Strategy Practice Quiz Questions

3. The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

4. A. fixed cost of production

2. Marcel, the owner and president of a three-star hotel, believes that only competitors within the same strategic group need to be analyzed. Nina, the chief of client services, believes that other groups must also be considered in order to stay ahead of competition. Which of the following situations strengthens Nina's argument?

A. A new café on the same lane as Marcel's hotel is being frequented by business people.

3. Lucy, a researcher, wants to identify the main differences in different healthcare firms competing to deliver value. She studies the relative price, product line breadth, and geographic placement to identify the differences. Which of the following is Lucy likely to rely on to identify how the firms compete?

A. A strategic group map

9. A research firm creates a graph to represent how companies compete with each other. The X-axis represents the competitive offerings and Y-axis represents performance. Which of the following is does the graph represent?

A. A strategy canvas

3. The employees at Voyage Ink Corp. were asked to draw a chart that explains the elements which go into making one of their products. They were asked to create a diagram showing the different types of materials that help create the whole product. Which of the following are the employees at Voyage Ink Corp. creating in this scenario?

A. A value chain

35. Plateus Inc., a food manufacturing company, has brand equity worth a billion dollars that has been accomplished through consistent delivery of quality products and long-term advertising. These strategies make entering the industry a formidable task for any other firm. Which of the following is exemplified in this case?

A. An entry barrier

39. BizTechno Inc. has always retained competitive advantage over its competitors. The company has offered customer satisfaction for many years by providing the best services and benefits for them. The resources, capabilities, and the organizational structure of the organization have also created an increased edge over its competitors. Which of the following does this scenario best illustrate?

A. Business model

28. At Red Inc., a retail store, Mark, the manager, maps the consumption chain to understand the buying patterns of the consumers. He has identified how consumers become aware of their needs for products or services. Which of the following is he likely to do next?

A. He identifies how consumers find the store's offerings.

12. A research institute plans to build a competitor response profile for a study. Which of the following is the first step to build such a profile?

A. Identifying the assumptions

24. Which of the following statements is true about an infinitely repeated game?

A. In this game, players always believe there is a future.

34. A hardware company named Ace Works Corp. has been going through financial problems because the entire industry experienced a drastic rise in prices. This has made it hard for the company to plan any future investments as it cannot risk the chance of losing more funds. Rather than development, most of the companies in this industry are experiencing an increase in price competition because all of them are competing with each other to gain more market share. Which of the following general economic conditions is Ace Works Corp. experiencing?

A. Inflation

4. Which of the following is a disadvantage of the value chain process?

A. It does not help analyze a company's strength compared to its competitors.

14. Which of the following statements is true of standardization of products?

A. It is easier to convince the customers to switch brands.

9. Which of the following is true of competitive advantage?

A. It requires a company to consistently outperform its rivals in generating above-average profits.

19. What is true about a minimum efficient scale?

A. It shows the optimal quantity for a company to produce.

33. The exclusive sofa company, Seaterz Inc., has the best resources in terms of equipment, employees, infrastructure, and technology. Yet, it is not able to keep pace with its competitor SoftSofa Corp. After extensive analyses, the CEO of Seaterz stated the reason for their limitation. He stated that their company did not have a definite administrative system to audit and retain the profits created by the employees. Which of the following statements can be inferred about Seaterz Inc. from this scenario?

A. It was not organized to exploit.

6. Fuchsia Inc., a cosmetics manufacturer, decides to change how it competes in the market. With this objective in mind, it decides to target a different market segment with its existing set of products. However, Fuchsia takes a long time to reconfigure its activities and systems to meet these changes. Which of the following is being exemplified in this case?

A. Mobility barrier

30. Annabey Inc., a small candy manufacturing company established in 1937, now has several large units that sell unique flavors of candies and assorted chocolates. When the company started out in 1937, it initially experienced slow growth as it was selling brand new products in the market, but later on, their sales picked up at a drastic speed when customers decided to try their products. The CEO of Annabey credits its growth to all the customers who love their candies and chocolates. Which of the following factors of inimitability is best reflected in this scenario?

A. Positive network externality

25. Katherine is the CEO of a car dealership company called Red Cars. When looking for new investors for the company, she usually says that Red Cars wants to, "Be the best automotive retailer in the eyes of its customers, employees, and shareholders." Which of the following does this statement best reflect?

A. Red Cars' mission

8. MediDose Inc., a pharmaceutical company, has been studying and experimenting with a few drugs. After 10 years of conducting and standardizing tests, the company comes up with positive results that would help many patients. These drugs become popular and effective among millions of patients and enable the company to expand its operations across the globe while spreading out the cost of the studies. Which of the following is the subject of economies of scale in the described scenario?

A. Research and development expenses

34. The top executives of Willow Inc., a furniture company, have decided what markets to compete in. Willow Inc. now has to adopt a set of organizational processes that enables it to effectively carry out these decisions. In order to translate these decisions into organizational action in a successful manner, the functional activities of the company are being measured for their efficacy to support organizational decisions. Which of the following does this scenario best illustrate?

A. Strategy implementation

36. Saturn Inc., a manufacturer of home appliances, familiarizes customers with its products through advertising. Apart from attracting new customers, it offers quick demos in mass media that assist existing customers. Which of the following stages in the consumption chain is depicted in this scenario?

A. The eighth step: what do customers need help with when they use a product?

39. The board of directors of August Inc., a company that provides legal services, has been debating over whether to provide its 99 full-time employees with health insurance. The managers of the firm, however, are considering dropping employee health insurance as a benefit. Which of the following statements strengthens the managers' consideration?

A. The fine that August Inc. would face would be cheaper than the current premiums for health insurance.

28. Mercury Corp., a startup company, is sure that it will achieve a steep curve of 75 percent as it is selling a unique product that has not been introduced into the market before. The company is confident that this product will be sold at a fast rate due to two reasons: the product is a necessity in every home and it is a break-through solution. Mercury sees this product as helping the company grow at a fast pace. Which of the following strategies has Mercury Corp. adopted?

A. The growth/investment strategy

12. Which of the following statements is true about concentrated industries?

A. These industries have few competitors and rivalry is less intense.

17. Zenith Corp., a bag company, produced a lot of high-end leather bags than could be sold in the market for a year. The leather bags eventually wore out and were not fit to be sold, thus causing huge losses for that year. Which of the following did Zenith Corp. most probably experience during that year?

A. Use of full production capacity

31. Rinkon Inc., an automobile company, purchased its competitor TrackRoads Inc. that had similar production quantities and a sufficient amount of raw materials. This takeover was done to decrease the unit cost production of Rinkon and to increase its production using more equipment in Rinkon. This strategy led to record profits and more customers investing their finances on cars manufactured by Rinkon. The scenario best illustrates the:

A. acquisition strategy.

26. The airline industry is a profitable industry. The firms in this industry create barriers to entry through patents and regulations in order to reduce the threat of new entrants. It also minimizes the threat of substitutes while keeping rivalry to a minimum. The airline industry can be best categorized as a(n):

A. attractive industry.

31. SunLite Corp. runs fitness centers which are owned by the parent company Cyan Inc. Ryan, the manager of Cyan Inc., needs to decide on how to overcome competition by other fitness centers. He finally decides to bring in advanced facilities, such as imported gym equipment, to give faster results and keep SunLite centers open for patrons 24x7. Ryan feels that this will allow the company to gain more profits. This scenario best illustrates a _____.

A. business unit strategy

23. Appetit Corp. is a famous deli in the metropolitan city of Atika. The company became popular because of its consistency in the quality of bread it provided and its creativity in adding unique elements to create different flavors. One of Appetit's products is an infusion of peanut butter and barbeque sauce filled in a bun. Appetit Corp. also engages its customers in contests that ask them to make their own unique variety of bread, which later features among the company's products with the winner's name. All these factors have helped to create unique value that keeps its customers coming back for more. This scenario best illustrates Appetit Corp.'s _____.

A. capabilities

29. Smart Waves Inc., a company that sells computers, provides an external hard disk along with its high-end professional laptops. Customers can store extra data in these hard disks without having to purchase them. The offer that Smart Waves provides is an example of _____.

A. complementary products

37. The managers at Marker Inc., a movers and packers company, wants to formulate a plan of action to implement their mission, "We deliver what we promise. Always." To achieve this, the company chooses the best markets to invest in, buys state-of-the-art transportation vehicles, employs spill and damage proof style of packaging equipment, and develops a service-oriented mentality. This method of conducting business earns them a reputation. This scenario is an example of _____.

A. deliberate strategy

14. Gia Inc., a healthcare company, aims to create a competitor response profile. It has identified its objectives and assumptions. The next step is to _____.

A. identify the competitors' resources and capabilities

28. An insurance firm decides to recognize its resources and capabilities. It observes that a few resources and capabilities deliver unique value, but others are subjected to easy imitation. In this case, the organization is _____.

A. learning its strengths and weaknesses

29. Noah, a researcher, identifies various resources and capabilities of an organization that are subjected to rapid obsolescence, easy imitation, and high cost not recouped by value. In this case, Noah is:

A. learning the organization's weaknesses.

30. Tracie, the CEO of Boney's Inc., wanted to analyze what customers think of their products. She began her survey by finding out how her customers become aware of their needs, how they find the products, how they purchase products, and how the products are serviced or repaired. These steps are part of:

A. mapping the consumption chain.

7. The ways of taking advantage of conditions in the environment to become more profitable most accurately defines the term _____.

A. opportunities

21. When firms rely on brand image to differentiate products, some of them associate their products with positive qualities in the minds of customers. These are known as _____.

A. prestige brands

16. The employees at Williamson Corp. are finding it hard to manage their daily work in an efficient manner. They are consistently not able to meet their daily targets because they have too much of unorganized workload to handle. Frustrated, they seek help from their managers requesting them to create a system wherein they are allotted work according to their level of importance, so that the important work gets done before they take up the work that is categorized as comparatively lesser important. This system is put into practice, and the employees find it easier to handle work in a systematic and sequential manner. From the information given in this scenario, we can infer that Williamson Corp. has worked out its _____.

A. priorities

13. An organization studies the strategies of its competitors closely. At the current stage, it studies factors such as geographic location, characteristics of business model, services provided, and time management. At this stage, the organization is identifying the competitor's _____.

A. resources and capabilities

15. An airline service provider watches its rivals closely. It studies the potential for reliable, timely, and service-oriented international travel offered by its competitors. In this case, the firm is focusing on the competitors' _____.

A. resources and capabilities

27. A company wants to form the foundation of a competitive strategy. It decides to assess its strengths and weaknesses. In this case, the company should first assess its _____.

A. resources and capabilities

18. Attire Corp., a garment manufacturing company, explains to its employees why its previous year's sales had not met the required standards. The management uses a diagram of the cost acquired for each item manufactured against the volume of items produced in a particular period of time. The pictorial representation is an example of the _____.

A. scale curve

28. Summer Inc., a departmental store, wants to provide better service to its customers. This includes providing expertise in each type of product and brand. In order to accomplish this, the general manager of the store suggests that they should begin by identifying the different types of customers. By classifying customers, into various groups, such as mothers, athletes, tech-savvy customers and so on,, the store's customer care personnel can specialize on detailed product information. With the help of this classification, the store is able to provide better service to each customers by offering more brands to choose from. This scenario best illustrates _____.

A. segmentation analysis

1. A set of companies that compete in similar ways with similar business models pursuing similar sets of customers is called a _____.

A. strategic group

31. Jupiter Bank was one of the first banks to adopt intelligent imaging that helps in classifying, storing, and retrieval of data. It was also among the first to practice virtual banking and transfer data electronically. As such, Jupiter Bank was an early adopter of these new and faster techniques of banking. This helped the bank to gain a large market share which consequently enabled it to generate huge profits. Jupiter Bank yielded such profits because it paid importance to _____.

A. technology changes

19. Value is usually created when:

A. the end user enjoys direct pleasure and satisfaction from a company's product.

7. Neptune LLC is a company that manufactures electronic products. Its employees are given specific guidelines regarding the resources and capabilities that they should invest their company's money and time in. The employees are expected to follow these guidelines during Neptune's lean as well as peak seasons. Which of the following terms best reflects the guidelines that the employees of Neptune LLC are expected to follow?

Attributes

26. Vladimir, the CEO of Autumn Inc., claims that a learning curve is a better option of identifying the growth of the company. His assistant, Mark, states that growth can be better assessed if a scale curve is used as it reflects reliable and validated results and moreover it shows results of a specific time period. Which of the following statements strengthens Vladimir's claim?

B. A learning curve assesses the overall company from its inception.

36. Walden Inc., a well-established finance company, hires the most valuable scientists and experts. Hence, start-ups and other small businesses find it difficult to compete with Walden. Which of the following is exemplified in this case?

B. A limited competitive access to scarce resources

37. A successful chain of restaurants is successful in securing the most advantageous geographic positions. This effectively bars competition. Which of the following is exemplified in this case?

B. A limited competitive access to scarce resources

38. An insurance company has procured all the capacity available in its market for $100 million. Thus, the company has placed a lock on the resources that other firms may require to develop their products. Which of the following is being exemplified in this case?

B. A limited competitive access to scarce resources

34. A well-established manufacturing firm decides to set the market price of a product just low enough so that a new firm cannot pay the cost of entering a market and eventually be profitable. Which of the following is exemplified in this case?

B. An entry barrier

30. Zeal Inc., an electronic goods manufacturer, launches an air conditioner that contributes to the downfall of Ochre Corp., a company struggling to stay in the market amidst bankruptcy. Which of the following concepts is exemplified in this scenario?

B. Bringing strength against weakness

31. Laser Tech., a leading printing firm, launches a new printing technique to meet the changing demands of the market. Blue Corp., its prime competitor, had been rigid in adapting to the changes in the market and is put out of business because of the launch of the new technique by Laser. Which of the following is exemplified in this case?

B. Bringing strength against weakness

21. SliderPage Inc., a furniture company, has been trying hard to keep its profits going. SliderPage asked its suppliers to reduce the cost of the raw materials that would be needed to create its products and also tried to buy supplies that are less expensive. Which of the following buyer price sensitivity factors is best illustrated in this scenario?

B. Buyers struggling financially

1. _____ can be best defined as when an organization generates higher profits compared to its rivals.

B. Competitive advantage

14. Dave's is a retail chain that offers all utility products ranging from home appliances, stationery, and groceries. Its customers prefer the store as they can buy everything they need under one roof. Dave's has more than a 100 outlets across the state, which makes the store easily accessible for customers easy. These features of Dave's best exemplify the element of _____.

B. Convenience

36. String Line Inc. has established a loyal supplier base. The management at String Line had created a system in which it chooses a supplier that is reasonably affordable, and instead of quoting the company's price and demanding that it be met, it complies with the supplier's quotes. Over time, this has established a bond of loyalty with the supplier. When String Line opened a new branch, the supplier built its plant close to the branch so as to save transportation costs. Which of the following has String Line Inc. established with the supplier?

B. Cooperation

24. Crimson Corp., designs its products based on demographics of its customers. Jaded Inc. designs its products based on product attributes. Which of the following is likely to be true in this case?

B. Crimson is unlikely to consider customizability of products as the primary factor for customer segmentation.

32. Summer Corp., a retailer of consumer electronics, has been experiencing high profits because an increasing percentage of the customers have sufficient disposable income to afford its products. Similar companies have also experienced a boom in customer demand. Which of the following macroeconomic forces is Summer Corp. experiencing?

B. Economic growth

17. An organization has few rivals in the industry. These rivals are considering such moves as price changes, capacity adjustments, or new product features. Which of the following will help the organization predict the strategic actions most likely to be taken by its rivals?

B. Game theory

11. The Finance Department of Neptune Industries has to audit expenses and profits made each year. It creates separate databases for costs accrued in the form of equipment used in the company and for other costs such as costs of accounting, rent, and managerial salaries. Which of the following is the subject of economies of scale in the described scenario?

B. General and administrative costs

35. Rita lives in a dorm with other students of her college. She hesitates to buy furniture owing to lack of space. She wants to buy a new study desk, one that can easily fold away and be dismantled so that it doesn't occupy much space when not in use. What is Rita's main concern?

B. How to store the product

10. Which of the following statements about risks is true?

B. Investors take up risks every time when they are not sure if their investments will be a gain or a loss.

15. Which of the following statements best describes the term internal analysis?

B. It examines a company's resources and capabilities to configure a firm's ability to deliver unique value.

10. Which of the following is true of a tangible resource?

B. It has a physical presence such as land, machinery, and cash.

13. Which of the following statements is true of external analysis?

B. It studies the factors that influence an organization's appeal and environment.

10. Which of the following statements is true of a fragmented industry?

B. It usually has very few competitors and tends to be dominated by a few large firms.

31. Kim, a consumer, is in the final stage of selecting a product. Which of the following is is true if her actions follow the typical consumption chain?

B. Kim is likely to be persuaded by the product attributes at this stage.

15. _____ occur(s) when some products or services are more convenient to use because there is a large network of other users.

B. Network effects

23. Leon Royal Hotel was the first inn in the county of Belvore. It had started out as a small investment with seven rooms, providing bed and breakfast in 1949 to many travelers who came to Belvore. Another inn called Meltown Inn started out a decade after Leon Royal Hotel. After 20 years of giving unique and satisfying service to its customers, Leon Royal Hotels was well established as a large hotel with more than 1,500 rooms. The facilities and services provided by the hotel made it one of the best hotels in the Belvore, while Meltown Inn started losing profits and eventually shut down in 1968 because of providing bad service. Which of the following factors of inimitability is explained in this scenario?

B. Path dependence

29. The managers at Spring Hotels want to find out how their competitor, Crimson Valley Hotels, consistently outdoes them. Spring Hotels have the same facilities and equipment as Crimson Valley Hotels, but each month its efforts to reach the benchmark set by Crimson Valley Hotels fails. This is because Crimson Valley has elements such as great location, beautiful architectural design, and customer-friendly employees that create an edge over other companies in its industry. Which of the following does this scenario exemplify?

B. Resource-based view of firm

22. Lavender Furniture established itself in 1965 as a small firm. It was situated on a small stretch of land located miles away from the town. Over the years, due to the high quality of its products, it acquires enough profits to own multiple assets, such as a bigger plot and machinery, recruit employees and establishe itself as a brand. Which of the following is an element of the strategic management process that Lavender Furniture has acquired?

B. Resources

25. Sasha, the marketing head of a firm, believes that customers hire products to do jobs for them and that these jobs should be the basis for market segmentation. In this case, which of the following is Sasha likely to approve?

B. Segmentation based on features such as durability and quality

12. The management of Neptune Inc. creates a definite plan of action that will surely create profits for the company. It allocates and sectionalizes its machinery and personnel. The main office is moved to a prime location that helps attract customers and facilitates competitive development. This plan of action helps Neptune Inc. retain its competitive advantage and has also grow as a company. Which of the following terms does this scenario best illustrate?

B. Strategic management process

25. Weavers Inc., a popular clothing brand, has been providing its customers with the best quality silk products for many years. The employees of Weavers Inc. use pink berry silkworms for their silk products and weave their greased silk threads in such a way that they produce different shades of colors when held at different angles. Weavers Inc. has been providing unmatched service toward millions of customers around the world. Other companies have tried to imitate their products and services, but have not been successful. Few competitors who captured these silkworms did not know the precise temperatures that were essential for their breeding and survival. Which of the following factors of inimitability does this scenario regarding Weavers Inc. best reflect?

B. Tacit knowledge

19. Tangerine Inc. differentiates its products by building a brand image, whereas Cloud Inc. does not rely on brand image to differentiate its products. Which of the following statements is likely to be true in this case?

B. Tangerine is likely to use advertisements to differentiate its products.

5. Willow Inc., a company that designs and manufactures watches, designs a digital watch allowing users to sync it with their mobile phones. It has a touchscreen, microphone, and Bluetooth device installed in it. The watch is also water-resistant for up to 200 meters. The other general features of the watch remain the same. Which of the following statements is true in this case?

B. The Bluetooth device feature enables the product to do a better job of the existing functions in terms of product differentiation.

25. In a recent presentation by the management of Seas Inc., the presenters conducted a discussion with a pictorial chart on the cumulative units of production of the company and its correlation with the cost per unit of the product. Which of the following charts did the presenters of Seas discuss?

B. The experience curve

6. Which of the following statements is true of research and development (R&D)?

B. The higher a firm's R&D costs, the more the scope for the company to expand globally allowing costs to be spread across more customers.

16. Zeal Inc. launches a new software application. The application doesn't offer any new features but is cheap compared to others in the market. However, because of its low price, customers benefit from network effects. The application often crashes due to bugs in the software. Which of the following is likely to be true in this case?

B. The users of the product can contact other users for queries.

26. Tina prefers buying products for the emotional dimension of the job they perform rather than its functional attributes. Jay prefers to buy products for the social dimension of the job they do rather than its functional or emotional attributes. In this case, which of the following is most likely to be true?

B. Tina buys an original painting by her favorite artist even though it is not in good condition.

8. Zara, a research analyst, is studying the business decisions of some restaurant owners. During the data analysis stage, she employs a strategic canvas. Which of the following is likely to be her primary reason to employ this tool?

B. To study the differences in the ways the restaurants compete with each other

1. Which of the following statements is true about customer needs?

B. Understanding them can be very helpful in defining the boundaries of an industry.

5. _____ can be best defined as the reason a firm wins with customers or the value proposition it offers to customers, such as a low cost advantage or differentiation advantage.

B. Unique value

16. The word "theory" in game theory refers to _____.

B. a set of predictions

8. The Mykari Publishing House invested in buying high-end machinery that allowed its newspapers to be printed at twice the speed of average printing machines. The executives of the company stated that this would increase the company's profit margin by 12% as opposed to the usual 7 to 8% that it makes annually. When the finances of the company were tallied this year, it was found that the profits increased to about 19%. This scenario best illustrates _____.

B. above-average profits

23. Most companies are in competition with their rivals each and every day, month, or year with no certain end date. This is an example of _____.

B. an infinitely repeated game

22. Orange Superstore is largely customer centric and economical in its methods. The store sells the best quality products at prices that are lower than other stores. The store depends on the fact that its salespeople get better at completing their tasks over time. This method used by Orange Superstore is an example of _____.

B. cost advantage strategy

20. DFN Inc. expanded its manufacturing plant to employ more equipment because the management of the company thought this would help them attain more sales. Unfortunately, this affected the cost of each unit produced because the company invested more finances for better equipment. This also led to a decrease in sales as customers were not willing to buy the product for an increased price. This scenario best illustrates _____.

B. diseconomies of scale

14. The management at WonderPlanners Inc. wants to improve their production and operating capabilities by adopting a leaner process. As such, the employees of WonderPlanners are asked to eliminate the excess use of efforts and materials. WonderPlanners Inc. finally manages to achieve a competitive advantage after its employees follow these new practices repeatedly over time. From the information given in this scenario, we can infer that WonderPlanners Inc. has developed _____.

B. dynamic capabilities

15. Connections Communications Inc. has been able to achieve optimal efficiency by identifying a task for each employee and enabling them to become thoroughly proficient in their tasks. The company has realized that employees develop an expertise in their specified job profile over time and they gradually begin to work faster than when they started the job. This is an example of _____.

B. employee specialization

27. Indigo Inc. experienced a drop in the price of each product as the overall volume of production increased. This relationship or method caused an increase in profits accrued by the company. This is an example of the _____.

B. law of experience

24. A group of students studying a firm named Sanders & Collins Corp. found that the workers initially learned their task-related activities very fast. In turn, this helped the firm reduce the labor cost incurred in producing each product. However, their rate of learning these tasks reduced over time. This scenario best illustrates the _____.

B. learning curve

11. The procedures, processes, or routines for delivering value to customers, employees, suppliers, or investors most accurately define the term _____.

B. operating capabilities

32. Ming Gardens Corp., an interior design company, is solely owned by Veronica. The company has been able to achieve competitive advantage due to the knowledge acquired by Veronica over the years. This knowledge was attained under the protective custody of Veronica and she does not want to publish them to anyone. This scenario reflects the development of _____.

B. proprietary knowledge

34. Yellow Corp., a supplier that provides raw materials to a leading computer brand, had to lower its costs by 7 percent as the computer brand doubled its order. As a result, Yellow Corp. experienced economies of scale. This negotiation tactic is an example of _____.

B. purchasing volume

38. A federal act was passed in the country of Arahonia which changed the way many of the Arahonian industries worked. Most of the firms in Arahonia had to restructure their strategic plans accordingly. This resulted in the larger firms acquiring the smaller ones which did not exit the market altogether. This scenario best illustrates a(n) _____.

B. regulatory force

37. CoolDrink Inc., a beverage company, had to change its medical insurance policies because of a new federal law. The new law required all companies with over 50 full-time employees to provide health insurance for their employees. In case these companies are unable to do so, they would have to face penalty. CoolDrink Inc. had to implement changes due to _____.

B. regulatory forces

40. The residents of the town of Segonon have initiated a campaign to stop the production of aerated beverages by Sip Drink Inc. The community members of Segonon stated that these beverages are causing loss of memory, nausea, and tiredness among the children who consume them regularly, and thus, have urged that the company should be shut down. The community's reaction to Sip Drink's beverages illustrates a _____.

B. social force

36. Sasha has the new responsibility of initiating strategies that would help safeguarding her company against recession. She conducts a meeting with all the employees in which she explains how she would go about implementing her plans. She also motivates and encourages employees to follow through with her plan. Sasha is a _____.

B. strategic leader

36. Rize Inc. has been running efficiently as a real estate organization for 25 years. It has consistently provided customer satisfaction by maintaining a customer-friendly culture in the organization. Their competitors have not been able to replicate Rize's services. This has helped then generate and hold on to profits accrued by its vast and rare resource pool. This is an example of _____.

B. sustained competitive advantage

15. The computers of Main Frame Inc., a computer company, are manufactured with in-built operating software. The users of this software have avoided using computers manufactured by other companies because that would entail converting their data to the other software. Also, they would have to get used to working smoothly with the other software. From this scenario, we can infer that:

B. the switching cost would be higher for the users of Main Frame Inc.

25. An organization watches it rivals closely and chooses actions that mimic what its rivals are doing. This is an example of a _____.

B. tit-for-tat strategy

26. A manufacturing firm maintains its price unless it observes its rival choosing to lower price. Any time the rival lowers price, the firm responds by lowering its own price. This is an example of a _____.

B. tit-for-tat strategy

40. TrueBiz Corp. follows a system wherein all the activities of the company are directed toward converting parts of a product into an entire finished good. These activities are done in tandem so that a perfected product can be created which can be sold to a prospective customer. This is an example of a _____.

B. value chain

31. ZipTag Inc. is an online company that allows venders of varied products to display their products to prospective buyers. This company has been providing service to both customers and sellers and has established itself in the market as a credible company to conduct business with. This has caused more dealers to display their products in ZipTag as they trust that the company will provide the necessary advertising to pull in prospective customers. This is an example of a _____.

B. virtuous circle

21. Which of the following is an example of a resource?

C. A patent

11. Which of the following products best exemplifies reliability?

C. A washing machine that works optimally for many years

37. Kevin, the General Manager at KlockWorks Inc., wants to assess the true worth of his company. Kevin wants to know the amount of profits accrued by the company, its strengths and weaknesses, and how far ahead is the company compared to its rivals. In order to conduct the research, he does an online search, studies the annual reports, the audits, and pays a visit to a local library. Which of the following types of data gathering techniques for company diamond analysis is being illustrated in the scenario?

C. Archival data

20. Suede Inc., a company that manufactures bags, makes extensive use of advertising to compete in the market. The features of its product are similar to existing products in the market. It uses other promotional tools such as discounts, coupons, and rebates to increase its customer base. In this scenario, which of the following elements does Suede rely on to differentiate its products?

C. Brand image

26. The CEO of Saturn Interiors Corp., an interior designing company, stated in an interview that he credits the company's success to the scenic environment that the company is located in. The employees of Saturn Interiors are inspired by the beauty of nature and that helps them create perfectly aesthetic homes for their customers. A similar company named Virgo Designs LLC had also started up in the same location and around the same time as Saturn Interiors. However, this company was unable to provide the same services to its customers even though the management hoped to do what Saturn Interiors did. It was later found that the employees of Saturn Interiors were trained in a specific way, and the culture of the company was very different from the way Virgo Designs functioned. Which of the following factors of inimitability does Saturn Interiors Corp., have?

C. Causal ambiguity

28. Michelle, the CEO of Nariko Jets, an airlines company, stated that she owes the credit of her professional success to the time spent as a volunteer at a homeless shelter and her passion for artwork. She said that she learned to never stop dreaming from her work as a volunteer. Nariko Jets, according to Michelle, was the result of her combined efforts at life lessons that she learnt at the homeless shelter and her paintings which provided her the inspiration to help create passenger and jet airlines that would make travel easier and comfortable. Her competitors have always envied her success. Which of the following factors of inimitability is best reflected in this scenario?

C. Causal ambiguity

27. The research and development department of Chi Inc. studies the buying patterns of its customers. If it starts with the customers in the first step of the consumption chain, which of the following does it most likely study?

C. How do its customers become aware of their needs?

38. Which of the following questions denotes the last step in a consumption chain?

C. How is your product repaired, serviced, or disposed of?

39. An automobile manufacturing firm has dominated its market by consistently releasing automobile upgrades and enhancements. Which of the following is being exemplified in this case?

C. Introducing new products frequently

14. Which of the following is a feature of task specialization?

C. It enables workers to be more efficient and thus enables them to avoid loss of time.

21. Which of the following statements is true about the Nash equilibrium?

C. It is the solution concept used to predict the outcome of competitive interaction.

39. Frieda, the manager of a retail store, believes that a customer, Jake, is in the selection making stage. Nina, the sales person, believes that Jake is at the stage where he requires help in using the product. Which of the following statements strengthens Frieda's argument?

C. Jake is comparing the product features offered by two brands.

24. A group of four people wants to start an office supply chain. They realize that if their company has to function well, they must set the primary aim for which the company has entered that particular business. This aim will help the company function in an organized manner and provide the staff with a focus to meet their goals. Which of the following does this scenario depict?

C. Mission

32. Peach Line Inc., manufacturers of furniture, identifies that its choice of suppliers is its weakness and makes this irrelevant by standardizing the production process irrespective of the source of raw materials. This way, its choice of suppliers does not become the target of competitors. Which of the following is exemplified in this case?

C. Neutralizing vulnerability

24. A company named Runathon Inc. had opened its store that displayed only shoe brands. The employees at the store were very service-oriented, and attended their customers and solved their queries efficiently. Runathon also had a special team of experts who advised customers on the type of shoe to choose for a particular sport. Few years later, another company called FitRight Corp. opened its store right opposite Runathon. Although FitRight had shoe brands, trekking gear, and sportswear displayed in its store, it was not able to attain the profits that Runathon did because its salespeople were not as experienced and learned as Runathon. Which of the following factors of inimitability did Runathon Inc. have?

C. Path dependence

26. The management of Earth Network Inc., a cell phone company, wants to conduct an overall study of the company. The top officials want to identify Earth Network's competencies, limitations that the company needs to improve on, areas of growth, as well as the areas that the company should completely avoid. The managers feel that this study will help them advance as an organization. This study to be conducted by the management of Earth Network Inc. can be best categorized as an example of a _____.

C. SWOT analysis

7. Ryan, a researcher, wants to indicate whether companies in one group appeal to the primary markets of another group. Which of the following is likely to help Ryan in his research?

C. Strategic group maps

25. Readmore Publishing House, the publisher of a regional daily, has been slowly losing profits as its readers prefer to get news through the television. A recent study on the readers who made the switch stated that it is more accessible and faster to attain up-to-date news through the television rather than to wait for the next day for an update on current events. Which of the following is Readmore Publishing House is facing?

C. Substitute

16. A popular food company, Crunchez Corp., is finding it difficult to retain its buyers as another food company, MidnightSnax Inc., has started to provide the same product with the same taste for a lesser price. Which of the following is a threat to Crunchez Corp.?

C. Switching cost

30. MouseTag Inc. has incorporated a new type of technology that has increased the potential of the company by two fold. Its machinery can now work faster and produce more products in a day than any of its previous machines ever could. This has also helped increase the profits of the company. Which of the following trends does this scenario best illustrate?

C. Technology change

4. Which of the following statements is true about strategic groups?

C. The firms within each group compete in similar ways.

34. Floyd Inc., a manufacturer of washing machines, encourages customers to choose their brand through extensive marketing. Features of Floyd's products are compared with those of other brands, and customers are made to see the benefits they get from purchasing Floyd's products. Which step of the consumption chain does this scenario depict?

C. The third step: how do consumers make their final selections?

19. Fashion Mart Corp., a clothing company, offers the best quality material made using the finest threads and advanced textile machinery. It offers an extended product guarantee to its customers, something that its competitors have found difficult to achieve. This guarantee claims that the clothes that Fashion Mart creates will not wear out even after 200 washes. This guarantee has helped Fashion Mart to retain its loyal customer base and to frequently get new custormers. This scenario best illustrates _____.

C. a differentiation advantage

7. Returns in excess of what an investor expects from other investments with a similar amount of risk are referred to as _____.

C. above-average profits

20. WillowWorks LLC, a retail clothing store, has been sourcing its raw materials from a supplier named ThreadTym Corp. for the last five years. A change of management at ThreadTym resulted in an increase of the prices of the raw materials. As a result, WillowWorks purchases ThreadTym so that it can produce these products on its own. This scenario best illustrates _____.

C. backward integration

22. Satchels Corp. has been in the retail bag business for 10 years. It has created unique value and attained brand loyalty from its customers. Recently, a new bag company started up in the same area as Satchels. In order to retain the reputation that it has established and avoid competition with the new company, Satchels introduced a new line of fashion bags, conducted a sale, and also increased its advertising. This made it difficult for the new company to gain profits. This scenario best illustrates _____.

C. barriers to entry

17. When products are differentiated through marketing, via advertisements, promotions, and other marketing activities, it is known as _____.

C. brand image

35. TumbleDry Inc., a washing machine company, has been able to make minimal profits in the market. However, TumbleDry has not been able to come up with any product innovations that are unique and hard to imitate. This scenario best exemplifies _____.

C. competitive parity

28. Products that can be used in tandem with those from another industry best define the term _____.

C. complementary products

13. Procedures, processes, and routines that continuously expand existing resources or improve operating capabilities most accurately define the term _____.

C. dynamic capabilities

1. A reduction in costs per unit due to increases in efficiency of production as the number of goods being produced increases best defines the term _____.

C. economies of scale

38. The management of Winters Corp., a small company, pursued an unexpected opportunity and gained huge profits over a period of 10 years. At the end of this period, Winters Corp. grew as a company and successfully established itself as a highly valued brand in the industry. This is an example of a(n) _____.

C. emergent strategy

38. Suppose a garment manufacturer named Vogue Inc. buys materials from another country that is well known for its cotton and silk exports. Recently, the currency of this country fell, which enabled Vogue Inc. to purchase more raw materials. Vogue Inc. achieved cost advantage through _____.

C. exchange rates

14. The Board of Directors of Miranay Corp. assesses and evaluates the firm's industry structure. In order to track the factors that could affect Miranay's performance, it tries to scan the industry's positive and negative trends. The Board of Directors of Miranay Corp. is involved in a(n) _____.

C. external analysis

5. Nirvana Publishing House invested on high-end printing equipment. After a year of production, the company had to double the amount of production of its newspapers and weekly magazine because of high customer demand. However, the company did not have to invest in another similar equipment to meet demands. This is an example of a _____.

C. fixed cost of production

11. Bright Inc. is a toothpaste manufacturing company that is facing intense competition from its rivals. In order to encourage higher consumption of its products as well as minimize brand switching among its existing consumers, Bright introduced sweepstakes as a consumer sales promotion strategy. However, its rivals retaliated by introducing deals such as a featured price which is lower than the regular price, buy one, get one free offers, and large package offers that give a percentage more free. This scenario best illustrates a _____.

C. fragmented industry

32. Sheng, the CEO of Mirrorz Inc., comes up with a plan to implement business unit strategies successfully. He decides to do this by making technical advancements in the manufacturing process of the products and developing a solid financial system run by an efficient team. He also plans to establish a marketing team that would sell to people who would not normally buy the product. The ultimate mission of the company would be to provide a customer friendly environment. The plan initiated by Sheng can be best categorized as a(n) _____.

C. functional strategy

18. CharmingBells Inc. has been running into a loss gradually, but the board of directors are reluctant to shut the company down because it has invested millions of dollars' worth of equipment which can only be used in that industry. Moreover, the people in CharmingBells Inc. have become emotionally attached to the company and do not want the company completely shut down. This scenario best illustrates _____.

C. high exit barriers

22. LuxeDrive Inc. is an automobile company with unmatched competition because it has certain qualifications and assets that set it apart from the rest of the companies selling similar products. These act as qualifications that rival companies find hard to configure and replicate. This scenario regarding LuxeDrive Inc. can be best categorized as an example of _____.

C. inimitability

38. A media house wanted to report on the continued success of the software company, AlphaDigiPro Inc. The reporters decided to assess the company in two ways. They spoke to the top management employees and handed out questionnaires to other employees. The results of these data collection techniques helped the media house construct a good article. This scenario illustrates the use of _____.

C. interviews

33. A restaurant chain serves common dishes that are also available in other restaurants. As it does not offer any unique dishes, it introduces other options to customize the products such as the choice of cheese, bread, and spices. It also promises a short waiting time for take-away and free home deliveries. In this case, the restaurant chain is _____.

C. neutralizing vulnerability

29. Lavender Inc., a computer manufacturing company, sells its products at costs that are lesser than its competitors as it wishes to gain profits in order to cover more of the competitive market. The company follows this method as it has high unit volumes. The scenario best illustrates the _____.

C. pricing strategy

1. The marketing department of a cosmetics brand conducts a research. 40% of its customers said that they prefer the brand because they do not need to reapply the product often, while 30% said that they chose the brand because the products are organic. If the brand segments the customers by the features of the cosmetics they prefer, the segmentation is primarily based on _____.

C. product attributes

33. Femi, the founder of Pluto Inc., feels that the company has been able to continuously maintain competitive advantage due to the plans of action she initiated years ago. The plan involved establishing and maintaining contacts with influential business personnel, amicably taking over small companies that would help bringing in profits for Pluto Inc., and creating raw materials from scratch rather than buying from other companies. This type of planning is an example of _____.

C. strategic vehicles

13. Breaking a large process into smaller elements that require specialized knowledge is known as _____.

C. task specialization

1. A visual description of the steps required to turn raw materials into finished products and/or services most accurately defines the term _____.

C. value chain

41. VisionZed Inc., a computer software company, spends a lot of finances on research. It tries to implement the latest technologies available and provides services that are matchless when compared to any of its competitors. At the same time, Xtron Technologies Corp., another computer software company, pays half the price that VisionZed pays on research as it combines the intelligence of different software companies and creates its product. This enables Xtron to have a cost advantage over VisionZed. Xtron Technologies Corp. is an example of a company that eliminates steps in the _____.

C. value chain

27. Speed Express, a courier company, proves to be a definite challenge to its competitors. The technology, personnel, services, and organizational structure of the company are intricately bound together to create a system that is widely appreciated by its customers. Speed Express has state-of-the-art facilities for its transportation, delivery, or packaging operations. Speed Express also has a range of travelling bags and brand of wrist watches. The company's success rests on the complex interplay between all of its functions, products, and operations. Customers remain loyal to the company and prefer it over other brands and services. Which of the following factors of inimitability does Speed Express have?

Complexity

7. Fuchsia Corp., a retail chain, opens four outlets in different locations of a city. It markets itself for attracting customers to these locations. The company invests in promotional campaigns for one of the outlets and then divides the expenses among the four outlets. Which of the following is the subject of economies of scale in the described scenario?

D. Advertising expenses

16. Ravi, a supervisor at Autumn Inc., notices that the company has been successful in outperforming its competitors in the industry and declares that the company has achieved competitive advantage. Yolanda, a manager at Autumn Inc., argues that this is not true. Which of the following strengthens Ravi's claim?

D. Autumn Inc. has been consistently outperforming its rivals in generating above-average profits

11. An organization wants to compete at an international level. It sets the company objectives and the assumptions to reinforce the objectives. Which of the following is being exemplified in this case?

D. Competitor response profile

23. Li, the president of Lavender Inc., believes that when employees are trained, they should work on one particular task till they know how to perform it perfectly. Thus, the employees are usually encouraged to repeatedly perform their designated tasks. Li claims that the more an employee engages in a particular task, the more skilled he or she will become at it. Which of the following statements strengthens Li's belief?

D. Employees will find better ways at completing the same task.

5. Alex, the CEO of a manufacturing company, is asked by the board if he will consider switching strategic groups. However, Alex thinks it might not be advisable. Which of the following statements strengthens Alex's belief?

D. His company has rigid systems, which have been in place for many years

29. During the process of mapping the consumption chain of a product, Nina looks at the methods followed by companies which send their engineers to check laptops when they detect that a possible bug could be affecting a system. Which of the following questions does this example address?

D. How is your product repaired, serviced, or disposed of?

35. The board of directors of Indigo Bank implements a sound strategy that will help them gain overall profits and maintain competitive advantage. It claims that supervising and measuring the efficacy of the functional strategies of the company are more than sufficient to implement the company's strategies. However, Klark, one of the board members, argues that this alone is not enough and that the company should think of creating an emotional appeal toward its employees. Which of the following statements strengthens Klark's argument?

D. Indigo Bank's structure, systems, staff, skills, style, and shared values will help progress strategic implementation if they are designed to facilitate the execution of the strategy.

33. Leo Corp., an automobile company, experienced an increase in growth rate this year as the company sold its products at a lesser rate due to the economic conditions that the industry recently went through. This has helped the company to attain more investments than before and consequently to invest in new assets, research and development, and new product development. Which of the following macroeconomic forces does this scenario best illustrate?

D. Interest rate

2. Which of the following statements is true of a value chain?

D. It is a method of depicting and evaluating the activities performed by a company.

9. Which of the following statements is true about rivalry?

D. It is an important driving force to increase profitability.

32. Kleo wants to start his own textile business. He believes that the best way to pull customers into buying his product is to be the first to create lightweight woolen jackets that would keep an individual warm and would also look good on the person. He decides to set up his store in the small town of Marida, which has a rough wintery season almost throughout the year. Kleo believes that he will be able to achieve plenty of profits with this idea with a commodity that is a needed all throughout the year. Which of the following statements strengthen Kleo's idea?

D. Kleo has access to all the clothing materials that will be needed to create these jackets.

12. Which of the following is a primary characteristic of employing automated equipment in a company with high levels of production?

D. Large companies can reduce per-unit cost of production.

40. Lieme Inc. and Pola Inc. are oligopolistic rivals in the automobile industry. Lieme has staked out a price position that is slightly higher than that of Pola. Even so, if Pola raises its price, Lieme would too, in order to maintain the differential. Which of the following is being exemplified in this case?

D. Monitoring and mimicking rival behaviour

20. An organization wants to maximize its payoff given the choices of rivals and remove incentive to defect in the sense that no organization can improve its payoffs by changing its choice. Which of the following concepts will help the organization create such a structure?

D. Nash equilibrium

22. A researcher wants to study an organization that strives at achieving the best outcome and ensures that the outcome is stable. In this case, the organization has developed the concept of _____.

D. Nash equilibrium

36. The management of GNH Corp., a chemical plant in the city of Werkshore, has promised to take care of its surroundings. It assured to dispose its factory wastes in a way that does not affect the habitat. In order to do so, the company had to go through renovations that allow the plant to take up green initiatives. Which of the following is the source of change for GNH Corp.?

D. Natural environment

12. The customers, investors, and employees of Pisces Inc. are invariably satisfied with the services and culture of the company. Pisces Inc. has delivered on all its promises and has continued to create a sense of worth among its varied audiences. Which of the following terms best categorizes the elements of Pisces Inc. described in this scenario explaining?

D. Operating capabilities

22. Peter always buys shoes from Brown Boot's Inc., although other brands offering shoes of same quality are available closer to home and at lower prices. Brown Boots differentiates itself through a strong brand image. Their advertisements associate the brand with class, style, and elegance. Which of the following is a likely reason for Peter's preference toward Brown Boot's?

D. Prestige

18. A simple game has two players; each player has two choices. Assume that the players make their moves at the same time and they only play the game once. Which of the following is exemplified in this case?

D. Simultaneous move game

11. Which of the following is the main purpose of a strategic management process?

D. Specifying a high-level plan that an organization will employ to achieve competitive advantage

27. Hercules Inc. is an high performing steel manufacturing company. Chang, a stakeholder of the company, believes that it is important to protect the company from threats. Hercules Inc. has often struggled to overcome rivalry and product substitutes. Chang claims that if the company constantly keeps a check on itself by creating power over buyers, paying heed to customers' requests, and strengthening its resources and manpower, the company can maintain competitive advantage. Which of the following statements strengthens Chang's claim?

D. The company can face first-time conflicts if it is not well prepared with a sound method to retain competitive advantage.

33. Home Shore Inc., an electronics store, provides value to its customers by setting up televisions at customers' homes for free. The company also provides instructional manuals on how to set them up without professional help. Which step of the consumption chain does this scenario depict?

D. The fifth step: how is your product/service delivered?

40. Walter Evans, the founder of IronRod Shipping Industry, in order to manage his company more efficiently, suggested using the company diamond model to help counter the fierce competition in the market. Walter believes that this is a successful model and that it would open new doors into the line of systematic and efficient work processes. He believes the model to be an all-purpose solution whether it is in terms of managing resources, prioritizing work, or acknowledging capabilities. Which of the following would strengthen Walter's suggestion to adopt the company diamond method?

D. The model will allow Walter to fully become aware of the limitations and assets of his company.

37. Whenever customers of Black Inc., a mobile manufacturer, have a complaint to make about a product not being up to the mark, the company makes it a point to contact the customer or even go to their homes to understand the issue. The company believes that this will help retain customers and create better products. Which step of the consumption chain is this scenario depicting?

D. The ninth step: what if customers aren't satisfied and need a return or exchange?

13. Kiara states that, as a customer, the pen she had recently purchased was a very convenient product. In terms of product differentiation, which of the following is Kiara most likely to denote?

D. The pen was easier to purchase than other products.

32. Leo Foods is an eatery that sells organic food. It opens a number of outlets across the state, creates a website that makes ordering and take-away easy, and also does not charge a delivery fee for its regular customers. Which step of the consumption chain does this scenario depict?

D. The second step: how do consumers find your offering?

10. Which of the following statements is true of a company's general and administrative costs (G&A)?

D. They help a company with high sales volume that creates cost advantage by managing its G&A across more units.

29. If a project requires a $20 million investment a year for the next two years, time compression diseconomies mean that you can't get the same results by spending $40 million in one year. MediCure Corp. is a pharmaceutical company that invested $30 million during the last financial year on research. The CEO of its rival company, PolyMed Inc., decides to spend $60 million on the research during the next year in order to exceed the findings of MediCure. However, PolyMed fails to get the same results. Which of the following best reflects the factor that acted as a barrier to imitation for PolyMed Inc.?

D. Time compression diseconomy

6. The employees of Flamingo Inc., a greeting card company, focus on providing unmatched customer satisfaction. Unlike its competitors, the employees of Flamingo take the time to listen to the needs of individual customers and design custom-made cards upon request. The customers of Flamingo state that the company provides a large variety of affordable products to choose from. The company has won many awards for providing complete customer satisfaction. In this scenario, which of the following does Flamingo Inc. provide to its customers?

D. Unique value

37. Techno Inc. is a computer hardware company that gets its computer parts from countries that manufacture them for lesser price than what its competitors pay and at a better quality. This allows Techno to save on the prices paid for the raw materials and use them to increase its production volume. Which of the following is Techno Inc. practicing in order to attain cost advantage?

D. Wage rates

2. Gems Corp. is a leading jewelry brand that finds it hard to make as much profit as its competitors. In order to overcome this, the employees of Gems Corp. decide to work harder to provide unique value to customers and increase the sales of the company. After a year, it is able to make more profits than its competitors. This scenario best illustrates _____.

D. competitive advantage

34. Lynx Inc., a startup firm, has been trying to sell its product to customers. However, the customers do not perceive any value in the product and neither do they find it unique in any way. Lynx Inc. also does not have proper systems and processes that can help in auditing and retaining the profits created by their employees. The company has drained its funds in the process, but it has not been able to successfully establish itself in the market. As a result, the firm has not been able to successful to its stakeholders. Ultimately, the board of directors at Lynx Inc. decides to shut it down completely. This scenario best exemplifies _____.

D. competitive failure

10. Copper Enterprises manufactures industrial machinery. It decides to identify the characteristics of a new firm that offers the same products as Copper. In order to assess how it might respond in the face of rival actions, Copper must develop a(n) _____.

D. competitor response profile

13. The household appliance industry has few major manufacturers like Nebula Corp., Cook Well Inc., and Mercury Corp. and a few smaller manufacturers. There is not much competition in this industry because the smaller companies cannot afford to compete aggressively with the large firms which do not engage in price wars. This scenario best illustrates a _____.

D. concentrated industry

30. The executives at Purple Inc. hold a meeting where they decide the best way to showcase their products. They have a brainstorming session to identify the best geographical areas to conduct business that will bring them maximum profits. They also identify their competitors and decide whether they would be able to withstand top companies selling similar products. The executives at Purple Inc. are discussing a(n) _____.

D. corporate strategy

18. Sweetmeats Inc., a deli, produces its own grains, such as corn, wheat, rice, and oats. The employees create different types of breads without having to buy the grains from other sources. This has helped them sell their bread items to customers at much lower prices than other neighboring delis. This scenario best illustrates a(n) _____.

D. cost advantage

20. The owners of Carpo Inc., a watch company, also own a steel company and a leather goods manufacturing company. This relieves them from expenses that they would have to bear, if they had to rely on outside sources for the raw materials needed to make their watches. This enables the company to produce watches at a much lesser cost than other companies in the industry. This scenario best illustrates a _____.

D. cost advantage

30. Trends Inc. has been awarded the best branded clothing company award for three years consecutively. The CEO of the company stated that this was possible due to the company strategically lowering the cost of each unit produced, and successfully maintaining that method in order to effectively contain finances. While comparing Trends with other similar production companies, it was found out that the company did certainly collect more profit than the others. The scenario best illustrates the:

D. cost-management strategy.

35. OneTick Shop Inc. experienced a loss of finances in the small town of Brightland as a lot of people from the town moved to bigger cities in search of jobs. This resulted in a loss of both returning as well as new customers. This scenario primarily reflects _____.

D. demographic forces

2. Taurus Inc. usually produces 5,000 handcrafted products in a day. Recently, the demand for handcrafted products drastically increased as one of its products became a popular item for home décor. Due to this increase, the company had to up its production level to 10,000 products per day. This, however, decreased the price of individual products. This scenario best illustrates _____.

D. economies of scale

21. Blaze Corp., a car company, shared its costs of producing cars. It did so by introducing the production of car accessories that are used by customers to upgrade or customize their cars. Blaze Corp. started selling car accessories such as engine oils, wheels, and music player and thus shared its market research costs between cars and car accessories. This led to a definite decrease in the overall cost of production. This scenario best illustrates _____.

D. economies of scope

17. The increased efficiency that results when employees perform a narrow range of tasks over and over again leading them to acquire specialized knowledge that helps them complete the task more efficiently accurately defines the term _____.

D. employee specialization

23. BlockWood Inc. has been providing raw materials to Couches Corp., a furniture company. The management at Couches recently decided to cut the prices it pays for the raw materials. BlockWood Inc. tried to negotiate a price that would be feasible for both companies, but Couches did not agree to pay more than what they had quoted. As BlockWood Inc. was facing similar difficulties with other buyers too, it eventually stopped supplying raw materials and took to manufacturing furniture instead. This scenario best illustrates _____.

D. forward integration

9. The expenses and taxes that are directly related to the wide-ranging operation of a company best define the term _____.

D. general and administrative costs

12. In terms of product differentiation, convenience refers to:

D. how easy it is for customers to purchase a product.

17. The board of directors of White Corp. meets to analyze the company's competencies and scope for improvement. It also examines whether White Corp. has been able to meet its potential customers' requirements. The board of directors of White Corp. is involved in a(n) _____.

D. internal analysis

19. Nash equilibrium is represented by a set of moves in a game that:

D. maximizes each firm's payoff given the choices of rivals.

35. Five Checkers Inc. has been able to purchase more supplies for less money than its competitors. Five Checkers makes use of a set of communication skills that create compromising deals with its suppliers. Sound reasons are stated by Five Checkers to show why the suppliers must reduce their prices. The reasons are accepted by the suppliers and thus have helped increase profits for Five Checkers Inc. In this scenario, Five Checkers Inc. used _____.

D. negotiating tactics

24. GetYoung Inc., a cosmetic company, recently launched a beauty bar soap that claims to soften the users' skin, giving it a natural glow, and also make them look up to 5 years younger. A lot of women eagerly tried out this soap and received positive results and thus encouraged their friends to try out the soap. GetYoung Inc. gained profits very fast through this word-of-mouth advertising. This scenario best illustrates _____.

D. network effects

27. MindaX is a beverage manufacturing company. Despite its various promotional efforts, the company finds it difficult to get more customers. Its market analysts later determine that its price is the reason. They are sold at $10 per liter, which makes it difficult for customers to buy this beverage frequently, so, they opt for other lower priced sodas instead. This scenario best illustrates _____.

D. price sensitivity

16. Turbine Industries breaks down its manufacturing process into smaller segments that are performed by employees who are trained very well. This also helps the firm to save time because this way the employees do not need to juggle between various tasks. This scenario best illustrates _____.

D. task specialization

18. Companies focus most on establishing brand image when:

D. they have trouble differentiating their product based on convenience.

4. Which of the following is true of product differentiation?

It is a matter of customer thought and perception.

1. Which of the following is necessary for a product to be considered reliable?

It needs to last longer than products offered by other firms in the market.

6. Time-Threads Inc. sells storage devices, such as memory cards, thumb drives, and external hard disks. Which of the following is most likely true if it achieves product differentiation by designing its products to perform more jobs than its competitors?

Its hard disks are designed for quicker copying of files from various mediums.

3. Leo Corp., a mobile manufacturer, attains competitive advantage over its rivals by providing unique features in the phones they manufacture, such as a 3000 mAh battery, facial recognition software, and customized applications. Which of the following is Leo trying to attain through these additional product features?

Product differentiation

10. Gear-up Inc., an apparel brand, differentiates its products by manufacturing jeans that last longer than those of other brands. The fabric is durable and does not wear out even after years of regular use. This attracts customers despite Gear-up's high prices. Which of the following elements of product differentiation is Gear-up primarily providing?

Quality

19. Royalz Inc. is an automobile company that requires a lot of raw material to manufacture its cars. Royalz Inc. buys these raw materials from other companies that sell car parts as products. From which of the following does Royalz Inc. source its inputs?

Suppliers

9. Juan, the manager of Pvari, a chain of jewelry stores, claims that mass customization is the best way to create value for their products. Nate, the senior designer, believes that every product must be customized from the pre-production stage. Which of the following statements will strengthen Juan's claim?

The production costs will reduce to half if products are made in large scale.

6. SevenCloud Inc., a soft drink company, provided service to fair amount of customers for a whole year until a new company called Sparkle Inc. came up. Sparkle provided flavored water as a new product in the beverage market. Customers were eager to try out this new product and purchased it because they believed that it a better substitute for aerated beverages. SevenCloud was afraid that if the trend continued, it would soon run the risk of going out of business. In this scenario, which of the following did SevenCloud Inc. experience?

Threat

5. _____ can be most accurately defined as conditions in the competitive environment that endanger the profitability of a firm.

Threats

18. Pinto's Home Bakes is a 64-year-old company established in the year 1950. The company has been providing freshly baked breads and pastries daily for many years and has created a high reputation for itself. Its customers have always been satisfied with its timely service and delivery. The customers of Pinto's Home Bakes state that they prefer to go this deli because the products it delivers are never stale and have a unique flavor. Which of the following has Pinto's Home Bakes created for its customers?

Value

9. LittleHut Inc., an international food company, has a number of resources to its credit. Over the years, the company has acquired factories, machinery, in-depth knowledge, and a stable reputation. The elements mentioned in this scenario can be best categorized as LittleHut Inc.'s _____.

assets

33. The board of directors of Colors Corp., a new startup, chalked out a list of resources that would be needed to optimize the efficiency of the company. It needed a human resources department to take care of recruitment, a few suppliers to provide raw materials, a few data recording equipment such as computers to store and manage data, and a large geographical area to start the company. The board stated that these provisions would help the company obtain desired profits. The resources and provisions mentioned in this scenario are examples of _____.

inputs

3. The industry and geographic area that a company competes in, is referred to as its _____.

market

4. Adia and Ali are two business partners who want to set up a company that sells imported sports gear and equipment. In order to make sure that the company makes and retains profit, they must choose an area that is close to where their products have the highest demand. This area should allow them consistently to make profit. In this scenario, Adia and Ali are looking for a _____.

market

7. When a company mass-produces the various modules of a product and then allows customers to select which modules will be combined together, it is known as _____.

mass customization

39. Bertha, a business analyst, wants to analyze Shop Wise Inc., a software company. She wants to know how the company, supplying its products and services for over a decade, still maintains competitive advantage over other companies. She does the analysis simply by walking around the company and taking notes. She even tries out one of the company's software programs and finds it useful. This scenario illustrates the use of _____.

observation

8. Pancake Platter Inc. opens a new breakfast deli in the small town of Lakeville. It makes a lot of profit during its first year because it is the only deli in the area. Customers choose to have breakfast at this deli because their only other options for availing this type of service would be to travel several miles to the next town. This scenario best illustrates _____.

opportunity

15. Todd & Tyler Inc. is an organization that has gained reputation in the market primarily because of its values. The managers of this organization have created a list that ranks the most important job of the day and then consecutively lists the other jobs according to a descending order of importance. In this way, the managers of Todd & Tyler Inc. ensure that the organization's deadlines are handled efficiently. From the information given in this scenario, we can infer that Todd & Tyler Inc. has worked out its _____.

priorities

8. A firm's values and rankings of what is most important most accurately defines the term _____.

priorities

1. A strategy whereby companies attempt to gain competitive advantage by offering value that is not available in other products or services is known as _____.

product differentiation

2. Purple Inc., an interior design company, offers its clients unique design solutions. Clients can choose from Purple's in-house products, customize them to meet their needs, and see how their home would appear using a 3D visualization software in a mini-theatre at Purple's office. This gives Purple a competitive advantage over its rivals since none of them offer this unique combination of services. Purple's advantage is due to its _____.

product differentiation strategy

20. Resources that create _____ can be defined as those that create economic value for a firm.

profits

21. UniFront Corp., a telecommunications company, has launched a new limited edition smartphone called zNINE that has advanced technology features and is built using high-grade material. The company has made only 99 of these zNINE cellphones and customers are ready to pay more than what the cellphone is worth because it is so limited in number. This scenario can be best categorized as an example of _____.

rarity

5. All assets, capabilities, organizational processes, firm attributes, information, knowledge, and so on, controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness most accurately defines the term _____.

resources

6. Erik, the CEO of Indigo Inc. wants to improve the efficiency and effectiveness of his company. In order to do this, he lists out the assets of Indigo and the knowledge that the company has acquired over the years. Erik also analyzes the company's processes and its overall culture. The factor of production that Erik is studying can be best categorized as:

resources

2. Competition among firms within an industry best defines the term _____.

rivalry

3. The companies LaceThings Inc. and BellePrints Corp. sell the same product. They constantly try to outdo each other in terms of resources, price, and customer satisfaction. The companies try to outperform each other in order to gain customer loyalty and generate more sales. This scenario is an example of _____.

rivalry

40. Ria, an entrepreneur, shares the company's profits as well as losses. She usually receives highest priority from the company. In this scenario, Ria is a _____.

shareholder

39. Thomas is an important figure at Seasons Inc. All of the company's functions, acquisitions, marketing strategies, and business development plans need to partially receive approval from Thomas. This is due to the fact that Thomas owns 20% of Seasons Inc. In this scenario, Thomas is a _____.

stakeholder

4. A product that is fundamentally different yet serves the same function or purpose as another product best defines the term _____.

substitute

17. A survey is conducted among the customers of a supermarket chain. This survey reveals that the majority of these customers prefer to buy Lia, a brand of soap, because they feel that the company Lia Products Inc. has created a product that is of worth to the customers. The reason for the customers' preference is because the company constantly delivers what it promises. In this scenario, the factor that has made the brand of soap named Lia popular among these customers can be best categorized as _____.

value