WPC Quiz 1
Which of the following questions does the values espoused by a company primarily answer? 1. How do we accomplish our goals? 2. Which of the value chain activities are primary? 3. What is the value added to a good or service at each step in the production? 4. What is the company's customer lifetime value?
1. How do we accomplish our goals?
Which of the following companies would most likely benefit from an economic recession? 1.Fast Chow Inc., which specializes in selling low-cost Asian food 2. Top Grill Inc., which offers expensive steaks and other meats 3. Luxury Suites Inc., which provides luxurious hotel accommodations 4. Fancy Jewelers Inc., which sells top-end gold and platinum jewelry
1.Fast Chow Inc., which specializes in selling low-cost Asian food
Which of the following statements about the five forces in the U.S. airline industry is true? 1. Substitutes are not readily available since customers cannot use other means of transport. 2. Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry. 3. The combination of the competitive forces leads to collusion among existing airlines. 4. Entry barriers in the airline industry are relatively high because of the high costs involved.
2. Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry.
Which of the following statements is true of customer-oriented visions? 1. They tend to force managers to take a myopic view of the business environment. 2. They define a business in terms of providing solutions to people's needs. 3. They are inflexible with regard to adapting to changing environments. 4. They state an organization's goals in terms of a good or service provided to customers.
2. They define a business in terms of providing solutions to people's needs.
Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained? 1. Suppliers in the automotive industry had low bargaining power. 2. Other American automakers of plug-in hybrid sports cars, like Fisker Automotive, filed for bankruptcy. 3. Complementary products and services like battery charging and service stations were pervasive. 4. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.
4. GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.
Which of the following firms most likely has the lowest bargaining power as a buyer? 1. an automobile company that can backwardly integrate to produce its own component parts 2. a fast food chain that has multiple suppliers for processed meat 3. a government agency that buys large quantities of cement from a private supplier 4. a cell phone company that requires highly customized software for its phones
4. a cell phone company that requires highly customized software for its phones
Complementor
A company that provides a good or service that leads customers to value your firm's offering more when the two are combined.
Level-5 Leadership Pyramid
A conceptual framework of leadership progression with 5 distinct, sequential levels
Upper-echelons Theory
A conceptual framework that views organizational outcomes—strategic choices and performance levels—as reflections of the values of the members of the top management team.
Which of the following statements about competitive advantage is not true?
A firm's competitive advantage is always absolute, not relative.
Five Forces Model
A framework that identifies five forces that determine the profit potential of an industry and shape a firm's competitive strategy.
Intended Strategy
A outcome of a rational and structured top-down strategic plan
Top-Down Strategic Planning
A rational, data-driven strategy process through which top management attempts to program future success.
Strategic Business Unit (SBU)
A standalone division of a larger conglomerate, with its own profit-and-loss responsibility.
Vision
A statement about what an organization ultimately wants to accomplish; it captures the company's aspiration.
Illusion of Control
A tendency of people to overestimate their power of control
Which of the following statements is true of strategy?
Actions that allow a firm to address a competitive challenge are strategy.
Strategic commitments
Actions to achieve the mission that are costly, long-term oriented, and difficult to reverse.
Which of the following statements is true of an oligopoly?
An oligopoly is often analyzed using game theory
A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy
Analysis
Strategy Initiative
Any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.
Serendipity
Any random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives.
Emergent Strategy
Any unplanned strategic initiative bubbling up from the bottom of the organization
Aura Software Inc. has been operating in the country of New Fernsland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Aura Software Inc.?
Aura Software Inc. will have better access to highly skilled human capital at a lower cost.
In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ___________ emerged as a consequence of the firm's resource allocation process.
Bottom-up strategy
Realized Strategy
Combination of intended and emergence strategy
Co-opetition
Cooperation by competitors to achieve a strategic objective.
The board of directors of Best Digital Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate?
Corporate strategy
Mission
Description of what an organization actually does—the products and services it plans to provide, and the markets in which it will compete.
Which of the following statements is true of the Level-5 leadership pyramid?
Each level of leadership builds upon the previous one in the pyramid.
Competitive industry structure
Elements and features common to all industries, including the number and size of competitors, the firms' degree of pricing power, the type of product or service offered, and the height of entry barriers.
Explain why anchoring a firm in ethical core values is essential for long-term success.
Ethical core values form a solid foundation on which a firm can build its vision and mission, and thus lay the groundwork for long-term success. ▪ Ethical core values are the guardrails that help keep the company on track when pursuing its mission and its quest for competitive advantage.
Organizational Core Values
Ethical standards and norms that govern the behavior of individuals within a firm or organization.
Which of the following statements does the upper-echelons theory support?
Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.
Strategic Leadership
Executives' use of power and influence to direct the activities of others when pursuing an organization's goals.
Which of the following statements with regard to determining firm performance is true?
External analysis will help understand the industry effects that determine a firm's performance.
Red Think Inc. is a company that supplies microprocessors to Osion Inc., a computer hardware company. When Osion Inc. demands lower prices for the microprocessors, Red Think Inc. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from Red Think Inc., Osion Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, Red Think Inc., as a supplier, has exercised its bargaining power by threatening to
Forward integrate
Which of the following questions would a firm's business strategy ideally answer?
How to compete
Spark Electronics Inc., One Digital Inc., and Esco Products Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from the same set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n)
Industry
A firm's _____ is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy.
Intended Strategy
_____ is best described as the amount that savers are paid for use of their money and the amount that borrowers pay for that use.
Interest Rate
Revved Rider Inc., a motorcycle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Revved Rider Inc. from this scenario?
It has a competitive advantage over the other firms
Larry has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Larry is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Larry is currently at _____ of the Level-5 leadership pyramid.
Level 4
Strategic management process
Method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage
Strategic Management Process
Method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage.
In the restaurant industry, a large number of restaurants cater to the similar food-related needs of customers. However, each restaurant makes its product unique by offering a different cuisine, a different ambience, or different services like home delivery and organic ingredients. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)
Monopolistically competitive structure
_____ describe the positive externality that one user of a product or service has on the value of that product or service for other users.
Network Effects
Entry barriers
Obstacles that determine how easily a firm can enter an industry and often significantly predict industry profit potential.
Exit Barriers
Obstacles that determine how easily a firm can leave an industry.
Restrictions imposed by the government, such as export quotas on certain products, are a part of the _______ environment of the PESTEL framework.
Political
Evaluate the strategic implications of product-oriented and customer-oriented vision statements.
Product-oriented vision statements define a business in terms of a good or service provided. ▪ Customer-oriented vision statements define business in terms of providing solutions to customer needs. ▪ Customer-oriented vision statements provide managers with more strategic flexibility than product-oriented missions. ▪ To be effective, visions and missions need to be backed up by hard-to-reverse strategic commitments and tied to economic fundamentals.
Quick Eats is a fast-food restaurant that has recently entered the hospitality industry. Since most of its competitors are pursuing a low-cost position and doing well, Quick Eats also wants to adopt the same strategy. Which of the following will be a likely implication of this decision?
Quick Eats will face low profit potential.
The annual net profit after taxes for RSL Corp., a multinational conglomerate, is $5.5 billion. As legal owners, which of the following stakeholder groups has the most legitimate claim on this profit?
Shareholders
Core Values Statement
Statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations.
_____ is best described as the behaviors and styles of executives that influence others to achieve an organization's vision and mission.
Strategic Leadership
Autonomous Actions
Strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations.
Planned Emergence
Strategy Process in which organizational structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top management
Scenario Planning
Strategy-planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses.
Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period of time?
Sustainable Competitive Advantage
If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication?
The company will tend to be more flexible when adapting to changing environments.
Strategy formulation
The part of the strategic management process that concerns the choice of strategy in terms of where and how to compete.
Strategy Implementation
The part of the strategic management process that concerns the organization, coordination, and integration of how work gets done, or strategy execution.
Which of the following statements will effectively guide a strategist?
The principles of strategic management can be applied universally to all organizations.
Dominant Strategic Plan
The strategic option that top managers decide most closely matches the current reality and which is then executed.
Resource-allocation process (RAP)
The way a firm allocates its resources based on a predetermined policies, which can be critical in shaping its realized strategy.
Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?
They can demand better terms from their suppliers.
Why are black swan events often bad for business?
They erode the implicit trust between the corporate world and society.
How do complements affect a primary product or service?
They increase the demand for the primary product.
As the chief executive officer (CEO) of Yahoo, Marissa Mayer declared Yahoo's vision to be "to make the world's daily habits more inspiring and entertaining." She wants to inspire Yahoo's employees and get its customers excited again. Which of the following approaches to the development of strategy does Yahoo best illustrate?
Top-Down Strategic Planning
Which of the following has contributed to Twitter's loss of a competitive advantage?
Twitter does not allow advertisers to target their online ads precisely enough.
Which of the following statements accurately brings out the difference between an organization's vision and mission?
Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished.
Which of the following statements related to a firm's stakeholders is not true?
While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.
Which of the following groups is most likely to be considered a firm's internal stakeholder?
board members
How has Threadless staked out a unique strategic position?
by providing customers a voice in product design
Strategic group mapping establishes that
competitive rivalry is strongest between firms that are within the same strategic group.
According to the Level-5 leadership pyramid, the Level 2 manager is a(n)
contributing team member
Which of the following is a philanthropic responsibility of a firm?
corporate citizenship
The metaphor of a black swan best applies to
events that are considered highly unexpected and highly impactful when they do occur.
Widgets Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Widgets Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Widgets Inc. is a(n) _____ for the appliance manufacturing company.
external stakeholder
The greater the difference between value creation and cost, the
greater a firm's economic contribution.
The relative bargaining power of suppliers is most likely low when
incumbent firms face low switching costs when changing suppliers.
Which of the following is a stakeholder attribute that managers should consider at every step in a stakeholder impact analysis?
legitimacy
An organization's ____________ describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete.
mission
According to the upper-echelons theory,
organizational outcomes reflect the values of the top management team.
Coffee bean producers in the country of Matterstein grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many producers supplying to a huge number of companies, and they are typically unable to differentiate their products from each other. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Matterstein best illustrates a(n)___ structure.
perfectly competitive
A firm is likely to have a competitive advantage when it
provides services that consumers will value more than those of its rivals.
A consolidated industry turns into a fragmented industry when
restrictive government policies are introduced in the industry.
Product-oriented vision statements provide managers with
service goals
The black swan events in the past have demonstrated that
stakeholders can affect or be affected by a firm's actions.
Which of the following groups will not be considered a company's internal stakeholder?
suppliers
Which of the following would be most likely to directly put an organization like BP at a major competitive disadvantage?
the Environmental Protection Agency (EPA) banning BP from any new contracts with the U.S. government
Which of the following actions of an automobile firm will be considered as a strategic commitment? the firm launching an existing model of a car in red as a limited edition for six months the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future the firm spending $100,000 on renting a manufacturing facility to meet the temporary demand for its cars the firm promoting its new model of coupe through a free Europe trip worth $15,000 to be won as an early bird offer
the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future
Which of the following forces are most closely related to firm effects within a pharmaceutical industry?
the strategic actions taken by managers of a firm in the industry
Evaluating the data collected from environmental analysis, the corporate executives of F&S Pharma Inc. realized that it was the right time to expand the business. The company's vision was accordingly adjusted from "To Be the Best in the Pharmaceutical Industry" to "To Make Good Health Accessible to Everyone around the Globe." To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate?
top-down strategic planning
When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in
trade-offs that work against each other.
A company's vision primarily states
what the company wants to accomplish ultimately
Describe the roles of vision, mission, and values in the strategic management process.
▪ A vision captures an organization's aspirations. An effective vision inspires and motivates members of the organization. ▪ A mission statement describes what an organization actually does—what its business is—and why and how it does it. ▪ Core values define the ethical standards and norms that should govern the behavior of individuals within the firm.
Describe the roles of corporate, business, and functional managers in strategy formulation and implementation.
▪ Corporate executives must provide answers to the question of where to compete, whether in industries, markets, or geographies, and how to create synergies among different business units. ▪ General managers in strategic business units must answer the strategic question of how to compete in order to achieve superior performance. They must manage and align the firm's different functional areas for competitive advantage. ▪ Functional managers are responsible for implementing business strategy within a single functional area.
Outline how managers become strategic leaders.
▪ To become an effective strategic leader, a manager needs to develop skills to move sequentially through five different leadership levels: highly capable individual, contributing team member, competent manager, effective leader, and executive. ▪ The Level-5 strategic leadership pyramid applies to both distinct corporate positions and personal growth.
Evaluate top-down strategic planning, scenario planning, and strategy as planned emergence.
▪ Top-down strategic planning is a sequential, linear process that works reasonably well when the environment does not change much. ▪ In scenario planning, managers envision what-if scenarios and prepare contingency plans that can be called upon when necessary. ▪ Strategic initiatives can be the result of top-down planning or can emerge through a bottom-up process from deep within the organization. They have the potential to shape a firm's strategy. ▪ A firm's realized strategy is generally a combination of its top-down intended strategy and bottom-up emergent strategy, resulting in planned emergence.
