MGT 4090
30. Spending money raising market perceptions of Hyundai's brand was: a. A worthwhile investment in intangible resources b. A worthwhile investment in human resources c. Eventually recognized in the balance sheet d. A waste of money
A
35. Modern business strategy has evolved across time due to: a. Business school academics developing new theories, which are taught to new graduates b. Earlier methods have simply been seen as old-fashioned c. Earlier thinking was repeatedly demonstrated to be inadequate in coping with the evolving more turbulent environment d. Computerisation and the internet age meaning that we know more about what's really going on nowadays
A
38. 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
45. A value chain analysis: a. Is an alternative framework within which to compare costs with your competitors b. Is an alternative framework within which to compare cost improvements in the last few years c. Is an alternative framework within which to compare a firm's profit margins with its competitors d. Is a framework for analyzing the chain of production of a good from nature to the 'final consumer'
A
54. 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
58. Path dependence is: a. Where you are today, with all your knowledge, being a result of how you got here b. The opposite: you could have got to today's position a hundred different ways c. Total reliance on one's own history d. A way of planning the careers of future CEOs
A
61. Dynamic capabilities: a. Are the capacity to learn new capabilities b. Can be acquired through 'reverse takeovers' c. Develop rapidly in some industries, then die d. Answers b and c
A
41. 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 supplier market, and as a seller in the customer market c. The labor market and the input markets d. The product market divided at least in two segments (such as mid-size car and SUV market segments)
B
42. 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
46. The analytical tools described in the text: a. Must be used if one is to understand the industry structure b. Are simply that; just tools. Their value depends on the skill with which they are deployed c. Should really only be used by academics d. Both a and c
B
46. The shift in strategy from a plan to a direction leads to@ a. A downgrade its role in management b. An overt reliance on flexibility and responsiveness c. A need for top managers' training d. Less work for top managers
B
53. A cost leadership strategy: a. Requires a commodity product b. Requires a firm to commoditize their product - i.e. no frills - 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
53. 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 insight and understanding of a firm's industry, and its position within the industry c. Requires artistic flair and creative questioning d. Requires detailed knowledge of business strategy theory, and all its intellectual roots
B
58. 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
24. One can view the connection between the general environment and the industry environment as: 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
26. To value 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 know how they could be used optimally d. This is a specialist task for professional accountants
C
35. 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 needs 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
41. The development of "collateralized debt obligations", by Drexel Burnham Lambert, shows that: a. Well-paid bankers always come up with good ideas b. The financial system can be very fragile c. Financial products are easily copied so first movers must quickly establish a large track record of successful trades d. A financial crisis was inevitable
C
44. 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
44. Tight complex organizational routines: a. Are based on unique corporate structures b. Can be copied if rivals hire the right employees c. Are complex capabilities that are hard for rivals to replicate d. Answers a and c
C
46. The value chain analysis of Singapore Airlines shown is: a. A fully-worked professional analysis that could be sold to SA b. A first cut analysis, the result of ten minutes work c. A good start on analysis but now needs to be followed up with hard figures of cost comparisons between SA and its rivals d. A waste of time; SA does not have a cost leadership strategy anyway
C
50. A capability that is "needed to play" is: a. A threshold resource b. A unique resource c. A threshold competence d. A core competence
C
52. 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
52. 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
60. 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
21. A firm with a competitive advantage other than superior 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
27. "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
27. Value is created when: a. The price that the customer is willing to pay for a product exceeds the firm's direct cost of production b. The surplus of value is distributed between customers and producers in the industry by the forces of competition c. The value of a product to consumers is more than they paid for it d. The price that the customer is willing to pay for a product exceeds the firm's cost
D
34. 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
35. Porter's firm value chain can be used to: a. Estimate the value added 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
36. Industries such as pharmaceuticals earn very high returns on investment. Such industries: a. Tend to be protected from competition by legal restrictions b. Can only maintain such high returns for short periods c. Always exist when intangible products are traded d. Tend to have high entry barriers and differentiated products
D
37. 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
44. 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
49. 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
50. It is quite natural to combine cost leadership and differentiation strategies: a. Into a strategy where you focus on doing both b. No: Porter says they are mutually exclusive c. If you do, you will probably end up being 'stuck in the middle' d. Answers b and c
D
61. 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
62. Acquiring a firm with similar products but sales in new markets is one of the easier ways to: a. Acquire new capabilities or strengthen old ones b. Extend current capabilities into new markets c. Destroy vital capabilities, if key staff in the acquired firm soon leave d. Answers b and c
D
63. Alliances are a way to develop new capabilities that: a. Is less permanent than an acquisition/merger b. Is cheaper than an acquisition or merger c. Will guarantee competitive advantage d. Answers a and b
D
65. Some firms introduce products into specific countries in a sequence: a. To provide sales for outmoded products b. To progressively develop workforce capabilities c. To please local politicians d. All of the above
D
Strategic goals should be:
D All of the above a. Simple b. Consistent c. Long term
Strategy is fundamentally about:
Success in achieving long-term goals
21. Understanding the external environment of a firm requires one ultimately to identify: a. The opportunities to make profit in the industry b. The five forces identified by Porter's model c. The barriers to entry and to exit in that industry d. The expected level of profit in the mid-term for that industry
A
22. Given the plethora of external influences, understanding the external environment requires managers to: a. Use a framework or a system that allows them to organize information and rank factors b. Monitor their rivals closely to detect signals of change in their strategies c. Use all existing techniques to gather and analyze information d. Work on the matter full-time
A
23. 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. Strategists may as well shoot themselves, this industry is so boring
A
25. We can define the following general resources for a firm: a. Human, Intangible and Tangible b. Tangible, Intaglio and Humane c. Humane, Fungible and Tangible d. Physical, Financial, and Other Current
A
30. If a firm's strategy ensures it is consistent with both its internal and external environment, it achieves: a. Strategic fit b. Strategic adjustment c. Environment consistency d. Political and social fit
A
31. 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
32. 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
32. 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 resource b. Identify and diagnose the rival's advantage, and then acquire the resource 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
36. Human Resource capabilities: a. Include the skills to train and develop people b. Are generally a firm's greatest resource c. Are the distinctive capability of most automobile makers d. Answer b and c
A
36. 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 **This question had two answers?
A
37. 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
39. 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
40. 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
41. 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
47. A good dealership network is a key capability for an automaker a. No: dealerships can be independent, or bought and sold, so they are a network of resources in which Hyundai has invested heavily b. So building a global dealership network was Hyundai's first substantial global move c. They are also assets against which firms can borrow d. Answers b and c
A
48. 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
48. The difference between intended and realised strategy is: a. So great that arguably only 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
49. 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
52. "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
54. BMW's core competence is its ability to integrate: a. World-class engineering, design excellence and effective marketing b. World-class engineering, design excellence and knowledge of global markets c. World-class engineering, design excellence and products for every luxury market d. World-class products, design excellence and products for every luxury market
A
55. 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
56. 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
58. 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
69. One useful way to analyse the drivers of a firm's relative profitability is: a. To disaggregate return on capital employed into component ratios that point to the main underlying drivers of profitability b. To disaggregate assets into component parts that point to the main drivers of profitability c. To undertake a benchmarking study to compare a firm's profitability with that of its rivals d. To conduct a survey of managers to ask what they think are the reasons why their firm is profitable
A
22. 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
23. 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
24. 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
27. Companies' "book values" are generally 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
B
27. The textbook limits attention to: a. The global business environment b. Profit-making companies in market economies c. Both public and private sector firms in English-speaking countries d. Profit making companies above a certain size
B
28. 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
28. 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
29. "Consumer surplus" is: a. The difference between the price customers expect to pay, and the price they would have been willing to pay b. The total of all the differences between the price each customer actually pays and the maximum price they would have been willing to pay, all other things being equal c. The difference between the costs incurred in serving customers, and the revenue that they generate d. The amount of extra product consumers buy because of the difference between the normal price and a special offer price
B
30. 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
31. The basic premise of industry analysis is that: a. Competition can be assessed between monopoly and perfect competition within the spectrum of industry structures 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
33. Strategy and tactics: a. Are interchangeable terms b. Relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively c. Can be seen as what top managers do and what lower level employees do, respectively d. None of the above
B
33. The idea with Porter's 5 Forces is to: a. Quantify the 5 forces, to ideally produce 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 these forces d. Use it to construct a plan to achieve monopoly power
B
34. Because marketing is a threshold capability for Hyundai: a. They learned all the vital lessons early on b. To counter their earlier poor image they have had to catch up their rivals' capabilities c. They do not need to pay it significant attention d. They now excel at marketing
B
35. Rivals can be pre-empted from entering a firm's markets using the above methods only if: a. There are significant economies of scale in this industry b. There is significant first-mover advantage in this industry c. Brand names matter to consumers in this industry d. Answers a and b
B
38. In the military field, we generally make the following distinction between strategy and tactics: a. Tactics are the overall plan whereas strategy focuses on specific actions b. Tactics are a scheme of specific everyday actions, practices and techniques whereas strategy relates to the top-level plan c. Tactics encompass specific political actions within the firm whereas strategy is the overall plan for deploying resources to establish a favorable position d. Tactics are the overall plan whereas strategy is concerned with the maneuvers to win battles
B
40. 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
42. 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
43. Differentiation is when a firm: a. Offers customers something valuable and unique b. Offers customers something valuable and unique other than a low price c. Offers customers a uniquely low price d. Offers customers products with many additional features
B
43. 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 need to make that resource or capability immobile c. Firms must use patents and the full array of legal protections d. Everyone involved in this activity must be paid higher than the rivals could pay
B
47. 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
48. 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
50. If a firm has no formal, intended strategy: a. The firm will soon go out of business b. A strategy of sorts will exist; an emergent strategy c. It cannot be a large company, or there would be a corporate report detailing the intended strategy d. There are no such companies
B
55. 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
55. Truly successful firms: a. Are told their strengths and weaknesses by external experts b. Are honest enough to recognize their own true strengths and weaknesses themselves c. Obtain confirmation of their strengths and weaknesses from outside experts d. Answers b and c
B
56. 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 evidently become more important c. Porter's model was developed over 30 years ago, so is old-fashioned d. Answers b and c
B
56. 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. Many firms are run by CEOs who think strategically, but fail to act strategically d. Many firms have had several different CEOs, each determined to pursue different strategies
B
57. 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
57. Porter's 5 Forces model was based on a static, stable view of industry which ignores dynamic forces: a. Because industries in Porter's day were not very dynamic b. Which can easily be dealt with by taking a dynamic perspective of the forces e.g. Innovation is a consequence of Rivalry c. And so has outlived its usefulness, and should be replaced with something more up to date d. Which was Porter's intention, because you have to "walk before you can run"
B
59. Early experiences for some major oil companies: a. Dictate their current positions b. Mean some of their modern core competences show path dependency c. Are irrelevant to current corporate cultures d. Are indelibly printed on older staff's minds
B
59. 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
20. 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 a persistently higher profit margin 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
21. The internal environment: a. Is the structure inside an industry b. Has become less important as an explanation of firms' profitability c. Is how a firm's resources and capabilities are deployed to deliver its business strategy d. Can safely be left to the HR Department to manage
C
29. The fundamental role of strategy is to: a. Determine how the firm will make a profit in its industry environment: b. Determine how the firm will deploy its resources to satisfy its short-term financial goals c. Determine how the firm will deploy its resources to satisfy its long-term goals, given the conditions in the competitive environment d. Determine how the firm can organize its own activities and achieve dominance
C
34. 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 should be welcomed
C
34. Modern business strategy has evolved across time due to: a. Are interchangeable terms b. Relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively c. Can be seen as what top managers do and what lower level employees do, respectively d. None of the above
C
36. By the 1980s, thinking on strategy had shifted to: a. An emphasis on competition, market share and industry profitability b. The development of the "PIMS" at the Strategic Planning Institute c. Research on the resource and capability approach d. The management of political, economic and technological influences
C
37. The shift from Corporate Planning to Strategy-Making implies: a. From the sources of profit outside the firm to the sources of profit within the firm b. To the Resource-based view of the firm c. Both a and b d. From the structure-based approach to the value-added perspective
C
38. A process is: a. What suspects endure in court rooms b. A long line of people performing one activity c. A sequence of coordinated actions that performs a task d. The chain of command above an employee
C
39. A contemporary phenomenon is known as "winner-take-all markets". This concept is exemplified by: a. Enron and WorldCom b. E-Trade and WebVan c. Microsoft (PC software) and Intel (PC core processors) d. Peapod in grocery retailing
C
39. In most small firms a process which is not usually routinized is: a. The sales process b. The end-of-month accounting process c. The staff disciplinary proceedings process d. The process for getting debtors to pay up
C
39. 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
40. 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
41. 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
42. 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
47. The central task of a differentiation strategy is: a. To see how you can 'tweak' the product by adding new features that differentiate it from rival products 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
C
49. 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
51. In the automobile industry resources such as brand strength: a. Are common enough; pick one, then use it b. Can be bought - look at Jaguar (three owners in the last ten years) c. Cannot be easily acquired d. Answers a and b
C
53. 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
55. 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
56. Unsuccessful firms: a. Don't know their own strengths and weaknesses b. Don't know where to invest their efforts and resources in remedying weaknesses c. Are arrogant about current capabilities, relying on past glories d. Can fall into a, b or c
C
57. 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
64. The point of 'resource leveraging' is to: a. Use all a firm's resources more efficiently b. Reduce the money tied up in working capital c. Limit the range of new capabilities a firm is trying to develop at one time d. Answers b and c
C
66. The question "What does a firm need to survive competition?": a. Can be addressed through a careful 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
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
From the three stories describing key attributes of strategy at the beginning of the chapter, four factors stand out:
Consistent goals, understanding the environment, objective appraisal of resources, and effective implementation
19. 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
22. 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. Won that year's Nobel prize for Economics d. Kick-started the modern resource-based view of the firm
D
23. To understand the environment, the starting point of the analysis is: a. Classifying the environmental influences by source b. Classifying the environmental influences by proximity c. Both a and b d. To identify the industry you are in; your customers, suppliers and competitors
D
24. 3M is: a. A successful 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 launch new Fast Moving Consumer Products d. A group of businesses with a core capability to develop and launch new products using adhesives, coatings, and other technologies
D
25. 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
26. 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
28. The approach taken in the textbook primarily assumes that: a. CSR is taking over from generating profits as the primary corporate goal b. Top managers determine the success of a firm by concentrating on short-term profits c. The "Anglo-Saxon" model of shareholder capitalism is the right one d. Profit making firms are seeking to maximise profits for the owners over the long term
D
29. "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
29. Organizational culture is: a. The way a firm is organized b. A firm's deeply held values, traditions and social norms c. A firm's deeply held values, traditions and social norms d. Answers b and c
D
30. In an industry, the profits earned by firms are determined by: a. The overall economic situation, and Porter's five forces of competition b. The degree of concentration of the industry 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
31. The notion of "strategic fit": a. Does not mean much, and is a common statement made in strategic literature b. Implies coherence between resources, capabilities, structure and systems c. Expresses how well a firm's strategy fits its internal and external environment d. Answers b and c
D
32. Modern strategy applied to the business world shares with military strategy: a. Only linguistic roots b. Some authors such as Sun Tzu and his "Art of War" c. The existence of resources, conflict, and battle between players d. Decisions of significance to overall success, and major resource commitment
D
33. Apple and 3M's ability to develop genuinely new products are: a. Part of their corporate structures b. Due entirely to their unique corporate cultures c. Lucky coincidences d. One of their core operational capabilities
D
33. 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
37. 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
38. Causal ambiguity and uncertain imitability are: a. Two academic phrases to describe a state of confusion b. Related because causal ambiguity causes uncertain imitability (the rival doesn't know what to imitate) c. Anyone who tries to imitate something they don't fully understand is asking for trouble d. All of the above
D
40. 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 organisations achieve their long-term objectives
D
43. 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
44. 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
45. Hyundai overcame the most difficult competitive advantages held by the incumbent automakers by: a. Recruiting experts from other auto companies b. Benchmarking the key capabilities needed to succeed, then making clear commitments to achieve them c. Making long term financial and business commitments to the auto industry d. All of the above
D
45. The 1950's/60's style of Corporate Planning assumed that: a. There would be almost no difference between the intended strategy and the realised strategy b. The business world is essentially a predictable environment c. There was unlikely to be anything unexpected to occur of sufficient importance to disrupt the strategic plan d. All of the above
D
45. 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 "our" (the customer's) industry is relatively fragmented d. All of the above
D
46. Superior capabilities are often traced to staff skills and efforts a. So pay is key: pay the highest rates and the best talents will walk into your firm b. You need to pay a good market rate to attract and retain top talent c. Having the right corporate culture and being set the right challenges motivates good staff d. Answers b and c
D
47. 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 they use the tools described in the chapter or not
D
49. 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
50. 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
51. 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
51. 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
51. 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
52. 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
53. 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
54. 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
54. Maximising shareholder value: a. Is the sole objective of all profit-making companies in every country b. Is the primary legal obligation only in the English-speaking countries c. Is not the only legal obligation in central & southern Europe, and in Asia. Firms here are legally obliged to take account of a broad range of stakeholder interests d. Both b and c
D
57. 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
59. Corporate Social Responsibility: a. Fits more readily with the central/southern Europe and Asian legal framework of broader stakeholder obligations b. Is not seen as an imperative requirement by all influential thinkers c. Is becoming more important for all firms to take account of due to the threat of adverse publicity d. All of the above
D
60. Core rigidities can: a. And must be eliminated by a new CEO b. Be the necessary obverse of core capabilities c. Inhibit firms' ability to develop new capabilities d. Answers b and c
D
60. The underlying purpose of studying strategy is: a. To reach quick-fix decisions b. To better understand the issues facing top managers c. To work out how to best create value in the future d. Both b and c
D
67. The value to managers of understanding key success factors is: a. Self-evident b. Legitimate because it is accepted by the academic world c. In question because some important academics disagree with it d. Generally accepted by the corporate, consulting and academic worlds, but as with most business concepts and models, there are always some detractors
D
68. An industry "direct modelling of profitability" is defined in the text as: a. The identification of the drivers of a firm's relative profitability within an industry b. The statistical modeling of the profit as determined by several variables, using multiple regression analysis c. The comparative modeling of one industry versus another industry d. Setting up a model of industry profitability from the interaction of the Five Forces
D
25. The core of a firm's business environment is determined by: a. Its relationships with customers, competitors, and suppliers b. Its relationships with customers, rivals, government, and suppliers c. Its relationships with its major stakeholders d. Its vision and mission
A
42. 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
43. A good starting-point to identify a large firm's strategy is: a. To read the annual corporate report b. To call the CEO and ask him/her what the strategy is c. To look on the company's website d. To search the internet to find out if someone else has already done the work
A
48. Increasing flight reliability at Singapore Airlines: 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
Success is fundamentally linked to:
A soundly formulated and effectively implemented strategy
26. If top management understands the customers, suppliers, competitors and the general environment then: a. It will be a successful company b. A successful strategy will emerge from these factors c. This is a good basis for assessing the industry, but has little bearing on predicting the success of an individual company d. They can save money by not employing management consultants
C
26. 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
28. Apple's ITunes success was an example of: a. A great new IT product: compatible hardware, software and content all working together b. The decline of the conventional recorded music industry c. An innovative and legal business model replacing the conventional (legal) recorded music business model d. Apple's non-stop stream of wacky gimmicks
C
32. 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
31. 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