fill gaps in its competency lineup. D. expand through unrelated diversification.

c. - fill gaps in its competency lineup

GreenThings Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. TransGold Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? A. While TransGold Inc.'s competitive advantage will lie in its high local responsiveness, GreenThings Inc. will lack such competencies. B. GreenThings Inc. will face greater pressure for cost-reductions than TransGold Inc. due to its strategy choice. C. Both GreenThings Inc. and TransGold Inc. will have to duplicate key business functions in multiple host countries. D. While GreenThings Inc. will require a global matrix structure, TransGold Inc. will require a traditional headquarters model.

c.- Both GreenThings Inc. and TransGold Inc. will have to duplicate key business functions in multiple host countries.

How does a conglomerate benefit from following an unrelated diversification strategy? A. The conglomerate can solely depend on its primary business activity for a major portion of its revenues. B. The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. C. The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. D. The conglomerate can limit the learning- and experience-curve effects it faces.

c.- conglomerate can overcome institutional weaknesses.....

Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A. backward integration B. forward integration C. horizontal integration D. vertical integration

c.- horizontal integration

The ( ) states that geographic location alone should not lead to firm level competitive advantage because firms, are now, more than ever, able to source inputs globally.

death of distance hypothesis

customer oriented visions do NOT:

define how a customer need will be met.

which of the following is an ineffective practice in an alliance management

focusing on developing an alliance-management capability in isolation

which of the following is an ineffective practice in alliance management?

focusing on developing an alliance-management capability in isolation.

stakeholder impact analysis primarily helps a firm

gain a competitive advantage while acting as good corporate citizen.

a firm that uses a structure that is organized along different business functions such as HR, R&D, sales, and marketing and also along different geographical areas such as different countries of the world is most likely using a ( ) structure.

global matrix

which of the following is a key question managers must answer to formulate an appropriate business-level strategy?

how will we satisfy our customer needs?

which of the following happens during the analysis stage of scenario planning?

identification of possible future scenarios

Which of the following happens during the analysis stage of scenario planning?

identification of possible future scenarios.

after a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to

identify stakeholders interests and claims

which of the following is step 3 in the five-step process of stakeholder impact analysis?

identifying the opportunities and threats the stakeholders present

which of the following was a key driver in the occupy movement of 2011?

the issue of income disparity

( ) are the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance.

inside directors.

Which of the following is NOT an advantage of the balanced scorecard approach to assess firm performance?

it is a tool which can be effectively used by managers for both strategic implementation and strategic formulation

which of the following best explains why a blue ocean strategy is difficult to implement?

it requires the reconciliation of fundamentally different strategic positions- differentiation and low cost.

which of the following types of strategic alliances is the least common in terms of frequency?

joint ventures

which of the following is a common drawback of a non-equity alliance?

lack of trust between partners

economies of scale are cost advantages that accrue for firms with

larger output

( ) are best described as contractual alliances in which the participants regularly exchange codified knowledge.

licensing agreements.

in principal-agent relationships ( ) describes the difficulty of principals to ascertain whether agents have really put forth their best efforts.

moral hazard

an organization is characterized as having a flexible division of labor, distributed decision making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely( ) in nature.

organic

In which of the following industry competitive structures do selling firms have the lowest pricing power?

perfect competition

the competitive advantage that one firm has will be short-lived in an industry where

perfect competition exists

Competitive rivalry based solely on( ) is destructive to firms as it transfers most of the value in the industry to the customers.

price-cutting

an individual who is part owner of a company and hires another individual to act on his or her behalf is referred to as a

principal

The most efficient way to overcome the principal-agent problem in a firm is to

provide stock options to managers

manufacturers of electric fragrance diffusers sell the electric outer device at an extremely low price, sometimes even at a loss. However, they make their money on the product by charging a premium on the perfume refills that have to be replaced regularly. Which of the following business models does this best illustrate?

razor-razor-blade

a ( ) is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time.

real options perspective

the core competency of MotorCraft Inc. is its fuel efficient engine found in its cars. These engines are developed and built in house. The company realizes that there is a new market opportunity to diversify. Thus, it produces the car engines on a large scale and sells them to other automobile companies. In this scenario, MotorCraft is

redeploying and recombining existing core competencies to compete in future markets.

The ( ) is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries.

relational view of competitive advantage

Boston Consulting Group (BCG) growth-share matrix locates a firm's individual strategic business units in which two dimensions?

relative market share and speed of market growth.

( ) is best described as moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain.

strategic outsourcing

which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones?

the huge demand for high-quality wireless services in Finland.

Strategic thinking is different from strategic planning in that

strategic thinking includes all types of information sources while strategic planning does not.

the management team at Clear solutions, Inc. decided to build a branch office in Memphis, TN. Which of the following terms correctly describes this action?

strategy formulation

Through ( )a firm puts its guiding policy into practice by employing a set of coherent actions.

strategy implementation

which of the following tasks in the AFI strategy framework involves putting the formulated strategy into practice through organizational structure, culture, and controls?

strategy implementation

a high percentage of R&D/Revenue ratio indicates a(n)

strong focus on innovation to improve current products and services

which of the following statements is true of strategic alliances?

they are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.

which of the following is a disadvantage of equity alliances?

they can entail significant investments.

which of the following is true of joint ventures?

they enable the exchange of both tacit and explicit knowledge.

Visionary companies are able to outperform their competitors because

they provide more aspirational visions

which of the following best explains why a board of directors may grant stock options as part of a compensation package?

to align incentives between shareholders and management.

A ( ) strategy arises out of the combination of high pressure for local responsiveness and high pressure foundation.

transnational

Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost?

transnational strategy