Which of the following statements regarding competitive parity and competitive
advantage is accurate?
A) Some firms develop valuable, rare, and costly-to-imitate resources and capabilities
in being efficient second movers, that is, in rapidly imitating and improving on the
product and technological innovations of other firms.
B) Firms that benchmark their performance against the performance of successful
competitors can expect to develop at least a temporary competitive advantage.
C) Firms must be first movers to gain competitive advantages.
D) Even if all a firm does is create value in the same way as its competitors, the firm
can expect to earn at least a temporary competitive advantage.
Answer:
Which component of the M-form structure evaluates the firm’s decision making to
ensure that it is consistent with the interests of equity holders?
A) senior executives
B) corporate staff
C) board of directors
D) division general managers
Answer:
________ are complex sets of resources and capabilities that link different businesses in
a diversified firm through managerial and technical know-how, experience and wisdom.
A) Managerial competencies
B) Core competencies
C) Competitive advantages
D) Core advantages
Answer:
P&G is a leading consumer goods company in the United States that has grown its
business through a combination of international growth, alliances, acquisitions and
mergers. In 2003, P&G acquired the beauty care company Wella to acquire products
that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd
to establish a stronger presence in the Chinese consumer goods products market. In
2005, P&G acquired Gillette, another consumer goods company, in a deal worth
approximately $57 billion dollars.
If P&G’s acquisition of Wella had been delayed because it had to overcome a stipulation
in Wella’s corporate bylaws requiring that more than 50% of Wella’s board of directors
had to approve the takeover, this would be an example of
A) the Pac Man defense.
B) a poison pill.
C) greenmail.
D) a shark repellent.
Answer:
Which of the following is not used to determine a firm’s level of vertical integration
using the value added as a percentage of sales approach?
A) value added
B) net income
C) sales
D) gross margin
Answer:
Most firms have a resource base that is composed primarily of resources and
capabilities that are
A) valuable but not rare.
B) neither valuable nor rare.
C) valuable and rare.
D) rare but not valuable.
Answer:
Actions firms take to gain competitive advantages by operating in multiple markets or
industries simultaneously are known as
A) business-level strategies.
B) corporate-level strategies.
C) functional-level strategies.
D) macro-level 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.
Peach Computers’ equity holders, its employees, suppliers and customers along with all
of those groups and individuals who have an interest in how Peach Computers performs
are referred to as
A) focal groups.
B) stakeholders.
C) supporters.
D) stockholders.
Answer:
The values, beliefs and norms that guide behavior in a society are known as
A) climate.
B) demographics.
C) economics.
D) culture.
Answer:
The senior executive (the president or CEO) in an M-form organization has two
responsibilities:
A) budgeting and accounting.
B) budgeting and mission setting.
C) strategy formulation and strategy implementation.
D) strategy formulation and budgeting.
Answer:
Which of the following is a weakness of using a hurdle rate as a standard of evaluating
the performance of a division?
A) The process is time-consuming.
B) The process is fraught with political intrigue.
C) This approach lets other firms determine what is and what is not excellent
performance for a division within a diversified firm.
D) The use of such a single standard ignores important differences in performance that
might exist across divisions.
Answer:
________ exists when a firm is unfairly exploited in an exchange.
A) Competitive advantage
B) Business level strategy
C) Opportunism
D) Corporate level strategy
Answer:
________ in the RBV are defined as the tangible and intangible assets that a firm
controls that it can use to conceive and implement its strategies.
A) Management controls
B) Capabilities
C) Resources
D) Compensation policies
Answer:
All other things being equal, which of the following would lead to lower barriers to
entry in an industry?
A) The existence of economies of scale in the industry
B) Products are highly differentiated in the industry.
C) Industry incumbents have learning-curve cost advantages.
D) Raw materials are widely and readily available at a competitive price.
Answer:
Which of the following statements regarding patents is accurate?
A) Patents always increase the costs of imitation.
B) Patents may decrease, rather than increase, the costs of imitation.
C) Patents always decrease the costs of imitation.
D) Patents have no impact on the costs of imitation.
Answer:
In ________ structures, employees report to two or more people.
A) unilateral
B) functional
C) divisional
D) matrix
Answer:
In emerging industries
A) firms that are first movers are unlikely to gain product-differentiation advantages
based on buyer loyalty and high switching costs.
B) firms that are first movers can gain product-differentiation advantages based on
perceived technological leadership.
C) product-differentiation efforts are focused on product refinement as a basis of
product differentiation.
D) firms can sometimes be tempted to exaggerate the extent to which they have refined
and improved their products and services.
Answer:
________ requires a firm to modify or abandon traditional ways of engaging in
business.
A) Unlearning
B) Learning
C) Relearning
D) Absorbing
Answer:
The quality of relations among labor and management, an organization’s culture, and
the quality of management controls are all examples of
A) technological hardware.
B) technological software.
C) productive inputs.
D) economies of scale.
Answer:
LaserTech is a manufacturer of industrial lasers and has developed a new, patented
technology that allows its customers to manufacture their products more precisely with
a higher level of consistency and at a lower cost than they could previously. LaserTech’s
executives believe that no rivals have a similar technology and that it would be very
difficult for rivals to copy this technology since the benefits of the new technology can
only be realized within LaserTech’s system, which includes processes that are protected
by trade secrets, making it difficult for rivals to understand the relationship between the
company’s new technology and its competitive advantage. If LaserTech’s new
technological development were due to proprietary investments the company made
when it was first founded twenty years ago, this would be an example of
A) social complexity.
B) tacit collusion.
C) path dependence.
D) causal ambiguity.
Answer:
In a ________, strategic and operational decisions are delegated to divisions/country
companies.
A) transnational structure
B) decentralized federation
C) coordinated federation
D) centralized hub
Answer:
Inputs whose quantity of supply is fixed and does not respond to price increases are said
to be
A) elastic in supply.
B) inelastic in supply.
C) elastic in demand.
D) perfectly competitive.
Answer:
Using ratio analysis, a firm earns ________ when its performance is greater than the
industry average.
A) above average economic performance
B) below average accounting performance
C) above average accounting performance
D) below average economic performance
Answer:
In many ways, the difference between traditional economics research and strategic
management research is that the former attempts to explain why ________, while the
latter attempts to explain ________.
A) competitive advantages should not persist; when they can
B) competitive advantages should persist; when they can
C) competitive advantages should persist; why they should not
D) competitive parity should not persist; why they should
Answer:
When a firm operates in multiple industries simultaneously, it is said to be
implementing a
A) product diversification strategy.
B) product-differentiation strategy.
C) geographic market diversification strategy.
D) geographic market differentiation strategy.
Answer:
________ does not affect the wealth of target firm equity holders.
A) Blue Man defense
B) Pac Man defense
C) Golden parachute
D) Silver parachute
Answer:
Alliances will be preferred to going it alone when
A) the level of transaction-specific investments required to complete an exchange is
low.
B) there are no transaction-specific investments required to complete an exchange is
low.
C) when there is low uncertainty about the future value of an exchange.
D) the level of transaction-specific investments required to complete an exchange is
moderate.
Answer:
________ is/are the distribution of individuals in a society in terms of age, sex, marital
status, income, ethnicity, and other personal attributes that may determine buying
patterns.
A) Demographics
B) Economics
C) Technological trends
D) Culture
Answer:
The Bates Company has been producing tools for over fifty years. In that time the
company has been acknowledged as a producer of high quality tools at a reasonable
price. Bates’ competitive prices can be attributed to three factors. First, the company
recognized early in its development that tools made from specific blends of various
types of metal were less costly to produce and had superior performance compared to
traditional metals. Accordingly, Bates made investments in developing tools made for
specialty metals long before other competitors and has made a series of investments
over its operating history that have put it far ahead of its competitors in terms of
product development. Industry analysts believe that based on these investments it
would be difficult and extremely costly, if it were even possible, for rivals to catch up
with Bates. Second, in recognizing the importance of certain metals, Bates was able to
sign long-term contracts with suppliers of the metals that have provided Bates with a
lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough
budgeting and reporting system that allows it to closely control costs, and these systems
are supported by a frugal company culture and financial incentives that reward
employees for finding ways to save money throughout the company. The budgeting and
reporting activities that Bates uses are examples of
A) informal management controls.
B) formal reporting structures.
C) formal management controls.
D) primary value chain activities.
Answer:
A ________ structure exists when individuals in a firm have two or more bosses
simultaneously.
A) U-form
B) multidivisional
C) cross-divisional
D) matrix
Answer:
Japanese retail distribution has historically been much more ________ than the system
that exists in the United States or Western Europe.
A) closely held
B) fragmented
C) consolidated
D) open
Answer:
Which of the following actions should bidding firm managers take to help earn superior
performance in an acquisition strategy?
A) Share information with other bidders.
B) Delay the closing of the deal.
C) Avoid winning bidding wars.
D) Operate in competitive acquisition markets.
Answer: