MQM 385 Actual Questions and Correct Answers
Q1
Technological disruption occurs when the manufacturing plants of a company fail. compels
firms to adopt new business models. mostly affects the new entrants. is typically a temporary
phase lasting a few months. is a problem primarily in embryonic industries
Answer: B. compels firms to adopt new business models.
Q2
To make sure that ethical issues are considered in business decisions: companies should
eliminate the principal-agent approach. top managers should generously grant stock options.
companies should hire and promote employees with a strong focus on economic gains.
companies should have a no-layoff policy. top managers should articulate and model ethical
behaviors.
Answer: E. top managers should articulate and model ethical behaviors.
Q3
Mobility barriers: inhibit the movement of companies between strategic groups in an industry.
are factors that operate outside of an industry. exclude the barriers to entry into a group and
the barriers to exit from a company's existing group. inhibit companies from shifting between
suppliers for the raw materials. allow industries to change their strategy and compete in that
strategic group.
Answer: A. inhibit the movement of companies between strategic groups in an
industry.
Q4
Which of the following is an advantage of franchising? It frees companies from the task of
monitoring and assisting operations at franchisees. It ensures tight control over quality. It
involves low development costs and risks. It enables the company to collect all the profits made
by the franchisees. It enables companies to engage in global strategic coordination.
Answer: C. It involves low development costs and risks.
Q5
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: stuck-in-the-middle
strategy. rapid-growth strategy. differentiation strategy. focus strategy. low-cost strategy.
Answer: C. differentiation strategy.
, Q6
Which of the following is a disadvantage of franchising? It restricts the franchisor from
expanding. It results in the franchisor taking all the financial burden of the franchisees. It results
in the delegation of authority to franchisees, and the franchisor may not enjoy complete control.
It does not provide sufficient incentive to the franchisees to run operations effectively because
franchisees are not entrepreneurs. It requires the franchisees to create a new business model
and plan strategies.
Answer: C. It results in the delegation of authority to franchisees, and the franchisor
may not enjoy complete control.
Q7
Market segments are groups of: companies that follow a similar business model and cater to
the needs of similar customers. closely related industries. companies within a market that
produce similar goods or services which are close substitutes of each other. large companies
that are in a position to determine industry price. customers within a market that can be
different from each other on the basis of their distinct attributes and specific demands.
Answer: E. customers within a market that can be different from each other on the
basis of their distinct attributes and specific demands.
Q8
Common exit barriers include: low fixed costs associated with leaving an industry. emotional
attachments to an industry. economic independence of a company minimal investment in
assets like specific machines. the lack of bankruptcy regulations.
Answer: B. emotional attachments to an industry.
Q9
Self-managing work teams: increase per-unit costs of manufactured items. perform all
workplace tasks except the making of hiring decisions. increase the cycle time of manufacturing
items. tend to increase productivity and product quality. require team members to learn only
one task and specialize in that alone.
Answer: D. tend to increase productivity and product quality.
Q10
Vertical disintegration occurs when: a company decides to exit industries to its core industry. a
company decides to acquire its suppliers and distributors. a company decides to sell its
business model to another company. a company uses its capital resources to purchase its
competitor. a company takes advantage of another company it does business with after the
other company has made an substantial investment in assets to meet the needs of the
company.
Answer: B. a company decides to acquire its suppliers and distributors.
Q1
Technological disruption occurs when the manufacturing plants of a company fail. compels
firms to adopt new business models. mostly affects the new entrants. is typically a temporary
phase lasting a few months. is a problem primarily in embryonic industries
Answer: B. compels firms to adopt new business models.
Q2
To make sure that ethical issues are considered in business decisions: companies should
eliminate the principal-agent approach. top managers should generously grant stock options.
companies should hire and promote employees with a strong focus on economic gains.
companies should have a no-layoff policy. top managers should articulate and model ethical
behaviors.
Answer: E. top managers should articulate and model ethical behaviors.
Q3
Mobility barriers: inhibit the movement of companies between strategic groups in an industry.
are factors that operate outside of an industry. exclude the barriers to entry into a group and
the barriers to exit from a company's existing group. inhibit companies from shifting between
suppliers for the raw materials. allow industries to change their strategy and compete in that
strategic group.
Answer: A. inhibit the movement of companies between strategic groups in an
industry.
Q4
Which of the following is an advantage of franchising? It frees companies from the task of
monitoring and assisting operations at franchisees. It ensures tight control over quality. It
involves low development costs and risks. It enables the company to collect all the profits made
by the franchisees. It enables companies to engage in global strategic coordination.
Answer: C. It involves low development costs and risks.
Q5
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: stuck-in-the-middle
strategy. rapid-growth strategy. differentiation strategy. focus strategy. low-cost strategy.
Answer: C. differentiation strategy.
, Q6
Which of the following is a disadvantage of franchising? It restricts the franchisor from
expanding. It results in the franchisor taking all the financial burden of the franchisees. It results
in the delegation of authority to franchisees, and the franchisor may not enjoy complete control.
It does not provide sufficient incentive to the franchisees to run operations effectively because
franchisees are not entrepreneurs. It requires the franchisees to create a new business model
and plan strategies.
Answer: C. It results in the delegation of authority to franchisees, and the franchisor
may not enjoy complete control.
Q7
Market segments are groups of: companies that follow a similar business model and cater to
the needs of similar customers. closely related industries. companies within a market that
produce similar goods or services which are close substitutes of each other. large companies
that are in a position to determine industry price. customers within a market that can be
different from each other on the basis of their distinct attributes and specific demands.
Answer: E. customers within a market that can be different from each other on the
basis of their distinct attributes and specific demands.
Q8
Common exit barriers include: low fixed costs associated with leaving an industry. emotional
attachments to an industry. economic independence of a company minimal investment in
assets like specific machines. the lack of bankruptcy regulations.
Answer: B. emotional attachments to an industry.
Q9
Self-managing work teams: increase per-unit costs of manufactured items. perform all
workplace tasks except the making of hiring decisions. increase the cycle time of manufacturing
items. tend to increase productivity and product quality. require team members to learn only
one task and specialize in that alone.
Answer: D. tend to increase productivity and product quality.
Q10
Vertical disintegration occurs when: a company decides to exit industries to its core industry. a
company decides to acquire its suppliers and distributors. a company decides to sell its
business model to another company. a company uses its capital resources to purchase its
competitor. a company takes advantage of another company it does business with after the
other company has made an substantial investment in assets to meet the needs of the
company.
Answer: B. a company decides to acquire its suppliers and distributors.
