A(n) ________ is any individual, group, or organization outside a firm that seeks to
reduce the level of that firm’s performance.
A) environmental threat
B) environmental opportunity
C) environmental equalizer
D) competitive advantage
Answer:
A ________ is a form of nonequity alliance that exists when one firm allows another to
use its brand name to sell its products.
A) supply agreement
B) distribution agreement
C) licensing agreement
D) joint venture
Answer:
Firms in a declining industry that engage in a long, systematic phased withdrawal from
the industry, extracting as much value as possible during the withdrawal period, are
following a(n) ________ strategy.
A) niche
B) expansion
C) divestment
D) harvest
Answer:
________ include a variety of relatively minor corporate governance changes that, in
principle, are supposed to make it more difficult to acquire a target firm.
A) Shark repellents
B) White knights
C) Greenmail
D) Poison pills
Answer:
Sematech is a producer of computer chips. To gain an advantage over other computer
chip makers, Sematech focuses on reducing its costs below all of its competitors and
has aligned its value chain accordingly. Recently, several of Sematech’s competitors
have begun to reduce the company’s competitive advantage. In response to this threat,
Sematech has decided to add production capacity in an effort to lower costs. Sematech
is pursuing which strategy?
A) cost-leadership business strategy
B) product-differentiation business strategy
C) cost-leadership corporate strategy
D) product-differentiation corporate strategy
Answer:
Which of the following is less likely to be a rare source of cost advantage?
A) technological software
B) learning-curve economies of scale
C) differential low-cost access to productive inputs
D) policy choices
Answer:
Thermacorp’s 17.3% ROE is an example of a(n) ________ ratio.
A) liquidity
B) profitability
C) activity
D) leverage
Answer:
The level of direct competition in the hardwood furniture industry can best be described
as
A) low because of the numerous firms in the industry and the slowing growth rate.
B) low because of the slowing growth rate and the competition from composite wood
furniture.
C) high because of the numerous firms in the industry and the slowing growth rate.
D) moderate because the slowing growth rate offsets the numerous firms in the industry.
Answer:
Frequent price cutting by firms in an industry, frequent introduction of new products by
firms in an industry and intense advertising campaigns are indications of
A) high power of buyers.
B) high threat of new entrants.
C) high levels of direct competition.
D) high threat of substitutes.
Answer:
All of the following are elements of the general environment except
A) technological trends.
B) demographic trends.
C) industrial trends.
D) cultural trends.
Answer:
A firm’s formal reporting structure, its formal and informal planning and its controlling
and coordinating systems are examples of which type of resources?
A) financial resources
B) physical resources
C) human resources
D) organizational resources
Answer:
ESPN’s development of an extensive offering of X-Games coverage that is unmatched
by any other sports outlet is an example of which element of the VRIO framework?
A) organization
B) imitability
C) competitive parity
D) rarity
Answer:
Cost advantages based on learning-curve economies are
A) rare, but they usually are not costly to duplicate.
B) costly to duplicate, but they usually are not rare.
C) both rare and usually costly to duplicate.
D) not rare and usually are not costly to duplicate.
Answer:
The only person in a functional organization who has to have a multifunctional
perspective is the
A) CFO.
B) CEO.
C) COO.
D) marketing manager.
Answer:
A process is said to be ________ when events early in the evolution of a process have
significant effects on subsequent events.
A) causally ambiguous
B) path dependent
C) socially complex
D) path independent
Answer:
The ________ is a subcommittee of the board of directors that maintains the
relationship between the firm and external capital markets.
A) nominating committee
B) audit committee
C) personnel and compensation committee
D) finance committee
Answer:
A(n) ________ approach to vertical integration suggests that rather than vertically
integrating into a business activity whose value is highly uncertain firms should not
vertically integrate and instead should form a strategic alliance to manage this
exchange.
A) alliance-based
B) flexibility-based
C) firm capabilities-based
D) opportunism-based
Answer:
The mission statements of visionary firms
A) suggest that profit maximizing, while an important corporate objective, is not their
primary reason for existence.
B) suggest that profit maximizing is neither an important corporate objective nor their
primary reason for existence.
C) suggest that profit maximizing is their primary reason for existence.
D) suggest that value maximizing is their primary reason of existence.
Answer:
A firm that earns its cost of capital is said to be earning
A) above normal economic performance.
B) normal economic performance.
C) below normal economic performance.
D) normal accounting performance.
Answer:
If the average ROE in the heating and cooling industry is 10.1%, and Thermacorp’s
ROE is 17.3%, Thermacorp is said to have
A) below average accounting performance.
B) above average economic performance.
C) above average accounting performance.
D) below average economic performance.
Answer:
eBay, the online auction company, has an impressive portfolio of cooperative
agreements. This portfolio includes an agreement with the U.S. Postal Service to
facilitate the shipping of goods purchased through eBay auctions, an agreement to allow
MBNA to use eBay’s name on a credit card, and an agreement in an online auction
company in Korea that is supplemented with an investment by eBay in the Korean
partner. In addition, at one time eBay had formed an independent firm, called eBay
Australia and New Zealand, with an Australian company known as ecorp.
Which of the following reasons helps explain why eBay may have preferred to enter
into an alliance to enter the Korean online auction industry rather than going it alone?
A) eBay’s Korean partner possesses capabilities that are valuable and rare but not costly
to imitate.
B) The level of transaction-specific investments required to enter the Korean online
auction industry is low.
C) There is little uncertainty about the future of the Korean online auction industry.
D) The level of transaction-specific investments required to enter the Korean online
auction industry is moderate.
Answer:
A firm implements a ________ when it operates in multiple industries or markets
simultaneously.
A) vertical integration strategy
B) corporate diversification strategy
C) business diversification strategy
D) product-differentiation strategy
Answer:
A firm’s ________ is its long-term purpose that defines both what it aspires to be in the
long run and what it wants to avoid in the meantime.
A) mission
B) strategy
C) objective
D) goal
Answer:
If one of the suppliers that Digipics purchases its components from purposefully
delivered a batch of its product that was substandard but did not inform Digipics of this,
this would be an example of
A) flexibility.
B) opportunism.
C) uncertainty.
D) vertical integration.
Answer:
Learning-curve-cost advantages are
A) restricted only to manufacturing firms.
B) restricted only to firms in services industries.
C) restricted only to firms in extraction industries.
D) not restricted to manufacturing.
Answer:
If TeleCo were to enter into a strategic alliance with a partner that promised it could
deliver a high quality wireless infrastructure when in fact the potential partner had
neither the skills nor abilities to provide this infrastructure, TeleCo could be said to be
impacted by
A) moral hazard.
B) adverse selection.
C) holdup.
D) tacit collusion.
Answer:
Theories of how to gain competitive advantage in an industry that emerge over time or
that have been radically reshaped once they are initially implemented are known as
A) emergent strategies.
B) objective strategies.
C) planned strategies.
D) ad hoc strategies.
Answer:
At the beginning of 2001, Peach Computers competed exclusively in the computer
industry and generated approximately 96% of its revenue from the sales of computers
and computer-related software and approximately 4% of its revenues were generated
from sales of other peripherals. Further, of these revenues, 60% was from sales in the
U.S., 30% was from sales in Europe, 7% was from sales in Asia and 3% was from other
areas. In October 2001, Peach entered the personal electronics industry by introducing a
new MP3 player known as the PeachPit. In developing and selling the PeachPit, Peach
Computers was able to use many of the same R&D facilities, suppliers, production
facilities, and distribution and sales outlets as the computers and software Peach
Computers traditionally sold. By 2003, the PeachPit MP3 Player, accessories for the
unit, and sales of songs on Peach Computers’ NectarTunes website accounted for 35%
of Peach Computers’ revenues.
One of the limits of the economies of scope that Peach Computers is leveraging in its
diversification strategy is
A) they may limit the ability of a particular business to meet specific customers’ needs.
B) they are significantly affected by the way a diversified firm is organized.
C) they are not tangible and may be reflected only in the shared knowledge, experience
and wisdom across businesses.
D) the level and type of diversification that a firm pursues can affect the efficiency of
this allocation process.
Answer:
Any actions a firm takes that have the effect of reducing the level of rivalry in an
industry that also do not require firms in an industry to directly communicate or
negotiate with each other can be thought of as
A) tacit cooperation.
B) tacit collusion.
C) explicit collusion.
D) competitive parity.
Answer:
Which one of the following is not a structural option for firms pursuing international
strategies?
A) corporate federation
B) decentralized federation
C) transnational structure
D) centralized hub
Answer:
Strategic alliances are particularly valuable in facilitating market entry and exit when
the value of market entry or exit is
A) high.
B) low.
C) moderate.
D) uncertain.
Answer:
According to the flexibility-based explanations of vertical integration, which of the
following would be the most appropriate type of compensation to support strategy
implementation?
A) stock options for individual performance
B) stock grants for individual performance
C) stock grants for corporate performance
D) cash bonuses for individual performance
Answer:
By increasing the perceived value of a firm’s products or services, a firm will be able to
A) charge a lower price than it would otherwise be able to do.
B) charge a higher price than it would otherwise be able to do.
C) sell its products at lower prices than firms pursuing a cost-leadership strategy.
D) gain significantly more market share than firms pursuing a cost-leadership strategy.
Answer:
Within the five forces framework, the five most common threats facing firms from their
competitive environment include each of the following except
A) substitutes.
B) complementors.
C) suppliers.
D) buyers.
Answer:
Which of the following statements regarding economies of scope is accurate?
A) Only firms pursuing single-business diversification can exploit economies of scope.
B) Only firms pursuing related-constrained diversification can exploit economies of
scope.
C) Only firms not pursuing diversification can exploit economies of scope.
D) Only diversified firms can exploit economies of scope.
Answer: