BUS 189 Midterm Exam 1 | Complete Solutions (Verified)

BUS 189 Midterm Exam 1 | Complete Solutions (Verified) Which of these principal factors helps increase shareholder value? profitability risk factors low brand awareness government regulations high production costs Which of the following statements is true about competitive advantage a. it is unaffected by the strategies taken by the company b. it exists only when the company's profitability is greater than the average profitability and profit growth of its rivals c. it is considered to be sustained when it lasts for three months d. it exists only when the company's profitability is greater than the ten highest grossing firms in the world e. it is seldom affected by the business model of the company Which of the following statements is true about strategic leadership a. It is the primary responsibility of the functional managers of an organization b. it does not take into account the task of maximizing shareholder value c. it is involved with making decisions about how to create a competitive advantage d. it is a concept that does not apply to multidivisional companies with several business units e. it is essentially about supervising workers at a manufacturing unit of an organization Erika works for Eagle Corp. She is involved in all the important decision-making processes of the company and is also responsible for the overall performance of the company. In the context of strategic management, Erika is most likely to be a ____________ a. line manager b. functional manager c. project manager d. general manager e. diversification In their article, "Building your company's vision," Collins & Porras point out that "Vision" has two major components. what are these two components? core ideology envisioned future In his article, "the knowledge creating company," Nonaka points out that there are two types of knowledge. What are these two types? explicit tacit Which of the following statements is true about functional-level managers? a. They oversee the operation of an entire company or division b. Their sphere of responsibility is generally confined to one organizational activity c. their activities and roles have no importance in realizing the strategic goals of an organization d. they provide a link between the people who oversee the strategic development of a firm and those who own it e. they occupy the apex of decision making within an organization A group of firms manufacture writing implements such as pens, pencils, and markers. This group should be referred to as a(n): a. substitute b. market segment c. service provider d. regulator e. industry Antitrust authorities: a. favor large companies b. seek to reduce industry competition c. are concerned with the abuse of market power d. tend to raise prices of products for consumers e. enable companies to achieve market power Scenario planning is a technique for coping with the problem of: a. planning equilibrium b. uncertainty c. bottom-up planning d. strategic fit e. cognitive basis Which of the following statements is true about potential competitors in an industry a. They threaten the profitability of established companies b. They are usually encouraged by establishing companies c. They find it easier to enter an industry when the entry to barriers are high d. they find it easier to enter an industry when established companies have economies of scale e. they usually have an absolute cost advantage over established companies vertical integration can be disadvantageous when: a. competitors are vertically integrated b. demand is stable c. industry technology is changing rapidly d. the company is operating in its home country e. the company's costs decrease A component of strategy implementation is a. providing the number and kind of periodic reports that must be submitted by functional-level managers b. defining the goals and objectives of the organizations c. answering the question, "what is our business" d. designing the best organization structure, culture, and control systems to put a strategy into action e. eliminating the feedback loop The bargaining power of an industry's suppliers is greater when: a. the supply industry is fragmented b. switching costs are minimal for companies because of little difference among products offered by different suppliers c. the industry buys in large quantities d. the product that suppliers sell has many substitutes and is not vital to the companies e. the industry is not an important customer to the suppliers Under which of the following circumstances is vertical integration considered hazardous? a. when the demand for the product fluctuates frequently b. when vertical integration involves moving downstream into retailing c. when the value added by successive stages of production is declining d. when the industries involved are undergoing rapid expansion e. when the company's competitors are also following a strategy of vertical integration Roza Munoz oversees the overall operations of Maxwell Coffee House which is one of the divisions of Kraft Foods Company. Roza is also responsible for the overall performance of the business division. Which of the following is not likely to be one of Roza's responsibilities? a. turning corporate-level strategy into action b. defining Kraft Foods mission statement c. deciding how to compete in the coffee industry d. supervising functional-level managers e. developing a business-level strategy Economies of scale can arise from: a. cost reductions gained through decreased production b. high prices on bulk purchases of raw material inputs and component parts c. an advantage gained by spreading fixed production costs over a large production volume d. increased spending on marketing and advertising activities e. poor production operations which of the following is a benefit that firms should expect to gain from the use of horizontal integration? a. reduced risk of coming into conflict with the FTC (federal trade commission) b. better realization of economies of scale c. greater control over the entire supply chain d. reduced risk of holdup e. reduced need for investment in core activities Good Strategic leaders: a. control all facets of decision-making b. make decisions without consulting others c. possess a willingness to delegate and empower subordinates d. ensure uniformity of purpose through the authoritarian exercise of power e. are usually inconsistent in their approach As a result of a recent strengthening of the pollution control laws by the government, Alpha Motors has increased the production of its electronic-powered cars. The company is responding to a change in which of the following macroenviornmental forces a. political and legal b. macroeconomic c. demographic d. social e. global When there is a minimal need for close long-term cooperation between a company and its suppliers, which of the following strategies is most appropriate? a. full vertical integration b. taper vertical integration c. competitive bidding d. long-term contracting In a typical scenario planning exercise a. managers entirely depend on employee feedback b. managers formulate plans based on "what if" situations about the future c. managers try to come up with alternative plans after a business model has failed d. managers do a postmortem to understand what went wrong with a strategy e. the corporate level management sets targets for functional-level managers as an industry enters the shakeout stage: a. rivalry among companies decline b. demand grows at a high rate c. excess productive capacity emerges d. prices of products increase e. new entrants come into the market ________ is the process of acquiring or merging with industry competitors to achieve competitive advantages a. tapered integration b. vertical integration c. horizontal integration d. franchising e. diversification Systematic errors in the decision-making process are most often caused by: a. inadequate information b. information overload c. cognitive biases of decision makers d. poor data collection procedures e. the devils advocacy method A consolidated industry structure: a. consists of a large number of small companies b. can be seen in agriculture, dry cleaning, health clubs and real estate brokerage c. consists of few companies that are in a position to determine industry price d. provides no scope for oligopoly to exist e. is characterized by low-entry barriers and commodity-type products GM typically solicits bids from global suppliers to produce a particular component and awards a 1-year contract to the supplier that submits the lowest bid. At the end of the year, a contract is once again put out for bid, and once again the lowest cost supplier is most likely to win the bid. Which of the following is GM using? a. Strategic outsourcing b. Competitive bidding c. Strategic bidding d. Long-term alliance e. Hostage taking A sector refers to a group of: a. government regulators b. closely related industries c. a group of manufacturing plants of a company based in the same location d. business units owned by a single firm e. companies that manufacture similar products under different brand names Which of the following is not a benefit of vertical integration? a. facilitated investments in specialized events b. enhanced product quality c. improved scheduling d. lowered cost structure e. strengthened differentiation advantage The extent of rivalry among established companies is lowest when: a. the industry's product is a commodity b. exit barriers are substantial c. the industry is entering a decline stage d. demand is growing rapidly e. the fixed costs are high When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may find itself a. locked into an old, inefficient technology b. able to sell its products at continually lower prices c. increasing returns on assets d. establishing a monopoly in the industry e. lowering its cost structure List all the forces in the competitive forces model: Bargaining power of suppliers bargaining power of buyers rivalry among established firms in the industry threat of entry threat of substitutes power of compliment providers In Building your company's vision, each major component in turn has two-sub components. What are these four sub-components? Big Hair Audacious Goal Vivid Description Core purpose Core Values In his article, "Sustainable Advantage," Ghemawat points out that sustainable advantage falls into 3 categories. What are these three categories? Size: size in target market Access: superior access to resources or customers Options: restrictions on competitors options In their article, "when and when not to vertically integrate," Stuckey and White gave four reasons to vertically integrate. What are these four reasons? The market is too risky and unreliable Companies in adjacent stages of the industry chain have more market power than companies in your stage It would raise barriers to entry or allow price discrimination across customer segments The market is young, or dying and people are pulling out of adjacent stages Capabilities refer to a company's: a. manufacturing equipment b. reputation c. skills at using resources effectively d. competitors who are capable of offering greater variety of products e. patents, copyrights and trademarks One of the primary roles of research and development in achieving superior efficiency is: a. designing products for ease of manufacture b. facilitating cooperation among functions c. limiting customer defection rates by building brand loyalty d. instituting training programs to build skills e. implementing pay for performance Info Tech. makes complex telecommunications products, such as cellular telephones. Since this company has a distinctive competency in research and development, it should try to differentiate its product through: a. reliability b. advertising c. service d. innovation e. low pricing Which of the following is not true regarding a company's distinctive competencies: a. They represent the unique strengths of a company b. they refer to company strengths that competitors cannot easily match or imitate c. they form the bedrock of a company's strategy d. they can be based in any of the value creation functions of the company e. they are shared by many firms in the industry resources: a. are only the tangible assets available to a company b. can be both tangible and intangible c. are harder for a company to copy than capabilities are d. do not include, patents, copyrights and trademarks e. are considered valuable only if they increase a company's costs the silicon personal tech corp. produces a variety of communication and personal computing products for various customer groups and has grown rapidly over the last few years. Which of the following strategies is the firm most likely pursuing? a. focus b. differentiation c. share building d. cost leadership e. product substitution benchmarking can be defined as the practice of: a. monitoring activities related to the design, creation, and delivery of a product, its marketing and its support and after-sales service b. developing products that are new to the world or have superior attributes to existing products in the market c. measuring the time that it takes for a good to be delivered or a service to be performed d. measuring a company against the products, practices, and services of some of its most efficient global competitors e. analyzing the financial position of a company and creating the income statements and the balance sheets Quality can best be thought of as: a. a competency in investigating and identifying needs of customers b. the attributes that customers perceive as superior in a product c. product development projects driven by customer needs d. the quantity of inputs that it takes to produce a given output e. unit cost reductions associated with a large scale of output When a company recognizes that the needs of one market segment is not the same as another and accordingly customizes its product offerings, it is said to be pursuing: a. stuck in the middle strategy b. rapid growth strategy c. differentiation strategy d. focus strategy e. low-cost strategy Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is: a. 50 b. 75 c. 125 d. 150 e. 225 If a product is to be properly commercialized, there must be integration between: a. research and development, materials management b. marketing and materials management c. R&D and marketing d. finance and marketing e. marketing and after-sales support a company that follows the _______ strategy customizes its offering to a particular niche in order to outshell its rivals a. focused differentiation b. broad low-cost c. market standardization d. rapid growth e. broad differentiation The failure rate of innovative products is: a. low b. nil c. high d. moderate e. too difficult to asses With regard to customer defection, which of the following statements is incorrect? a. defection rates are determined by customer loyalty b. the longer a company holds on to a customer, the greater is the volume of customer generated unit sales c. lowering customer defection rate allows a company to achieve a lower cost structure d. the longer a company retains a customer the higher the average unit cost of each sale e. there is a positive relationship between the length of time that a customer stays with the company and profit per customer when a company produces a wide range of products for various customer groups, it is following a _________ strategy a. cost leadership b. customer retention c. market concentration d. differentiation e. share building _____ refers to unit cost increases associated with a large scale of output a. economies of scale b. learning effects c. diseconomies of scale d. flexible manufacturing e. mass customization Cool Looks produces a variety of clothing for various customer groups. Which of the following strategies is the firm most likely pursuing? a. cost leadership b. differentiation c. product substitution d. focus e. share building Ford Motors developed the Explorer sports utility vehicle, the number 1 selling sports utility vehicle in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies? A. Research and development B. Human resources C. Materials management D. Marketing and sales E. Company infrastructure The term value innovation is used to describe: a. the way the company decides to group customers based on important differences in their needs to gain competitive advantage b. a business's overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different positioning strategies that can be used in different industry settings c. what happens when innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than was previously thought possible d. what happens when a company decides to ignore different segments, and produces a standardized product for the average customer e. what happens when a company decides to serve many segments, or even the entire market, producing different offerings for different segments Kodak possesses the leading imaging technology. This technology has allowed the company to differentiate its products from those offered by rivals. Imaging technology is Kodak's: a. corporate infrastructure b. support activity c. distinctive competence d. manufacturing activity e. information system Industry dynamism refers to: a. the gradual erosion of a company's customer base over time b. shifts in product and profitability c. increasing per-unit cost d. a company's difficulty in changing its strategies and structure e. rapidly changing industry environment distinctive competencies directly shape the: a. business-level