Strategic Mgmt Exam 1 A+ Pass Solved Correctly

Strategic Mgmt Exam 1 A+ Pass Solved Correctly How should firms in an industry defend against substitutions? - Answer- Increase incumbent product buyer surplus Increase customer switching costs What are the 3 ways firms can slow imitation? - Answer- Property rights over key resources establishing causal ambiguity regarding executing capabilities sunk costs in developing a brand or capability What are the underlying causes of the concentration-profitability relationship? - Answer- More efficient Interact strategically without cooperating Collude to increase profits Cartels fail at a remarkably high rate, why? - Answer- An inability to prevent entry into the business Uncontrolled cheating or defection Fluctuations in demand Bargaining problems among the cartel members Firms that repeatedly receive benefits from cooperation are said to have developed a - Answer- relational capability Five forces that drive down profitability are: - Answer- rivalry buyer power supplier power potential entry substitutes The basic conditions for collusion in a concentrated industry are: - Answer- mutual familiarity repeated interaction consistent roles strategic complementarity Which of the following is threatened by industry evolution? a. firms pursuing value advantage only b. firms pursuing cost advantage only c. all types of competitive advantage d. firms in niche markets only - Answer- C Path dependence is mostly determined by? a. the firms history of innovations b. the firms location in different regulatory environments c. the firms labor costs d. the CEOs compensation - Answer- A 10. The buyer's surplus is: a. a source of customer sensitivity b. the difference between a product's value and its market price c. the difference between the cost to produce the product and its market price d. a firm's total economic contribution - Answer- B 1. What determines the value of a product? a. its technology b. its market price c. the price the customer would be willing to pay for it in the absence of competing products and given budget constraints d. the market prices of competing products - Answer- C 2. Which of the following are isolating mechanisms? a. causal ambiguity b. property rights c. search costs d. all of the above - Answer- D 3. Which of the following are value drivers: 1. the product's technology, 2. the firm's risk assumption, 3. economies of scale, 4. network externalities? a. 1 and 2 b. 1, 2 and 3 c. 1, 2 and 4 d. all - Answer- C 4. Which of the following are cost drivers: 1. the learning curve, 2. complementary products, th of product line, 4. economies of scope? a. 1 and 2 b. 3 and 4 c. 1 and 4 d. 1, 3 and 4 - Answer- C 5. A firm creates a one-sided network externality when: a. customers using the product speak to each other b. the benefit customers receive from using the firm's product increases as new customers are added c. the products are produced using network technologies d. all its products are connected - Answer- B 6. Time compression diseconomies are larger when: a. a firm's capability's contribution to a its V-C position is path dependent b. a firm's capability resides win an individual employee c. the knowledge underlying a firm's capability is organization specific. d. a and c - Answer- D 7. Which of the following value drivers is less likely to contribute to customer retention through switching costs? a. customization b. product line breadth c. network externalities d. brand - Answer- D 8. If a firm is neither a cost leader nor a differentiator, it is called a. competitively disadvantaged b. poorly positioned c. stuck in the middle d. lost in competitive space - Answer- C 9. What determines a superior market position compared to rivals? a. the difference between value and cost b. superior technology c. economies of scope d. cost leadership - Answer- A 1. In which of these three sectors of the economy - manufacturing, services, transportation - is the effect of business strategy on performance the smallest? a. manufacturing b. services c. transportation d. all the same - Answer- C 2. Which of the following industry forces is not one of Porter's five forces? a. rivalry b. supplier power c. complements d. substitutes - Answer- C 3. Which of the following conditions is not necessary for perfect competition? a. there are many competitors b. exit is relatively costless c. all firms have the same cost structure d. all firms are the same age - Answer- D