MGT 3830 Ch. 1-4

. In our discussion of the resource-based view of the firm, we categorise the resources of a firm as: a. Human, Intangible and Tangible b. Fixed, Variable and Human c. Human, Fungible and Tangible d. Physical, Financial, and Brand-related

a. Human, Intangible and Tangible

Overall, the Singapore Airlines case shows that: a. Firms do face the stark choices of being stuck in the middle that Porter cites b. Firms can create cultures that do motivate staff to continually eliminate waste, reduce costs and improve customer service c. Firms that create causal ambiguity cause creative ambiguity d. Cost leadership and low costs are the same thing

b. Firms can create cultures that do motivate staff to continually eliminate waste, reduce costs and improve customer service

"The market" and "the industry" are: a. Related but not the same thing b. Unrelated and different c. Exactly the same concept, and can be used interchangeably d. Exclusively used in marketing and strategic management respectively

a. Related but not the same thing

The difference between intended and realised strategy is: a. Significant because studies suggest that only 10 to 30% of intended strategy becomes realised b. Greater in unsuccessful companies c. Unimportant, because no-one ever expects the intended strategy to seriously be implemented d. Only a very small difference, in general

a. Significant because studies suggest that only 10 to 30% of

Business strategy can be summarized as: a. The means by which organisations achieve their long-term objectives b. The means by which individuals achieve their objectives c. The formal detailed plans used by organizations to guide their actions d. The will of top managers to change their organization

a. The means by which organisations achieve their long-term objectives

Two basic questions concern corporate and business strategy: a. Where and how to compete? b. How and when to compete? c. What are the best arenas and structures to compete? d. When and where to compete?

a. Where and how to compete?

When firms develop organizational routines they are: a. Seeking to liven up boring production manuals b. Learning by doing c. In the mature stage of an industry's life cycle d. In the declining stage of an industry's life cycle

b. Learning by doing

A mission statement: a. is a statement of the company's values b. is a basic statement of the organization's purpose c. outlines what the company wants to be d. articulates the company's competitive strategy

b. is a basic statement of the organization's purpose

Business strategy defines: a. The way a firm competes in a particular industry or market b. How a firm gains a competitive advantage over its rivals within a specific industry or market c. Both a and b d. Neither a nor b

c. Both a and b

Strategic goals should be: a. Simple b. Consistent c. Long term d. All of the above

d. All of the above

Profit-making firms are about creating value: a. This value is simply the profit generated at the end of the year b. They must create value for several stakeholder groups if this is to result in sustainable long-term profit generation c. Value to some stakeholders eg customers, may be difficult to quantify in money terms d. Both c and b

d. Both c and b

Which of the following is typically viewed as a functional area of firm activity: a. financial control b. research and development c. marketing d. all of the above

d. all of the above`

. Corporate strategy is also called business strategy, or competitive strategy.

F

A sound strategy relies on four factors: measurable short-term targets; sound understanding of the competitive environment; objective appraisal of resources; and top down implementation of strategic decisions.

F - long-term targets

Strategy is predominantly about countering short-term competition.

F- long term

Strategy today is essentially a detailed plan which every member of the organization must follow to ensure success.

False

For most firms, although good luck may play a part, success is more likely to be a result of a soundly grounded and well executed strategy.

T

Much can be learned about a firm's actual strategy by looking at where it invests most money, and what products, services and technologies it is working on.

T

Some observers have noticed that there's only a weak link between a firm's intended or stated strategy, and its actual or realized strategy

T

Sound strategy and effective implementation largely determine the probability and extent of the success of a firm.

T

Strategy has evolved from "strategy as a detailed plan" to become "strategy as direction" in the early 21st century.

T

. Strategy is a unifying theme that gives coherence and direction to the actions and decisions of an individual or an organization.

True

In practice, strategy making is: a. A combination of centrally-driven rational design and decentralized adaptation b. A combination of luck, organizational politics, and centrally-driven planning c. The expression of political games among top managers d. None of the above

a. A combination of centrally-driven rational design and decentralized adaptation

Isolating mechanisms are: a. Barriers that slow or stop the equalization of profits between firms, such as barriers to imitation b. Mechanisms that speed up the equalization of profits between firms c. Barriers that prevent potential entrants from grabbing a significant market share in the industry d. Mechanisms that limit or enhance the ex post equilibration of rents among individual firms, depending on their relative bargaining powers

a. Barriers that slow or stop the equalization of profits between firms, such as barriers to imitation

Threshold capabilities enable a firm to do what every firm in its industry must do. Distinctive or core competences: a. Enable it to earn higher profits or greater market share than its competitors in the same industry b. Are its unique selling point c. Are those product features that stop non-customers from buying the product d. Are captured in logos, trademarks etc.

a. Enable it to earn higher profits or greater market share than its competitors in the same industry

If an industry has a stable environment and firms pursue similar strategies: a. Firms with similar resources and capabilities should have similar profit rates b. Firms with similar resources and capabilities should have similar structures c. Firms without similar resources and capabilities will have left the industry d. All of the above

a. Firms with similar resources and capabilities should have similar profit rates

The hierarchy of capabilities refers to: a. How capabilities to do market research time-effectively and buy advertising cost-effectively, belong under marketing capabilities b. How capabilities are made up of processes that use resources to achieve a desired result c. How the CEO should have more capabilities than the CFO, the COO etc. d. How core capabilities are more valuable than threshold capabilities

a. How capabilities to do market research time-effectively and buy advertising cost-effectively, belong under marketing capabilities

To successfully imitate the strategy of another firm, an organization must: a. Identify and diagnose the rival's advantage, believe in its ability to deliver a superior return, and, finally, acquire the necessary resource and capabilities b. Identify and diagnose the rival's advantage, and then acquire the necessary resources and capabilities c. Benchmark the rival's activities and resources, believe in a superior return, and build the rival's resource in-house d. Benchmark the rival's activities and resources, identify the rival's weaknesses, and, finally, believe in its ability to deliver a superior return

a. Identify and diagnose the rival's advantage, believe in its ability to deliver a superior return, and, finally, acquire the necessary resource and capabilities

Human Resource capabilities: a. Include the skills to train and develop people b. generally constitute a firm's greatest resources c. Are the distinctive capability of most large organisations d. Answer b and c

a. Include the skills to train and develop people

A strategy can be described as: a. Intended, emergent, or realized b. Intended, emergent, or sustained c. Emergent, critical, or sustained d. Realized, emergent, failed

a. Intended, emergent, or realized

Increasing flight reliability at Singapore Airlines, alluded to in Case Insight 4.4: a. Is likely to be the outcome of several linked activities b. Is basically down to the age of the planes c. Depends on the incentives given to ground and air crew for planes to take off on time d. Answers b and c

a. Is likely to be the outcome of several linked activities

'Reputation' in the context of an organization's resources can provide competitive advantage because: a. It is difficult to copy b. It is based on word-of-mouth c. it is essential for a firm to do business d. it is easily destroyed by bad publicity

a. It is difficult to copy

. The core of a firm's business environment is determined by: a. Its relationships with customers, competitors, and suppliers b. Its relationships with key pressure groups and shareholders c. Its relationships with its major stakeholders d. Its vision and mission

a. Its relationships with customers, competitors, and suppliers

In many industries the market leaders a. Manage to reconcile low costs with some effective differentiation b. Are the cost leaders c. Have very well-differentiated brands a. Answers b and c

a. Manage to reconcile low costs with some effective differentiation

For a manufacturer access to distribution is a barrier to entry because: a. New entrants face a disadvantage from retailers who are reluctant to carry their new products b. Retailers have limited capacity of distribution to offer to new entrants c. Retailers are risk-averse d. Carrying new products induces fixed costs

a. New entrants face a disadvantage from retailers who are reluctant to carry their new products

Is it easy for Sears Holdings (Kmart) to understand Wal-Mart's competitive advantages? a. No, it is not that easy b. Yes: just walk into any Wal-Mart store c. Any professional retailer could d. Answers b and c

a. No, it is not that easy

An industry's current profitability: a. On its own tends to be a poor predictor of future profitability b. Is an excellent predictor of its future profitability c. Explains the past in that industry d. Is determined by the forces of competition and so many other factors that gaining insights into its causes is almost impossible

a. On its own tends to be a poor predictor of future profitability

Barriers to exit are: a. The non-recoverable costs of quitting or scaling down capacity in an industry b. Legal restrictions which prevent a firm from leaving an industry c. The opposite of barriers to entry d. Of no consequence if you don't plan to leave the industry

a. The non-recoverable costs of quitting or scaling down capacity in an industry

To imitate the competitive advantage of another company, a firm must first: a. Understand the basis of its rival's success b. Collect comprehensive information about its rival c. Analyse its rival's marketing strategy d. None of the above

a. Understand the basis of its rival's success

Analysing key success factors leads one to ask the following two questions: a. What do customers want which we could supply profitably and what should the firm do to survive competition? b. What do customers want and what type of operational changes should a firm implement to survive competition? c. Which of the five forces of competition are critical for a firm's survival and how could the firm deal with them? d. How should managers analyse information collected from the market and what should they do about it?

a. What do customers want which we could supply profitably and what should the firm do to survive competition?

Barriers to entry are effective: a. Yes, because long-term empirical evidence shows that industries with high barriers to entry exhibit higher returns on investment on average b. Yes, because once established they are irreversible c. No, because firms can overcome these barriers by modifying their strategies d. No, because higher returns attract more new entrants who want to benefit from higher returns than in non-protected industries

a. Yes, because long-term empirical evidence shows that industries with high barriers to entry exhibit higher returns on investment on average

When using value chain analysis to analyse a firm's competitive strategy, the main aim is to: a. compare costs with those of competitors b. identify where costs have increased over time c. identify opportunities for reducing costs d. a and c

a. compare costs with those of competitors

Three characteristics of resources and capabilities determine the sustainability of the competitive advantage they offer: a. durability, transferability and replicability b. scarcity, relevance and property rights c. property rights, relative bargaining power and embededness d. None of the above

a. durability, transferability and replicability

The management systems of most firms: a. pay more attention to the physical and financial assets on their balance sheets than to their intangible and human resources b. pay more attention to intangible and human resources than to the physical and financial resources on their balance sheet c. provide detailed and up-to-date information on the firm's resources and capabilities d. provide an easy way of identifying key resources and capabilities

a. pay more attention to the physical and financial assets on their balance sheets than to their intangible and human resources

Which of the following is not a primary characteristic of Emotional intelligence: a. the ability to perceive emotions accurately b. the recognition of the importance of interpersonal skills c. the ability to think rationally and solve problems d. the ability to access and generate feelings

a. the ability to perceive emotions accurately

Competitive advantage depends on: a. the existence of market imperfections b. the ability of the firm to compete in more than one market c. the absence of barriers to exit d. all of the above

a. the existence of market imperfections

In fast changing environments: a. A firm should focus on its oldest markets b. A firm may define itself by its resources and capabilities c. Both a and b d. Neither a nor b

b. A firm may define itself by its resources and capabilities

Companies' "book values" can be much less than their stock market valuations because: a. Auditors tend to err on the conservative side b. Accountants are generally required by accounting standards to ignore the value of brands and all other reputational assets c. To be on the safe side accountants tend to undervalue brand values d. Accountants and marketing experts have different methods of valuing brands

b. Accountants are generally required by accounting standards to ignore the value of brands and all other reputational assets

The shift in strategy from a plan to a direction leads to: a. A downgrade its role in management b. An overt quest for flexibility and responsiveness c. A need for top managers' training d. Less work for top managers

b. An overt quest for flexibility and responsiveness

Porter says that firms get stuck in the middle because: a. The mindsets of cost-minimization and differentiation are culturally opposed, and firms cannot optimize the investments needed for both at once b. As a above and firms need very different organizational processes to achieve the lowest costs or effective differentiation in the industry c. Mid-market positions are unattractive to consumers d. Many firms have had several different CEOs, each determined to pursue different strategies

b. As a above and firms need very different organizational processes to achieve the lowest costs or effective differentiation in the industry

Firms in any industry can be said to operate in two major markets: a. The labour market and the output market b. As a buyer in the market for inputs, and as a seller in the output market c. The labour market and the input markets d. The product market divided in two or more segments (such as mid-size car and SUV market segments)

b. As a buyer in the market for inputs, and as a seller in the output market

Firms try to develop resources and capabilities to: a. Maximize attractiveness to our customers b. Create sustainable competitive advantage c. Maximize current profit rates d. Attract the best employees

b. Create sustainable competitive advantage

A firm's ability to turn change in its external environment into profit: a. Requires just one key resource: information b. Depends on its ability to respond by changing its capabilities appropriately c. Is the test of a Sustained Focus strategy d. Is always measured by its market share

b. Depends on its ability to respond by changing its capabilities appropriately

Competitive advantage: a. Exists only when an industry is in long term equilibrium b. Emerges from external and internal sources c. Both a and b d. Neither a nor b

b. Emerges from external and internal sources

Cost leadership means a firm must: a. Exploit all sources of cost advantage before tailoring the product to each customer b. Exploit all sources of cost advantage in providing customers with a standardised product c. Exploit all sources of cost advantage in providing each customer with their minimum requirements d. Exploit all sources of cost advantage while providing every customer an individual service

b. Exploit all sources of cost advantage in providing customers with a standardised product

To stop rivals acquiring a core resource or capability: a. Is foolish: a firm cannot stop its rivals from doing things they want to b. Firms must make that resource or capability immobile c. Firms have to rely on patent and copyright legislation d. Everyone involved in this activity must be paid at a higher rate than that offered by rivals

b. Firms must make that resource or capability immobile

The idea with Porter's 5 Forces is to: a. Quantify the 5 forces, to produce ideally a mathematical model of the industry b. Identify which forces are relatively more powerful, and to assess their impact on competition and industry profitability c. Work out how management can eliminate each of the competitive forces d. Use it to construct a plan to achieve monopoly power

b. Identify which forces are relatively more powerful, and to assess their impact on competition and industry profitability

Resources and capabilities can generate higher profits a. If competition is fierce b. If the competitive advantage they generate is sustained for some years c. Only if governments allow firms to share resources d. Only where cartels are effectively allowed

b. If the competitive advantage they generate is sustained for some years

A 6th force - Complements - should arguably be added to Porter's 5 Forces Model because: a. Porter's original analysis was inadequate b. It's clear that since Porter devised his model, complementers have become more important c. Porter's model was developed over 30 years ago, so is old-fashioned d. Answers b and c

b. It's clear that since Porter devised his model, complementers have become more important

The question "What do customers want?": a. Is not relevant because customers will show their preferences through their behaviour b. Must be asked by managers, and an accurate answer obtained and understood, since it's the driving force behind generating profit c. Can be outsourced to a Market Research company d. Is best answered by ensuring that certain managers are educated in Marketing

b. Must be asked by managers, and an accurate answer obtained and understood, since it's the driving force behind generating profit

Once value is created, it is, in general: a. Equally shared between customers and producers b. Not equally shared between customers and producers c. Distributed to the firm's shareholders d. Reinvested into the firm or put aside as a reserve

b. Not equally shared between customers and producers

Differentiation is when a firm: a. Offers customers something valuable and unique at a significantly lower price than rivals b. Offers customers something valuable and unique for which customers are willing to pay a price premium c. Offers customers a uniquely low price d. Offers customers products with many additional features

b. Offers customers something valuable and unique for which customers are willing to pay a price premium

Which of the following is a framework for categorising key elements of an organization's external environment? a. SWOT b. PEST c. The BCG matrix d. Porter's value chain

b. PEST

The success of Japanese Total Quality Management: a. Shows that it is possible to pursue Cost Leadership and Differentiation strategies simultaneously b. Refutes the perceived trade-off between low cost products and high quality products c. Has made Porter's analysis outdated d. Answers b and c

b. Refutes the perceived trade-off between low cost products and high quality products

A cost leadership strategy: a. Requires a commodity product b. Requires a firm to produce a "no frills" product - even if the industry's product is differentiable (e.g. cars or airlines) c. Can be achieved with a unique brand image d. Can only be achieved in the modern world by outsourcing to cheap-labor countries

b. Requires a firm to produce a "no frills" product - even if the industry's product is differentiable (e.g. cars or airlines)

The final appraisal of the strengths and weaknesses of a firm's resources & capabilities: a. Is a quantitative appraisal by an objective outside body b. Requires an objective appraisal of the firm's resources and capabilities c. Requires artistic flair and creative questioning d. Requires detailed knowledge of business strategy theory, and all its intellectual roots

b. Requires an objective appraisal of the firm's resources and capabilities

As the environment becomes more turbulent, or unpredictable: a. Strategy appears to not be very useful b. Strategy remains just as vital a tool to navigate the firm through "stormy seas" c. Strategy is put into the hands of external consultants d. Strategy becomes an "impossible exercise"

b. Strategy remains just as vital a tool to navigate the firm through "stormy seas"

Once established, competitive advantage is: a. Relatively stable over time b. Subject to erosion by competitors or entrants c. A firm's reward for leading the industry d. Easily maintained unless entry barriers are high

b. Subject to erosion by competitors or entrants

Strategy is fundamentally about: a. Being better than rivals b. Success in achieving long-term goals c. Satisfying all stakeholders d. Being an excellent "corporate citizen"

b. Success in achieving long-term goals

. The basic premise of industry analysis is that: a. Competition depends, primarily, on the number of firms within an industry b. The level of profitability within an industry is largely determined by the industry structure c. The internal variables of the firm determine a firm's performance within the industry d. Profits are squeezed by powerful suppliers

b. The level of profitability within an industry is largely determined by the industry structure

. The balance between designed strategy and emergent strategy depends mostly on: a. The type of organizational structure b. The stability and predictability of a firm's environment c. Top managers' personalities d. Middle managers' autonomy

b. The stability and predictability of a firm's environment

Brand values are a: a. Type of tangible resource b. Type of intangible resource c. Type of synergistic resource d. Type of sustainable resource

b. Type of intangible resource

If a company has only a few key strengths this suggests the company should : a. sell up and exit its existing business as soon as possible b. adopt a niche strategy c. move into new unrelated product markets d. recruit a more dynamic management team

b. adopt a niche strategy

In Porter's five forces framework, the term "industry attractiveness" refers to: a. the appeal of the industry to a particular firm b. overall industry profitability c. the extent to which the industry draws in new entrants d. the potential for one firm to dominate the industry

b. overall industry profitability

In appraising resources and capabilities we need to acknowledge the important role that industry context plays. In general it is best to define the industry context: a. very narrowly b. relatively broadly c. on the basis of the firm's existing strategy d. on the basis of the firm's likely future strategy

b. relatively broadly

The creation of organizational capabilities: a. is simply a matter of allowing routines to merge b. requires conscious and systematic action by management c. is a result of lucky coincidences d. requires a stable environment

b. requires conscious and systematic action by management

The resource-based view of the firm can be described as: a. the outside-in approach b. the inside-out approach c. the positioning approach d. the planning approach

b. the inside-out approach

. For a resource or capability to establish a competitive advantage two conditions must be present. These are: a. The resource or capability must be widely available and relevant to the key success factors in the market b. the resource or capability needs to be scarce and relevant to the key success factors in the market c. The resource or capability must be central to operations and its strategic role well understood by all employees d. The resource or capability must be central to operations and its strategic role appreciate by just a few members of the organization

b. the resource or capability needs to be scarce and relevant to the key success factors in the market

. Competitive advantage can be defined as: a. The difference between a firm's return on assets and its return on sales b. A firm's ability to earn persistently higher revenue than its rivals c. A firm's ability to earn a persistently higher profit rate than its rivals d. A firm's ability to outwit its competitors

c. A firm's ability to earn a persistently higher profit rate than its rivals

A capability that is "needed to play" is often referred to as: a. A threshold resource b. A unique resource c. A threshold competence d. A core competence

c. A threshold competence

A typical cost leadership strategy involves: a. A firm producing a few limited-feature standard products, or providing a very standardised service b. A medium or small firm with minimal overheads, and cheaply acquired (sometimes second-hand) assets c. Answers a and b d. Being the firm with the highest market share, and, often, the best-known brand in the industry

c. Answers a and b

Tight complex organizational routines: a. Are based on unique corporate structures b. Can be copied if rivals hire the right employees c. Are hard for rivals to replicate d. Answers a and c

c. Are hard for rivals to replicate

Appraising a firm's resources consists of: a. Protecting the firm from its weaknesses and trying to reduce or eliminate them b. Leveraging the firm's strengths to increase market share and profit c. Being very realistic yet creative about what can be achieved with what you've got d. Completing 360-degree analytical evaluations of top managers' strengths and weaknesses

c. Being very realistic yet creative about what can be achieved with what you've got

Corporate and Business strategy differ mainly in that: a. Corporate Strategy has a broader scope, including decisions about which industries to operate in b. Business strategy is subordinate to corporate strategy c. Both a and b d. There is no real difference; they are the same thing

c. Both a and b`

The fundamental choice for capability acquisitions is the decision to either: a. Buy them or sell them b. Develop them or maintain them c. Buy them or build them d. Buy them or copy them

c. Buy them or build them

The seven drivers of cost advantage: a. Must be equally examined in all firms b. Can be a useful framework within which to compare a firm's cost improvements in the last few years c. Can be a useful framework within which to compare a firm's costs with its competitors d. Can be a useful framework within which to compare a firm's profit margins with its competitors

c. Can be a useful framework within which to compare a firm's costs with its competitors

From the two illustrations describing key attributes of strategy at the beginning of the chapter, four factors stand out: a. Goals, environment, appraisal of resources, and social and cultural implications b. Goals, internal and external analysis of the environment, effective implementation, and awareness of rivals' strengths c. Consistent goals, understanding the environment, objective appraisal of resources, and effective implementation d. Goals, environment, irreversibility of decision, and effective implementation

c. Consistent goals, understanding the environment, objective appraisal of resources, and effective implementation

A firm can pre-empt imitation by: a. Vigorous legal action b. Threatening to imitate its imitators c. Introducing new products to fill each niche, investing in capacity ahead of market growth and filing many patents d. None of these: imitators cannot be deterred

c. Introducing new products to fill each niche, investing in capacity ahead of market growth and filing many patents

If an industry earns a return on capital in excess of its cost of capital: a. Incumbents will earn abnormal profit, and build entry barriers b. The government will intervene to make sure that competition will increase c. It is likely to attract the attention of firms looking to enter the industry, which may eventually lead to the return on capital falling d. It will attract firms outside the industry, but the incumbents will have erected entry barriers

c. It is likely to attract the attention of firms looking to enter the industry, which may eventually lead to the return on capital falling

. In practice, drawing the boundaries of industries and markets is: a. A matter of personal preference on behalf of top managers b. Almost impossible to carry out with rigor because it requires many "rules of thumb" and approximations c. Largely a matter of judgment and experience contingent on the purpose of the analysis d. Critical to the output of the analysis and therefore should only be undertaken with the help of an academic or consultant

c. Largely a matter of judgment and experience contingent on the purpose of the analysis

We need to appraise our resources and capabilities against: a. Our past record; we must continually improve b. The best firms around the world, no matter in what country, market or industry c. Our competitors' resources and capabilities d. The best that our competitors might attain in the future

c. Our competitors' resources and capabilities

. Outsourcing to specialists can help a firm: a. Reduce unnecessary costs b. Increase control over a key production process c. Reduce a relative weakness in its capabilities d. Improve launch times for new products

c. Reduce a relative weakness in its capabilities

The question "What does a firm need to survive competition?": a. Can be addressed through analysis of competitors using all possible means, even at the edge of legality and ethics b. Can be addressed by studying very carefully the two largest rivals in the industry c. Requires an understanding of the current and future basis of competition specific to the industry d. Can never be answered clearly, because competitors will not divulge what they are doing

c. Requires an understanding of the current and future basis of competition specific to the industry

Market and industry are: a. Very specific economics terms which must be rigidly adhered to b. Are concepts which require careful consideration of their philosophical underpinning to use correctly c. Somewhat flexible in scope depending on what aspect of business you are considering d. Close concepts where market is identified with broader sectors, while industries refer to specific technologies

c. Somewhat flexible in scope depending on what aspect of business you are considering

Overall, the Singapore Airlines case shows: a. SA's biggest resource is the innate culture of its staff b. SA's biggest resource is the location of its hub c. That rivals may copy parts of your business strategy but some unique resources and causal ambiguity can successfully hide your key distinctive capabilities d. Answers a and b

c. That rivals may copy parts of your business strategy but some unique resources and causal ambiguity can successfully hide your key distinctive capabilities

The overall bargaining power of buyers depends on: a. The buyer's price sensitivity b. The intensity of rivalry among sellers and the willingness of the buyer to exploit this c. The buyer's price sensitivity and the relative bargaining power between the seller and the buyer d. The intensity of rivalry among buyers and the ability to vertically integrate

c. The buyer's price sensitivity and the relative bargaining power between the seller and the buyer

One can view the connection between the general environment and the industry environment a. The general environment is diffuse, whereas the industry environment consists of a small number of close competitors b. The industry environment consists of customers, suppliers, rivals, and new entrants, whereas the general environment comprises everything else c. The industry environment includes customers, competitors and suppliers, whereas the general environment matters to the extent that it affects the industry environment d. The critical influence of the industry environment on the wider social environment

c. The industry environment includes customers, competitors and suppliers, whereas the general environment matters to the extent that it affects the industry environment

Zara's response to very fast-changing fashion demands was: a. To fight on price by cutting costs to the absolute minimum b. To have thousands of products in stock at all times c. To cut the product launch cycle from concept to store to three weeks d. To hire the best designers and decide new fashions in advance

c. To cut the product launch cycle from concept to store to three weeks

Porter's 5 Forces model is intended to be: a. Used as an alternative to the earlier PEST model b. Used primarily as an academic tool c. Used in conjunction with PEST and other models d. Used to analyse industries in the 1980's and 1990's

c. Used in conjunction with PEST and other models

When valuing a firm's tangible resources: a. We should take the historic cost book value b. We must update historic cost assets to current cost (modern replacement cost) assets c. We need to understand their potential for creating competitive advantage d. We need to rely on the services of professional accountants

c. We need to understand their potential for creating competitive advantage

The internal environment: a. Is the structure inside an industry b. Has become less important as an explanation of firms' profitability c. focuses on the relationship between a firm's resources and capabilities and its business strategy d. focuses on industry attractiveness as a primary source of profit

c. focuses on the relationship between a firm's resources and capabilities and its business strategy

Which of the following changes in industry structure are likely to improve industry attractiveness: a. a change in consumer buying patterns that favours substitute products b. a wave of new entrants joining the industry c. industry consolidation through mergers and takeovers d. a and b

c. industry consolidation through mergers and takeovers

The value chain analysis of Singapore Airlines, illustrated in Case Insight 4.3, is : a. sufficiently comprehensive to guide strategic decision-making b. irrelevant because Singapore Airlines doesn't have a cost leadership strategy c. is a reasonable start on analysis but now needs to be followed up with hard figures of cost comparisons between SA and its rivals d. of little practical value

c. is a reasonable start on analysis but now needs to be followed up with hard figures of cost comparisons between SA and its rivals

. Porter (1980) in his early work suggests that combining cost leadership and differentiation strategies: a. is relatively easy. Successful firms can pursue both strategies at the same time b. can be accomplished by focussing on a narrow market segment c. is likely to result in a firm becoming 'stuck in the middle' d. is likely to result in above average performance

c. is likely to result in a firm becoming 'stuck in the middle'

Harley-Davidson retained its competitiveness in the motorcycle market by: a. investing heavily in new technology b. introducing a broad range of motorcycles targeted at different customer segments c. making a virtue out of its traditional designs d. by outsourcing much of its production process

c. making a virtue out of its traditional designs

If top management understands customers, suppliers, competitors and the general environment then: a. the company will be successful b. a successful strategy will emerge from these factors c. they are able to evaluate industry attractiveness, d. they can predict the success of their company

c. they are able to evaluate industry attractiveness,

The central task of a differentiation strategy is: a. To yield a price premium for the firm b. To add valuable new features to your product so long as the extra value to customers exceeds the extra cost to you of supplying it c. To ask how all your customers' interactions with your product could be enhanced even more d, All of the above

d, All of the above

3M is: a. A successful conglomerate comprising a group of unrelated businesses b. A group of businesses linked by their use of glue-based technologies c. A group of businesses with an outstanding ability to develop and market new Fast Moving Consumer Products d. A group of businesses with a core capability to develop and launch new products using adhesives, thin-film coatings, and other technologies

d. A group of businesses with a core capability to develop and launch new products using adhesives, thin-film coatings, and other technologies

Success is fundamentally linked to: a. A soundly formulated strategy and luck b. An effectively formulated strategy and a strong awareness of the rivals' strengths c. A clear understanding of the environment and strong political skills d. A soundly formulated and effectively implemented strategy

d. A soundly formulated and effectively implemented strategy

Understanding the competitive forces in an industry is: a. A largely futile exercise for managers b. Is of academic interest, but does not bring any value for strategic management c. A way to enable managers to allocate their resources where competition is the strongest d. A way to enable managers to position the firm where its particular capabilities can be deployed to best advantage

d. A way to enable managers to position the firm where its particular capabilities can be deployed to best advantage

. In addition to just reading published information, to identify a firm's strategy you could a. Identify where the company is making most of its investments b. Identify where the company is doing most of its business c. Find out what new products and services the company is putting most effort into d. All of the above

d. All of the above

According to Porter and Siggelkow, Urban Outfitters was successful because: a. it developed a set of management practices that were distinctive b. It tailored its retail environment to target customers c. It developed a highly integrated strategy d. All of the above

d. All of the above

Being 'stuck in the middle' gives low profits because: a. The firm loses those customers who want the lowest prices b. The firm loses those customers who want the best product on the market c. Employees become confused about what the firm's goals and strategy really are d. All of the above

d. All of the above

Causal ambiguity and uncertain imitability are: a. Two academic phrases to describe the difficulty of linking superior performance to the strategic decisions that generate that performance b. Related because causal ambiguity causes uncertain imitability (the rival doesn't know what to imitate) c. related because competitive advantage is often based on complex bundles of organizational capabilities d. All of the above

d. All of the above

In regard to strategy making, most firms are likely to exhibit: a. A combination of design and emergence b. A process labeled as "planned emergence" c. An interaction between strategic design, through formal top-level processes, and strategic enactment through decisions made by all management levels of the organization d. All of the above

d. All of the above

Singapore Airlines appears to have competitive advantages from: a. Lower costs than many of its rivals b. Better plane utilization rates than its rivals c. Better service levels than many of its rivals d. All of the above

d. All of the above

The bargaining power of suppliers is likely to be high: a. When the suppliers' industry is concentrated b. When suppliers are supplying differentiated products c. When the industry with which suppliers are transacting is relatively fragmented d. All of the above

d. All of the above

The relative bargaining power of buyers depends on: a. The size and concentration of buyers relative to suppliers b. A buyer's access to information about products and costs c. The ability or threat to integrate vertically d. All of the above

d. All of the above

The role of strategy today is claimed to be: a. A unifying role underpinning all consequent decisions b. A means by which top management can communicate and gain commitment to a sense of direction c. A means by which top management can inspire and motivate the workforce d. All of the above

d. All of the above

The success of an organization in general, depends on the following: a. Being consistently focused on an achievable goal b. Having a strong and in-depth knowledge of the competitive environment c. Realistic appraisal of its own strengths and weaknesses d. All of the above plus the ability to implement strategy with commitment, consistency and determination

d. All of the above plus the ability to implement strategy with commitment, consistency and determination

"Strategic innovation" means introducing: a. New products b. New markets c. New technologies d. All of the above, or introducing new ways of doing business

d. All of the above, or introducing new ways of doing business

Rivals can be pre-empted from entering a firm's markets only if: a. The market is small relative to the minimum efficient scale of production b. There are significant first-mover advantage available to the firm c. Brand names matter to consumers in this industry d. Answers a and b

d. Answers a and b

. Internal appraisal of a company's capabilities against the best competitors: a. Cannot be done; only external appraisal is valid b. Can be done using discussion of past successes and failures c. Can be done using external benchmarking d. Answers b and c

d. Answers b and c

Organizational culture is: a. The way a firm is organized b. A firm's distinctive myths, rituals and symbols c. A firm's deeply held values, traditions and social norms d. Answers b and c

d. Answers b and c

Porter's value chain: a. Can only be used to analyse cost leadership strategies b. Can be used to look at the current and additional costs of changes in a differentiation strategy c. Can be used to examine the current and additional service levels offered to customers in a differentiation strategy d. Answers b and c

d. Answers b and c

How can a firm hide its superior profits? a. By masking its results so that rivals fail to see its success b. By avoiding disclosing financial performance c. By temporarily lowering prices, so that the firm forgoes short term profits but succeeds in dissuading potential entrants d. Any of the above

d. Any of the above

. A barrier to entry is: a. Anything that facilitates the entry of would-be new entrants in a specific industry b. Capital requirements, cost advantages, and product differentiation c. A law restricting trade d. Anything that makes entry into an industry as a new competitor more difficult, more costly, slower or even impossible

d. Anything that makes entry into an industry as a new competitor more difficult, more costly, slower or even impossible

To forecast industry profitability consistently accurately, professional analysts have to: a. Look at the link between performance and industry structure, then to identify major trends and to examine the link between these trends and the forces of competition b. Look at the probability of new entries in the industry, to determine the major trends, and to forecast the probable overall industry profit c. Determine the five largest players in the industry and their relative bargaining power in regards to their buyers and customers, and to identify their strengths and weaknesses d. Develop a deep understanding of how the industry creates value now and in the future, whether or not they use the tools described in chapter 2.

d. Develop a deep understanding of how the industry creates value now and in the future, whether or not they use the tools described in chapter 2.

A capability requires: a. Many unique resources b. Just one unique resource c. No unique resources d. Individuals to coordinate with each other, and some capital or technology, to achieve a valuable transformation to goods or services

d. Individuals to coordinate with each other, and some capital or technology, to achieve a valuable transformation to goods or services

Porter's firm value chain is often used to: a. Estimate the revenue the firm derives at each stage of a good's production and distribution b. Show the after-tax profit generated by each part of the firm c. Show the pre-tax profit generated by each part of the firm d. Map out a firm's main activities into threshold and distinctive capabilities

d. Map out a firm's main activities into threshold and distinctive capabilities

Economies of scale are a barrier to entry because: a. New entrants do not know where they are positioned on their learning curve b. New entrants do not yet understand the scale economies so they cannot precisely determine their selling price c. New entrants face a risk of price retaliation from the incumbents which could occur immediately on a large scale d. New entrants face the cost and risk of creating large-scale capacity to start with or a severe cost disadvantage if they enter on a smaller scale

d. New entrants face the cost and risk of creating large-scale capacity to start with or a severe cost disadvantage if they enter on a smaller scale

The difference between a capability and a competence is: a. A competence is core to a firm's operations b. A capability is necessary to survive, but a competence is essential to thrive c. A competence is necessary to survive, but a capability is essential to thrive d. No difference in this textbook where they are taken as interchangeable

d. No difference in this textbook where they are taken as interchangeable

"Strategic innovation" involves: a. Limitless financial and organizational resources b. Spending more on Research & Development than your competitors c. Top managers' total dedication to achieving timely innovations d. Pioneering in at least one of the three dimensions: new industry, new customer segment, or new source of competitive advantage

d. Pioneering in at least one of the three dimensions: new industry, new customer segment, or new source of competitive advantage

Requirements for quick organizational response to a turbulent environment are: a. Flexible manufacturing systems and a good 'gut' feel for customer trends b. Excellent resources and capabilities c. Short product launch cycle times and excellent quality control d. Quick, accurate information, and short product launch cycle times

d. Quick, accurate information, and short product launch cycle times

A firm with a competitive advantage that is not manifest in higher profitability may have? a. A rising market share b. Strong and rising customer loyalty, or good executive perks, or both c. Invested in new technologies its rivals do not have d. Some or all of the above

d. Some or all of the above

Changing the industry structure is: a. Not really within the power of a single firm b. An endeavour that firms are undertaking on a permanent basis with great success c. A risky strategic move that may backfire, because of retaliation from the industry's incumbents d. Sometimes possible even by small firms, if the mix of drivers for change and existing structure make it susceptible to change

d. Sometimes possible even by small firms, if the mix of drivers for change and existing structure make it susceptible to change

A market's boundaries are defined by: a. The geographies of the markets that are supplied by the incumbents b. The type of product which is sold, and the type of customers willing to pay for the product c. Substitutability on the demand side and on the supply side d. Substitutability on both the demand side and the supply side, combined with an element of judgment depending on context and purpose

d. Substitutability on both the demand side and the supply side, combined with an element of judgment depending on context and purpose

The simplest useful definition of business strategy would be: a. A sort of plan b. A conceptual construct relating to the juxtaposition of corporate richness versus the snakes and ladders of a kaleidoscopic environment c. How to win the corporate wars; price wars, technology races, develop killer applications d. The means by which organizations achieve their long-term objectives

d. The means by which organizations achieve their long-term objectives

Bargaining power rests, ultimately, on: a. The negotiating skills of the buyer versus the seller b. Historic and accidental events c. The respective effectiveness and cohesion of top management teams d. The perceived or real threat for one party to refuse to deal with the other party

d. The perceived or real threat for one party to refuse to deal with the other party

. Value is created when: a. The price that the customer is willing to pay for a product exceeds the price the customer is actually charged b. Competition ensures that no firm can make above average profit c. Surpluses are appropriated by suppliers d. The price that the customer is willing to pay for a product exceeds the firm's cost

d. The price that the customer is willing to pay for a product exceeds the firm's cost

. In an industry, the profits earned by firms are determined by: a. The overall economic situation, and the intensity of rivalry between established firms b. The degree of concentration of the industry and the availability of substitutes c. The existence of barriers to entry in the industry d. The value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers and their buyers

d. The value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers and their buyers

Suppose that an industry's profitability is zero or negative overall: a. Then all firms in the industry are performing badly b. Then no firm in the industry can be performing well c. Then the biggest firm in the industry is performing badly d. Then even so it's entirely possible that some firms are making very good profits

d. Then even so it's entirely possible that some firms are making very good profits

The value to managers of understanding key success factors is: a. Self-evident b. Legitimate because it is accepted by the academic world c. That it generates "generic strategies" which guarantee success d. To help maintain a strategic perspective of what needs to be done to survive, and help them avoid degenerating into a fire fighting approach

d. To help maintain a strategic perspective of what needs to be done to survive, and help them avoid degenerating into a fire fighting approach

. Prahalad and Hamel's 1990 paper: a. Summarized the main constraints of the external environment b. Summarized the strategic positioning school's point of view c. Emphasized technological innovation as the as main source of "competitiveness" d. Was one of the papers that popularised the modern resource-based view of the firm

d. Was one of the papers that popularised the modern resource-based view of the firm

Developing the strategic implications of the resource-based view of the firm, requires the firm to: a. identify its strengths and assess how these can be exploited more fully b. identify its weaknesses and c. consider whether it can outsource activities that can be performed better by other organizations identify its weaknesses and assess whether these can be corrected by acquiring new resources and capabilities d. all of the above

d. all of the above

Superior capabilities are often traced to staff skills and efforts so: a. the organization should, if possible, lock key staff in through their employment contracts b. the organization needs to pay a good market rate to attract and retain top talent c. it is important to have the right corporate culture and motivate staff d. all of the above

d. all of the above

Systematic, continual scanning of a wide range of external influences would appear desirable but: a. merely listing a large number of external factors is rarely helpful b. environmental analysis can be expensive to undertake c. extensive scanning can result in information overload d. all of the above

d. all of the above

Cost leaders are frequently: a. Market leaders b. Firms with cheaply acquired assets c. Smaller competitors with minimal overheads d. b and c

d. b and c

Industries such as pharmaceuticals have typically earned high returns on investment because they a. have tended to be protected from competition by legal restrictions b. have spent large sums on research and development c. have tended to have high entry barriers and differentiated products d. both a and c

d. both a and c

Jay Barney in his 1986 paper argues that a strong organizational culture: a. is rarely of strategic importance b. is often associated with poor financial performance c. often results in inflexibility and corporate rigidity d. is potentially a very valuable strategic resource

d. is potentially a very valuable strategic resource

The starting point for industry analysis is: a. Classifying the environmental influences by source b. Classifying the environmental influences by proximity c. understanding the value of the product to customers and suppliers d. understanding the value of the product to customers, the intensity of competition and the bargaining power of producers relative to their suppliers

d. understanding the value of the product to customers, the intensity of competition and the bargaining power of producers relative to their suppliers