MGT 3830 Final

a. Massive and unpredictable b. Gradual and predictable *c. Could be either answer a or b, depending on the industry and the prevailing conditions

21. Change in the industry environment faced by a firm is:

*b. Both external forces and the incumbents' competitive strategies

22. Change in an industry is the result of:

*c. Understand, predict, manage change, and adapt its strategy to it

23. Regarding change, a firm really needs to:

a. Is an extension of the concept of the product life cycle b. Uses the same stages as the product life cycle c. Nearly always lasts much longer than a typical product life cycle in that industry *d. All of the above

24. The industry life cycle:

*d. Internationalize though direct investment

36. Multi-domestic industries:

*b. Tends to decrease significantly

47. With the onset of the maturity stage, the number of firms in most industries:

*c. The dangers of failing to integrate development properly

70. The Philips example of developing TVs around the world shows:

*a. Trade and direct investment are both important

37. In global industries:

*b. Potential for economy of scope based on organisational or managerial capability

40. A company in a mature industry which is good at cost-reduction is exhibiting:

*d. A sheltered industry

40. Hairdressing is traditionally an example of:

*c. Shareholders can invest in other industries themselves, achieving risk-reduction more efficiently

47. One common argument against diversification strategies is:

*d. The firm is be able to spread common cost somehow, either by performing the additional activity internally, or by licensing the resource

50. Gaining the advantage from economies of scope requires that:

*a. The production and diffusion of knowledge

25. The text claims that two factors are fundamental to the industry life cycle. One of these is:

*c. Increased global efficiency and growth options, and widened consumer choice

26. Internationalization has:

*a. The emergence of a radically better substitute product, representing a new industry

26. The decline phase of the industry life cycle is caused by:

*c. New knowledge manifests itself in the guise of a sufficiently radical product innovation

27. A new industry life cycle begins when:

*d. A source of opportunity for firms and individuals

27. For most of the last sixty years internationalization has been:

*b. An emergent de facto industry standard broad product format

28. A dominant design is:

*d. Direct investment and trade

28. Two mechanisms promote internationalization:

b. Emerges when there are interconnectivity and interface compatibility issues c. Can emerge for safety and other reasons from standards bodies eg ISO *d. Answers b and c

29. A technical standard:

*b. Exploit foreign resources, capabilities and markets

29. Underlying both of these are the quests to:

*c. Domestic markets to foreign competitors

30. Internationalization opens:

*a. The evolution of the industry growth rate over time

30. The different stages of the industry life cycles are characterised by:

*b. May never enter the decline phase, in some industries supplying basic essential products or services

31. An industry life cycle:

*a. Where a firm chooses to compete i.e. in which industries

31. Corporate strategy is concerned with:

*b. Made minimal changes to its products and processes

31. In its first, largely European, phase of internationalization IKEA:

*b. The scope of a firm's activities

32. Corporate strategy is concerned with:

*b. Made minimal changes to its products and processes

32. On expanding into the USA, IKEA changed:

a. It did not exist at all prior to this time b. The introduction phase was typical: no mass market, many product variants, small firms C. By the 1980's, the growth phase had begun, with a design standard emerging *D. All of the above

32. The PC industry clearly began in the 1970's because:

*b. IBM had seen the PC as a tiny, hobbyist's niche within the computer industry, not worth IBM's attention

33. IBM initially ignored the PC market because:

*c. Inward direct investment and imports

33. Sheltered industries are protected from:

*a. The first describes the regions of the world where the firm is present and the second the stages of the industry value chain which the firm performs itself

33. What is the difference between a firm's geographical scope and its vertical scope?

a. Perishability b. Transport difficulties and high transport costs c. Very small size of operation and lack of scale economies *d. Any of the above

34. Sheltered industries are protected by their:

*a. What business(es) are we in?

34. The starting point for strategy is usually:

a. Did so with a maverick offshoot, and by buying in sub-systems, which went against the IBM usual methods b. Suffered slow growth since they were late to market c. Relied on business users recognising the established IBM reputation *d. Answers a and c

34. When IBM did enter the PC market, they:

*d. This is not true. Some firms narrow some aspects of their scope, or voluntarily even break up

35. As a firm progresses, it is invariably the case that it expands its scope:

a. IBM established a dominant design b. IBM had an established access to the business market, which Apple et al did not have c. IBM opted to encourage 3rd parties to write software and provide additional hardware, unlike Apple *d. All of the above

35. The essence of IBM's success in the PC industry in the 1980's was:

*a. The widespread practice of importing and exporting

35. Trading industries are distinguished by:

b. The PC market in the developed world was saturated, so was no longer attractive to IBM c. The PC was increasingly becoming a multimedia consumer product, whereas IBM is a business-oriented firm *d. Answers b and c

36. IBM sold its PC division to a Chinese company because:

a. Economies of scope b. Transaction costs c. Corporate complexity *d. All of the above

36. The main concepts to determine the scope of a firm's activities are:

a. Economies of scale refer to cost-advantage from higher volume of a single product b. Economies of scope refer to cost-advantage from spreading a common cost over multiple products *c. Answers a and b

37. Economies of scope and economies of scale both relate to lower average cost but:

a. Yes - growth has started to decline, and shakeout occurred years ago b. Yes - emphasis is on production efficiency, and the PC is being commoditised c. No - there is still huge growth potential in China, India, Brazil and so on *d. Answers a and b

37. Is the PC industry in the maturity stage of the life cycle?

*b. Change in every major aspect e.g. product evolution, the nature of competition

38. As the industry life cycle progresses, overall strategies need to:

*b. A global industry

38. Consumer electronics (laptops, personal devices etc.) are an example of:

*b. Expand the scope of its activities in some relevant way

38. The existence of economies of scope are likely to lead a company to:

*a. The USA and Canada

39. "Psychic distance" is the least between:

*d. It IS still true for brand extension, since creating and maintaining a brand does cost a lot e.g. in advertising

39. Although economies of scope refer to spreading cost, this is not the case for brand extension:

*b. de novo entrants

39. Start-up firms in a new industry are also sometimes known as:

*c. de alio entrants

40. Firms entering a new industry who were already established in a related industry are sometimes known as:

*b. The invisible hand

41. Adam Smith, the famous economist, called the market mechanism:

*a. Effective product innovation

41. The basis of entering a new industry at the Introduction phase is:

*a. Interacts across the world from the outset - especially regarding selling

42. A "born global" company is one which:

*a. Whether the transaction costs of buying in the activity in the market exceed the administrative cost of doing it themselves

42. A significant determining factor on whether a firm conducts an activity internally is:

*b. Matches its strongest resources & capabilities to the key success factors of the industry

42. Competitive advantage is achieved when a firm:

*a. Emerge from a strong national environment in this industry

43. In international industries competitive advantage often means a firm will:

a. The need for managers to understand a wider range of businesses b. The need for managers to operate differently to succeed in different businesses c. The extent of the linkages between the various businesses *d. All of the above

43. Increased corporate complexity because of expanded scope is caused by:

*b. Needs to be closely associated with the dominant design which emerges

43. Often, to succeed in the evolution from Introduction to Growth a firm:

*c. In producing those products or services that make intense use of those resources in which it has a relative abundance

44. A country has a comparative advantage:

*c. Not always as unrelated as it may seem e.g. the businesses may share some common attributes which can be exploited

44. A strategy of unrelated diversification is:

a. Offer a product or service which is designed to be "scaled up" in volume b. Obtain sufficient resources and build capabilities to support effective scaling-up of operations c. Have sufficient market access or commercial muscle to sell scaled-up volume *d. All of the above

44. To succeed as a leading player in the Growth phase a firm should:

*b. A country's relative efficiency in producing goods or services

45. Comparative advantage refers to:

*a. Growth, risk reduction and value creation

45. The most often cited benefits of diversification are:

*b. Operate as a specialist, niche player, thus avoiding the necessity to fully "scale up"

45. To survive the Growth phase profitably a firm NOT having all the attributes of a leading player could:

*c. Climate, minerals, history and culture

46. For the theory of comparative advantage a country's innate national endowments include its:

*b. Low growth does not look good for managers with an eye on their next job

46. The managers of firms in low-growth, cash-generative industries often opt for diversification because:

*c. Emphasise cost efficiency

46. To survive going into the Maturity phase of the industry life cycle a firm needs to:

a. Management, developed capital markets and an efficient legal system b. A large home market, and good transport and communication facilities c. Large military forces and a space capability *d. Answers a and b

47. For a modern country innate resources include:

*d. The experience may reduce risk, and secure their job; and if not it looks dynamic for securing their next job

48. A major reason why managers are attracted to diversification is:

*a. Determine a country's competitive advantage for a sector

48. Porter's national diamond identifies some factors that:

*b. The middle-sized companies

48. With maturity, the type of firms who fail to survive are typically:

a. Strategy, structure and rivalry, such as intense domestic competition b. Factor conditions, such as the scarcity or abundance of certain resources c. Related and supporting industries, such as clusters of complementary or supporting industries *d. All of the above

49. Besides demand conditions the other factors in Porter's national diamond are:

*a. The linkages or synergies between the businesses concerned

49. The primary source of value creation from diversification is likely to be:

a. Technological substitution e.g. the horse and cart replaced by the car b. Local regional decline due to low-cost foreign competition c. Changing consumer tastes e.g. tobacco *d. Any of the above

49. The typical cause of the Decline phase in an industry is:

a. Ceasing of product and process innovation b. Incumbents going out of business c. Remnant niche-sized players may survive profitably *d. All of the above

50. The decline phase of the industry life cycle is characterised by:

a. Policymakers, such as politicians and civil servants b. The Boards of companies when deciding where to locate their major resource centers (Corporate HQ, R&D labs, Marketing etc.) c. Venture Capitalists when influencing where a start-up company should locate itself *d. All of the above

50. The people who might profitably use a Porter's national diamond analysis are:

*b. Enough cash generated by one set of internal firms is used by other internal firms in need of cash

51. An internal capital market occurs when:

*a. The way capacity is dismantled as demand declines, and how dramatic is the decline in demand

51. The determining factors of how calamitous the Decline phase turns out to be are:

*c. Exporting firm-specific competitive capabilities from home territory requires close attention and may not even be possible

51. When considering where to locate production globally:

*a. Despite the cost-savings, poor investment decisions tend to be made

52. A major problem associated with internal capital markets is:

*a. Effective product innovation i.e. getting new products launched and in front of customers

52. The key success factor in the Introduction phase of the industry is:

a. Some products or services are almost impossible to export or import b. Some goods have to be produced where they are consumed: eating a meal in a restaurant would be a good example *c. Answers a and b both illustrate the idea of tradability

52. Tradability refers to the idea that:

*c. Employees can be transferred rather than hired / fired, and the firm knows these people well

53. An advantage of diversification is a better internal labour market because:

*b. To divide and locate production between countries with different natural resources that suit each stage of production

53. Firms can use a value chain analysis of their industry:

*d. Being able to scale up volume production and operations effectively and efficiently

53. The key success factor for leading firms in the Growth phase is:

*b. Be able to see a way to make superior profits in that industry

54. Michael Porter's "attractiveness test" means that a firm considering diversifying into another industry should:

*a. At least five factors need to be considered

54. The diagram illustrating the optimal location of value chain activities shows that:

*b. Maintaining cost efficiency as good as competitors

54. The key success factor for firms surviving in the Maturity phase is:

*d. The "better-off" test

55. Of Michael Porter's 3 tests of whether a proposed diversification will create value, the most important one is usually:

a. They are owned by the government b. They are wholly or partly government-funded c. They often provide a service at price well below that of an equivalent private sector firm *d. All of the above

55. Public sector firms differ from private sector firms in that:

*a. Where a firm's competitive advantage is based on national resource advantages it should not move production abroad

55. That Tata Motors should stay in India and export its cars round the world shows that:

*b. Having all of the resources and capabilities needed to earn a higher potential profitability

56. "Appropriating the returns to a resource" means:

*a. Services which cannot be provided by the private sector e.g. an army for defence

56. In some cases, public sector organisations provide:

*a. Tends to be particularly unsuccessful

56. Mergers and acquisitions are frequent. Diversifying into another industry this way:

*d. Firms to share resources and capabilities

57. International strategic alliances allow:

*b. A trend for diversified firms to refocus and reduce their diversification

57. Over the past 30 years, the tendency in the USA and Europe has been:

*b. Have stakeholders some of whom are obliged by law to act in the national or public interest

57. Public sector organisations:

*c. It moves to own more stages of the value chain, either upstream or downstream of its core activity

58. A firm becomes more vertically integrated when:

*c. Often do make profits (called a surplus), but these are re-invested in the organisation

58. Not-for-profit organisations:

a. Allow firms to economize on resources b. Allow firms access to specialized resources or capabilities *c. Answers a and b

58. The advantage of alliances is that they:

a. Firms squabble over the contributions and returns from the alliance b. Each firm really wants to acquire the other's core capabilities c. The firms are Customer and Supplier *d. Either answers a or b

59. Alliances usually go wrong if:

*c. De-integration or disaggregation

59. Outsourcing is a form of:

a. Shaped by political considerations b. Multiple, often conflicting and shifting c. Lacking the overriding obligation to return a profit to shareholders *d. All of the above

59. The aims, goals and objectives of public sector firms are characteristically:

*b. There are significant economies of scale in your industry

60. Being international can be a source of competitive advantage if:

a. The absence of a market e.g. the police b. A legally enforced monopoly c. Heavily unionised workforces *d. Answers a and b

60. Further characteristics of -some not all - public sector organisations include:

*b. Because in some industries the conditions favouring further vertical integration outweigh the benefits of focusing and outsourcing

60. The move over the past 25 years to refocus and de-integrate has not been universal; some industries have further vertically integrated:

*b. A cost-saving arising from the technicalities of performing integrated processes

61. A "technical economy" is:

*a. Replicating the product or service in other countries or markets

61. Knowledge-based assets are best exploited through:

*c. Public sector organisations are often legally obliged to take a wide spectrum of stakeholders' views into account

61. Stakeholder analysis for public sector organisations is particularly important because:

*a. To learn from the fiercest competition or most demanding customers in the world

62. An advantage of internationalizing can be:

*a. Identifying, understanding and prioritizing the needs of stakeholders

62. Stakeholder analysis in the public sector is about:

a. There can no longer be a market operating between them for the item concerned b. There can be an adversarial relationship as each tries to gain advantage c. There can be strategic benefit, so long as the partners try to jointly maximise their profit in the downstream market *d. All of the above

62. When a customer and a supplier choose to, or are technically obliged to, integrate their processes:

a. Defeating the Gauls, Goths and Barbarians b. Using profits from one country to subsidize a price war in another country *c. Answer b and subtler versions of the same principle

63. Competing strategically means:

*c. Vertical integration of the processes involved

63. Large transaction-specific investments tend to lead to:

*d. Easily constructing alternative plausible views of how the world may look, often in the more distant future eg 25 years

63. Scenario planning is a tool for:

*b. Now is the time to attack his high-price markets and grow your market share there

64. If a rival uses cash flows from one country to finance aggressive pricing in another:

*a. The lack of a market removes the high-powered incentive of market forces to keep costs low

64. Once a firm buys its supplier in order to vertically integrate a process:

*a. Externally and internally sourced inputs

65. High powered-incentives and low-powered incentives respectively generally apply to:

*c. The world now has more than three major economic centres

65. The "triad doctrine" no longer works because:

*a. It should be a pleasurable experience that varies with national cultural differences

66. International retailing has generally not succeeded because:

*d. It depends very much on the circumstances whether it's best to source from the market or vertically integrate

66. When increased flexibility is required:

a. Structure follows strategy, and their original strategies may now be irrelevant b. Once you have established them successfully, it is hard to change both international structures and strategies c. Strategy follows structure, so they have to adapt their global strategies to the reality of global political structures *d. Answers a and b

67. Many MNCs are 'captives of their history' because:

*b. The entire integrated value-chain is subject to the same single market risk

67. One huge problem with vertical integration of activities with only one major sellable output is:

*c. TNCs are a globally integrated network of independent resources and capabilities

68. Transnational corporations (TNCs) differ from multinational corporations (MNCs) in that:

a. The firm has built a capability to respond speedily in a coordinated fashion b. The firm maintains spare capacity, and can bear spare capacity c. The market cannot respond as quickly, or capacity is unavailable *d. All of the above

68. Vertical integration may afford flexibility in responding to uncertain demand when:

*a. Creating or moving divisional or corporate headquarters out of the firm's country of origin

69. A symbol of TNCs acting differently from MNCs is:

a. Top managers have a complete knowledge of the entire value chain b. The capital invested and the fixed costs are often much higher for a vertically integrated firm c. A decline in sales and profits in the end market affects all stages simultaneously *d. Answers b and c

69. Full vertical integration compounds risk because:

*a. It depends on the specific factors prevailing

70. To make a choice between vertical integration or external sourcing, which statement is true?

*c. A long-term agreement with competitors to fix the market price for a commodity product

71. Which of these choices is NOT an example of a vertical relationship?

*a. Attempts to secure optimum benefits from close collaboration whilst preserving some form of market transaction

72. A hybrid vertical relationship is one which:

b. Such a company may find it loses the ability to understand the industry it is in c. A group of suppliers and/or customers may decide to co-ordinate themselves, and isolate the virtual company *d. Answers b and c

73. There was a fashionable trend towards "virtual companies" in recent years, who make the largest profits in a value chain by co-ordinating all the other aspects. The risk with this plan is:

*d. Relative market share

74. Which of these is NOT a factor to be included in "industry attractiveness" in the GE/McKinsey Matrix:

a. It's only based on one variable to judge market attractiveness b. It's only based on one variable to assess competitive strength c. It presumes a portfolio of businesses which have little synergy or mutual dependence *d. All of the above

75. A major limitation of the BCG Growth-Share Matrix is:

*b. Inherently risky, but at some stage necessary - so should be based on sound analysis

76. A key message for corporate bosses is to recognise that diversification is: