Strategic Management Exam 2
Decisions related to "what stages of the industry value chain to participate in" determine a firm's
vertical integration
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of
related-link diversification
In a radical innovation, a firm targets
NEW MARKETS BY USING NEW TCHNOLOGIES
Overall, the Adidas acquisition of Reebok a success?
NO. ADIDAS HAS SLIPPED FROM NUMBER 2 IN THE US MARKET TO NUMBER 3
Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters?
UNLIKE TECHONOLOGY ENTHUSIASTS, EARLY ADOPTERS' DEMAND IS FUELED MORE BY INTUITION AND VISION RATHER THAN TECHNOLOGY CONCERNS
Which of the following is not an advantage when it comes to "first-mover advantages"?
first movers must educate potential customers about the product
Whole Foods focuses on a small market segment, affluent consumers who want to buy high-end, organic groceries. What is the appropriate name for Whole Foods's scope of competition?
focused
Value drivers contribute to a firm's competitive advantage only if
the increase in value creation exceeds the increase in costs
Product features, customer service, and complements are all examples of important
value drivers
product features, customer service, complements are all examples of important
value drivers
________ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs.
vertical integration
The four-step innovation process ends with
IMITATION
A(n) ____ leverages new technologies to attack existing markets.
DISRUPTIVE INNOVATION
Which of the following best illustrates physical-asset specificity?
a machine solely designed to give a candy its trademarked shape
What does it mean for a firm to have an 80 percent learning curve?
***EVERY TIME THE CUMULATIVE OUTPUT IS DOUBLED, THE COST PER UNIT WILL DECLINE BY 20 PERCENT***
In the United States, the time period for the right to exclude others from the use of a patented technology is ___ from the filing date of a patent application
20 YEARS
When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit. When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the following is the firm's minimum efficient scale?
3,000-4,000 units
A primary advantage of organizing economic activity within firms is the
ABILITY TO COORDINATE HIGHLY COMPLEX TASKS TO ALLOW FOR SPECIALIZED DIVISION OF LABOR
When Aviato Inc. wanted to sell its cars in the country of Yugoslakia, it lacked access to distribution channels and marketing expertise in the country. Thus, Aviato Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario?
ACCESSING CRITICAL COMPLEMENTARY ASSETS
Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies.
BACKWARD VERTICAL INTEGRATION
Which of the following businesses is most likely to disrupt an existing industry?
BLACK ROCK DEVELOPED AN EARPHONE THAT RECEIVES EMAILS AND TEXT MESSAGES AND CONVERTS THEM TO VOICE MESSAGES. THE FIRST MODELS HAD POOR RECEPTION, BUT THEY RAPIDLY IMPROVED OVER TIME
In a successful ___ strategy, the tradeoffs between differentiation and low cost are reconciled.
BLUE OCEAN
Janet wants to restructure the portfolio of all her firm's strategic business units. Janet will more than likely employ the ________ tool.
Boston Consulting Group (BCG) matrix
Which of the following provides an example of a firm in a red ocean?
COOL APPAREL OFFERED CLOTHING AT A LOW PRICE BUT FAILED TO DIFFERENTIATE ITS PRODUCT AS BEING EXCLUSIVE
___, which are incurred when pursuing a related-diversification strategy, are a function of the number, size, and types of businesses that are linked to one another.
COORDINATION COSTS
CooCoo Cola has successfully achieved a competitive advantage in the soft drink industry as a differentiator. Which of the following scenarios would undermine CooCoo's position?
CooCoo's customers start to consider soda a commodity
When Total Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as?
DISECONOMIES OF SCALE
Which of the following best explains why Disney showed superior post-merger integration capabilities?
DISNEY MANAGED ITS NEW SUBSIDIARIES MORE LIKE ALLIANCES RATHER THAN ATTEMPTING FULL INTEGRATION
On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?
EACH STAGE OF THE INDUSTRY LIFE CYCLE IS DOMINATED BY A DIFFERENT CUSTOMER GROUP
Afya Limited is a new firm that entered the smartwatch industry during the growth stage of the industry life cycle. It managed to become one of the top-three smartwatch manufacturers during the shakeout stage due to its low-cost structure. What features should Afya Limited emphasize in its product marketing to ensure it successfully crosses the chasm into the maturity stage?
EASE OF USE
Which of the following best illustrates site specificity?
EQUIPMENT NECESSARY FOR MINING BAUXITE AND ALUMINUM SMELTING
DalTech Inc., a publicly traded company, designs and manufactures wearable technology. What approach should DalTech take after a long period of horizontal integration in its industry? Assume that the industry is now stable and competitors have not made any major changes in price or marketing recently.
FOCUS ON RESEARCH AND DEVELOPMENT AS A FORM OF NONPRICE COMPETITION
Condax Electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones, and televisions and also to provide customer service and technical support. However, that retailer outsourced its service departments, and customers began to complain that they could not get reliable tech support for Condax products. In response, Condax Electronics decided to set up its own tech support department, and it also began to investigate opening its own brand-based retail stores. What does this scenario best illustrate?
FORWARD VERTICAL INTEGRATION
To be successful and to survive the shakeout stage of the industry life cycle, a firm should
GAIN ECONOMIES OF SCALE
Evaluate the following statement: Strategic leaders should always try to pursue a blue ocean strategy because it is the most complex, coveted, and most desirable strategy that exists.
I disagree; firms should only pursue this strategy if they are able to reconcile the tradeoffs of each generic strategy
Trader Joe's differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Trader Joe's focuses on
INCREASING THE PERCEIVED VALUE CREATED FOR CUSTOMERS, WHICH ALLOWS IT TO CHARGE A PREMIUM PRICE
What must a cost-leadership strategy accomplish to be successful?
It must reduce the firm's cost below that of its competitors while offering adequate value.
Which of the following best explains why a blue ocean strategy is difficult to implement?
It requires the reconciliation of fundamentally different strategic positions—differentiation and low cost.
There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale?
LOWERING COSTS
In Fasehatice's Office of Alliance Management, the alliance champion is primarily responsible for
MAKING SURE THAT AN ALLIANCE FITS WITHIN THE FIRM'S EXISTING ALLIANCE PORTFOLIO AND CORPORATE-LEVEL STRATEGY
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 PASS A MAJOR PORTION OF THIS INCREASE ALONG AS A PRICE INCREASE TO ITS CUSTOMERS
Which of the following accurately describes how Netflix used innovation to gain a competitive advantage?
Netflix applied big data analytics to its user preferences to provide highly personalized viewing recommendations
What causes the winner's curse?
OVERPAYING FOR AN ACQUISITION
Rosa is a senior manager at Veridian Dynamics, a motorcycle manufacturer. Veridian Dynamicshas entered an equity alliance with Parker Industries, a moped manufacturer. "Don't worry, Rosa," her counterpart at Parker Industries tells her. "I'm going to send you all our guidelines and documentation for manufacturing catalytic converters, and then you'll be all set." What else should Rosa request from Parker Industries?
PERSONNEL EXCHANGES TO SHARE TACIT KNOWLEDGE
A firm experiences diseconomies of scale when it
PRODUCES AT AN OUTPUT LEVEL BEYOND THE MINIMUM EFFICIENT SCALE
Which of the following businesses is most susceptible to negative network effects?
RITE PICS IS A SOCIAL MEDIA PLATFORM WHERE USERS UPLOAD PHOTOS TO THE SIRE AND ARE MATCHED WITH OTHER USERS WHO HAVE TAKEN SIMILAR PHOTOS
Which of the following scenarios best exemplifies a platform business?
SAMANTHA OPERATES AN INDUSTRIAL TEST KITCHEN IN WHICH LOCAL GROWERS BRING THEIR PRODUCE TO LOCAL CHEFS, WHO USE THE KITCHEN TO TRY NEW RECIPES AND DETERMINE WHICH PRODUCE TO BUY
Which of the following best illustrates a merger between the two companies Scotfind Inc. and Inity Inc.
Scotfind Inc. and Inity Inc. join together to form a single new company called ScotfindInity Inc.
Which of the following scenarios best illustrates horizontal integration?
Siliss Inc. joins with Cancity Inc., one of its direct competitors
The downside of equity alliances is
THE AMOUNT OF INVESTMENT THAT CAN BE INVOLVED
Which of the following is a competitive benefit experienced by the first-mover firm in an industry?
THE FIRST MOVER WILL BE ABLE TO REDUCE COSTS THROUGH ECONOMIES OF SCALE
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because
THE HORIZONTAL INTEGRATION ACTIVITY HAS THE POTENTIAL TO REDUCE COMPETITIVE INTENSITY IN AN INDUSTRY
Mary has been named CEO of an office furniture manufacturing company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Mary most likely to make?
WHAT RANGE OF PRODUCTS THE FIRM SHOULD OFFER
All of the following are questions that managers should ask before crafting a business-level strategy except
WHEN SHOULD WE INTRODUCE OUR PRODUCT/SERVICE IN THE MARKET?
Tablette Corp. is a consumer electronics company known for its affordable mobile devices that follows a cost-leadership strategy. In this scenario, Tablette Corp. should ideally compare its strategic position with
a consumer electronics company popular among price conscious customers
Which of the following examples uses a focused differentiation strategy?
a cosmetics brand that offers superior skin lotion for sensitive skin priced at 100 dollars per bottle
Which of the following accurately describes a common difference between a merger and an acquisition?
a merger tends to be friendly; an acquisition can be friendly or unfriendly
Revolve Group is a mobile platform that matches independent fashion designers with consumers who want a personalized wardrobe. Which of the following initiatives would best allow Revolve Group to fine-tune its offerings to better meet the needs of its consumers?
allowing users to provide feedback to producers on the style and fit of clothing
Golddex Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Golddex should pursue
backward integration
Billy is the CEO of Billy's Kicks, a soccer ball retailer. He decides to purchase the synthetic rubber manufacturing firm so he can create his own soccer balls and sell them, nationally, in his retail stores. In order to do this, Billy will need to engage in ________, which is a corporate level strategy.
backward vertical integration
Which quadrant in the core competence-market matrix is the hardest to pursue?
building new core competencies to create and compete in markets of the future
The managers at Acme Corporation decided that their firm needed to diversify because of overall falling sales and lower performance in one sector. How does diversifying compensate for the declining performance in this sector?
by having higher performance in another sector
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?
by lowering competitive intensity in the industry overall
How has Apple been able to sustain its competitive advantage in the smartphone industry?
by regularly introducing incremental improvements in its products
Which of the following is an example of social entrepreneurship? The committee approved the new formula for an all-purpose cleaner because it
cleaned as well as other cleaners and used organic ingredients
When a firm pursues a maintain strategy, it
continues to support marketing efforts even if the demand for the product is declining
Louis's Secondhand Store offers slightly lower quality merchandise than competitors at a much lower price. What strategy is Louis's Secondhand Store using?
cost-leadership
Vehement Capital Partners wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, Vehement Capital Partners invested $100 million in the project. This investment made by Vehement Capital Partners will result in a
credible commitment
Gr8t Food is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. The restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Gr8t Food adopted in this scenario?
differentiation
Streaming video services replacing brick-and-mortar video rental stores would be an example of a(n)
disruptive innovation
When Japanese carmakers entered the existing U.S. automobile market by first offering small fuel-efficient cars, and then leveraging their low-cost and high-quality advantages into high-end luxury segments, they were engaging in
disruptive innovation
The type of customers vital to a firm introducing a new innovation are the ___, who are willing to pay higher prices and like to tinker with new products.
early adopters
The group of customers referred to as the ___ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage
early majority
The group of customers referred to as the ________ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage.
early majority
ComfySeat Furniture is a brand reputed for its wide variants of sofas that introduced a new range of mattresses and bed frames a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure lowered, while its product portfolio widened. In this scenario, which of the following value and cost drivers is ComfySeat applying?
economies of scope
The concept of a(n) _____ attempts to capture both learning effects and process improvements at firms.
experience curve
Finger Lickin' BBQ is a chain of casual restaurants that promises affordable barbecue using top-quality local ingredients. However, the company has struggled to achieve a competitive advantage because of its high overhead costs. Which of the following scenarios is most likely to result in a competitive advantage?
eliminating brick-and-mortar locations and offering delivery from a central kitchen
Trader Joe's successfully used a blue ocean strategy by offering lower cost food than Whole Foods for the same market of patrons. By doing this, Trader Joe's was able to
gain a market share and make up the loss in margin through increased sales
The key objective for firms during the growth phase is to
gain economies of scale
When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it
gains market share from other firms
Intel's Celeron chip and Atom chip are initiatives to
guard the company against disruptive innovation by protecting the low end of the market
Jennifer is the strategic business unit (SBU) CEO in charge of manufacturing stereo speakers for computers and laptops. Her SBU earnings and cash flow are both low and unstable. Which of the following strategies should Jennifer enact if examining her SBU through the Boston Consulting Group (BCG) matrix lens?
harvest and/or divest
Jimmy can be categorized under the late majority customer segment. Which of the following behaviors is he most likely to exhibit?
he will prefer to buy from well-established brands rather than unknown new ventures
The Umbrella Corporation (UC) recently acquired a smaller competitor, Packer and Associates, which specializes in issues not previously covered by UC, such as land use and intellectual property cases. Given the increase in the firm's size and complexity, it is likely that its internal transactions will
increase
Fulcrum Feet is a manufacturer of athletic shoes. It has released an improved version of its premier running shoe in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate?
incremental innovation
According to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy?
innovation that allows competitors to emerge with economical replacements
Coca-Cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. However, with the success of Gatorade, Coca-Cola developed competencies in the development and marketing of its own sports drink, Powerade. Which of the following is true of Coca-Cola?
it is building new core competencies to protect and extend its current market position
Konmatfix Inc. recently acquired Finhigh Pharmaceuticals Inc. It now sells its own products along with the products originally sold by Finhigh Pharmaceuticals. As a result, Konmatfix's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect Konmatfix?
it will lower its costs through economies of scale
Which of the following is an accurate statement about learning effects?
learning effects occur over time as output
Sterling Cooper Footware and NERV Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other's competencies. Sterling Cooper Footware entered the strategic alliance to acquire the production system pioneered by NERV Shoes. Similarly, NERV Shoes agreed to the strategic alliance to study the design process of Sterling Cooper Footware. However, Sterling Cooper Footware was more successful and faster than NERV Shoes in accomplishing its alliance goal. What does this scenario best illustrate?
learning races
We Cut Corners lawn service initially spent nine man hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?
learning-curve effect
Decisions related to the range of products and services a firm will offer determine the firm's
level of diversification
Tom is the CEO of Endless Possibilities Inc. and proudly boasts his firm's slogan, We Guarantee Success! However, Tom's constituents presented him with data on their latest project which suggests that they should not move forward. Tom, undeterred with this data, decides that he will still accept the project because he believes that he can't lose. This is a classic example of
managerial hubris
Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them?
many owners, managers, and business analysts believe they are essential to survive in an industry
Adidas acquired Reebok primarily to
overcome it competitive disadvantage against Nike
Goodsilron is a U.S.-based consumer electronics company. It owns smaller firms in Japan and Taiwan where most of its cell phone technology is developed and manufactured before being released worldwide. Which of the following alternatives to integration does this best illustrate?
parent-subsidiary relationship
VineRipe Tomato Inc. makes organic ketchup. To promote its products, this firm decided to make bottles in the shape of tomatoes. To accomplish this, VineRipe worked with its bottle manufacture to create a set of unique molds for its bottles. Which of the following specialized assets does this example demonstrate?
physical-asset specificity
Customer service and ___ are two of the value drivers that managers can utilize when trying to improve a firm's differentiation strategic position.
product uniqueness
Plexzap Sodas has been a market leader in the soft drink industry for several decades. However, its market research shows that consumer tastes have begun to shift to sugar-free flavored seltzer waters, a product that Plexzap is capable of producing with minimal changes to its facilities and production processes. Based on your knowledge of the core competence-market matrix, which diversification strategy should Plexzap pursue?
redeploy and recombine existing core competencies to compete in markets of the future
Susan is the founder of the restaurant chain Right and Fresh. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and all packaging is manufactured from recycled material. Also, her company sources ingredients from farms within 100 miles from her locations. Susan's belief is that her restaurants should be able to support the community at large. Which of the following terms best describes Susan?
social entrepreneur
A drawback involved in using cross-border strategic alliances to enter new foreign markets is that
some of the firm's proprietary know-how may be appropriated by the foreign partner
In order to achieve a competitive advantage, the Heavenly Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?
take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Heavenly Hotels brand image
Mark owns Drones 'R' Us, Inc. and is looking for an alternative to vertical integration. He decides to manufacture some of his own parts while keeping a few key suppliers in his industry value chain as well. This is known as
taper integration
In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply?
the industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation
The typical four-step innovation process begins with
the presentation of an idea as findings derived from basic research
Which of the following statements is true of joint ventures?
they enable the exchange of both tacit and explicit knowledge
Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms?
unlike incumbent firms, new entrants do not have formal organizational structures and processes
XYZ Inc. is a publicly traded company and a highly diversified firm. However, XYZ's most recent stock price is valued less than the sum of all its individual business units. We would conclude that XYZ is currently experiencing a
DIVERSIFICATION DISCOUNT
Both Tom's Car Repair and Fast Engines. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Fast Engines. is more than that created by Tom's Car Repair. What does this indicate?
Fast Engines can charge a premium price on its automobiles
A factor favoring the success of disruptive innovation is that
INCUMBENT FIRMS ARE SLOW TO CHANGE
Each stage of the vertical value chain typically represents a distinct ________ in which a number of different firms are competing.
INDUSTRY
Combining economies of learning with the existing production technology allows a firm to
MOVE DOWN A GIVEN LEARNING CURVE
The Boston Consulting Group (BCG) growth-share matrix locates a firm's individual strategic business units (SBUs) in which two dimensions?
relative market share and speed of market growth
The process of alliance management begins with
selecting the best possible partner
___ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage
strategic alliances
When a firm uses the tools and concepts learned from strategic management in order to achieve competitive advantage by pursuing innovation, it is said to be engaging in
strategic entrepreneurship
Rundofase International, a large conglomerate, procures a few component parts from external suppliers and also manufactures some of the key raw materials in its own subsidiaries. Aside from this, the company does not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to distribute its products. In this scenario, which of the following alternatives to vertical integration is Rundofase International applying?
taper integration
Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion?
the desire to gain a new capability
Which of the following customer segments as described in the chasm framework make up the mass market?
the early and late majority together
A differentiation strategy works best when a
FIRM HAS INTANGIBLE RESOURCES, IS ABLE TO PASS ON INCREASE IN SUPPLIER COST TO THE CUSTOMER, AND ITS DIFFERENTIATION APPEAL CREATES CUSTOTMER LOYALTY
BellRing Brands is a manufacturer of educational toys for children. Six months ago, the company's research and development division came up with an idea for a unique touchscreen device that can be used to introduce children to a number of foreign languages. Three months ago, the company produced a working prototype, and last month the company successfully launched its new device on the commercial market. What should BellRing Brands's managers prepare for next?
INCREASED COMPETITION FROM IMITATORS
Although JetBlue used a blue ocean strategy to achieve an initial competitive advantage, it failed to maintain this advantage. Which of the following provides the best reason for this development?
IT FAILED TO REFINE ITS STRATEGIC POSITION OVER TIME
Which of the following is a drawback of vertical integration?
IT INCREASES THE POTENTIAL OF LEGAL REPERCUSSIONS
How is a cost leader protected from threats from powerful suppliers?
IT IS MORE ABLE TO ABSORB PRICE INCREASES THROUGH ACCEPTING LOWER PROFIT
Which of the following scenarios would be characteristic of an entrepreneur?
John implemented a new and more efficient way to produce pottery
Jonathan is the owner of a landscaping company that caters to a very wealthy clientele. His company has struggled to differentiate itself from the other high-end landscapers in the area, but because he has hired several expensive but highly qualified team members, Jonathan is unable to shift to a cost-leadership strategy. Which strategy is most likely to achieve a competitive advantage?
Narrow the scope of competition and focus on the unique features such as the use of organic materials
Soylent Corporation is a major nutritional supplement chain. Its managers are motivated to grow the firm in order to increase their market power and change the industry structure in their favor. Which of the following strategies is most associated with their motive for growth?
PURCHASING COMPETITORS
Salesforce is one of the leading providers of platform as a service (PaaS) tools and services. They developed a new competency in delivering software development that allows its customers to better customize their future needs. Viewing this through the lens of the Core Competence-Market Matrix, which of the following four options below does Salesforce best exemplify?
SALESFORCE BUILT NEW CORE COMPETENCIES TO CREATE AND COMPETE IN MARKETS OF THE FUTURE
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?
high price, high comfort, high customer service, high concessions variety, low hours of operation
While the personal computer industry is flooded and growing with laptops and tablets, Javier recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Javier best represent?
laggards
To initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy. These questions focus on
lowering cost and increasing perceived customer benefits
Feran is the founder of an innovative "impromptu catering" business that provides elegant, healthy party food and decorations on less than 24 hours notice. The company has grown by over 150 percent in the past year. Feran credits some of the company's success to studying the strategies of prominent social entrepreneurs, such as Wikipedia's Jimmy Wales. What can Feran do to exemplify the social entrepreneurship model?
provide free weekly catered meals for the homeless
Since Coca-Cola focuses on selling only soft drinks, a low degree of product diversification, we would conclude that they compete in a(n) ________ market versus their main competitor PepsiCo, that sells a wide variety of products.
single product
Todd Wilkinson, the founder of 123.com, looked outside his firm for the right talent in order to develop his firm's website. The search led him and his team to a different country where they were able to procure the right talent to get the job done. This example best illustrates the concept of
strategic outsourcing
A blue ocean strategy differs from a low-cost strategy in that
the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value
What is an invention?
the transformation of an idea into a new product or process
Companies must evaluate the relevancy of their internal resources. This happens in two ways: they test whether resources are (1) similar to those the firm needs to develop and (2) superior to those of competitors in the targeted area. Which of the following is the best way in which firms assess the second test?
firms can apply the VRIO framework for the second test
Which of the following is a disadvantage of a horizontal integration corporate strategy?
it increases the potential for legal repercussions
Which of the following is a drawback of a nonequity alliance?
lack of trust between partners
Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?
the weaker firms are forced out of the industry in this stage
Which of the following is a result of horizontal integration in terms of Porter's five forces model?
there is a reduction of excess capacity in the market
When examining all the generic strategies, which of the following below is inherently superior in every industry?
there is no single superior business-level strategy
Which of the following is true of acquisitions?
they can be friendly or hostile
A strategy of ________ will be most beneficial for a firm to enhance its overall corporate performance.
RELATED-LINKED DIVERSIFICATION
Codehow Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Codehow?
SERIAL ACQUISITIONS
When a firm is able to successfully employ a blue ocean strategy, it will create a competitive advantage by
beating rivals on product attributes while offering a better price
In a successful ____ strategy, the trade-offs between differentiation and low cost are reconciled.
blue ocean
Jennifer is the CEO of JustFixIt Inc., a firm that merges technology with commercial hardware. She has been struggling with the decision to allocate her resources for the development of a new system or go to the market and search for an already established system. The Board of Directors for JustFixIt Inc. suggested that enter a contractual agreement with a partner. This scenario best illustrates the concept of
build-borrow-or-buy
When does a firm fall into the large competitive chasm between early adopters and early majority?
when it fails to successfully launch a mass-market version of its product
Konmatfix Inc. recently acquired Finhigh Pharmaceuticals Inc. It now sells its own products along with the products originally sold by Finhigh Pharmaceuticals. As a result, Konmatfix's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect Konmatfix?
***IT WILL LOWER ITS COSTS THROUGH ECONOMIES OF SCALE***
Which of the following business models in the landscaping industry is likely to scale most efficiently?
A COMPANY THAT ALLOWS USERS OF ITS WEBSITE TO SCHEDULE APPOINTMENTS WITH LANDSCAPERS WHO SPECIALIZE IN THE EXACT SERVICE REQUIRED
Adaptive Biotechnologies Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which of the following types of innovations does this scenario best illustrate.
ARCHITECTURAL INNOVATION
Which of the following is primarily a value driver?
COMPLEMENTS
John owns John's Trucking Corporation and is trying to determine if his firm should engage in vertical integration and diversify the range of services his business sells. Before John goes through with these decisions, he'll need to consider what is his
CORPORATE LEVEL STRATEGY
Digital photography replacing film photography is an example of which type of innovation?
DISRUPTIVE
In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should
DIVEST THE STRATEGIC BUSINESS UNIT
Which of the following corresponds to the use of tacit knowledge?
Phil assembles a motorcycle from memory
Susan owns a firm that is considered fully integrated. Which of the following statements below would best describe a firm that is fully integrated?
all of susan's business activities are conducted within the boundaries of the firm
Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing
differentiation
Condax Autos Inc. merged with its competitor NOW Autos Inc. This allowed Condax Autos to use its technological competencies along with NOW Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What type of integration does this scenario best illustrate?
horizontal
NoRu Inc. is a publicly traded firm that does not wish to be acquired by FRESHPoP Corporation, a much larger publicly traded firm, who is planning an acquisition of NoRu Inc. This is an example of a
hostile takeover
The question that business-level strategy answers is ____ the firm will compete.
how
___, which captures the cultural fit between different firms, is one key element needed when selecting an alliance partner.
partner compatibility
Connell Inc. has been successful at differentiating itself from competitors by claiming a premium price for its digital cameras based on superior image quality and advanced technology. In this scenario, which of the following is the key value driver?
product features
Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?
the chief executive officer
Which of the following is a feature of the growth stage of the industry life cycle?
the consumer demand increases
Which of the following is an example of an external transaction cost?
the cost of searching for a contract manufacturer
Peloton Interactive is a manufacturer of high-definition televisions. The industry has gone through a period of rapid growth and expansion and has started to experience a decline in the rate of growth. Several smaller firms have been bought out by larger competitors, and competition for market share is intensifying. Which of the following strategies is most likely to give Peloton Interactive a competitive advantage?
***IMPLEMENT PROCESS INNOVATIONS THAT LOWER PER-UNIT COSTS***
When a firm combines experience based learning and process innovation, the firm
***JUMPS TO A STEEPER LEARNING CURVE***
Many financial service firms, IT firms, and health care companies are among the most active when it comes to ___, which occurs when value chain activities are taken care of outside the home country of the firm.
OFFSHORE OUTSOURCING
Hooli Computers has decided to procure processing chips required for its laptops from external suppliers instead of manufacturing them in their own facilities. How will this decision affect the firm?
***THE FIRM WILL HAVE MORE FLEXIBILITY IN PURCHASING AND COMPARING PRICES FOR GOODS AND SERVICES***
A drawback of short-term contracting as an alternative to making a component in-house is that
***THE SUPPLYING FIRM HAS NO INCENTIVE TO MAKE ANY TRANSACTION-SPECIFIC INVESTMENTS TO INCREASE PERFORMANCE OR QUALITY***
When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the production cost is again $5 per unit. At 14,000 units and above, the production cost increases further. At what output level does the firm experience economies of scale?
11,000 units
Due to its large sales volume and low cost structure, Bunny's Lo-Cost enjoys a cost leadership position. Which of the following scenarios might threaten Bunny's competitive advantage?
A NEW COMPETITOR IS PERCEIVED TO PROVIDE SIMILAR VALUE, BUT IN ADDITION OFFERS INNOVATIVE SELF-CHECKOUT THAT BUNNY'S DOESN'T OFFER
Which of the following is an example of explicit knowledge?
A RESEARCH SUMMARY
Which of the following is true of explicit knowledge?
EXPLICIT KNOWLEDGE IS SHARED IN NONEQUITY ALLIANCE FIRMS
Facebook has become one of the largest media companies in the world, valued at nearly 50 billion in 2019, but hasn't produced a single piece of content. Facebook is an example of a
platform business
Marriott is able to create greater economic value than its competitors due to their ability to take advantage of ________, which describe the savings that come from producing two (or more) outputs at less cost than producing one output individually, while utilizing the same amount of resources and technology.
ECONOMIES OF SCOPE
Which of the following describes an airline that is most likely stuck in the middle?
Eastern Airlines offers high-quality beverages and meals, plush airport lounges, only a few connections via hubs domestically, poor customer service, and low prices
Jerry is the owner of All Hinges Inc. and has recently modified his firm's strategic objective based on a shift in his industry. Jerry is responding to a(n) ___ life cycle.
INDUSTRY
The pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is called
VALUE INNOVATION
When firms innovate by leveraging existing technologies into new markets, they are said to be involved in
architectural innovations
It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they
enter into the market in large numbers, creating a herding effect
A candy company called Blackzim Inc. forms an agreement with another candy company called Streethex Inc. Through this agreement, Blackzim owns 30 percent of Streethex. However, Streethex does not own any part of Blackzim. This type of agreement is called a(n)
equity alliance
The concept of a(n) ____ attempts to capture both learning effects and process improvements at firms.
experience curve
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 both the industry and the firm
How is a cost-leader protected from threats from powerful suppliers?
IT IS MORE ABLE TO ABSORB PRICES THROUGH ACCEPTING LOWER PROFIT MARGINS
Jill is the CEO of Note's Etc, a stationary manufacturer. She decides to open up a retail store to sell her products directly to consumers instead of just selling to retailers. In order to do this, Jill will need to engage in ________, which is a corporate level, strategy.
FORWARD VERTICAL INTEGRATION
Which of the following below is not considered an advantage of utilizing a platform business model?
PLATFORMS PUSH FIRMS TO CONSTANTLY ENGAGE IN RADICAL INNOVATION IN ORDER TO PRODUCE GOODS AND SERVICES FOR THE MARKET
The main reason behind Alphabet's decision to acquire the Israeli start-up company Waze for $1 billion was probably to
PREEMPT ITS COMPETITORS FROM BUYING WAZE
Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?
the framework does not explain everything about changes in industries
Geovax Inc., a biotechnology company, was established to develop an effective vaccine against a deadly virus. As such, a large investment firm formed an equity alliance with Geovax that resulted in a significant financial investment that followed a string of smaller investments so long as Geovax continued to make headway towards their vaccine. This "wait and see approach" can best be described as
A REAL-OPTIONS PERSPECTIVE
Johnson is an executive vice president at Conecom Hardware. He researches a proposal by a larger company, Openlane Hardware, to combine the two companies. By analyzing past performance, conducting focus groups, and interviewing Openlane employees, Johnson concludes that Openlane has poor profit margins, sells shoddy merchandise, and treats customers poorly. What actions should Johnson and Conecom Hardware take?
turn down the acquisition offer and prepare to resist a hostile takeover
American Snacks Inc., a conglomerate, has a strategic alliance with Très Bien Limité, a French snack-maker. However, Très Bien managers are concerned that the different business units of American Snacks will set up partnerships with direct competitors of Très Bien in France. What can owners and managers at American Snacks do to respond to Très Bien's concern?
ARRANGE FOR THE ALLIANCE TO BE MANAGED AT THE CORPORATE LEVEL
Betasoloin Corp. is an automobile company whose core competency lies in manufacturing petrol- and diesel-based cars. The company realizes that more of its potential customers are switching to electric cars. The R&D department of the company acquires competencies in developing electric cars and launches its first hybrid car, which uses both gas and electricity. In this scenario, Betasoloin is primarily
BUILDING NEW CORE COMPETENCIES TO PROTECT AND EXTEND CURRENT MARKET POSITION
Bigger & Better Inc. is a big box retailer who is in direct competition with Walmart and Target. Bigger & Better Inc. initially tried to respond to Walmart by cutting its prices and reducing costs. Walmart has greater buying power and a more efficient supply chain, therefore, Bigger & Better Inc. was not able to compete on costs. The company then tried to differentiate itself by signing a celebrity to create an in-house line of clothing. However, Target has a celebrity clothing line that has a more differentiated appeal. The economic value created by Bigger & Better Inc. is currently less than Target and Walmart. It can be said that
Bigger & Better is "stuck in the middle" and has a competitive advantage
As a start-up company, Cambium Networks entered the low end of the highly competitive smartwatch industry with its low-cost smartwatches. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartwatches in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?
DISRUPTIVE INNOVATION
Dana wishes to strengthen her firm's marketing department by partnering with a large marketing firm that can complement her existing value chain. However, she fears potential legal repercussions including potential lawsuits filed by U.S. federal agencies such as the Federal Trade Commission (FTC). Which of the following strategic options should Dana pursue?
Dana should consider forming a strategic alliance with the marketing firm
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP?
IT ENABLED HP TO COMPETE HEAD ON WITH CISCO'S VIDEOCONFERENCING SOLUTION
How has Kraft Foods benefited from its hostile takeover of Cadbury PLC?
IT HAS ACCESS TO CONVENIENCE STORES AND A NEW DISTRIBUTION CHANNEL
Donware Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleds by Gogozoom LLC This company produced bobsleds, but its sales had slowed. The managers of Donware convinced themselves that they were able to manage the business of Sleds by Gogozoom LLC more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleds by Gogozoom LLC's bobsleds plummeted. Which of the following terms is often used to describe this scenario?
MANAGERIAL HUBRIS
After the creation of social networking websites were introduced, their value increased exponentially as the number of users increased. This is the positive effect of a(n)
NETWORK EFFECT
Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of
PRODUCT DIVERSIFICATION
Incumbent firms favor incremental innovation over radical innovation because
RADICAL INNOVATION WILL DISTURB THE EXISTING POWER DISTRIBUTION WITHIN THE FIRMS
Rantouch is one of the largest tax-preparation firms in the United States. It wants to acquire Doncon , a smaller rival. After the merger, Rantouch will be one of the two largest income-tax preparers in the U.S. market. What should Rantouch include in its acquisition plans?
RANTOUCH WILL NEED TO EXPLAIN TO THE FEDERAL TRADE COMMISSION HOW THE AQUISITION WILL NOT RESULT IN AN INCREASE IN PRICES FOR CONSUMERS
Karat Packaging has entered a stage in which the demand for their innovative fax machines has declined. Now most customers are buying replacement parts or buying their second fax machine from the firm. What stage in the industry life cycle does this scenario describe?
SHAKEOUT STAGE
In terms of build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are
SIMILAR TO THOSE THAT NEED TO BE DEVELOPED AND SUPERIOR TO THOSE OF COMPETITORS IN THE TARGETED AREA
In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are
SIMILAR TO THOSE THAT NEED TO BE DEVELOPED AND SUPERIOR TO THOSE OF COMPETITORS IN THE TARGETED AREA
In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech start-up Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates
THE REAL-OPTIONS PERSPECTIVE
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because
THE US POPULATION WAS GROWING SLOWLY AND BECOMING MORE HEALTH CONSCIOUS
Which of the following statements is true of the early majority section of consumers?
THEY WEIGH THE BENEFITS AND COSTS CAREFULLY WHEN ADOPTING A NEW PRODUCT
Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?
TO MAKE SMALL-SCALE INVESTMENTS IN VENTURES POISED TO DISRUPT EXISTING MARKET ECONOMICS
While the domestic airline industry is in the maturity stage of the industry life cycle, the internet-enabled appliance industry is in its growth stage. Which of the following can be inferred from the given data?
WHILE THE DOMESTIC AIRLINE INDUSTRY IS MOSTLY FREE FROM EXCESS CAPACITY, THE INTERNET-ENABLED APPLIANCE INDUSTRY WILL HAVE NEW ENTRANTS
Delos Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Delos Autos controlling interests in the start-up company. However, Delos Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Delos Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as
a real-options perspective
Tyrell Corporation, a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Tyrell Corporation and the software company best referred to as in this scenario?
a strategic alliance
The Konex Hotel Group purchased Green-Plus Hotels for an estimated value of $120 billion. All the hotels previously owned by Green-Plus Hotels are now managed by the Konex Hotel Group and are known as Konex hotels. What does this scenario best illustrate?
an acquisition
Iselectrics, a medium-sized medical technology company, has been successful in its research and development but needs improvement in its European sales. Which of these actions would most likely lead to long-term success for Iselectrics's European sales?
acquire a company that has a successful medical technology sales force in Europe so that Iselectrics can gain access to new distribution channels
There are several mechanisms in which strategic alliance can be governed. Which of the following below is not one of those ways?
acquisitions
Which of the following statements about managing alliance-related tasks is true?
alliance-management capability is based on three alliance-related tasks
Tough Guy's Inc. is a chain of gyms. It offers a fitness package that allows its members to use the gym facilities for 12 months by paying only for 10 months. Included in the package are two health check-ups and a gym kit. These add-ons by themselves are not very valuable, but as a package they can enhance the perceived value of the service offerings. In this case, Tough Guy's primary value driver is
availability of complements
In 2007, Salesforce.com recognized an emerging market platform as a service (PaaS) offerings and developed a new competency in delivering software development and deployment tools. This allowed its customers to either extend their existing CRM offering or build completely new types of software. This is an example of
building new core competencies to create and compete in markets of the future
A ___ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market
business-level strategy
When the market for standalone Global Positioning System (GPS) devices declined with the arrival of GPS-enabled mobile phones, InMode Ltd., a manufacturer of GPS devices, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has InMode Ltd. adopted in this scenario?
consolidation strategy
InGen Pharmaceuticals Inc., Desktop Pharma Inc., and WEN Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with one another. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as?
coopetition
Benny's Closet Inc. is an apparel company that caters to highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Benny's Closet applying?
cost-leadership
A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the
differentiator is able to create a significant difference between perceived value and current market prices
The primary goal of pursuing a blue ocean strategy should be able to
offer a differentiated product or service at a low cost
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
focuses on adding unique features to her product that customers will value
Rebecca is in an interview for a sales job that requires no experience. She is trying to portray herself as a highly enthusiastic, energetic person with high-level communication and interpersonal skills. The interviewer is convinced that Rebecca should be hired as a salesperson in the company. However, in her resume, Rebecca had not mentioned her previous work experience as she was fired from that job because of her frequent absenteeism. Which of the following does this scenario best illustrate?
information asymmetry
In a successful ___ strategy, the trade-offs between differentiation and low cost are reconciled.
innovation that allows competitors to emerge with more economical replacements
Ganjaflex Industries is a major multinational conglomerate. Its business units compete in a range of industries, including home appliances, pharmaceuticals, commercial real estate, and plastics manufacturing. Although its largest business unit, which produces kitchen appliances, is among the most profitable in the industry, it generates only 35 percent of the company's revenues. Which of the following is most likely true of Ganjaflex's stock price?
it is valued at less than the sum of its individual business units
Openlane and Yearin Technologies have together invested and created a new organization, Globex Corporation, to focus on developing diagnostic devices. Through this new firm, both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments. However, the new organization operates independent of Openlane and Yearin Technologies. Which of the following alternatives to integration does this scenario best illustrate?
joint venture
Warephase Airway's decision to acquire Konex Fuels Inc. proved to be ill-fated because the Warephase managers overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airline industry. What does this scenario best illustrate?
managerial hubris
Which of the following motivations for business growth involves principal-agent problems?
motivating managers
A disruptive innovation leverages ___ technologies, while architectural innovations are based on ___ technologies
new; existing
When Monopar Therapeutics released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. However, any attempts by competitors to copy the chemical composition would result in infringement of Monopar Therapeutics' intellectual property rights. Thus, the drug is protected by a
patent
Susan wants to create a networking site that would connect local artists to homeowners who are looking for unique and original art. She knows that network effects will play a big role in her success and doesn't want to build her business using a linear value chain. Susan would best be served by employing a(n)
platform business model
Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate?
principal-agent problem
The managers at Statholdings Mobile Inc. want to diversify the business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Statholdings Mobile Inc. is most likely a result of
principal-agent problems
Doncon Guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. Although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickups for sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. Which of the following approaches is likely to produce superior results?
pursue taper integration
The core competency of Newex Motors is its fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that the growing demand for "green" vehicles has created a new market opportunity. Thus, it uses its existing technology to develop an engine that improves the fuel efficiency of recreational motorhomes. In this scenario, Newex Motors is
redeploying and recombining existing core competencies to compete in future markets
Better Pill LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Better Pill's owners or managers to take?
seek an alliance with a company or companies that will complete the value chain
A voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services is best described as a
strategic alliance
Can't Believe It's Not Hair Inc. (CBNH) dominates the ladies' wig market and wants to expand into men's toupees. How can CBNH 's managers determine whether the company should develop a toupee division internally, ally with a toupee maker, or acquire a toupee-making firm?
the managers need to determine whether the skills needed to create wigs and toupees are similar and whether CBNH creates better hairpieces than its competitors do
Which of the following best describes a strategic tradeoff?
the tension between value creation and the pressure to keep costs in check
___ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs
vertical integration
When does a merger between companies typically occur?
when two firms of comparable size join to form a combined entity