RSM 392 Strategic Management
Multiple Choice Questions
Please circle the right answer for each question. There is only one right answer for each question.
1. How did Coke and Pepsi increase the barriers to entry into the Carbonated Soft-Drinks
(CSD) industry?
a. They spent massive amounts on advertising to create strong brands.
b. They expanded into international markets, like South America.
c. They started producing and selling bottled water.
d. They increased the price of concentrate.
2. Coke and Pepsi were able to lower their immediate buyers’ negotiating power (i.e. the
power of those companies who bought concentrate from them) by:
a. Competing intensely with each other.
b. Allowing new CSD brands to proliferate in the 1980s.
c. Establishing the franchising system, which locked bottlers into exclusive long-
term contracts.
d. Using only commodities in the production of concentrate.
3. Which of the following activities was not a threat to Wal-Mart’s low-cost strategy and
competitive advantage?
a. Dis-economies of scale associated with managing increasingly complex
international operations.
b. Being the largest discount retailer in the US.
c. Running out of rural markets and venturing into suburban/urban areas.
d. Imitation by competitors of the technologies Wal-Mart used and developed to
coordinate its logistics and operations.
4. How did Wal-Mart get employees to “live to work for the glory of Wal-Mart”?
a. They didn’t spend much on advertising.
b. They invested in sophisticated satellite communication technology.
c. They located their stores in rural areas.
d. They developed a strong inclusive culture around employee participation,
complemented by pay incentives.
5. Cirque du Soleil was able to charge customers more per ticket than the traditional circus
because:
a. It eliminated star acts from its shows.
b. It did not allow concession sales during shows.
c. It shifted the buyer group away from children towards adults.
d. They kept clowns and humor in their shows.
, 6. In the value creation and capture model, a firm’s added value is defined as:
a. The smallest payment that suppliers will accept.
b. The difference between buyer’s willingness to pay and supplier’s opportunity
cost.
c. The largest amount that customers are willing to pay for a product.
d. A firm’s unique contribution to value creation.
7. According to the Five Forces Framework, the bargaining power of suppliers against the
firms that buy their products is higher when:
a. There are few substitutes for the suppliers’ product.
b. There is a threat of backward integration by the firms that buy the supplier’s
product.
c. There are many suppliers.
d. The suppliers’ product is an undifferentiated commodity.
8. In the Five Forces Framework, which of the following factors tends to directly increase
rivalry in an industry:
a. There are many substitutes for the industry’s product.
b. Slow industry growth (i.e. stagnant or falling demand for the industry’s product).
c. The number of firms in the industry decreases.
d. Barriers to exit for firms in the industry are low (i.e. it’s easy to liquidate assets
and exit the industry).
9. Which of the following companies benefits from demand-side economies of scale (also
known as network effects)?
a. McCain Foods (producer of frozen foods, like frozen French fries)
b. Air Canada
c. The Ford Motor Company
d. Facebook
10. When IKEA offers babysitting services at its stores, this is a case of:
a. Cutting operating costs.
b. Distracting potential customers.
c. Creating new market space by integrating features from an industry that is a
complement.
d. Improving the quality of their core product (i.e. the furniture).
Multiple Choice Questions
Please circle the right answer for each question. There is only one right answer for each question.
1. How did Coke and Pepsi increase the barriers to entry into the Carbonated Soft-Drinks
(CSD) industry?
a. They spent massive amounts on advertising to create strong brands.
b. They expanded into international markets, like South America.
c. They started producing and selling bottled water.
d. They increased the price of concentrate.
2. Coke and Pepsi were able to lower their immediate buyers’ negotiating power (i.e. the
power of those companies who bought concentrate from them) by:
a. Competing intensely with each other.
b. Allowing new CSD brands to proliferate in the 1980s.
c. Establishing the franchising system, which locked bottlers into exclusive long-
term contracts.
d. Using only commodities in the production of concentrate.
3. Which of the following activities was not a threat to Wal-Mart’s low-cost strategy and
competitive advantage?
a. Dis-economies of scale associated with managing increasingly complex
international operations.
b. Being the largest discount retailer in the US.
c. Running out of rural markets and venturing into suburban/urban areas.
d. Imitation by competitors of the technologies Wal-Mart used and developed to
coordinate its logistics and operations.
4. How did Wal-Mart get employees to “live to work for the glory of Wal-Mart”?
a. They didn’t spend much on advertising.
b. They invested in sophisticated satellite communication technology.
c. They located their stores in rural areas.
d. They developed a strong inclusive culture around employee participation,
complemented by pay incentives.
5. Cirque du Soleil was able to charge customers more per ticket than the traditional circus
because:
a. It eliminated star acts from its shows.
b. It did not allow concession sales during shows.
c. It shifted the buyer group away from children towards adults.
d. They kept clowns and humor in their shows.
, 6. In the value creation and capture model, a firm’s added value is defined as:
a. The smallest payment that suppliers will accept.
b. The difference between buyer’s willingness to pay and supplier’s opportunity
cost.
c. The largest amount that customers are willing to pay for a product.
d. A firm’s unique contribution to value creation.
7. According to the Five Forces Framework, the bargaining power of suppliers against the
firms that buy their products is higher when:
a. There are few substitutes for the suppliers’ product.
b. There is a threat of backward integration by the firms that buy the supplier’s
product.
c. There are many suppliers.
d. The suppliers’ product is an undifferentiated commodity.
8. In the Five Forces Framework, which of the following factors tends to directly increase
rivalry in an industry:
a. There are many substitutes for the industry’s product.
b. Slow industry growth (i.e. stagnant or falling demand for the industry’s product).
c. The number of firms in the industry decreases.
d. Barriers to exit for firms in the industry are low (i.e. it’s easy to liquidate assets
and exit the industry).
9. Which of the following companies benefits from demand-side economies of scale (also
known as network effects)?
a. McCain Foods (producer of frozen foods, like frozen French fries)
b. Air Canada
c. The Ford Motor Company
d. Facebook
10. When IKEA offers babysitting services at its stores, this is a case of:
a. Cutting operating costs.
b. Distracting potential customers.
c. Creating new market space by integrating features from an industry that is a
complement.
d. Improving the quality of their core product (i.e. the furniture).
