ya know

_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs.

A.Venture capitalism B.Bootlegging C.Vertical integration D.Crowdsourcing VERTICAL INTEGRATION

How do firms benefit from vertical integration?

A.Vertical integration allows firms to reduce organizational complexity and administrative costs. B.Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. C.Firms that vertically integrate do not have to make transaction-specific investments. D.Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities. VERTICAL INTEGRATION ALLOWS FIRMS TO INCREASE OPERATIONAL EFFICIENCIES THROUGH IMPROVED COORDINATION OF ADJACENT VALUE CHAIN ACTIVITIES

Which of the following statements is true of transaction costs?

A.When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate. B.When companies transact in the open market, they incur internal transaction costs. C.Transaction costs exclusively consist of external costs associated with economic exchanges. D.Transaction costs are necessary to explain and predict the boundaries of a firm. TRANSACTION COSTS ARE NECESSARY TO EXPLAIN AND PREDICT THE BOUNDARIES OF THE A 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.a few start-up publishers B.many small to mid-sized publishers C.a few large publishers D.one large publisher A FEW LARGE PUBLISHERS

Which of the following firms is least integrated?

A.a firm that enters a joint venture with another company to develop a new technology B.a firm that owns production subsidiaries across the globe C.a firm that makes equity investments in its supplier's company D.a firm that buys all the required raw materials from multiple external vendors A FRIM THAT BUYS ALL THE REQUIRED RAW MATERIALS FROM MULTIPLE EXTERNAL VENDORS

Andrew invested $200,000 in the shares of a company. At the end of a year, he had earned $7,000 as dividends on his shares along with a $1,000 appreciation in the overall value of his shares. However, if Andrew had invested the same amount on an asset, like gold, the appreciation in its value would have earned him $10,000 at the end of the year. In this scenario, which of the following is Andrew's opportunity cost?

$10,000

At a certain output level, the per-unit cost incurred by a firm to manufacture a product is $5. Other factors remaining constant, what will be the new per-unit cost if the cumulative output is doubled, and the firm is able to achieve an 80 percent learning curve?

$4

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that:

-the foreign firm will need to make larger investments when compared to entering the new market on its own. -some of the firm's proprietary know how may be appropriated by the foreign partner. -all potential business risks in the new market will have to be faced alone by the foreign firm. -the shareholder value of the foreign partner will decline drastically. Some of the firm's proprietary know-how may be appropriated by the foreign partner

In order to achieve a competitive advantage, the Coastal Haven Hotels, a chain of luxury beach resorts, wants to increase its market share. Which of the following strategies is most likely to do so?

A) Maintain prices but significantly increase spending on customer service and other amenities.B) Lower prices but eliminate several of the features that have come to define Coastal Haven properties for consumers, such as complimentary meals and in-room massages.C) Take advantage of economies of scale and scope by opening a chain of lower-priced economy hotels that leverage the Costal Haven brand image.D) Raise prices without increasing spending on customer service or resort features. TAKE ADVANTAGE OF ECONOMIES OF SCALE AND SCOPE BY OPENING A CHAING OF LOWER-PRICED ECONOMY HOTELS THAT LEVERAGE THE COSTAL HAVEN BRAND IMAGE

The owners of Puff Ball bakery want to open a second retail outlet. Which of the following scenarios is most likely to yield a competitive advantage?

A) Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction. B) Purchase an existing bakery from a business that closed due to declining sales and try to revive it. C) Build a shop in a sparsely populated rural area where the land is inexpensive and few other bakeries exist. D) Open a shop in a crowded downtown location where several other bakeries have been successful over the years. Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction.

In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems?

A) The expectation that the agent will go above and beyond the call of duty B) The expectation that the agent will reconnect economic and social needs C) The expectation that the agent will act in the principal's best interest D) The expectation that the agent will follow the country's laws and regulations THE EXPECTATION THAT THE AGENT WILL ACT IN THE PRINCIPAL'S BEST INTEREST

To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate?

A. how an organization accommodates strategy implementation through a flexible organizational structure B. how strategy implementation has an effect on resource allocation and power distribution C. how an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure D. how an organization optimizes its organizational structure to the current situation how an organization accommodates strategy implementation through a flexible organizational structure

Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?

A. to pursue an unrelated-options perspective without disrupting existing market economics B. to make small-scale investments in ventures poised to disrupt existing market economics C. to invest their excess cash flow in the superior technology of the biotech start-ups D. to share their continuously updated research technology with the biotech start-ups TO MAKE SMAL SCALE INVESTMENTS IN VENTURES POISED TO DISRUPT EXISTING MARKET ECONOMIES

Ethics is:

A.) Not synonymous with law B.)Impossible to codify into lay C.) Always universal and cannot differ between cultures D.) The minimum acceptable standard in business practice NOT SYNONYMOUS WITH LAW

Which of the following is an example of an external transaction cost?

A.the cost of setting up a production unit B.the cost of searching for a contract manufacturer C.the cost of recruiting and retaining employees D.the cost of maintaining plant and machinery THE COST OF SEARCHING FOR A CONTRACT MANUFACTURER

Which of the following customer segments as described in the chasm framework make up the mass market?

A.the early and late majority together B.the early adopters alone C.the technology enthusiasts and laggards together D.the technology enthusiasts alone THE EARLY AND LATE MAJORITY TOGETHER

What is an invention?

A.the transformation of an idea into a new product or process B.a unique idea that has not been thought of before C.the transformation of an idea into a successful product D.a unique idea that has been patented THE TRANSFORMATION OF AN IDEA A NEW PRODUCT OR PROCESS

Which of the following is primarily a value driver?

Complements

True or False: Top-Down strategic planning is most effective when the environment is constantly changing.

False

As the inventor of hypertension medication, OneSure Pharmaceuticals (OSP) Inc. was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Even when competitors later developed similar drugs after the expiry of OSP's patents, regular users did not want to switch because they were concerned about possible side effects. Which of the following benefits does this scenario best illustrate?

First Mover Advantages

Keeping in mind Apple's competitive advantage, which of the following products was introduced by Apple in 2007?

IPhone

There are many reasons why firms need to grow. Which of the following is strongly influenced by economies of scale?

Increase Profit Lower Costs Increase Market Power Reduce Risk Motivate Management BUT IN THIS CASE LOWERING COSTS

The greater cultural distance between two trading countries

Increases the liability of foreignness

Economies of scale are cost advantages that occur with

Larger Output

Nirvana shoes Inc and StepOut Shoes Inc. two competing shoe brands, entered into a strategic alliance to study and acquire each others competencies. Nirvana shoes entered into the alliance to acquire the production system pioneered by StepOut Shoes. Similarly, StepOut Shoes agreed to the strategic alliance to study the design process of Nirvana Shoes. However, Nirvana Shoes was more successful and faster than StepOut Shoes in accomplishing its alliance goal. What does this scenario best illustrate?

Learning races

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?

Market volatility makes it difficult to assess firm performance through these measures, particularly in the short term.

Which of the following is a feature of the Globalization 2.0 stage?

Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

A firm is said to gain competitive advantage when it can

Provide products similar to competitors but at lower prices

The strategic objective of a first mover during the introduction stage of the industry life cycle is to A.pursue a harvest strategy. B.survive by drawing on deep pockets. C.achieve market acceptance. D.lower entry barriers.

Pursue a harvest strategy

During market testing, Sensation Cosmetics (SC) realized that the cosmetics industry was dominated with multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. A new entrant like SC would require a different business model to be successful. Thus, SC started selling its products through direct marketing. In this scenario, Sensation Cosmetics accomplished substitution primarily through A. path dependence. B. technology transfer. C. knowledge diffusion. D. strategic equivalence.

Strategic Equivalence

____ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Strategic Management

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage.

Strategic alliances

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

Strategy Analysis

A firm's _____ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed.

Structure

Managers in a firm hired to improve a firms profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self interests. What does this best illustrate?

The Principle Agent Problem

A bank, YPC, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical.

The bank knows that the customer will be unable to pay the loan if the interest rate rises

Which of the following is a feature of the growth stage of the industry life cycle?

The consumer demand increases.

_____ which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

Total Return to Shareholders.

Why is it easier for new entrants to involve in radical innovations when compared to incumbent firms?

Unlike incumbent firms, new entrants do not have formal organizational structures and processes.

_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs.

Vertical Integration

Which of the following statements is true with regard to international trade between countries?

Wealthy countries engage in relatively more cross-border trade than poorer ones.

The tenet behind the triple bottom line is that:

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

A new product often has a high price when it is launched because of a

a large investment in designing a product while producing small quantities

Which of the following scenarios would typically happen in a firm that uses open innovation?

a meeting with professors at a university to get ideas for product

Process innovation is more important than product innovation during the growth stage because

a standard, in terms of engineering features and design choices, has been set across the industry.

Which of the following is part of Geert Hoftstede's cultural dimensions?

a.) short term orientation b.) groupthink c.) embrace risk taking d.) power distance ANSWER: POWER DISTANCE

Which of the following best illustrates a process innovation as opposed to a product innovation

an automobile company using computer-aided design in its production

A firm always has a competitive disadvantage when its return on invested capital is _____.

below the industry average

Dollar Shave Club is an ecommerce start-up that delivers razors by mail. By doing this, Dollar Shave Club is using a(n) _____ to disrupt an existing market.

business model innovation

__________ refers to the degree to which decision making is concentrated at a single point in the organization.

centralization

To support the rise of emergent strategies, an organization should:

centralize decision making and all other activities limit serendipity that is in the form of random events empower lower-level employees to take up autonomous actions. rely solely on hard data to formulate strategies EMPOWER LOWER-LEVEL EMPLOYEES TO TAKE UP AUTONOMOUS ACTIONS

General Electric's CEO, Jeffrey Immelt, decided to refocus GE's portfolio of businesses and leverage the firm's core competency in industrial engineering while pursuing future-growth industries. The two industries that CEO Immelt had identified as major future-growth industries were the:

clean-technology sector and health care sector.

A differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the:

differentiator is able to create a significant difference between perceived value and current market prices.

A differentiation strategy works best when a:

firm has intangible resources, is able to pass on increases in supplier cost to the customer, and its differentiation appeal creates customer loyalty.

How do firms benefit from vertical integration?

from vertical integration? Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.

In which of the following stages of the industry life cycle is a standard first established?

growth stage

network effects

increases in the value of a product to each user, including existing users, as the total number of users rises AN EXAMPLE OF A POSITIVE EXTERNALITY

Chao is in an interview for a sales job that requires no experience. He is trying to portray himself as a highly enthusiastic, energetic person with high-level communication and interpersonal skills. The interviewer is convinced that Chao should be hired as a salesperson in the company. However, in his resume, Chao had not mentioned his previous work experience as he was fired from that job because he used illegal drugs. Which of the following does this scenario best illustrate?

information asymmetry

Which of the following lists the stages of the industry life cycle in the correct order?

introduction, growth, shakeout, maturity, and decline

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's

is mechanistic in nature.

Which of the following is a macroeconomic factor that can affect a firm's strategy?

level of employment

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?

perfect competition

Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of

product diversification.

Incumbent firms favor incremental innovation over radical innovation because

radical innovation will disturb the existing power distribution within the firms.

When a firm is said to be pursuing a geographic diversification strategy, it means that the firm will:

sell its products in several different regional, national, and international markets.

EasyOpen Inc. has entered a stage in which the demand for their innovative electric can openers has declined. Now most customers are buying replacement parts or buying their second can opener from the firm. What stage in the industry life cycle does this scenario describe?

shakeout stage

Voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage.

strategic alliances

Zenya is the founder of an online service that allows users to rent out spare rooms in their homes. she has hired a number of extremely bright employees whose opinions are central to the company's success in the fat-paced online service industry. which type of strategic management process would be most likely to fully utilize the strengths embodied by her team and position the company to capitalize upon autonomous actions and serendipity?

strategy as planned emergence

A high percentage of R&D/Revenue ratio indicates a(n)

strong focus on innovation to improve current products and services

A firm's strategic position is likely to be strong when

the gap between the value the firm's product generates and the cost to produce it is large.

Organizational design is the process of

the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization

When does a firm fall into the large competitive chasm between early adopters and early majority?

when it fails to successfully launch a mass-market version of its product

What is an invention?

the transformation of an idea into a new product or process NOT NECESSARILY SUCCESSFUL

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?

A. The first-line employees B. The creditors C. The chief executive officer D. The middle manager CEO

Which of the following is the source of the principal-agent problem in publicly traded companies?

A) Transferability of investor ownership B) The law of legal personality C) Limited liability for investors D) The separation of ownership and control THE SEPARATION OF OWNERSHIP AND CONTROL

A differentiation strategy works best in which of the following market circumstances?

A) When buyers incur low costs in switching to rival brands B) When most competitors are resorting to clever advertising to try to set their product offerings apart C) When new and improved products are introduced frequently D) When there are many ways to differentiate the product or service that have value to buyers E) When buyers have a low degree of bargaining power and purchase the product frequently ANSWER: When there are MANY WAYS to differentiate the product or service that have value to buyers

Mondo Tacos, a fast food restaurant, operates through a business model in which individuals can buy the rights to set up Mondo Taco stores and sell the company's food in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to offer a menu approved by the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate?

A) crowdsourcing B) credit rationing C) franchising D) bootstrapping FRANCHISING

Tina is the inventor of a personal fitness tracking device, and she is in the process of hiring employees after receiving investment funding. When considering how to structure her company, she should

A) emulate the structure of the leading firm in the industry.B) first establish a strategy and let that be her guide.C) choose the structure that will give her the most control.D) ask employees what structure they are most comfortable with. ANSWER: First establish a strategy and let that be her guide.

InSeason Inc. started a chain of organic supermarkets that had initial success. The managers achieved a mastery of the firm's current environment, thereby filling a need in the market. However,InSeason defined and measured it success by financial metrics, with a focus on short-term performance. As a result, the firm put in place metrics and systems to accommodate and manage increasing firm size due to continued success. As a result of this tightly coupled system, InSeason developed a _________.

A) innovative approach. B) holacratic system. C) significant value gap. D) resistance to change. RESISTANCE TO CHANGE

Which of the following strategies best illustrates a generic business strategy?

A. A cost-cutting strategy that corporate executives in the headquarters want all business units of a large conglomerate to implement B. A strategy to use monetary incentives to motivate employees working on a project C. A decision to computerize a firm's database in order to improve customer service D. A decision to niche market the jewelry sold by a company while the apparel division under the same company sells its products through mass marketing A DECISION TO NICHE MARKET THE JEWELRY SOLD BY A COMPANY WHILE THE APPAREL DIVISION UNDER THE SAME COMPANY SELLS ITS PRODUCTS THROUGH MASS MARKETING

Which of the following best illustrates forward vertical integration?

A. A firm that manufactured and sold car engines to major automobile companies launches its own line of cars.B. A chain of ice cream parlors launches a brand of toys and accessories for children.C. A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. D. A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery. A FIRM THAT MANUFACTURED AND SOLD CAR ENGINES TO MAJOR AUTOMOBILE COMPANIES LAUNCHES ITS OWN LINE OF CARS

Which of the following statements is true of accounting data?

A. Accounting data are historical data and thus backward-looking. B. Accounting data consider off-balance sheet items, such as pension obligations of a firm. C. Accounting data do not have to be adjusted in any manner to compare companies with different capital structures. D. Accounting data focus mainly on intangible assets, rather than tangible assets. ACCOUNTING DATA ARE HISTORICAL DATA AND THUS BACKWARD LOOKING

Which of the following methods of developing a strategy best illustrate scenario planning?

A. Based on the previous year's profits, the CEO of Kelvon Inc. decided to adopt an expansion strategy in its home market. B. A sales personnel of GL Foods Inc. suggested that the company should introduce a baked version of its potato wafers to cater to the needs of the increasing health-conscious population. C. The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future. D. The CEO of DHP Inc., a large conglomerate, has decided to enter the Asian market based on the competitor's success in the same market. The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future.

For a firm that operates in an industry where competition is high, which of the following practices will result in inferior performance?

A. Choosing a distinct but different strategic position in the industry B. Working toward increasing the difference between value creation and cost C. Trying to be everything to everybody by combining different competitive strategies D. Focusing on creating value for customers rather than destroying rivals TRYING TO BE EVERYTHING TO EVERYBODY BY COMBINING DIFFERENT COMPETITIVE STRATEGIES

Blue Bird Products Inc. (BBP) is a large conglomerate. The human resources department of its telecom division has decided to reduce its employee turnover by encouraging internal promotions. Which of the following strategies does this scenario best illustrate?

A. Corporate strategy B. Business strategy C. Functional strategy D. Grand strategy Functional Strategy

The CEO of True West Products Inc. (TWC) is a company that sells a wide range of products. It has decided to enter the markets of emerging nations like China and Brazil. This means that the cars, consumer electronics, and services such as hotels included under the TWC banner would be made available in these nations. Which of the following strategies does this scenario best illustrate?

A. Corporate strategy-where to compete-W-WB. Functional strategy C. Business strategy D. Divisional strategy CORP STRATEGY

Which of the following statements is true of customer-oriented visions?

A. Customer-oriented visions identify how a customer need will be met. B. Customer-oriented vision statements are not the same as listening to your customer. C. Customer-oriented visions reduce a company's ability to adapt to a changing environment. D. Customer-oriented visions define a business in terms of goods or services provided. CUSTOMER-ORIENTED VISION STATEMENTS ARE NOT THE SAME AS LISTENING TO YOUR CUSTOMER

Which of the following functions do the general managers in strategic business units primarily perform?

A. Design generic business strategies based on guidelines received from corporate headquarters B. Set overarching strategic objectives to unify the entire conglomerate under one mission C. Take responsibility for decisions and actions within a single functional area D. Allocate scarce resources among different business divisions DESIGN GENERIC BUSINESS STRATEGIES BASED ON GUIDELINES RECEIVED FROM CORPORATE HEADQUARTERS

During an assessment of employees and leaders in a company, Ethan Browne was categorized as a Level-5 manager in the Level-5 leadership pyramid. Which of the following can be inferred from this information?

A. Ethan is currently a team lead in the company. B. Ethan shows no signs of being a good leader. C. Ethan is a top management executive in the company. D. Ethan has just started his career as a member of a team in the company. Ethan is a top management executive in the company

Which of the following statements is true of firms pursuing a closed innovation?

A. Firms following the closed innovation model are less likely to be prone to the not-invented-here syndrome. B. Firms in the closed innovation model are extremely protective of their intellectual property. C. Firms in the closed innovation model focus on building a more effective business model to commercialize R&D, rather than focusing on being first to market. D. Firms following the closed innovation model will find activities such as spin-out ventures or strategic alliances crucial to commercialize their internally developed R&D. FIRMS IN THE CLOSED INNOVATION MODEL ARE EXTREMELY PROTECTIVE OF THEIR INTELLECTUAL PROPERTY

_____ are primarily responsible for decisions and actions within their respective departments like finance, human resources, marketing, and production in a strategic business unit.

A. Functional managers B. Corporate executives C. Strategic leaders D. General managers Functional Managers

Pioneer Pharma Inc. and GH Medicines Corp. are two competing firms in the pharmaceutical industry. While Pioneer Pharma Inc.'s vision is "to be a preeminent drug manufacturer in the industry," GH Medicines Corp.'s vision is "to make good health a reality for everyone around the world." Which of the following is an implication of these different visions?

A. GH Medicines's vision is more product-oriented than the vision of Pioneer Pharma. B. Pioneer Pharma is more likely to have a positive relationship between its vision and firm performance than GH Medicines. C. Pioneer Pharma's vision is more long-term and futuristic than GH Medicines's vision. D. GH Medicines will be more flexible than Pioneer Pharma when adapting to changing environments. GH MEDICINES WILL BE MORE FLEXIBLE THAN PIONEER PHARMA WHEN ADAPTING TO CHANGING ENVIROMENTS

True Help is a non-profit organization that works toward rehabilitating the homeless. The credo of the organization is "help us help you." For an organization like True Help, which of the following statements would make an appropriate mission?

A. Help us help you find a home. B. One day, everyone in this nation will have a home to protect themselves. C. We help the homeless gain and sustain financial independence by providing employment opportunities. D. Our mission is to turn this not-for-profit organization into a for-profit organization so that the stakeholders are benefited. C. We help the homeless gain and sustain financial independence by providing employment opportunities.

Which of the following statements is NOT true about innovation?

A. Innovation as a competitive weapon can simultaneously create and destroy value. B. Successful innovation allows a firm to extract temporary monopoly profits. C. Innovation has to be high-tech in order to be a potent competitive weapon. D. Process innovations are made possible through advances such as the Internet. INNOVATION HAS TO BE HIGH TECH IN ORDER TO BE A POTENT COMPETITIVE ADVANTAGE

Even though many valuable, rare, and inimitable resources were generated at Xerox's Palo Alto Research Center (PARC), the management at Xerox's headquarters failed to gain a competitive advantage by exploiting the breakthroughs in computing software and hardware. What is the most likely implication of this example?

A. It is advisable to outsource research and development functions. B. Competitive advantage cannot be gained through unrelated diversification. C. A firm must be effectively organized to capture value. D. It is better to build competitive advantage on tangible assets rather than intangible assets. A firm must be effectively organized to capture value

Which of the following is a primary feature of the five forces model?

A. It is concerned exclusively about the intensity of rivalry among direct competitors. B. It takes into account a firm's internal resources, capabilities, and core competencies. C. It helps managers determine the changing speed of an industry or the rate of innovation. D. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes. IT VIEWS COMPETITION BROADLY TO INCLUDE FORCES SUCH AS BUYERS SUPPLIERS AND THREAT OF SUBSTITUTES

What must a cost-leadership strategy accomplish to be successful?

A. It must increase the firm's cost above that of its competitors while offering adequate value. B. It must reduce the firm's cost below that of its competitors while offering adequate value. C. It must increase the firm's cost above that of its competitors while offering superior value. D. It must reduce the firm's cost below that of its competitors while offering superior value. IT MUST REDUCE THE FIRM'S COST BELOW COMPETITORS WHILE OFFERING ADEQUATE VALUE

_____ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.

A. Job descriptions B. Customs duties C. Corrective controls D. Organizational values Organizational Values

Richard is a manager. His colleagues and subordinates look up to him as a man who always does the right things. Along with other skills, his ability to effectively organize and deploy resources like manpower, material, and money has been appreciated by his seniors. According to the Level-5 leadership pyramid, which of the following levels would be the immediate next step for Richard?

A. Level 2 B. Level 3 C. Level 4 D. Level 5 Level 4

Nathan is part of a sales team. He effectively coordinates his tasks with others in the team and willingly contributes to their efforts in achieving the team's objectives. Thus, Nathan is in _____ of the Level-5 leadership pyramid

A. Level 5 B. Level 4 C. Level 3 D. Level 2 LEVEL 2

Gerald has been an employee with GeoFuture Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Gerald has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Gerald has reached so far?

A. Level 5 B. Level 4 C. Level 3 D. Level 2 LEVEL 4

According to Michael Porter, which of the following is a problem with many publicly traded companies?

A. Shareholders of publicly traded companies do not have a legitimate claim on profits. B. Many publicly traded companies have defined value creation too narrowly in terms of financial performance. C. There is no transferability of stock ownership in publicly traded companies. D. The legal owners of publicly traded companies also make management decisions for the company. MANY PUBLICLY TRADED COMPANIES HAVE DEFINED VALUE CREATION TOO NARROWLY IN TERMS OF FINANCIAL PERFORMANCE

In a large company, who is most responsible for devising the corporate strategy?

A. The CEO of the company B. The lower-level employees in the company C. The head of the production department in the company D. The human resource manager in the company CEO

Who among the following is responsible for making business STRATEGIES in a large conglomerate?

A. The board of directors at the headquarters B. The shareholder of the company C. The lower-level employees in the company D. The general managers of individual business units THE GENERAL MANAGERS OF INDIVIDUAL BUSINESS UNITS

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

A. The exit barriers within the industry in which the firm operates B. The number of companies operating in the industry in which the firm operates C. The intensity of rivalry among existing companies in the firm's chosen industry D. The value and the cost position of the firm relative to its competitors THE VALUE AND COST POSITION OF THE FIRM RELATIVE TO ITS COMPETITORS

Which of the following best illustrates a strategic business unit (SBU)?

A. The human resource department of a large company that is responsible for hiring employees for all its divisional branches B. The consumer electronics division of a large company that also manufactures automobiles, apparel, and processed food C. The product development team at the headquarters of a fast-food chain D. The market segment which can be categorized between the income levels $10,000 and $25,000 THE CONSUMER ELECTRONICS DIVISION OF A LARGE COMPANY THAT ALSO MANUFACTURES AUTOMOBILES APPAREL AND PROCESSED FOOD

Which of the following statements is true of corporate strategy?

A. The objective of corporate-level strategy is to ensure that the sum of the values of individual business units is greater than the overall corporate value. B. A corporate strategy must be able to create synergies across business units that are quite different. C. Formulating a corporate strategy involves general managers answering questions relating to how to compete in order to achieve superior performance. D. Deciding whether to adopt a differentiation or a cost-leadership strategy is part of formulating the corporate strategy. A CORPORATE STRATEGY MUST BE ABLE TO CREATE SYNERGIES ACROSS BUSINESS UNITS THAT ARE QUITE DIFFERENT

Which of the following statements about product-oriented visions is true?

A. They tend to force managers to take a myopic view of the landscape. B. They allow companies to effectively adapt to changing environments. C. They define a business in terms of providing solutions to customers. D. They allow firms to take a need-based approach to their goals. THEY TEND TO FORCE MANAGERS TO TAKE A MYOPIC VIEW OF THE LANDSCAPE

Which of the following is a customer-oriented vision?

A. To be the most progressive insurance company B. To be the best automobile company in the world C. To enable people throughout the globe to identify their capabilities D. To manufacture innovative products through continuous learning TO ENABLE PEOPLE THROUGHOUT THE GLOBE TO IDENTIFY THEIR CAPABILITIES

Which of the following is a top-down approach to the development of strategy that involves asking "what if" questions to anticipate plausible futures?

A. Top-down strategic planning B. Bottom-up strategic thinking C. Scenario planning D. Reverse mentoring Scenario Planning

Orange Synergy Inc. is a company that manufactures a variety of products that run on solar power. The company wants to ensure that solar technology replaces all forms of exhaustible energy sources in the near future. Which of the following statements will make an accurate vision for Orange Synergy?

A. We make products that run on solar energy. B. All nations around the globe should have access to a sustainable energy source. C. The company aims to make working fun and pleasurable for its employees. D. We provide energy-efficient sources and services by investing in research and innovation. ALL NATIONS AROUND THE GLOBE SHOULD HAVE ACCESS TO A SUSTAINABLE ENERGY SOURCE

When do employees fail to adopt the organizational values of a firm?

A. When the internal stakeholders of the firm are involved in designing the values B. When the top managers in the firm are merely paying lip service to the firm's stated values C. When the strategic leaders in the firm propagate and exhibit the same values D. When the organizational structure, such as its strategic decision making, is aligned with its values When the top managers in the firm are merely paying lip service to the firm's stated values

Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?

A. When the need for "hard numbers" arises, managers and analysts rely on economic value creation perspective to measure competitive advantage. B. In economic value perspective, analysts not only consider historical costs, but also opportunity costs. C. Arriving at the economic value created is easy because determining the value of a good in the eyes of consumers is a simple task. D. It is the most efficient tool for assessing corporate-level competitive advantage of highly diversified companies with large product portfolios. In economic value perspective, analysts not only consider historical costs, but also opportunity costs.

When does a merger between companies typically occur?

A. When two firms of comparable size join to form a combined entity B. When large, incumbent firms buy startup companies C. When a target firm does not want to be acquired D. When two or more firms enter a temporary vertical strategic alliance ANSWER: when two firms of comparable size join to form a combined entity

Which of the following would be the result of product innovation?

A. a new system for shipping large packages B. an inexpensive, high-quality refrigerator C. an inexpensive method of producing bicycle wheels D. a new technology for Internet servers AN INEXPENSIVE, HIGH QUALITY REFRIGERATOR

A primary advantage of organizing economic activity within firms is the:

A. ability to coordinate highly complex tasks to allow for specialized division of labor. B. low administrative costs because of reduced bureaucracy. C. eradication of the principal-agent problem. D. high-powered incentive to work as salaried employees for an existing firm. ABILITY TO COORDINATE HIGHLY COMPLEX TASKS TO ALLOW FOR SPECIALIZED DIVISION OF LABOR

Companies that pursue related diversification are able to create a diversification premium because they:

A. are able to leverage time compression economies.B. can operate beyond the minimum efficient scale.C. are able to increase value due to economies of scope.D. can reduce the value gap created by its products.Answer: Are able to increase value due to economies of scope

To be effective, firms need to:

A. back up their visions with strategic commitments that are costly and difficult to reverse. B. increase their strategic flexibility by developing product-oriented vision statements. C. isolate top managers from the organizational values. D. pursue visions that are exclusively financial and not aspirational. BACK UP THEIR VISIONS WITH STRATEGIC COMMITMENTS THAT ARE COSTLY AND DIFFICULT TO REVERSE

A _____ primarily details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

A. business-level strategy B. code of ethics C. mission statement D. functional-level strategy BUSINESS-LEVEL STRATEGY

In an industry, the threat of entry is high when

A. capital requirements are low. B. switching costs are high. C. technological know-how is industry specific. D. expected returns are high. CAPITAL REQUIREMENTS ARE LOW

T & R Autos Inc. is a large conglomerate that operates in 12 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity. Based on this guideline received from the top management team, the product leader of the home appliances division has decided to adopt a cost leadership strategy in all his 12 units. Thus, the decision made by the product leader best illustrates a _____.

A. corporate strategy B. functional strategy C. grand strategy D. business strategy Business Strategy

The regional head for First Electronics Inc. in New Dalvia has decided to sell the company's products directly through company-owned stores because the distribution system in the market is primitive. In six other markets, however, the company will continue to operate through a franchise system. Thus, this decision made by the regional head at New Dalvia will be considered as a _____.

A. corporate strategy B. tactical strategy C. functional strategy D. business strategy Business Strategy

A(n) _____ is best described as a standalone division of a larger conglomerate, with its own profit-and-loss responsibility.

A. corporation B. strategic business unit C. affiliate company D. functional department SBU

Large companies, such as AT&T, IBM, and GE, have been shifting their knowledge landscape from closed innovation to open innovation because of the

A. decreasing capability of external suppliers and vendors. B. lack of reliability on venture capital. C. increasing need to internally control research and development. D. increasing supply and mobility of skilled workers. INCREASING SUPPLY AND MOBILITY OF SKILLED WORKERS

The first step in the strategic management process is to:

A. define a firm's vision, mission, and values. B. understand the strategies of the competitors. C. put the guiding policies of a firm into practice. D. develop functional and business level strategies. DEFINE A FIRM'S VISION MISSION AND VALUES

A company's strategic business unit:

A. does not need to adopt the overall corporate strategy. B. is responsible for its own profit and loss. C. is a division solely created to design strategies during turbulent times. D. decides which industries and markets to compete in for an entire conglomerate. IS RESPONSIBLE FOR IT'S OWN PROFIT AND LOSS

Organizational values are the _____ that govern the behavior of individuals within a firm or organization.

A. economic measures B. ethical standards and norms C. political principles and policies D. social beliefs and actions ETHICAL STANDARDS AND NORMS

To implement specific business strategies, general managers of strategic business units rely on:

A. external stakeholders .B. corporate executives. C. strategic leaders. D. functional managers. FUNCTIONAL MANAGERS

To implement specific business strategies, general managers of strategic business units rely on:

A. external stakeholders. B. corporate executives. C. strategic leaders. D. functional managers. FUNCTIONAL MANAGERS

Strategies developed at the departmental level, such as the accounting human resource, production, and marketing departments, within a strategic business unit are referred to as _____.

A. grand strategies B. corporate strategies C. business strategies D. functional strategies FUNCTIONAL STRATEGIES

Strategic commitments are actions that are:

A. inexpensive. B. long-term oriented. C. easy to reverse. D. easy to imitate. Long-term oriented

Organizational values help individuals make choices that are:

A. legal but unethical .B. both illegal. C. both ethical and effective in advancing a company's goals. D. ethical but ineffective in achieving long-term success. BOTH ETHICAL AND EFFECTIVE IN ADVANCING A COMPANY'S GOALS

According to the Level-5 leadership pyramid, a manager in Level 1 typically:

A. makes productive contributions through motivation, talent, knowledge, and skills. B. works effectively with others to achieve synergies and team objectives. C. presents compelling vision and mission to guide groups toward superior performance. D. builds enduring greatness into the organizations he or she leads. MAKES PRODUCTIVE CONTRIBUTIONS THROUGH MOTIVATION TALENT KNOWLEDGE AND SKILLS

According to the Level-5 leadership pyramid, a manager at Level 3 has acquired the ability to:

A. organize resources effectively to accomplish predetermined goals. B. build enduring greatness into the organizations he or she leads. C. identify the vision and the mission of the company. D. justify unethical activities as legal and ethical. Organize Resources Effectively

Dynamic capabilities are especially relevant for surviving and competing in markets that

A. shift quickly. B. shift slowly. C. remain constant. D. remain unpredictable Shift Quickly

As the CEO of a conglomerate, Juana Mark exhibited her strong commitment toward the company's core value that customer's 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 the society. In this scenario, Juana has demonstrated _____.

A. strategic leadership B. intrapreneurship C. Machiavellianism D. individualism Strategic Leadership

Which of the following is more of a value driver than a cost driver?

A. superior customer service B. economies of scale C. learning-curve effects D. experience-curve effects Superior customer service

Underperformance relative to other firms in the same industry or the industry average results in a(n) _____ for a firm.

A. sustainable competitive advantage B. increased power distance C. diseconomies of scope D. competitive disadvantage COMPETITIVE DISADVANTAGE

Visionary companies are able to outperform their competitors because:

A. their vision statements are more product-oriented. B. they provide more aspirational visions. C. their visions are exclusively financial. D. they isolate internal stakeholders in defining their visions. THEY PROVIDE MORE ASPIRATIONAL VISIONS

Visionary companies are able to outperform their competitors because:

A. their vision statements are more product-oriented. B. they provide more aspirational visions. C. their visions are exclusively financial. D. they isolate internal stakeholders in defining their visions. THEY PROVIDE MORE ASPIRATIONAL VISIONS

The _____ is 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, who interpret situations through the lens of their unique perspectives.

A. two-factor theory B. expectancy theory C. upper-echelons theory D. value orientation theory Upper-Echelons Theory

A positive relationship between vision statements and firm performance is more likely to exist when:

A. visions are product-oriented. B. internal stakeholders are isolated from defining and revising the visions. C. organizational structures are aligned with the firm's vision statement. D. vision statements are equivalent to listening to the customers. ORGANIZATIONAL STRUCTURES ARE ALIGNED WITH THE FIRMS MISSION STATEMENT

The pharmaceutical company Merck's new drug Vioxx was a blockbuster, generating revenues of $2.5 billion a year by 2002 and growing fast. When allegations began to appear in the medical community, Merck announced the voluntary withdrawal of Vioxx from the market. In this example, Merck provides an example of what can happen if a company deviates from its _____.

A. voluntary responsibilities B. realized strategy C. core values D. strategic decisions CORE VALUES

As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to:

A. where to compete. B. when to compete. C. how to implement business strategy. D. how to enter target markets. how to implement business strategy.

As a part of strategy formulation, corporate strategy concerns questions relating to:

A. why we should compete. B. how to compete. C. where to compete. D. how to implement the business strategy. WHERE TO COMPETE

Which of the following is true of business ethics?

A.) Certain notions such as fairness, honesty, and reciprocity are universal norms. B.) Business ethics is an agreed upon code of conduct in business based on laws C.) The perception of what is ethical and what is not is similar across different cultures D.) Business ethics needs to be codified into lay in order to be followed. CERTAIN NOTIONS SUCH AS FAIRNESS HONESTY AND RECIPROCITY ARE UNIVERSAL NORMS

How is differentiation parity different from cost parity?

A.) Differentiation parity deals with pricing not innovation B.) Differentiation parity deals with innovation not value C.) Differentiation parity deals with pricing not value D.) Differentiation parity deals with value not pricing DIFFERENTIATION PARITY DEALS WITH VALUE NOT PRICING

Jamiro Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability.?

A.) Employees of Jamiro are legally permitted to invest their capital in the company's stock B.) Employees of Jamiro are also the owners of the company C.) Shareholders of Jamiro are responsible to the company only for the capital they have invested D.) Shareholders of Jamiro are not permitted to trade their company stock at the NYSE SHAREHOLDER ARE RESPONSIBLE TO THE COMPANY ONLY FOR THE CAPITAL THEY HAVE INVESTED

Which of the following is an accurate statement about learning effects?

A.) Learning effects involve the dilution of output overtime B.) Learning effects involve the accumulation of output over time. C.) Learning effects involve the increase of output at a point in time D.) Learning effects involves the decrease of output at a point in time. LEARNING EFFECTS INVOLVE THE ACCUMULATION OF OUTPUT OVER TIME.

A mortgage-loan officer persuades unsuspecting consumers to sign up for exotic mortgages, such as "option ARMs." These mortgages offer borrowers the choice to pay less than the required interest, which is then added to the principal while the interest rate can adjust upward. Because of this setup, many borrowers are unable to repay the mortgage once the interest rates go up. Which of the following phrases best describes this scenario?

A.) Legal but not ethical B.) Legal and Ethical C.) Neither legal nor ethical D.) Ethical but not Legal LEGAL BUT NOT ETHICAL

A customer oriented vision statement focuses employees to think about how best to:

A.) Make a product easier to use B.) Increase their efficiency to benefit customers C.)Improve a popular product D.)Solve a problem for a customer SOLVE A PROBLEM FOR A CUSTOMER

Which of the following statements should ideally reflect a firm's strategy for competitive advantage?

A.) Our strategy is to win at any cost. B.)We will be number one in the industry. C.) Our aim is to create superior customer value while controlling costs. D.) We want to be the market leader by exactly replicating our competitor's strategy. OUR AIM IS TO CREATE SUPERIOR VALUE WHILE CONTROLLING COSTS

Which of the following scenarios would be characteristic of an entrepreneur?

A.) Rachel implemented a new and more efficient way to produce pottery. B.) Mary imitated a new, more efficient method of producing pottery C.)Alissa scaled back the production of pottery because it wasn't cost effective D.) Ursula used a proven marketing method to advertise her pottery RACHEL IMPLEMENTED A NEW AND MORE EFFICIENT WAY TO PRODUCE POTTERY

What does "limited liability for investors" imply in a public stock company?

A.) Shareholders are liable for their invested capital and personal wealth and not for any other investments made. B.)Shareholders who provide the risk capital are liable only to the capital specifically invested C.) Shareholders are liable for all the decisions made by the board of directors of the company. D.) Shareholders have financial but not legal responsibilities toward the public stock company SHAREHOLDERS WHO PROVIDE THE RISK CAPITAL ARE LIABLE ONLY TO THE CAPITAL SPECIFICALLY INVESTED

Which of the following statements is true of strategy in an organization?

A.) Strategy implementation is considered unsuccessful if it requires changes within an organization B.) To implement a strategy successfully, an organizations structure must be rigid. C.) Strategy implementation does not affect resource allocation and power distribution within the organization D.) Organizational Structure must follow strategy in order for firms to achieve superior performance. ANSWER: STRUCTURE MUST FOLLOW STRATEGY

Why does strategy implementation often require changes within an organization?

A.) Strategy implementation is less important than strategy formulation B.) Strategy implementation transforms a strategy into actions and business models C.) Strategy always follows structure D.) Strategy implementation does not affect resource allocation and power distance within an organization STRATEGY IMPLEMENTATION TRANSFORMS STRATEGY INTO ACTIONS AND BUSINESS MODELS

Which of the following statements is true of shareholders in a public stock company?

A.) They directly supervise and coordinate the manufacture of products and delivery of services B.) They are granted a charter of incorporation by the state and legally own company stock C.) They are the centerpiece of corporate governance D.) They are appointed by the board of directors to oversee the company's management

In the United States, the time period for the right to exclude others from the use of a patented technology is _____ from the filing date of a patent application.

A.20 years B.25 months C.15 months D.25 years 20 YEARS

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

A.Cost drivers B.Value drivers C.Specialized assets D.Liquid assets SPECIALIZED ASSETS

_____ is best described as the commercialization of any new product, process, or the modification and recombination of existing ones.

A.Direct imitation B.Mass customization C.Innovation D.Headhunting INNOVATION

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage.

A.Embargos B.Cartel agreements C.Strategic alliances D.Corporate acquisitions Strategic Alliances

Which of the following statements accurately brings out the difference between closed innovation and open innovation?

A.Firms following the open innovation model are much more likely to be prone to the not-invented-here syndrome than firms pursuing a closed innovation model. B.While open innovation focuses on building an effective business model to commercialize R&D, closed innovation focuses on being first to market. C.Firms following the open innovation model are more protective about their intellectual property than firms pursuing a closed innovation model. D.While open innovation means introducing new technologies to new markets, closed innovation refers to introducing new technologies to existing markets. WHILE OPEN INNOVATION FOCUSES ON BUILDING EFFECTIVE BUSINESS MODELS TO COMMERCIALIZE R&D, CLOSED INNOVATION FOCUSES ON BEING FIRST TO MARKET

_____ is best described as changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain.

A.Forward vertical integration B.Corporate divestiture C.Reverse engineering D.Closed innovation FORWARD VERTICAL INTEGRATION

Which of the following statements is strongly influenced by the not-invented-here syndrome?

A.If a product was created and developed at our company, it probably is good enough. B.If a product was not created and developed at our company, it probably is good enough. C.If a product was not created and developed at our company, it could not be good enough. D.If a product was created and developed at our company, it could not be good enough. IF THE PRODUCT WAS NOT INVENTED HERE IT COULD NOT BE GOOD ENOUGH

Which of the following most accurately describes a difference between incremental innovation and radical innovation?

A.Incremental innovation researches new materials; radical innovation researches new processes. B.Incremental innovation targets new markets and technologies; radical innovation reinvents markets and technologies. C.Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base. D.Incremental innovation draws on novel methods; radical innovation draws on proven methods. Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.

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

A.Internal transaction costs arise when companies transact in the open market. B.When the internal costs involved in pursuing an activity in-house are more than the costs of transacting, then the concerned firm should vertically integrate. C.Internal transaction costs tend to increase with organizational size and complexity. D.It is beneficial to "buy" goods or services rather than "make" when internal transaction costs are low. INTERNAL TRANSACTION COSTS TEND TO INCREASE WITH ORGANIZATIONAL SIZE AND COMPLEXITY

GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information?

A.It is easier to buy intangible assets with cash than tangible assets. B.It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage. C.It takes longer time to build tangible assets than intangible assets. D.There is no resource heterogeneity between the two firms, BC Inc. and GN Corp. as they operate in the same industry. IT IS LIKELY THAT BC INC IS BETTER ENABLED THEN GN CORP TO PRODUCE AND SUSTAIN A COMPETITIVE ADVANTAGE

When Toyota wanted to secure a long-term supply of lithium, it had to create a bond of trust with an Australian company, Orocobre Ltd. Orocobre wanted to establish the bond of trust before making huge investments in specialized equipment required to extract the high-quality lithium. What did Toyota do to instill this trust?

A.It offered Orocobre exposure to Toyota's proprietary information. B.It made a credible commitment by taking an equity stake in Orocobre. C.It acquired Orocobre as part of its backward vertical integration plans. D.It offered Orocobre franchising opportunities to sell hybrid vehicles. It made a credible commitment by taking an equity stake in Orocobre.

What most likely happens when a firm optimizes its organizational structure to its current situation?

A.It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. B.It achieves superior performance.C.It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution. D.It transforms strategy into actions and business models. IT PLANTS THE SEED OF SUBSEQUENT FAILURE: THE TIGHTLY COUPLED SYSTEM CAN BREAK APART WHEN INTERNAL OR EXTERNAL PRESSURES OCCUR

Which of the following is a feature of the shakeout phase of the industry life cycle?

A.There is rapid industry growth during this stage. B.Market demand in this stage primarily consists of first-time adopters. C.Competitive intensity within the industry increases. D.The mode of competition shifts from price to non-price in this stage. COMPETITIVE INTENSITY WITHIN THE INDUSTRY INCREASES

Which of the following is an observable feature in the Globalization 3.0 stage?

A.Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B.Only sales and distribution functions of a multinational enterprise are located in a few key countries. C.Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. D.Firms have reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries. BASED ON AN OPTIMAL MIX OF COSTS SKILLS AND PESTEL FACTORS COMPANIES NOW FREELY LOCATE BUSINESS FUNCTIONS ANYWHERE IN THE WORLD

_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property.

A.Lean manufacturing B.Licensing C.Crowdsourcing D.Bootlegging LICENSING

In the context of industrial growth, which of the following statements is true of standards?

A.Standards emerge exclusively from bottom-up through competition in the marketplace. B.As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices. C.Standards are exclusively imposed top-down by government or other standard-setting agencies such as the Institute of Electrical and Electronics Engineers. D.After a standard is established in an industry, the basis of competition tends to move away from process innovations toward product innovations. As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices.

Which of the following is true of the parent-subsidiary relationship?

A.The ability to create a community of knowledge is low. B.The parent firm has no control and command over the subsidiary. C.The transaction costs that arise are frequently due to transfer prices. D.The parent firm will lack specialization and division of labor. THE TRANSACTION COSTS THAT ARISE ARE FREQUENTLY DUE TO TRANSFER PRICES

Which of the following is an example of social entrepreneurship?

A.The committee approved the new formula for an all-purpose cleaner because it cleaned better than other cleaners and used easy-to-obtain ingredients. B.The committee approved the new formula for an all-purpose cleaner because it cleaned better than other cleaners and did not cost more to produce. C.The committee approved the new formula for an all-purpose cleaner because it cleaned as well as other cleaners and could be produced more efficiently. D.The committee approved the new formula for an all-purpose cleaner because it cleaned as well as other cleaners and used organic ingredients THE COMMITTEE APPROVED THE NEW FORMULA FOR AN ALL-PURPOSE CLEANER BECAUSE IT CLEANED AS WELL AS OTHER CLEANERS AND USED ORGANIC INGREDIENTS

Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?

A.The economic value creation model B.The accounting profitability model C.The shareholder value creation model D.The balanced scorecard model THE BALANCED SCORECARD MODEL

Grace Apparel Inc. has decided to procure fabrics required for its garments from external suppliers instead of maintaining its own dyeing and weaving facilities. How will this decision affect the firm?

A.The firm will be protected against the principal-agent problem. B.The firm's administrative costs will be low because of necessary bureaucracy. C.The firm will have more flexibility in purchasing and comparing prices of goods and services. D.The firm will have high-powered incentives, such as hourly wages and salaries. THE FIRM WILL HAVE MORE FLEXIBILITY IN PURCHASING AND COMPARING PRICES OF GOODS AND SERVICES

Globe Source Inc. is a consumer electronics company that follows an open innovation model. Which of the following can be concluded about this firm?

A.The firm will suffer from the not-invented-here syndrome. B.The firm is less likely to commercialize researches from other firms. C.The firm will buy others' intellectual property whenever it advances its own business model. D.The firm will equate R&D with a high likelihood of benefitting from first-mover advantages. THE FIRM WILL BUY OTHER'S INTELLECTUAL PROPERTY WHENEVER IT ADVANCES ITS OWN BUSINESS MODEL

Which of the following is a competitive benefit experienced by the first mover firm in an industry?

A.The first mover will be able to achieve a less steep learning curve. B.The first mover will be able to reduce the switching costs. C.The first mover will not have to patent its products or technology. D.The first mover will be able to reduce costs through economies of scale. THE FIRST MOVER WILL BE ABLE TO REDUCE COSTS THROUGH ECONOMIES OF SCALE

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?

A.The number and size of competitors remain constant throughout the industry life cycle. B.Each stage of the industry life cycle is dominated by a different customer group. C.Industries tend to follow an unpredictable industry life cycle. D.The supply and demand sides of the market remain constant irrespective of the phase of the industry life cycle. EACH STAGE OG THE INDUSTRY LIFE CYCLE IS DOMINATED BY A DIFFERENT CUSTOMER GROUP

How has China been affected by its one-child-per-family policy and appreciation of its currency?

A.The purchasing power of its workforce has reduced. B.The value added to production has reduced. C.The standard of living within the economy has lowered. D.The country's advantage in low-cost manufacturing has reduced. THE COUNTRY'S ADVANTAGE IN LOW-COST MANUFACTURING HAS REDUCED

Which of the following is an open innovation principle?

A.The smart people in our field work for us. B.To profit from R&D, we must discover it, develop it, and ship it ourselves. C.If we discover it ourselves, we will get it to market first. D.External R&D can create significant value. EXTERNAL R&D CAN CREATE SIGNIFICANT VALUE

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?

A.There is more strategic variety in the growth stage when compared to the introduction stage. B.The number of competitors is more in the introduction stage than the growth stage. C.The market size for a new product or service is larger in the introduction stage when compared to the growth stage. D.While achieving market acceptance is the strategic objective during the introduction stage, the objective in the growth stage is to pursue a harvest strategy. THERE IS MORE STRATEGIC VARIETY IN THE GROWTH STAGE WHEN COMPARED TO THE INTRODUCTION STAGE

Divina Pharma Inc. and MF Electronics Inc. have together invested and created a new organization, FirstHealth Inc., to focus on developing diagnostic devices. Through this new firm, both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments. However, the new organization operates independent of Divina Pharma and MF Electronics. Which of the following alternatives to integration does this scenario best illustrate?

A.a joint venture B.a franchisee C.a licensing contract D.a corporate acquisition A JOINT VENTURE

Which of the following best illustrates physical-asset specificity?

A.a unique training program developed in an organization B.a ship container designed to carry more than the average load of iron ore C.a generic machine that can be used to churn different mixtures D.a machine solely designed to give a candy its trademarked shape A MACHINE SOLELY DESIGNED TO GIVE CANDY ITS TRADEMARKED SHAPE

A primary advantage of organizing economic activity within firms is the

A.ability to coordinate highly complex tasks to allow for specialized division of labor. B.low administrative costs because of reduced bureaucracy. C.eradication of the principal-agent problem. D.high-powered incentive to work as salaried employees for an existing firm. ABILITY TO COORDINATE HIGHLY COMPLEX TASKS TO ALLOW FOR SPECIALIZED DIVISION OF LABOR

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

A.architectural innovation. B.incremental innovation. C.radical innovation. D.disruptive innovation. Architectural Innovation

Futura Inc. introduced an automobile that could run completely on electricity for longer periods of time than any other electronic or hybrid automobile. Also, this vehicle was less expensive than the vehicles of competitors. On the downside, it required more repairs than the competition's automobiles. However, the technology of the Futura vehicle improved rapidly, thereby improving its repair record. This example describes

A.architectural innovation. B.incremental innovation. C.radical innovation. D.disruptive innovation. DISRUPTIVE INNOVATION

Investments in specialized assets tend to incur high opportunity costs because the

A.assets can be profitably used for multiple purposes. B.threat of one of the partners pursuing his or her self-interest is high. C.social costs associated with these assets are high. D.firms can avoid backward integration by investing in these assets. B.threat of one of the partners pursuing his or her self-interest is high.

GreenCure Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, GreenCure Pharma invested $100 million in the project. This investment made by GreenCure Pharma will result in a

A.cartel. B.credible commitment. C.corrective action. D.parent-subsidiary relationship. CREDIBLE COMMITMENT

To be successful and to survive the shakeout stage of the industry life cycle, a firm should

A.charge higher prices than its competitors. B.focus on product innovation rather than process innovation. C.gain economies of scale. D.shift from price to non-price competition. GAIN ECONOMIES OF SCALE

Due to resource immobility, a critical assumption in the resource-based model of a firm, the

A.competitive advantage of a firm exists for a short period of time. B.resource bundles of a firm can be easily imitated by competitors. C.resource differences between firms last for a long time. D.competencies and capabilities of all firms in an industry are similar. RESOURCE DIFFERENCES BETWEEN FIRMS LAST A LONG TIME

Virtue Products Inc., a large conglomerate, procures a few component parts from external suppliers and also manufactures some of the key raw materials in its own subsidiaries. This apart, the company does not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to distribute its products. In this scenario, which of the following alternatives to vertical integration is Virtue Products applying?

A.concentric integration B.taper integration C.horizontal integration D.conglomerate integration TAPER INTEGRATION

A trend observed during the Globalization 3.0 stage involves

A.countries around the globe becoming more self-sufficient and independent. B.multinational companies organizing as global-collaboration networks. C.privately-owned firms getting nationalized. D.world's market economies becoming less integrated. MULTINATIONAL COMPANIES ORGANIZING AS GLOBAL COLLABORATION NETWORKS

Neon Electronics Inc. sourced touch screens required for its tablet computers, cell phones, and televisions from a manufacturer in China. But the demand for such components was high globally, and the supplier could not meet the quality standards of Neon Electronics. Thus, Neon Electronics decided to set up its own unit to develop and manufacture the required touch screens. What does this scenario best illustrate?

A.crowdsourcing B.new product development C.backward vertical integration D.conglomerate diversification BACKWARD VERTICAL INTEGRATION

A firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones is called

A.disruptive innovation. B.reverse innovation. C.absorptive capacity. D.open capacity. absorptive capacity

Norce Autos Inc. allows its customers, suppliers, researchers, and the community in general to contribute their ideas toward new product developments. Customers and other interested stakeholders can let the company know what new features they want to see in their next car. If the company faces any technical complexities that its internal R&D team cannot solve, it posts the problem on its website and allows people from the external community to provide solutions. In this scenario, Norce Autos Inc. is primarily leveraging its

A.economies of scope. B.open innovation model. C.razor-razor-blade business model. D.experience-curve effects. OPEN INNOVATION MODEL

A(n) _____ is best used to depict the transformation of raw materials into finished goods and services along distinct vertical stages.

A.encrypt B.chain of command C.industry value chain D.scatter chart INDUSTRY VALUE CHAIN

As a research scholar, Ricardo had built a helicam as part of his project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, he started a new venture where he could customize these helicams to fit the specific needs of the buyers and sell them. Ricardo can be best described as a(n)

A.entrepreneur. B.category captain. C.franchisor. D.early adopter. ENTREPRENEUR

Which of the following best illustrates site specificity?

A.equipment necessary for mining bauxite and aluminum smelting B.bottling machinery to manufacture bottles with trademarked shapes C.investment made in human capital to master procedures of a specific organization D.investment made to train employees to operate computers EQUIPMENT NECESSARY FOR MINING BAUXITE AND ALUMINUM SMELTING

In a radical innovation, a firm targets

A.existing markets by using new technologies. B.new markets by using existing technologies. C.new markets by using new technologies. D.existing markets by using existing technologies. New markets, new technologies

During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved

A.exporting goods. B.making foreign direct investments. C.making foreign institutional investments. D.licensing production and distribution. EXPORTING GOODS

Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of

A.geographic diversification. B.product diversification. C.vertical integration. D.horizontal integration. PRODUCT DIVERSIFICATION

If a strategic business unit is recognized as a cash cow, it is advisable to:

A.harvest the business.B.invest into the business to hold its current position.C.divest the business due to its low market share.D.maintain it till it turns into a dog. ANSWER: Invest into the business to hold its current position.

The four-step innovation process ends with

A.idea generation. B.invention. C.idea testing. D.imitation. IMITATION

The most efficient way to overcome the principal-agent problem in a firm is to

A.increase the level of vertical integration within the firm. B.provide stock options to managers. C.downsize the existing workforce. D.organize economic activities within the firm. PROVIDE STOCK OPTIONS TO MANAGERS

The crossing-the-chasm framework states that _____ need to be adjusted for each customer segment.

A.incremental contributions B.business strategies C.innovations D.competitors BUSINESS STRATEGIES

First movers often have several competitive benefits including

A.incremental effects. B.shakeout effects. C.network effects. D.experience effects NETWORK EFFECTS

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.

A.industry B.functional department C.economy D.customer segment INDUSTRY

The leading producer of gardening tools, YourGarden Inc, has achieved great success because they produce high-quality tools that are not too expensive. Even so, another company that produces lower-quality tools at the same price has also achieved some success, but not as much as YourGarden. Also, in general, the price of gardening tools has declined because of economies of scale and learning. In addition, YourGarden has added complementary assets, such as gardening instruction. Considering all of these factors, the gardening tool industry is most likely in the

A.introduction stage. B.growth stage. C.shakeout stage. D.maturity stage. GROWTH STAGE

The key objective for firms during the growth phase is to

A.invest as many resources as possible in product innovations. B.stake out a strong strategic position not easily imitated by rivals. C.pursue a harvest strategy. D.reduce their network effects. STAKE OUT A STONG STRATEGIC POSITION NOT EASILY IMITATED BY RIVALS

A drawback of short-term contracting as an alternative to making a component in-house is that

A.it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. B.the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. C.it fails to allow a long planning period that individual market transactions provide. D.the buying firm cannot demand lower prices due to the lack of a competitive bidding process. THE SUPPLYING FIRM HAS NO INCENTIVE TO MAKE ANY TRANSACTION SPECIFIC INVESTMENT TO INCREASE PERFORMANCE OR QUALITY

The value a consumer attaches to a product or service is captured in the:

A.least price a consumer is willing to pay for it. B.consumer's maximum willingness to pay for it. C.expenses incurred by the firm in manufacturing it. D.difference between the price charged for it and the cost to produce it. CONSUMERS MAX WILLINGNESS TO PAY

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

A.level of diversification. B.geographic scope. C.vertical integration. D.absorptive capacity. VERTICAL INTEGRATION

Hitoro Inc. developed a superior touch screen technology for tablet computers that enabled multiple users to operate the screen at the same time. The technology was leased to Revox Inc., a consumer electronics company, for five years. Which of the following alternatives to integration does this best illustrate?

A.licensing B.franchising C.crowdsourcing D.bootlegging Licensing

Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. This is an example of

A.monopsony. B.geographic diversification. C.crowdsourcing. D.taper integration. TAPER INTEGRATION

A _____ is best described as a form of intellectual property that gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for public disclosure of the underlying idea.

A.patent B.promissory note C.franchise D.royalty PATENT

When firms innovate by leveraging existing technologies into new markets, they are said to be involved in A.incremental innovations. B.radical innovations. C.architectural innovations. D.disruptive innovations.

Architectural Innovations

a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of emerging nations. Which of the following types of diversification strategies is the firm pursuing?

A.product diversification strategy B.process diversification strategy C.geographic diversification strategy D.product-market diversification strategy Geographic diversification strategy

When TrueHeal Pharma Inc. released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug's cover. However, any attempts by competitors to copy the chemical composition would result in infringement of TrueHeal Pharma's intellectual property rights. Thus, the drug is protected by a

A.promissory bill. B.patent. C.franchise. D.royalty. PATENT

The strategic objective of a first mover during the introduction stage of the industry life cycle is to

A.pursue a harvest strategy. B.survive by drawing on deep pockets. C.achieve market acceptance. D.lower entry Pursue a harvest strategy

Which of the following alternatives on the make-or-buy continuum allows for most integration

A.short-term contracting B.joint ventures C.licensing D.parent-subsidiary relationship PARENT-SUBSIDIARY RELATIONSHIP

A high percentage of R&D/Revenue ratio indicates a(n):

A.strong focus on innovation to improve current products and services. B.inefficiency in the management to focus on new products. C.strong focus on marketing and sales to promote products and services. D.negligent investment toward research and development. A STRONG FOCUS ON INNOVATION TO IMPROVE CURRENT PRODUCTS AND SERVICES

Which of the following is an example of an internal transaction cost?

A.the cost of searching for a contract manufacturer B.the cost of signing a contract with a supplier C.the cost of buying raw materials D.the cost of maintaining a production unit THE COST OF MAINTAINING A PRODUCTION UNIT

Which of the following is an accurate definition of the customer segment "laggards"?

A.the last consumer segment to come into the market, entering in the declining stage of the industry life cycle B.the last consumer segment to come into the market during the growth stage of the industry life cycle C.the last consumer segment to come into the market during the shakeout stage of the industry life cycle D.the last consumer segment to come into the market, entering in the maturity stage of the industry life cycle THE LAST CONSUMER SEGMENT TO COME INTO THE MARKET< ENTERING IN THE DECLINING STAGE OF THE INDUSTRY LIFE CYCLE

The typical four-step innovation process begins with

A.the modification and recombination of an existing product or process. B.the presentation of an idea as findings derived from basic research. C.the commercialization of an invention by entrepreneurs. D.a competitor's attempt to imitate an innovation. THE PRESENTATION OF AN IDEA S FINDINGS DERIVED FROM BASIC RESEARCH

What is strategic entrepreneurship?

A.the pursuit of an innovation that uses concepts from the triple-bottom-line approach B.the pursuit of an innovation that uses concepts from strategic management C.the pursuit of an innovation that benefits the ecosystem D.the pursuit of an innovation that benefits society THE PURSUIT OF AN INNOVATION THAT USES CONCEPTS FROM STRATEGIC MANAGEMENT

Stellar Products Inc. is a U.S.-based consumer electronics company. It owns smaller firms in Japan and Taiwan where most of its cell phone technology is developed and manufactured before being released worldwide. Which of the following alternatives to integration does this best illustrate?

A.venture capitalism B.franchising C.joint venture D.parent-subsidiary relationship PARENT SUBSIDIARY RELATIONSHIP

How is the early majority section of consumers different from the late majority section?

Although the early majority is confident in their ability to master a new technology, the late majority is not.

The payable turnover for Apple and BlackBerry (as of fiscal year 2012) was 7.4 and 24.8 respectively. From this data we can conclude that

Apple has been more efficient than Blackberry in paying creditors and generating interest-free loans from suppliers.

DigitalHealth Electronics Inc. is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from small hospitals, nursing homes, and private practice doctors who were earlier dependent on the scanning machines in large hospitals. Which of the following types of innovations does this scenario best illustrate?

Architectural Innovation

Which of the following countries has a high geographic but low cultural distance from the united states?

Australia

Euan manages product design and development at a toy company. The Junior manages who report to him tell him that new complementors for the firm's products are available. What should Euan's reaction be?

He needs to find out if his company as well as other companies can provide complements?

When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because

Building downstream complementary assets can be expensive and time-consuming

How has Apple been able to sustain its competitive advantage in the smartphone industry?

By regularly introducing incremental improvements in its products

According to the upper-echelons theory, the organizational outcomes of a company primarily reflect the values of the _____.

CEO of the company

Which of the following statements is true of a strategic position?

Choosing a strategic position requires making important trade-offs between value and cost positions.

The increasing availability of external options to commercialize ideas that were previously shelved is one of the factors that led to the shift from the

Closed to open innovation

You are the CEO of a home appliance manufacturing company and have recently undertaken a review of your company's strategy. You are valued at 50 bil your closest competitor 40 bil. How should you proceed?

Compare the current valuations with past valuations to determine a trend

Seth's Computer Repair has maintained a competitive advantage based on its thorough and professional service, reasonable pricing, and money-back guarantee. Management at the company is so committed to doing repairs well that they often have rejected employee suggestions to expedite their processes. Recently, the company has begun to lose customers to a new local service offering same day in-home repairs and 24/7 online customer support. According to the dynamic capabilities perspective, Seth's Computer Repair has lost its competitive advantage due to

Core Rigidity

Strategic leadership pertains to the use of power and influence by _____ to direct the activities of others when pursuing an organization's goals.

Corporate Executives

What are the cost drivers

Cost of Input factors Economies of Scale Experience Curve Affects Learning Curve Affects

What are the three value drivers

Customer Service, Product Features, Complements

Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented?

Customer-oriented visions tend to be more flexible when adapting to changing environments.

Carlos is the manager of a graphic design firm, and he relies on a top-down strategic management approach to maintain tight control over the activities of his employees. the company has recently started to lose market share to its more innovative competitors, and carlos wants to encourage his employees to start contributing to the strategy formulation process to make the company more competitive. which of the following steps should carlos take?

Designate Friday afternoons as time for employees to pursue outside interests loosely related to the business.

A(n) _____ leverages new technologies to attack existing markets. A.disruptive innovation B.incremental innovation C.radical innovation D.architectural innovation

Disruptive Innovation

As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?

Disruptive Innovation

Although TechnoWare Electronics Inc. still sells its VCR players, a product in its decline stage, the investments made by the company on improving or marketing the product are very low. The company has allocated the least amount of human and financial capital to this department. Which of the following strategies has TechnoWare Electronics adopted in this scenario?

Harvest Strategy

BuyMart Inc. is a large chain of hypermarkets. It has cost benefits due to its extensive operation. The company's marketing and sales, logistics, administrative, and other such related costs get divided between a large number of product units stocked in its stores. This makes it difficult for smaller retail stores and supermarkets to compete against BuyMart's low prices. Thus, BuyMart has a competitive advantage due to its:

Economies of Scale

Which of the following statements accurately brings out the difference between economies of scale and economies of scope? A. Economies of scale refer to the decreases in per-unit cost with decreases in output, whereas economies of scope refer to the increases in per-unit cost with increases in output. B. Economies of scale result in decreasing returns to scale, and economies of scope result in constant returns to scale. C. Economies of scope are the savings that come from producing two or more outputs from the same resources, whereas economies of scale are decreases in per-unit cost with increases in output. D. Economies of scope are realized when a firm operates at the minimum efficient scale, whereas economies of scale are realized when the firm operates beyond the minimum efficient scale. Economies of scope are the savings that come from producing two or more outputs from the same resources, whereas economies of scale are decreases in per-unit cost with increases in output.

Economies of scope are the savings that come from producing two or more outputs from the same resources, whereas economies of scale are decreases in per-unit cost with increases in output.

Patriot Tools, a company that manufactures industrial tools, incurs higher costs because of its refusal to outsource its manufacturing to countries where labor is lower, this reflects

Ethical Responsibility

Which of the following terms or phrases best characterizes Zappos organizational structure?

Extremely Flat

In which of the following situations is a company that exists in the telecommunications industry most likely to face the highest threat of entry?

If the industry has recently become deregulated

Each activity a firm performs along the horizontal value chain adds _____ value. A. temporary B. little C. incremental D. absolute

Incremental

Which of the following most accurately describes a difference between incremental innovation and radical innovation?

Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.

A factor favoring the success of disruptive innovation is that A. incumbent firms are slow to change. B. new entrants have highly formal organizational structures and processes. C. the low end of the market is highly guarded. D. incumbent firms focus on radical innovation rather than incremental innovation.

Incumbent firms are slow to change

Which of the following is an advantage of the balanced scorecard approach.

It allows managers to translate a firm's vision into measurable operational goals.

Which of the following statements is true of a disruptive innovation?

It invades the market from the bottom up, by first capturing the low end

Which of the following is NOT an advantage of the balanced scorecard approach to assess firm performance? A. It allows managers to communicate and link the strategic vision to responsible parties within an organization. B. It helps managers to implement feedback and organizational learning in order to modify and adapt strategic goals when indicated. C. It provides a concise report that tracks chosen metrics and measures and compares them to target values. D. It is a tool which can be effectively used by managers for both strategic implementation and strategic formulation.

It is a tool which can be effectively used by managers for both strategic implementation and strategic formulation.

Which of the following is an implication of high employee turnover in a company?

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

What was one of the reasons for Jerry Yang's failure at Yahoo?

Jerry's preference for obtaining concensus among his managers led to bickering and infighting.

Phoenix Guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. Although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickups for sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. Which of the following approaches is likely to produce superior results?

NOT Invest in vertical integration despite the cost of producing pickups.

Sanjaya was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically?

Observe executives at the company, and see whether they model ethical behavior and demand it of others.

_____ are best described as the value of the best forgone alternative use of the resources employed

Opportunity costs

_____ describes the collectively shared values and norms of an organizations members.

Organizational Culture

A firms resistance to change is the status quo referred to as

Organizational Inertia

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

Path Dependence

When a firm pursues a harvest strategy, it A.exits the industry by bankruptcy or liquidation. B.invests significant resources in product innovations. C.buys out its rivals to strengthen its strategic position. D.reduces investments in product support.

Reduces investments in product support

Disney became the world's leading media company to a large extent by pursuing a corporate strategy of ________. A) hostile takeovers B) cost-leadership C) related-linked diversification D) unrelated diversification

Related Linked Diversification

Which of the following is NOT true of risk capital? A. From the shareholders' perspective, the measure of competitive advantage is primarily based on return on their risk capital. B. Risk capital invested in a firm can be legally recovered if the firm goes bankrupt. C. A person who provides capital to a firm gets equity shares in return. D. Return on risk capital includes stock price appreciation plus dividends received over a specific period.

Risk capital invested in a firm can be legally recovered if the firm goes bankrupt.

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true?

While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation.

In emerging economies, the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity within the industry is high, and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost-leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD television industry currently in?

Shakeout Stage

Georgia Ray is the founder of the departmental stores chain, Ether Inc. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and manufactured from recycled material. Also, her company purchases handicrafts from nonprofit organizations supporting the aged. Georgia's belief is that her company should be able to support the community at large. Which of the following terms best describes Georgia Ray?

Social Entrepreneur

Which of the following statements accurately describes social entrepreneurs?

Social entrepreneurs are those who consider financial, ecological, and social metrics to evaluate their firm's performance.

Lu runs a company that manufactures satellites for commercial and government use. It has few rivals. At the moment, the power of buyers, the power of suppliers, and the threat of substitutes are all low. Based on this information, what can Lu conclude?

The company is likely to be very profitable as long as the threat to entry is low.

Which of the following is a competitive benefit experienced by the first mover firm in an industry?

The first mover will be able to reduce costs through economies of scale

Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?

The framework does not explain everything about changes in industries

Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice? A.The framework believes that the life cycle of industries is unpredictable.B.The framework does not explain everything about changes in industries.C.The framework is based on the tenet that industries can be rejuvenated even in the declining stage.D.The framework believes that the number and size of competitors remain constant throughout the life cycle.

The framework does not explain everything about changes in industries.

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply?

The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation

Which of the conditions prevail when an industry is at the end of its life cycle?

The level of process innovation reaches its maximum as firms attempt to lower cost.

Which of the following methods of developing a strategy best illustrates scenario planning?

The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the prices of aluminum sheets in the future.

Showstopper Inc. dominates the ladies' wig market and wants to expand into men's toupees. How can Showstopper's managers determine whether the company should develop a toupee division internally, ally with a toupee maker, or acquire a toupee-making firm?

The managers need to determine whether the skills needed to create wigs and toupees are similar and whether Showstopper creates better hairpieces than its competitors do.

What helps notions such as fairness, honesty, and reciprocity to be codified into law?

The notions are relatively universal norms.

While the industry for e-book readers is in its growth stage, the industry for landline telephones is in the decline stage of the industry life cycle. Which of the following can be inferred from this?

The number of competitors in the e-book reader industry will be larger when compared to the landline telephone industry.

A microchip company wants a computer company to produce more powerful tablets and therefore use more of its chips. That same computer company wants the microchip maker to create chips with faster processing power. What approach could these companies take so that both can serve stockholders well?

The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?

The weaker firms are forced out of the industry in this stage.

Which of the following are the most important determinants of economic distance?

The wealth and per capita income of consumers

The market for 3-D televisions is in the introduction stage of the industry life cycle. What does this imply?

There are only a few competitors in the 3-D television market.

Which of the following statements accurately brings out the difference between top-down strategic planning and scenario planning?

While in top-down strategic planning a top-down approach is used to develop strategies, in scenario planning a bottom-up approach is used. While top-down strategic planning takes place at both the corporate and business levels of strategy, scenario planning takes place only at the corporate level. Top-down strategic planning addresses only pessimistic futures, whereas scenario planning addresses only optimistic futures. Scenario planning helps create strategic plans that are more flexible, and thus more effective, than those created through the more static strategic planning approach. SCENARIO PLANNING HELPS CREATE STRATEGIC PLANS THAT ARE MORE FLEXIBLE AND THUS MORE EFFECTIVE THAN THOSE CREATED THROUGH A MORE STATIC STRATEGIC PLANNING APPROACH

which of the following statements accurately brings out the difference between closed innovation and open innovation?

While open innovation focuses on building an effective business model to commercialize R&D, closed innovation focuses on being first to market.

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true?

While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation. GROWTH STAGE= Focus on PRODUCT MATURITY STAGE=PROCESS

Which of the following statements accurately brings out the difference between economies of scale and learning effects?

While there are no diseconomies to learning, there are diseconomies to scale

_____ is best described as a measure of how effectively capital is being used by a firm to generate revenue.

Working capital revenue

How does a conglomerate benefit from following an unrelated diversification strategy?

a) The conglomerate can solely depend on its primary business activity for a major portion of its revenues. b) The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses.c) The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. d) The conglomerate can limit the learning- and experience-curve effects it faces ANSWER: The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies.

Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization?

a. It allows a high level of integration. b. It leads to competition between SBUs. c. It helps evaluate each SBU as a stand-alone profit-and-loss center. d. It helps contain the core competencies within a strategic business unit (SBU). IT ALLOWS FOR A HIGH LEVEL OF INTEGRATION

Smooth Fusion Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage?

a. The resources of the company that are mobile b. The capital raised by the company from its shareholders c. The expertise acquired by the employees in the company d. The headquarters owned by the company ANSWER: THE EXPERTISE ACQUIRED BY THE EMPLOYEES IN THE COMPANY

According to the value chain analysis, which of the following is a primary activity?

a.)research and development b.)HR c.) accounting and finance d.)marketing and sales MARKETING AND SALES

After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and founded Amazon, which is now the world's largest online retailer. This is clearly an example of a(n)

entrepreneur who commercialized invention into an innovation.

Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa Rica, where its main suppliers were located, would double in less than three years. This would significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans was able to maintain its profit margins in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate?

better expectations of future resource value

Integration

close and seamless business processes

When the market for photo film negatives declined with the arrival of digital cameras, Momento Films Inc., a manufacturer of film negatives, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has Momento Films adopted in this scenario?

consolidated strategy

When a firm pursues a maintain strategy, it

continues to support marketing efforts even if the demand for the product is declining.

top down strategic planning as an approach to strategic management will be more effective when

environment is constantly changing size of the firm is large probability of a black swan event is high top management wants to decentralize decision making SIZE OF THE FIRM IS LARGE

One way to foster ethical behavior in employees is to

create a control system that encourages desired values

In an economic context, strategy for producers is primarily about:

distributing economic value created equally between consumers and themselves reducing the difference between consumers willingness to pay and cost to produce it Lowering producer surplus and increasing consumer surplus capturing as much of the economic value created as possible. CAPTURING AS MUCH OF THE ECONOMIC VALUE CREATED AS POSSIBLE

In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should:

divest the strategic business unit

The customers entering the market in the growth stage are primarily

early adopters.

At the time when Kevin decided to purchase a tablet computer, the product had just become accessible to the mass market. He purchased the tablet only after he was completely convinced that the benefits it would offer him would far exceed its price. Also, he waited for his friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Kevin best represent?

early majority

By selling a laptop at $1000 for which consumers are willing to pay up to $1200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the _____.

economic value created

The production head at the Omnitone Paint Company would frequently stay back after office hours and experiment with new color combinations even though this was part of the new product development team's job. As a result of these experiments, he came up with two new interior paint colors, foggy morning and mint julep. The new colors proved popular among test groups, and quickly became some of Omnitone's best-selling products. Which of the following strategies does this scenario best illustrate?

emergent strategy

It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because

enter into the market in large numbers, creating a herding effect

An intrapreneur is described as a person whoA.restricts changes within an organization.B.innovates within existing companies.C.introduces new products or services by starting his or her own ventures.D.invests funds in the ideas of another person in the same organization.

innovates within existing companies.

True Tomato Inc. makes organic ketchup. To promote its products, this firm decided to make bottles in the shape of tomatoes. To accomplish this, True Tomato worked with its bottle manufacture to create a set of unique molds for its bottles. Which of the following specialized assets does this example demonstrate?

site specificity research specificity physical asset specificity human asset specificity PHYSICAL ASSET SPECIFICITY

A traditional top-down strategic planning process typically begins with:

strategic leaders adjusting a company's vision and mission based on environmental analysis.

The internet service provider industry in the country of Megalopolis is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the internet service provider industry, the

threat of new entrants is most likely low.

Bubble Buddy is a company that manufactures hot tubs. Which of the following best illustrates a product-oriented vision for Bubble Buddy?

to be the pioneering manufacturer of hot tubs