WPC 480

Which of the following statements about competitive advantage is true?

Competitive advantage can be assessed by measuring accounting profit, shareholder value, or economic value.

The board of directors of a public stock company consists of

individuals who formally represent the firm's shareholders and oversee the work of executives.

In the smartphone industry, Google is a complementor to Samsung. Which of the following statements best explains why this is true?

Samsung's smartphones increase in value when they are preinstalled with Google's Android system.

What is the strategic management process?

Strategic leaders design a method to formulate and implement strategy.

is best described as moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain.

Strategic outsourcing

White Leo Motors (WLM) Inc. generates a major portion of its revenues by manufacturing luxury sports cars. However, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. Which of the following terms best describes WLM?

a dominant-business firm

Assume that the market for print book publishing has entered the maturity stage. Which of the following would most likely exist during this stage?

a few large publishers

Which of the following is an accurate description of a Level 1 manager?

a highly capable individual who makes productive contributions through motivation, talent, knowledge, and skills

Shield Autos Inc. has newly launched a luxury car into the European market. Which of the following would most likely not be a complement to the car?

a premium car manufactured and sold by Mova Autos Inc., a rival company

When large, incumbent firms buy start-up companies, the transaction is generally described as a(n)

acquisition

Both Blue Horizons Electronics Inc. and CLR Inc. have achieved cost parity in the television market. To gain and sustain a competitive advantage against CLR, Blue Horizons Electronics should

create greater perceived economic value than CLR.

A candy company called SweetThings Inc. forms an agreement with another candy company called Reverie Inc. Through this agreement, SweetThings owns 30 percent of Reverie. However, Reverie does not own any part of SweetThings. This type of agreement is called a(n)

equity alliance.

State-level government agencies that check whether firms are meeting statutory safety measures in their production units are considered to be the firms'

external stakeholders.

The production department at Coral Cements that is a subsidiary of the large conglomerate Five East Corp. has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its cement bags. Which of the following strategies does this scenario best illustrate?

functional strategy

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.

________ is a process of closer integration and exchange between different countries and peoples worldwide.

globalization

In the decline stage, which of the following strategies involves a reduction of investments in product support?

harvest strategy

Creating resources that meet the VRIO criteria is strategically important to a firm because it

helps the firm to gain and sustain a competitive advantage.

Which of the following is a feature of an oligopolistic industry structure?

high entry barriers

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

industry convergence

When a firm pursues a(n) ________, it sells the same products or services in both domestic and foreign markets.

international strategy

Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of

location economies

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage. Which of the following stages of the industry life cycle will they move to next?

maturity stage

A firm's resistance to change in the status quo is referred to as

organizational inertia

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

Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which One Electro Inc. lacks. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?

resource heterogeneity

Correct Which of the following characteristics of a public stock company deals with principals and agents?

separation of legal ownership and management control

As the CEO of a conglomerate, Juana Mark exhibited her strong commitment toward the company's core value that customers' well-being is more important than profit when she decided to liquidate the company's tobacco subsidiary. The tobacco brand sold by her company was a major revenue earner in lesser-developed nations. However, Juana believed that her company had to be responsible toward society. In this scenario, Juana has demonstrated

strategic leadership.

A firm's ________ relates to its ability to create value for customers (V) while containing the cost to do so (C).

strategic position

Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments?

strategy analysis

Which of the following is not an accurate expression of the economic value created per unit of a product sold?

the difference between the price charged and the firm's cost

Due to economic regression in United Filipia, the profitability of the large conglomerate Blue Wing Products Inc. (BWP) was poor. An analysis of the company's business showed that the company could become profitable if it divested a few strategic business units under its banner. From which of the following businesses would BWP find it most easy to exit?

the e-commerce retail business where investments on assets are low

Which of the following best describes a strategic trade-off?

the tension between value creation and the pressure to keep cost in check

After trying on a dress, a consumer assesses it to be worth a maximum of $100 and is willing to pay that amount for the dress. However, the dress was priced at $80. What is the amount, $100, referred to as?

the value (V) the consumer attaches to the dress

Which of the following is a firm effect that has an impact on the competitive advantage of a firm?

the value and the cost position of the firm relative to its competitors

Which of the following is not a reason why firms enter alliances?

to replace competitive advantage with competitive parity

Which of the following features about a buyer indicates that the buyer has high bargaining power?

when the buyer operates in an industry where products are undifferentiated

A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?

$180

Which of the following statements about strategy is not true?

Operational effectiveness, competitive benchmarking, or other tactical tools are not strategy. All these elements may be a necessary part of a firm's functional and global initiatives to support its competitive strategy, but these elements are not sufficient to achieve competitive advantage.

Which of the following statements is true of explicit knowledge?

Explicit knowledge is shared in non-equity alliance firms.

Which of the following facts proves that GE's board is fairly diverse compared to other Fortune 500 companies?

GE's board is composed of 28 percent women, compared to less than 16 percent for the others.

Which of the following statements is true of internal transaction costs?

Internal transaction costs tend to increase with organizational size and complexity.

How is a firm's task environment different from its general environment?

Managers have some influence over external factors in the task environment; they have little direct effect over external forces in the general environment.

The "diagonal assembly system" was a production system pioneered by the automobile company Gogo. Recently, Gogo was able to sue a competitor and won the suit, thereby receiving $100 million in damages. Which of the following would most likely enable Gogo to win such a lawsuit?

The competitor infringed on Gogo's patent of the "diagonal assembly system."

A firm's learning curve is steeper than that of its competitor. What does this imply?

The firm is at an advantage when compared to its competitor.

Which of the following is an implication of high exit barriers in an industry?

The industry will face excess capacity.

How is the triple-bottom-line approach different from the traditional approaches to measuring competitive advantage?

The triple-bottom-line takes a more integrative and holistic view in assessing a company's performance than traditional approaches do.

What is the rule of thumb behind Porter's five forces model?

The weaker the five forces, the greater the industry's profit potential—making the industry more attractive.

Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario?

Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc.

Which of the following is a drawback of vertical integration?

Vertical integration increases the potential of legal repercussions. Due to monopoly concerns, vertical integration has not gone completely unchallenged by the Federal Trade Commission and the Justice Department.

Sam is a manager at StyleOne Apparels Inc. and is friends with the company's CEO. This privilege gives Sam the information that StyleOne Apparels is in the midst of talks to take over a leading rival. Sam buys stocks of StyleOne with the expectation that its stocks will appreciate. But the deal falls through and the stocks of StyleOne depreciate in the following months. Are Sam's actions unethical? Why?

Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome.

Rice Dazzle Inc. has been making the same breakfast cereal for 50 years. Recently, sales have plummeted. To counteract this, the company created a new package that included an endorsement by a celebrity. As a result, sales increased close to previous highs. However, the cereal itself remained the same. According the VRIO framework, is the new packaging a valuable resource for Rice Dazzle?

Yes, because the new packaging made the product more attractive in the eyes of consumers.

hich of the following scenarios illustrates a firm that has a sustainable competitive advantage?

Zhang Corp. was able to hold its market share of 68 percent in the social networking industry for more than three years.

At Opnic Corp., a cross-functional team is formed to work on a project for a new client. The team consists of Darius and four other members. At most of the team's presentations to senior management, Darius takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Darius is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Darius did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Opnic Corp. is a typical consequence of

adverse selection.

Canon was able to redesign the copying machine so that it didn't need professional service—reliability was built directly into the machine, and the user could replace parts, such as the cartridge. What Xerox had not envisioned was the possibility that the components of the copying machine could be put together in an altogether different way that was more user-friendly. This example describes

architectural innovation

Why did the American MTV network cable channel fail when pursuing a global-standardization strategy?

because cultural distance most affects products with high linguistic content

When the strong dictatorial rule in Backenstein unexpectedly collapsed due to the shocking death of the royal family in an explosion, the nation's economy experienced drastic changes. The laws became more restrictive, the country lost many locally produced resources and products, and the distribution of wealth became inequitable. The unexpected event that led to these changes can best be described as a(n) ________ event.

black swan

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

causal ambiguity.

In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the

chief executive officer.

FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime 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 each other. 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?

co-opetition