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Indicate whether the statement is true or false.
1. For firms that adopt innovation as a core component of their strategy, price, not product performance, is the major
selling feature.
a. True
b. False
2. Customer segments cannot be based on sales volume and profitability.
a. True
b. False
3. Professor Terry Hill’s operations strategy framework cannot be applied to service-providing firms.
a. True
b. False
4. A strategy of quality improvement often leads to increased short-run profitability.
a. True
b. False
5. The core competencies of an organization are the strengths that are unique to that organization.
a. True
b. False
6. A small change in a firm’s targeted markets or strategic direction usually has little impact on the value chain.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
7. Which of the following is a difference between the evaluation of goods and the evaluation of services by customers?
a. Customers rely more on information from nonpersonal sources when evaluating services, whereas they rely more
on information from personal sources when evaluating goods.
b. Customers perceive lesser risks when buying services, whereas they perceive greater risks when buying goods.
c. Customers cannot look at or touch services prior to the purchase decision, whereas they can feel a product prior to
purchase.
d. Customers adopt innovations in services faster, whereas they resist adopting innovations in products.
8. Credence attributes stem from _____.
a. the design of products
b. the nature of services
c. drive key operational controls
d. operations design choices
9. Families of goods or services having similar characteristics or methods of creation are called _____.
a. core competencies
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b. order qualifiers
c. strategic business units
d. customer benefit packages
10. Which of the following is one of the key areas that is addressed by operations design choices?
a. Functional plans and control systems
b. Learning and innovation systems
c. Value chain integration and outsourcing
d. Quality control and mass customization
11. According to several research studies, which of the following findings is true of the role of quality in gaining
competitive advantage?
a. Quality is negatively related to return on investment for almost all kinds of market situations.
b. A strategy of quality improvement is usually accompanied by increased short-run profitability.
c. Quality has a trivial effect on returns in most kinds of market situations.
d. Businesses offering premium-quality goods usually have large market shares.
12. _____ sustainability is driven by ethics and human ideals of protecting the planet and its people for the well-being of
future generations.
a. Environmental
b. Social
c. Economic
d. Political
13. Which of the following statements is true of quality as a key competitive priority?
a. It has evolved over the years and now is generally considered an order qualifier.
b. It is usually improved by businesses to increase short-run profitability.
c. It is negatively related to a higher return on investment for almost all kinds of market situations.
d. It suffers increasingly with time reductions in a supply chain.
14. Rues and West Inc. manufactures various electronic goods. It uses mass-customization strategies to make its products
available to all consumers at any place in the world. It also manufactures various electronic goods in the same assembly
line. Given this information, Rues and West Inc.’s operations are aligned around _____.
a. sustainability
b. flexibility
c. reliability
d. durability
15. An operations strategy can be defined as:
a. the set of decisions across the value chain that supports the implementation of higher-level business strategies.
b. a strategy necessary to define the businesses in which a corporation will participate.
c. a strategy necessary to develop plans for the acquisition and allocation of resources among businesses.
d. the decisions management must make as to what type of process structure is best suited to produce goods or create
services.
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16. _____ is the discovery and practical application or commercialization of a device, method, or idea that differs from
existing norms.
a. Measurement
b. Learning
c. Innovation
d. Diversity
17. Eric is admitted to a hospital to undergo a surgery for hernia. He is unable to discern the expertise of his surgeon
before the surgery nor evaluate the quality of the service after the surgery. In this case, the expertise of Eric’s surgeon is an
example of a(n) _____ attribute.
a. search
b. experience
c. credence
d. variant
18. Brenda is planning a vacation to an exotic island. Though she has pre-planned her accommodation and itinerary, she is
unsure of how the vacation will turn out. In this case, Brenda’s vacation is high in _____ attributes.
a. search
b. experience
c. credence
d. variant
19. _____ is an example of innovation in services.
a. Optical fibers
b. Internet banking
c. Customer satisfaction surveys
d. Smart tags
20. Which of the following statements is true of sustainability?
a. Sustainability is not an organizational strategy.
b. Environmental sustainability is driven by stakeholders such as the community, green advocacy groups, and the
government.
c. Sustainability is narrower than a competitive priority.
d. Economic sustainability is driven by ethics and human ideals of protecting the planet and its people for the well-
being of future generations.
21. Applying Professor Terry Hill’s generic strategy framework to McDonald’s, the operating design choices of resource
scheduling, inventory placement and control, and standardized operational and job procedures best relate to the corporate
objective of _____.
a. profitable growth
b. operational excellence
c. operational sustainability
d. operational diversity
22. According to Professor Terry Hill’s generic strategy framework, which of the following statements is true of the first
loop?
a. It ties together an organization’s corporate strategy and marketing strategy.
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b. It describes how operations evaluate the implications of competitive priorities in terms of process choice.
c. It determines if process choice decisions are consistent with infrastructure decisions.
d. It represents operations’ input into the corporate and marketing strategy.
23. Which of the following statements is true of mass customization?
a. It involves the commercialization of a device, method, or idea that differs from existing norms.
b. Flexibility is manifested in mass-customization strategies that are becoming increasingly prevalent today.
c. It requires companies to align their operations around quality.
d. Goods and services produced by a firm through mass customization are available only in the country where the
firm is located.
24. Identify a true statement about corporate strategy of large organizations.
a. It defines the focus for strategic business units of an organization.
b. It provides the means by which business strategies are accomplished.
c. It is necessary to define the businesses in which an organization will participate.
d. It defines how an organization’s processes are designed and organized.
25. The style and fit of a jacket can be classified as a(n) _____ attribute.
a. search
b. experience
c. credence
d. variant
26. _____ attributes are those that a customer can determine prior to purchasing goods or services.
a. Search
b. Experience
c. Credence
d. Variant
27. Basic customer expectations are generally considered the minimum performance level required to stay in business and
are often called _____.
a. order qualifiers
b. credence attributes
c. experience attributes
d. order winners
28. _____ are the decisions management must make as to what type of process structure is best suited to produce goods or
create services.
a. Operations design choices
b. Competitive priorities
c. Core competencies
d. Credence attributes
29. Which of the following is considered an order winner in an automobile?
a. A comfortable seating arrangement that is similar to other automobiles
b. A driver-side air bag that most high-end automobiles have
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c. A good-quality radio particular to that brand of automobile
d. A collision avoidance system particular to that design of automobile
30. Competitive advantage can be defined as:
a. the ability of customers to properly perform and co-produce their part of a service.
b. a firm’s ability to achieve market and financial superiority over its competitors.
c. a pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.
d. a firm’s ability to commercialize a device, method, or idea that differs from existing norms.
31. _____ often drive simultaneous improvements in quality, cost, and productivity.
a. Credence attributes
b. Time reductions
c. Corporate strategies
d. Mass standardization
32. At Ritufa Food Corp., flexibility is the key competitive priority. Food products are manufactured according to
customers’ requirements, at any volume and globally delivered at any time. Given this information, Ritufa Food Corp.’s
operations strategy is based on _____.
a. compensation
b. mass customization
c. mass standardization
d. cost reduction
33. Sustainability is best described as a(n) _____.
a. idea that differs from existing norms
b. pattern that integrates an organization’s major goals
c. organizational strategy
d. competitive priority
34. _____ represent the strategic emphasis that a firm places on certain performance measures and operational capabilities
within a value chain.
a. Competitive priorities
b. Order satisfiers
c. Search attributes
d. Order winners
35. Which of the following companies is most likely to have a competitive advantage in its market?
a. Porthis Inc., a sports good manufacturer that treats the market as a single segment
b. Singletone Corp., a stationery manufacturer that reduces mass customization
c. Huran Co., a clothing manufacturer that focuses on the organization’s capability rather than customers’ needs or
wants
d. Greyon Inc., a computer manufacturer that builds and leverage operational capabilities to support desired
priorities
36. Which of the following companies is most likely to have a true understanding of customer wants and needs?
a. Harlose Suits, where customer benefit packages include more order qualifiers than order winners
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b. Magnira Jewelry, where all customers are provided with the same type of jewelry
c. Blyrie Apparels, where customers are segmented into groups based on buying behavior and demographics
d. Scorla Automobiles, where customers are provided with low quality products at prices slightly lower than the
standard prices
37. _____ attributes are any aspects of a good or service that a customer must believe in but cannot personally evaluate
even after purchase and consumption.
a. Search
b. Experience
c. Credence
d. Variant
38. A(n) _____ enterprise is an organization that sources, markets, and produces its goods and services in several
countries to minimize costs, and to maximize profit, customer satisfaction, and social welfare.
a. external distribution
b. complex
c. sustainable
d. multinational
39. Goods and service features and performance characteristics that differentiate one customer benefit package from
another and win the customer’s business are called _____.
a. order qualifiers
b. credence attributes
c. experience attributes
d. order winners
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Answer Key
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