Strategic Management 4000 Level

The ____ Model's two key assumptions are that a firm's resources and capabilities are unique as well assuming resource immobility

RBV

Which of the following is an implication of high employee turnover in a company? It makes the source of the company's competitive advantage causally ambiguous. It makes the source of the company's competitive advantage socially complex. It results in greater immobility and heterogeneity of the company's resources. It results in a reduction in the company's intangible-resource stocks.

Correct Answer It results in a reduction in the company's intangible-resource stocks.

When a firm's resources and capabilities are valuable, rare, costly to imitate, but is not organized to ______ _____, it results in a temporary competitive advantage.

Capture Value

The RBV and I-O Model are ______.

Complimentary

Which of the following statements with regard to industry structures is true? They are stable over time, not dynamic. Having few but large competitors increases the threat of strong competitive forces such as supplier or buyer power. Having a large number of competitors generally equates to higher industry profitability. A consolidated industry tends to be more profitable than a fragmented one.

Correct Answer A consolidated industry tends to be more profitable than a fragmented one

Which of the following statements is true of customer-oriented visions? Customer-oriented visions reduce a company's ability to adapt to a changing environment. Customer-oriented vision statements are not the same as listening to your customer. Customer-oriented visions define a business in terms of goods or services provided. Customer-oriented visions identify how a customer need will be met.

Correct Answer Customer-oriented vision statements are not the same as listening to your customer.

A firm's ability to integrate, build, and reconfigure its resources and capabilities to address rapidly changing environments are called its _______ ___________.

DYNAMIC CAPABILITIES

Several senior managers recently left Fred's Autos Inc. and went to work at Better Autos Inc., a rival company. What does this imply? Fred's Autos Inc.'s tangible assets decreased. The resource stock of Fred's Autos Inc. increased. Fred's Autos Inc. faced resource leakage. The resource flow into Better Autos Inc. was reduced.

Fred's Autos Inc. faced resource leakage.

Capabilities

How multiple tangible and intangible resources are put together and used

The ____ Model's three key assumptions are that companies are under constant external pressure, a firm's resources and capabilities are similar, as well assuming high resource mobility.

I-O

When a company's resources or capabilities are valuable but not ______, it results in a competitive parity

Rare

Two examples of _____ resources? financial ( cash, and ability to raise funds) Physical (Plants, equipments, access to raw materials)

Tangible

assets that can be seen, touched, and quantified

Tangible Resources

Capabilities

The following are examples of a firms _______. Organizational routines: regular and predictable pattern of activities Brand building, New product development capability, Manufacturing quality products

After implementing the RBV Model and generating it's list of strengths, what do we use to take it one step further and "filter" strengths to only strengths which will supply you a competitive advantage?

VRIN test

valuable, rare, inimitable, non-substitutable

VRIN test

When a company's resources or capabilities are not _______, it results in a competitive disadvantage.

Valuable

WeClean Inc., a manufacturer of cleaning agents, supplies its products to Goodings Inc., a supermarket chain. It demands that Goodings create more shelf space in its stores for WeClean s' products. However, Goodings Inc. refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash." In this scenario, Goodings Inc. has exercised its bargaining power as a buyer through price stability. backward integration. retroactive market share. enhanced technology.

backward integration.

BestReads spent 10 million dollars to buy the rights to a best-selling novel. The company then prepared for production by hiring a screenwriter to adapt the novel, casting the main roles, renting cameras and other equipment, and scouting locations in southern Montana. Which of the following pairs of resources are both intangible? best-selling novel; locations in southern Montana best-selling novel; screenwriter's experience adapting novels money spent to buy rights to the novel; screenwriter's experience adapting novels money spent to buy rights to the novel; locations in southern Montana

best-selling novel; screenwriter's experience adapting novels The best-selling novel is intellectual property and therefore is an intangible resource. Also, a worker's experience is an intangible resource.

One of the reasons that Circuit City filed for bankruptcy was due to its inability to reinvest, hone, and upgrade its once impressive resource base. Ultimately, Circuit City's core competences became value chain activities. core rigidities. costly to imitate. strategic resources.

core rigidities Core rigidities occur when a firm fails to reinvest their core competencies and thus lose their competitive advantage.

As manager of a relatively new company, you are tasked with analyzing company resources to identify core competencies capable of supporting a competitive advantage. Which of the following resources is most likely to generate a competitive advantage? large cash holdings enthusiastic company culture stockpile of supplies new production facilities

enthusiastic company culture Competitive advantage is more likely to spring from intangible resources, such as an energetic and enthusiastic company culture, than from tangible resources, such as buildings, capital, or supplies.

The concept of a(n) ________ attempts to capture both learning effects and process improvements at firms. experience curve growth matrix managerial grid diminishing utility curve

experience curve

Power Juice is the owner of a firm that produces sports drinks. Since there are a number of firms in the industry competing on cost, Power Juice has decided to pursue a differentiation strategy. In this case, she should concentrate on improving process technologies to achieve economies of scale. enforce strict budget controls at all levels of the organization. focus on adding unique features to her product that customers will value. devote all resources to reducing the value gap.

focus on adding unique features to her product that customers will value.

The strategy canvas for movie theaters includes factors such as prices, comfort, customer service, concessions variety, and hours of operation. Which of the following value curves is most likely to represent a theater that successfully positions itself as a differentiator? low price, low comfort, low customer service, low concessions variety, low hours of operation low price, high comfort, high customer service, high concessions variety, low hours of operation high price, low comfort, low customer service, high concessions variety, low hours of operation high price, high comfort, high customer service, high concessions variety, low hours of operation

high price, high comfort, high customer service, high concessions variety, low hours of operation

Chips & Motherboards Inc., a leading hard drive manufacturer, recently filed for bankruptcy. While most of Chips & Motherboards Inc.'s competitors were shifting away from physical data storage devices toward online cloud storage services, Chips & Motherboards Inc. invested most of its retained earnings in the effort to improve its hard drives. Once the hard-drive market drastically declined, Chips & Motherboards Inc. was unable to capitalize on the new technology. Which of the following does this scenario best illustrate? social complexity path dependence knowledge diffusion causal ambiguity

path dependence

Amelia has recently started a restaurant in a commercial area that already has many other established restaurants and popular fast-food chains. Amelia owns the building in which her restaurant is located, rather than leasing premises as her competitors do. This factor allows her to offer her products at a more competitive price. Amelia has also invested a huge amount in designing the restaurant's interior and in equipping the kitchen with the appliances that are most widely used in her industry. In this scenario, which of the following is the most valuable resource for Amelia's business? the type of kitchen equipment widely used in her industry the restaurant's late entry into the market the investments made by Amelia on the restaurant's interior the building owned by Amelia, which reduces cost of operations

the building owned by Amelia, which reduces cost of operations A resource is valuable if it helps a firm increase the perceived value of its product or service in the eyes of consumers, either by adding attractive features or by lowering price because the resource helps the firm lower its costs.

The goal of a strategic position is to create the largest gap possible between the ________ that a firm creates through its offerings and the ________ required to create these offerings. market share; defensive strategy value; cost marketing; innovation process gap; ROIC

value; cost

During an interview for a CEO position, Jennifer's potential employers ask her, "If you get this job, will you focus more on industry effects or firm effects?" What should her answer be? "Neither. I would focus on business cycle effects. These are the most predictable, so they are worth the most effort." "Industry effects. They have the most substantial effect on superior firm performance." "Neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful." "Firm effects. I will be able to have the most impact on those."

"Firm effects. I will be able to have the most impact on those." While all of these effects can change a firm's performance, firm effects have the biggest impact—up to 55 percent. Because firm effects come from the actions that managers take, Jennifer would be able to have the most impact on those.

FOUR ASSUMPTIONS OF THE I-O MODEL

1. External environment imposes constant pressure on firms 2. Firms have homogeneous resources and pursue similar strategies 3. Resources are highly mobile 4. Decisions are made in the firm's best interest

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

Correct Answer HD and Good Ole Cinemas will not be direct competitors to each other, and their customer segments will overlap very little.

HomeAgain is a nonprofit organization that works toward rehabilitating the homeless. The credo of the organization is "help us help you." For an organization like HomeAgain, which of the following statements would make an appropriate mission? We help the homeless gain and sustain financial independence by providing employment opportunities. One day, everyone in this nation will have a home to protect themselves. Our mission is to turn this not-for-profit organization into a for-profit organization so that the stakeholders benefit. Help us help you find a home.

Correct Answer We help the homeless gain and sustain financial independence by providing employment opportunities.

OpenUrToys Inc. is a consulting firm that opens your toys for you and then films your emotional response. They have many clients and are able to generate above average returns relative to their competitors. In this scenario, we would conclude that OpenUrToys Inc. probably has a a competitive disadvantage. sustainable competitive advantage. competitive advantage. a competitive parity.

Correct Answer competitive advantage

All Foods is the parent company of several chain restaurants offering a variety of cuisines. The top management at All Foods has decided to enter the frozen foods industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate? corporate strategy functional strategy business strategy divisional strategy

Correct Answer corporate strategy

Contour Inc., a vendor, regularly supplies capacitors to All Purpose Electronics for use in its products. Therefore, Contour Inc. is All Purpose Electronics' internal stakeholder. external stakeholder. shareholder. director.

Correct Answer external stakeholder

With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as? industry convergence product differentiation backward integration customer myopia

Correct Answer industry convergence

Which of the following options below would serve as a feasible option when deciding how to enter an established industry? raise stakeholder capital by issuing stock initiate a greenfield operation leverage existing assets only enter if it's an oligopoly

Correct Answer leverage existing assets

WeBreak4Bikes Inc. has a new U.S.-based client in the bicycle industry. The client's company produces only bicycles for riding on the road. The bicycles are used for reliable general purpose transportation. When asked to identify a potential substitute for the bicycle industry from the Five Forces perspective, you would select motorcycles. hot air balloons. None of these are substitutes. tractors.

Correct Answer motorcycles

Firms that are classified as operating in an oligopoly tend to have some pricing power if they are able to differentiate their product or service offerings from those of their competitors, so the recommended mode of competition is service-based competition. non-price-based competition. hypercompetition. price-based competition.

Correct Answer non-price-based competition.

To reduce the amount of time it takes to apply packaging to its finished products, North Star Foods is implementing new equipment at its production plants. By doing this, North Star is addressing a _____ in the value chain analysis. primary activity premier activity support activity secondary activity

Correct Answer primary activity

Although eHook Inc. and eFury Inc. operate in the same consumer electronic industry, eHook Inc. has better sales and brand equity. This is attributed to eHook Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which eFuryInc. lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated? resource heterogeneity resource immobility resource value resource imitation

Correct Answer resource heterogeneity

Southwest Airlines (SWA) and Alaska Airlines both compete as point-to-point airlines, but they draw upon different resource bundles. This example best illustrates which of the following assumptions regarding the resource-based view? resource immobility resource homogeneity resource heterogeneity resource allocation process

Correct Answer resource heterogeneity

Which of the following strategy plans might work best in an industry that is considered a fast-changing environment with new laws going into effect regularly? dominant planning bottom-up planning top-down planning scenario planning

Correct Answer scenario planning

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's core competency. intangible resources. capabilities. tangible resources.

Correct Answer tangible resources.

Who among the following is responsible for making business strategies in a large conglomerate? the lower-level employees in the company the shareholder of the company the general managers of individual business units the board of directors at the headquarters

Correct Answer the general managers of individual business units

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

Correct Answer trying to be everything to everybody by combining different competitive strategies

Which of the following statements should ideally reflect a firm's strategy for competitive advantage? We will be number one in the industry. Our strategy is to win at any cost. We want to be the market leader by replicating our competitor's strategy? Our aim is to create superior customer value while controlling costs.

Correct Answer: Our aim is to create superior customer value while controlling costs.

ABC Inc., It's Electric Inc., and Wares Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate? monopolistic competition oligopoly monopoly perfect competition

Correct answer oligopoly

The government of Pentsu has mandated that the standard minimum wage in the country be increased to $8,000 per year. Which of the following factors in a firm's general environment does this mandate best indicate? legal factors technological factors ecological factors sociocultural factors

Correct legal factors

Wheat and Steak is a restaurant located inside a five-star hotel. It caters mainly to customers who are concerned about quality dining rather than the prices. In this scenario, which of the following will be a part of Wheat and Steak's strategic group? a premium rooftop restaurant in the same city a food kiosk in an adjacent subway station a nearby fast-food restaurant a mobile food cart parked opposite to the five-star hotel

Correct! a premium rooftop restaurant in the same city

In the five forces model developed by Michael Porter, ________ is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes. a barrier to entry regulation a stakeholder competition

Correct! competition

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength? rise in the income of the demographic segment to which a firm caters loss of a competitor's reputation growth in the size of the market in which a firm operates increase in a firm's customer loyalty

Correct! increase in a firm's customer loyalty

We Build & Build's' core competency is building multi-family housing in urban areas. This competency is based primarily on the decisions made by the company's top management over several years to focus on building in densely populated cities. Management used the process of path immobility. path dependence. dependence complexity. causal dependence.

Correct! path dependence.

When a companies resources or capabilities are valuable and rare, but not ______ to _______, it results a temporary competitive advantage.

Costly to imitate

A successful strategy details a set of goal-directed actions that managers make to gain and sustain a competitive advantage; in order to create this strategy, managers must focus on three pillars. Which of the following below is not one of these pillars? execution implementation analysis formulation

Execution

The following are the first two steps to which model? Identify attractive industry, Occupy attractive position in the industry

I-O MODEL

The RBV-Models structural direction is from ____ the firm and then focuses ____.

Inside, Outwards

The following are examples of _____ resources. Knowledge, Culture, Reputation

Intangible

How does causal ambiguity act as an isolating mechanism for organizations? It makes it difficult for competitors to deploy their resources by creating ambiguity within their organizational structures. It makes it difficult for the competitors to understand why a company has been so successful. It creates a situation in which different social and business systems interact with one another. It makes it difficult for competitors to imitate core competencies quickly due to time compression diseconomies.

It makes it difficult for the competitors to understand why a company has been so successful Causal ambiguity describes a situation in which the cause and effect of a phenomenon are not readily apparent. To formulate and implement a strategy that enhances a firm's chances of gaining and sustaining a competitive advantage, managers need to have a hypothesis or theory of how to compete. Understanding the underlying reasons of observed phenomena is, however, far from trivial.

Which of the following is a drawback of Porter's five forces model? The model describes competition narrowly as a firm's closest competitors. The model fails to consider that threat of substitutes can come from outside a given industry. It fails to provide a basis for deriving implications for a firm's strategic position within an industry. Managers cannot determine the changing speed of an industry or the rate of innovation.

Managers cannot determine the changing speed of an industry or the rate of innovation. With the five-forces-plus-complements model, one cannot determine the changing speed of an industry or the rate of innovation. This drawback implies that managers must repeat their analysis over time in order to create a more accurate picture of their industry.

Mohawk is a leader in sustainable and innovative carpeting and floorings, as evidenced by its signature product, the world's first organic cotton carpet. Its product is unique and has appealing customer attributes. If Mohawk's raw material costs increased by 12 percent this year, what would be the likely outcome? Mohawk would lower profit margins to absorb this cost increase. The company would launch an all-out effort to reduce other costs by 12 percent. Mohawk would seek to find other materials with lower costs, even if it meant losing the carbon-neutral label on the product. Mohawk would pass a major portion of this increase along as a price increase to its customers

Mohawk would pass a major portion of this increase along as a price increase to its customers

Intangible Resources

Non-physical assets rooted deeply in the firm's history, accumulated over time

The I-O Model's structural direction is from _____ the firm and then focuses ____.

Outside, Inwards

What are the two following statements determined by? Value offered to customers, Market segments it serves, Sources of revenue within segments, Attractive or Unattractive The firm's relative position vis- à - vis suppliers, customers, rivals, potential entrants, substitute products

Position (I-O MODEL)

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines? The industry will face excess capacity in the future. The overall industry profitability will increase. The threat of strong competitive forces such as supplier power will increase. The structure of the industry will change from consolidated to one that is fragmented.

The overall industry profitability will increase.

When wireless service providers offer free or discounted mobile phones for subscriptions to their wireless voice and data service, the perceived value of the service offering increases. In this case, the value driver would be availability of complements. economies of scale. experience-curve effects. learning-curve effects.

availability of complements.

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as capabilities. capital gains. tangible resources. reserves.

capabilities.

Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company's product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of resource homogeneity. path dependence. causal ambiguity. time compression diseconomies.

causal ambiguity. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of causal ambiguity. Causal ambiguity describes a situation in which the cause and effect of a phenomenon are not readily apparent.

ezTV, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, ezTV's competitors have now begun to produce more-advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to the dynamic capabilities perspective, what should ezTV do? ezTV should stick to its existing core competency, that is HD LED technology, as it is the best in that segment. ezTV should take steps to reduce the causal ambiguity and socially complexity of its core competency. ezTV should work on enhancing the mobility of its core competency. ezTV should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment.

ezTV should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment. According to the dynamic capabilities perspective, ezTV should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment. The essence of dynamic capabilities perspective is that competitive advantage is not derived from static resource or market advantages, but from a dynamic reconfiguration of a firm's resource base.

Customer service and ________ are two of the value drivers that managers can utilize when trying to improve a firm's differentiation strategic position. cost of input factors experience curve product uniqueness economies of scale

product uniqueness

In order for a firm to formulate an effective business-level strategy, it is important to remember that competitive advantage is determined by the characteristics of the industry in which a firm competes. the amount of market share a firm can gain. the characteristics of the firm alone. the characteristics of both the industry and the firm.

the characteristics of both the industry and the firm.

Viral Apparel is the market leader in the sportswear industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Viral Apparel is most likely to be considered a rare resource that is contributing to its competitive advantage? the company's land and buildings the company's design patents the company's raw material supplies the company's plant and machinery

the company's design patents Viral's design patents would be considered a rare resource that is best contributing to its competitive advantage. A resource is rare if only one or a few firms possess it.

Value drivers contribute to a firm's competitive advantage only if the increase in value creation exceeds the increase in costs. they can restrict the firm from claiming a premium price for its products. they can shrink the firm's value gap. the decrease in perceived value leads to an increase in costs.

the increase in value creation exceeds the increase in costs.

One of the reasons that big box retailers like Home Depot are able to achieve economies of scale is that they have been able to protect themselves from the threat of buyer power by increasing input prices. they are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently. they have both broad and narrow economies of scope. they are able to take advantage of market size and spread investment losses over many locations.

they are able to take advantage of physical properties and maximize their scale efficiencies by stocking more merchandise and handling inventory more efficiently.