P&G’s acquisition of Gillette reshaped its competitive scope by giving P&G a stronger
presence in some products for whom men are the target market.
a. True
b. False
One of the potential problems associated with acquisitions is that the additional costs
required to manage the larger firm will exceed the benefits of economies of scale and
additional market power.
a. True
b. False
The recent bankruptcy filings by General Motors and Chrysler Corporation illustrate
that firms cannot directly control the general environment’s segments.
a. True
b. False
Corporate tax laws, rather than tax laws affecting individuals, have had the most impact
on the firm’s use of free cash flows for investment in acquisitions.
a. True
b. False
Sustained competitive advantage is most achievable in a ______ market.
a. slow-cycle
b. medium-cycle
c. standard-cycle
d. fast-cycle
GreenBox, a company that recycles paper products to make cardboard cartons, has
introduced a new product that resists damage by moisture. GreenBox can expect that
a. this innovation will resist competitors’ attempts to imitate it.
b. its investors will react positively to the introduction of the new product because of
the potential for higher returns.
c. its investors will react negatively because of the risk and cost entailed in introducing
a new product.
d. this will be recognized in the industry as a radical innovation.
Entrepreneurial opportunities exist because of competitive imperfections in the markets
and among the factors of production.
a. True
b. False
Managerial motives to seek diversification include a desire to
a. improve their marketability to other firms.
b. effectively use corporate resources.
c. provide higher returns to corporate stakeholders.
d. increase their compensation.
All of the following are characteristic of the global economy EXCEPT
a. the increasing importance of developing countries as sources of revenue growth.
b. the free movement of goods, services, people, skills, and ideas across geographic
borders.
c. the increased use of tariffs to protect industries.
d. higher levels of opportunities and challenges.
CaseScenario3:B.B.Mangler.
B.B. Mangler is a top U.S. business-to-business distributor of maintenance, repair, and
service equipment, components, and supplies such as compressors, motors, signs,
lighting and welding equipment, and hand and power tools. Customers include
contractors, service and maintenance shops, manufacturers, hotels, government, and
health care and educational facilities. Mangler’s industry is typically referred to as
MRO, an acronym for
maintenance, repair, and supplies. Mangler states its strategy as having the “capacity to
quickly offer an unmatched breadth of lowest total cost MRO solutions to business.”
Mangler’s GoMRO sourcing center for indirect spot buys locates products through its
unique database of 8,000 suppliers and 5 million products. Mangler also dominates the
North American market in terms of its sheer local physical presence. It has 388 physical
branches in the U.S. largest cities, including Puerto Rico (90 percent of sales), 184 in
Canada, and 5 in Mexico. This physical presence also has garnered Mangler a
reputation for excellent, dependable service in its target markets, which in turn
translates into a vast and loyal clientele.
Mangler’s physical locations are best an example of The Internet threatens to displace
physical locations as a basis for competitive advantage. If Mangler’s vast network of
branch offices were an integral part of its core competencies, what might the branches
become if the basis for competitive advantage in the MRO industry moves to the
Internet?
A. a core rigidity
B. a capability
C. an intangible resource
D. a tangible resource
Which of the following is NOT a factor affecting sustainability of a competitive
advantage?
a. the availability of substitutes for a firm’s core competence
b. the rate at which obsolescence of the core competence occurs because of
environmental changes
c. the imitability of a core competence
d. the length of time the core competence has existed
In order to be successful, a new entrepreneurial enterprise should be sheltered from the
global environment until it is firmly established in domestic markets.
a. True
b. False
Which of the following statements is FALSE?
a. Synergy resulting from an acquisition generates gains in shareholder wealth beyond
what they could achieve through diversification of their own portfolios.
b. Private synergy results when the combination of two firms yields competencies and
capabilities that could not be achieved by combining with any other firm.
c. Private synergy is easy for competitors to understand and imitate.
d. Private synergy is more likely when the two firms in an acquisition have
complementary assets.
The CEO of Twin Spires, Inc., is emotionally and intellectually committed to using the
resources of the firm to serve the needs of the natural gardening community by
providing rare and native plants to individuals and nurseries around the United States.
This commitment has carried the CEO through long periods of below-average returns
on investment. The perspective of the CEO of Twin Spires is consistent with the
assumptions of the industrial organization (I/O) model.
a. True
b. False
The entrepreneurial mind-set is found primarily among managerial and scientific
employees.
a. True
b. False
The corporate research division of Siemens files, on average, 25 patents a day. The
patents are a(n)______ resource.
Assume that you are a consultant and have been asked by the management at Romulac
Inc. whether it should be a first mover with the new component technology. Romulac is
leaning toward being a first mover because the general evidence is that first movers
have greater survival rates than later market entrants. Is this true or false?
FrameCo, a maker of commercial greenhouses, has just extricated itself from a failing
cooperative alliance with another firm. The expected synergies never were achieved,
and FrameCo lost most of its investment. The top management of FrameCo should
a. avoid future cooperative alliances because they lack the skills needed to manage
them successfully.
b. enter into future cooperative alliances only if the alliance is closely monitored by a
third party to prevent opportunistic behavior by the alliance partner.
c. realize that most cooperative alliances fail and that it should ally itself only with an
experienced alliance partner in the future.
d. internalize the knowledge about the successes and failures of this alliance so
FrameCo can learn from the experience.