MGT490 MidTerm

The black swans in chronological order

1. Large MNC Accounting Scandals 2. Global financial crisis 3. European Recession

Which of the following statements about competitive advantage is not true? A. A firm's competitive advantage is always absolute, not relative. B. A firm can gain a competitive advantage by providing goods similar to its competitors' goods at a lower price. C. A firm will have a sustainable competitive advantage when it outperforms its competitors over a prolonged period of time. D. A firm's past performance does not guarantee its future performance.

A. A firm's competitive advantage is always absolute, not relative.

Not all stakeholder groups are created equal. Their differential power can influence how economic value is both created and captured. As noted in the textbook, in the ________ industry, one of the most powerful external stakeholders has historically been unions. A. aerospace B. computer C. healthcare D. hospitality E. retailing

A. Aerospace

A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy A. analysis. B. formulation. C. control. D. implementation.

A. Analysis

Which of the following groups is most likely to be considered a firm's internal stakeholder? A. board members B. customers C. creditors D. alliance partners

A. Board members

According to the Level-5 leadership pyramid, the Level 2 manager is a(n) A. Contributing team member. B. Effective leader. C. Strategic leader. D. Competent manager.

A. Contributing team member

The board of directors of Best Digital Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate? A. corporate strategy B. business strategy C. divisional strategy D. functional strategy

A. Corporate strategy

Widgets Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Widgets Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Widgets Inc. is a(n) _____ for the appliance manufacturing company. A. External stakeholder B. Representative sample C. Internal stakeholder D. Focus group

A. External Stakeholder

Which of the following statements with regard to determining firm performance is true? A. External analysis will help understand the industry effects that determine a firm's performance. B. Industry effects attribute firm performance to the actions managers take within a chosen industry. C. Industry effects are more important than firm effects in determining a firm's performance. D. Firm and industry effects are independent of each other.

A. External analysis will help understand the industry effects that determine a firm's performance.

Which of the following companies would most likely benefit from an economic recession? A. Fast Chow Inc., which specializes in selling low-cost Asian food B. Top Grill Inc., which offers expensive steaks and other meats C. Fancy Jewelers Inc., which sells top-end gold and platinum jewelry D. Luxury Suites Inc., which provides luxurious hotel accommodations

A. Fast Chow Inc., which specializes in selling low-cost Asian food

Implementing the strategy is often overlooked by senior managers especially in large organizations. What level of manager is often responsible for making sure the strategy gets implemented in alignment with the corporate goals? A. functional manager B. corporate manager C. business director D. project manager E. board member

A. Functional manager

Which of the following questions does the values espoused by a company primarily answer? A. How do we accomplish our goals? B. What is the value added to a good or service at each step in the production? C. Which of the value chain activities are primary? D. What is the company's customer lifetime value?

A. How do we accomplish our goals?

Which of the following questions would a firm's business strategy ideally answer? A. How to compete? B. How to implement the functional strategy? C. Why should we compete? D. Where to compete?

A. How to compete?

Revved Rider Inc., a motorcycle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Revved Rider Inc. from this scenario? A. It has a competitive advantage over the other firms. B. It has a direct investment in the other firms. C. It has competitive parity with the other firms. D. It has an exchange relationship with the other firms.

A. It has a competitive advantage over the other firms.

Which of the following is a stakeholder attribute that managers should consider at every step in a stakeholder impact analysis? A. legitimacy B. solvency C. supremacy D. literacy

A. Legitimacy

Quick Eats is a fast-food restaurant that has recently entered the hospitality industry. Since most of its competitors are pursuing a low-cost position and doing well, Quick Eats also wants to adopt the same strategy. Which of the following will be a likely implication of this decision? A. Quick Eats will face low profit potential. B. Quick Eats will not face any direct competition in the industry. C. Quick Eats will be able to create higher value for its customers. D. Quick Eats will be better placed to gain a competitive advantage in the industry.

A. Quick Eats will face low profit potential.

Which of the following statements will effectively guide a strategist? A. The principles of strategic management can be applied universally to all organizations. B. Industry and firm effects that determine firm performance are independent of each other. C. It is necessary to isolate the key stakeholders and their needs when formulating a strategy. D. Strategy is all about competitive benchmarking and operational effectiveness.

A. The principles of strategic management can be applied universally to all organizations.

Which of the following statements is true of customer-oriented visions? A. They define a business in terms of providing solutions to people's needs. B. They state an organization's goals in terms of a good or service provided to customers. C. They are inflexible with regard to adapting to changing environments. D. They tend to force managers to take a myopic view of the business environment.

A. They define a business in terms of providing solutions to people's needs.

Which of the following statements accurately brings out the difference between an organization's vision and mission? A. Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished. B. Vision is valid at the functional level of the organization, whereas mission covers the entire organization. C. Vision is short-term: oriented and related to the organization's present, whereas the mission is futuristic. D. Mission is the organization's aspirations and vision is about how these aspirations can be made true.

A. Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished.

Which of the following statements related to a firm's stakeholders is not true? A. While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits. B. A firm's stakeholders include organizations and groups along with individuals who can affect or be affected by the firm's actions. C. Effective stakeholder management is an example of the actions managers can take in order to enhance a firm's competitive advantage. D. If internal or external stakeholders withhold participation in the firm's exchange relationships, it can have severe negative performance implications.

A. While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.

Which of the following groups will not be considered a company's internal stakeholder? A. suppliers B. shareholders C. managers D. board members

A. suppliers

A company's vision primarily states A. what the company wants to accomplish ultimately. B. how the company plans to accomplish its goals. C. how the company plans to compete in its industry. D. what the company actually does to generate revenues.

A. what the company wants to accomplish ultimately.

Which of the following firms most likely has the lowest bargaining power as a buyer? A. an automobile company that can backwardly integrate to produce its own component parts B .a cell phone company that requires highly customized software for its phones C. a government agency that buys large quantities of cement from a private supplier D. a fast food chain that has multiple suppliers for processed meat

B .a cell phone company that requires highly customized software for its phones

Which of the following is a feature of a fragmented industry? A. A fragmented industry is dominated by one large firm. B. A fragmented industry consists of many small firms. C. A fragmented industry allows firms to set prices. D. A fragmented industry tends to generate high profitability.

B. A fragmented industry consists of many small firms.

Which of the following statements is true of the Level-5 leadership pyramid? A. Successful companies are led by Level-1 executives. B. Each level of leadership builds upon the previous one in the pyramid. C. Once a manager moves to higher levels, he or she loses the qualities acquired in the previous levels to gain new ones. D. At Level 3, managers are capable of devising a vision and mission to guide the firm toward superior performance.

B. Each level of leadership builds upon the previous one in the pyramid.

The flexibility the organization showed by entering animal control and policing rather than remaining only a shelter for stray animals is an indication of what? A. having ethical standards and norms B. having a customer-oriented vision C. having a product-oriented vision D. leveraging a large strategic commitment E. Level-5 leadership

B. Having a customer-oriented vision

According to the text, superior performance within the strategic business unit (SBU) is sought by asking which major question? A. Who are the competitors? B. How to compete? C. Where to compete? D. When to compete? E. Why to compete?

B. How to compete?

A firm is likely to have a competitive advantage when it: A. Provides goods similar to those of its competitors, but at a higher price. B. Provides services that consumers will value more than those of its rivals. C. Performs at a level similar to the other firms in the industry. D. minimizes the difference between value creation and the costs involved.

B. Provides services that consumers will value more than those of its rivals.

Christine Benninger as President of the Humane Society is facing many challenges. To be successful she will need to use her influence and power in directing others. What term from the text is used to describe this skill? A. realizing a strategy B. strategic leadership C. upper-echelons theory D. creating an effective mission dominant strategic plan

B. Strategic leadership

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication? A. The company will have a short-term, unidirectional focus. B. The company will tend to be more flexible when adapting to changing environments. C. the company will clearly define how it means to satisfy a customer need. D. the company will fail to establish a positive relationship between its vision statement and performance.

B. The company will tend to be more flexible when adapting to changing environments.

Why are black swan events often bad for business? A. They foster a false sense of prosperity, which results in economic depression. B. They erode the implicit trust between the corporate world and society. C. They allow companies to gain a competitive advantage unfairly. D. They contribute to competitive parity, which hinders economic growth.

B. They erode the implicit trust between the corporate world and society.

Mr. Fulgham states the price of water should be commensurate with the costs of gathering, cleaning, and transporting it for end use. What are the two monthly expenses that most people in the West pay that are much larger than the monthly water bill? A. bread and milk expenses B. cable and cell phone bills C. fast food and candy expenses D. cell phone and gasoline bills

B. cable and cell phone bills

Strategic group mapping establishes that: A. competitive pressures within an industry are similar among all strategic groups. B. competitive rivalry is strongest between firms that are within the same strategic group. C. product features and prices are irrelevant to a strategic group. D. rivals inside a strategic group serve different customers.

B. competitive rivalry is strongest between firms that are within the same strategic group.

Mr. Fulgham points out that the pricing of water is essentially free in many places. He notes that it is hard for consumers to make good decisions on the use of a resource if it is heavily subsidized. Which aspect of the five forces does this situation impact most directly? A. Raises barriers to entry B. price sensitivity of buyers C. Increases threat of substitutes D. Switching costs of suppliers E. backward integration of buyers

B. price sensitivity of buyers

Which of the following statements is true of an oligopoly? A. In an oligopoly, competing firms are most often independent of each other. B. In an oligopoly, price-competition is the preferred mode of competition. C. An oligopoly is often analyzed using game theory. D. An oligopoly is characterized by low entry barriers.

C. An oligopoly is often analyzed using game theory.

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained? A. Complementary products and services like battery charging and service stations were pervasive. B. Suppliers in the automotive industry had low bargaining power. C. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry. D. Other American automakers of plug-in hybrid sports cars, like Fisker Automotive, filed for bankruptcy.

C. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

An organization's ____________ describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete. A. promissory note B. code of conduct C. mission D. vision

C. Mission

Mr. Fulgham cites Singapore as a model city in the use of their water resources. Which of the five forces does this "four tap" program impact most directly? A. Rivalry among existing competitors B. Threat of substitutes C. Power of suppliers D. power of buyers E. threat of entry

C. Power of suppliers

_____ is best described as the behaviors and styles of executives that influence others to achieve an organization's vision and mission. A. Intrapreneurship B. Venture capitalism C. Strategic leadership D. Machiavellianism

C. Strategic leadership

How do complements affect a primary product or service? A. They act as the strategic equivalent of the primary product. B. They lower the utility of the primary product. C. They increase the demand for the primary product. D. They reduce the value of the primary product.

C. They increase the demand for the primary product.

Evaluating the data collected from environmental analysis, the corporate executives of F&S Pharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate? A. reverse mentoring B. bottom-up strategic approach C. top-down strategic planning D. scenario planning

C. Top-down strategic planning

Which of the following has contributed to Twitter's loss of a competitive advantage? A. Individuals pay nothing to use Twitter, which gives Twitter free user-generated content. B. Twitter delivers ads in real time, as opposed to competitors such as Facebook. C. Twitter does not allow advertisers to target their online ads precisely enough. D. Core users of Twitter are unable to stay connected permanently.

C. Twitter does not allow advertisers to target their online ads precisely enough.

According to the upper-echelons theory: A. top managers of a company should isolate themselves from the organizational values. B. strong strategic leadership is solely the result of learning. C. organizational outcomes reflect the values of the top management team. D. strategic commitments made by upper-level managers are inexpensive and short-term.

C. organizational outcomes reflect the values of the top management team.

Successful business strategies generate value. Creating value lays the foundation for the important benefits that economies can provide. Superior performance allows the firm to A. reach competitive parity with other firms in the industry. B. overcome dominant industry effects since they are more important than firm effects. C. reinvest some of its profits in gaining more resources and thus grow. D. rely on alliances and partnerships for success. E. ignore some stakeholders and focus on others.

C. reinvest some of its profits in gaining more resources and thus grow.

A consolidated industry turns into a fragmented industry when: A. technological advances lead to industry convergence. B. firms reduce competition within the industry through mergers and acquisitions. C. restrictive government policies are introduced in the industry. D. network effects enjoyed by incumbent firms within the industry become stronger.

C. restrictive government policies are introduced in the industry.

The annual net profit after taxes for RSL Corp., a multinational conglomerate, is $5.5 billion. As legal owners, which of the following stakeholder groups has the most legitimate claim on this profit? A. managers B. government C. shareholders D. local communities

C. shareholders

Larry has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Larry is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Larry is currently at _____ of the Level-5 leadership pyramid. A. Level 1 B. Level 3 C. Level 5 D. Level 4

D. 4

Besides the financial problems, the organizational challenges were enormous. The entire management team was replaced and community trust needed to be rebuilt in the first year. Ms. Benninger noted that "people make all the difference." What did she find instrumental in attracting the right people to the organization? A. good pay and benefits package B. her personal charisma C. support from board of directors D. a common goal and mission E. the adorable animals

D. A common goal and mission

Which of the following real-world examples best supports the statement that strategic commitments to a specific industry may be the result of more political than economic considerations? A. Airbus and Boeing are likely to exit the aircraft manufacturing industry when industry profit potential falls to zero. B. The traditional U.S. airlines Delta, United, and American Airlines have large fixed costs to maintain their network of routes that affords global coverage, frequently in conjunction with foreign partner airlines. C. Given their strategic commitments, airlines are unlikely to exit the industry. D. Airbus was created by a number of European governments through direct subsidies in order to provide a countervailing power to Boeing.

D. Airbus was created by a number of European governments through direct subsidies in order to provide a countervailing power to Boeing.

In the face of employees dealing drugs on site and illegally selling animals, and with limited community support, the organization was in real trouble. However, true to the examples in our text, when Ms. Benninger joined the team, what was one of the biggest positives she inherited? A. a new building and grounds B. a large endowment C. the board of directors D. an amazing mission E. support from local vets

D. An amazing mission

Aura Software Inc. has been operating in the country of New Fernsland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Aura Software Inc.? A. Aura Software Inc. will find it easier to secure capital to finance future growth. B. Aura Software Inc. will experience lower competition from rival companies. C. Aura Software Inc. will have to expand its operations to meet the increasing consumer demand. D. Aura Software Inc. will have better access to highly skilled human capital at a lower cost.

D. Aura Software Inc. will have better access to highly skilled human capital at a lower cost.

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ___________ emerged as a consequence of the firm's resource allocation process. A. unrealized strategy B. intended strategy C. strategic alliance D. bottom-up strategy

D. Bottom-up

Which of the following statements does the upper-echelons theory support? A. The leadership actions of executives are independent of their characteristics like age, education, and career experiences. B. Strong leadership is solely the result of innate abilities and not learning. C. Organizational outcomes including strategic choices and performance levels reflect the values of external stakeholders. D. Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

D. Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

A firm's _____ is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy. A. Recognized strategy B. Realized strategy C. Dominant strategy D. Intended strategy

D. Intended strategy

Product-oriented vision statements provide managers with A. customer solutions. B. employee goals. C. strategic flexibility. D. service goals.

D. Service goals

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms? A. They can spread fixed costs over lesser units. B. They cannot employ technology efficiently. C. They benefit from a less specialized division of labor. D. They can demand better terms from their suppliers.

D. They can demand better terms from their suppliers.

How has Threadless staked out a unique strategic position? A. by providing faster service than other T-shirt companies B. by providing higher quality T-shirts than other companies C. by providing more discounts than other T-shirt companies D. by providing customers a voice in product design

D. by providing customers a voice in product design

The relative bargaining power of suppliers is most likely low when: A. The suppliers provide products that are differentiated. B. the suppliers' industry is more concentrated than the industry it sells to. C. there are no readily available substitutes for the products and services they offer. D. incumbent firms face low switching costs when changing suppliers.

D. incumbent firms face low switching costs when changing suppliers.

Which of the following would be most likely to directly put an organization like BP at a major competitive disadvantage? A. the fact that the small business owners along the Gulf coast have become powerful BP stakeholders B. the fact that BP caused an environmental disaster despite being recognized as having high business integrity C. the claims it faces by many small business owners in the tourism and seafood industries D. the Environmental Protection Agency (EPA) banning BP from any new contracts with the U.S. government

D. the Environmental Protection Agency (EPA) banning BP from any new contracts with the U.S. government

Which of the following actions of an automobile firm will be considered as a strategic commitment? A. the firm launching an existing model of a car in red as a limited edition for six months B. the firm spending $100,000 on renting a manufacturing facility to meet the temporary demand for its cars C. the firm promoting its new model of coupe through a free Europe trip worth $15,000 to be won as an early bird offer D. the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

D. the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

Which of the following forces are most closely related to firm effects within a pharmaceutical industry? A. the number and the size of the firms in the industry B. the entry and exit barriers existing within the industry C. the types of products and the services offered within the industry D. the strategic actions taken by managers of a firm in the industry

D. the strategic actions taken by managers of a firm in the industry

As the chief executive officer (CEO) of Yahoo, Marissa Mayer declared Yahoo's vision to be "to make the world's daily habits more inspiring and entertaining." She wants to inspire Yahoo's employees and get its customers excited again. Which of the following approaches to the development of strategy does Yahoo best illustrate? A. emergent strategic planning B. realized strategic planning C. bottom-up strategic approach D. top-down strategic planning

D. top-down strategic planning

The video discusses the valuable uses and contents found in waste water. If utilities can effectively recycle large amounts of waste water, how would this impact the industry environment? A. reduce attractiveness by decreasing profits B. increase attractiveness from price increases due to scarcity C. no change on the industry attractiveness D. reduce attractiveness due to over-supply of goods E. increase attractiveness by increasing profits

E. increase attractiveness by increasing profits

Spark Electronics Inc., One Digital Inc., and Esco Products Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from the same set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n) plant. occupational group. industry. focus group.

Industry

Community's major contribution and major benefit

Infrastructure and safety, taxes and new jobs

_____ is best described as the amount that savers are paid for use of their money and the amount that borrowers pay for that use. Surcharge Interest rate Service tax Royalty fee

Interest rate

Stockholder's major contribution and major benefit

Investment capital, dividends

_____ describe the positive externality that one user of a product or service has on the value of that product or service for other users. Network effects Experience effects Economies of scale Economies of scope

Network effects

Coffee bean producers in the country of Matterstein grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many producers supplying to a huge number of companies, and they are typically unable to differentiate their products from each other. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Matterstein best illustrates a(n)___ structure. perfectly competitive oligopolistic monopolistic monopolistically competitive

Perfectly competitive

Restrictions imposed by the government, such as export quotas on certain products, are a part of the _______ environment of the PESTEL framework. political ecological economic sociocultural

Political

Employees major contribution and major benefit

Time and talents, wages and salary

In the restaurant industry, a large number of restaurants cater to the similar food-related needs of customers. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, or different services like home delivery and organic ingredients. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n) oligopoly. perfectly competitive structure. monogopoly. monopolistically competitive structure.

monopolistically competitive structure.