ch 2 end of chapter

Question 1

Which of the following is NOT an example of a sustaining​ technology?

A. Smartphones with larger displays
B. Portable DVD players with longer battery
C. Uber
D. Digital cameras with larger LCD screens
E. Newly designed side airbags in the latest model Toyota RAV4

Answer 1

C. Uber

Question 2

The Internet is a disruptive innovation that has affected​ Porter’s Five Forces in all the following ways EXCEPT​ ________.

A. lowering barriers to entry
B. increasing rivalry among competitors
C. eliminating switching costs
D. decreasing the threat of substitutes
E. increasing the power of buyers

Answer 2

D. decreasing the threat of substitutes

Question 3

When established companies fail to respond to disruptive innovations that capitalize on new​ technologies, they can become victims of​ ________.

A. creative destruction
B. a takeover
C. bankruptcy
D. creative dissolution
E. a merger

Answer 3

A. creative destruction

Question 4

In the music​ industry, why were innovations like​ Apple’s iTunes considered to be disruptive​ innovations?

A. Because Apple had the support of music company executives
B. Because these innovations reduced​ Apple’s supplier power in the music industry
C. Because these innovations had a negative effect on existing competitors in the music industry
D. Because these innovations had higher operational costs
E. Because these innovations were illegal

Answer 4

C. Because these innovations had a negative effect on existing competitors in the music industry

Question 5

Which of the following governmental actions will increase the threat of new entrants in a​ market?

A. The Federal Reserve reduces the interest rates on credit for small businesses.
B. There is a decrease in enforcement of​ anti-trust laws that prevents monopolies.
C. The Department of Commerce offers a patent to an existing player.
D. The government squeezes money from the market through​ open-market operations.
E. The Federal Reserve increases the cash reserve ratio to tackle inflation.

Answer 5

A. The Federal Reserve reduces the interest rates on credit for small businesses.

Question 6

The ecosystem in which a company is embedded is​ a(n) ________.

A. natural community that is restricted to the members of its value chain
B. community constituted by markets that are not related to the company
C. economic community that includes related industries
D. economic community that focuses entirely on the company and its immediate competitors
E. single industry containing similar firms

Answer 6

C. economic community that includes related industries

Question 7

Which of the following activities would you perform to measure and compare your business processes to similar processes of other companies within your​ industry?

A. Best practices
B. Value chain analysis
C. Business process redesign
D. Competitive forces analysis
E. Benchmarking

Answer 7

E. Benchmarking

Question 8

Which of the following represents procurement as part of the support value activities in a value chain​ analysis?

A. Purchasing inputs such as raw​ materials, resources,​ equipment, and supplies
B. Hiring new employees
C. Creating a new advertising campaign for the​ company’s products
D. Distributing goods and services to customers
E. Providing technical support for the manufacturing processes

Answer 8

A. Purchasing inputs such as raw​ materials, resources,​ equipment, and supplies

Question 9

​”The value chain does not end when the buyer pays for the product or​ service.” Which of the following statements contradicts this​ judgment?

A.Total value transfer of tangible goods happens at the point of sale.
B. Customer orientation is the key to success in modern business.
C. The value chain includes all components that add value to a product or service.
D. Customer reviews of products and services can help companies identify areas of improvement.
E. Marketing success should be measured in terms of customer satisfaction.

Answer 9

A.Total value transfer of tangible goods happens at the point of sale.

Question 10

In the highly competitive cell phone​ market, BlackBerry had positioned its smartphone by focusing its product on the needs of government and corporate business users. Which of​ Porter’s three basic strategies did BlackBerry pursue with its​ smartphone?

A. Product differentiation strategy
B. Value-added strategy
C. Low-cost leadership strategy
D. Customer-focused strategy
E. Focused niche strategy

Answer 10

E. Focused niche strategy

Question 11

HR​ Solutions, Inc. provides human resource technology solutions to companies that are seeking ways to reduce costs and improve efficiencies in their operations. Which one of the following functions is NOT a human resource function that would benefit from a​ technology-based solution?

A. Developing a website to answer routine HR questions
B. Interviewing potential job candidates
C. Processing timesheets electronically
D. Implementing direct deposit for all payroll processing
E. Implementing an online application process

Answer 11

B. Interviewing potential job candidates

Question 11

According to Michael​ Porter, companies should pick one of the three basic strategies and stick with it. Walmart has followed this theory by focusing its strategy on dominating a broad market. Which strategy is Walmart​ following?

A. Focused niche
B. Market leadership
C. Customer intimacy
D. Product differentiation
E. Low-cost leadership

Answer 11

E. Low-cost leadership

Question 12

Information technology​ (IT) is a strategic enabler when​ ________.

A. it is used to automate the procurement processes in manufacturing
B. it focuses on the growth of an organization
C. it is used to manage​ day-to-day operations
D. it is used to develop work schedules
E. it is used to create a new marketing campaign for the company

Answer 12

B. it focuses on the growth of an organization

Question 13

Which of the following statements is NOT a key reason that information technology​ (IT) is essential to managing nonprofit​ organizations?

A. Operational requirements for nonprofits are similar to​ for-profit businesses.
B. Most nonprofit organizations have a concealed profit motive.
C. Some nonprofit organizations engage in sales and marketing activities.
D. Nonprofits often require extensive human resources to operate effectively.
E. Nonprofits need to communicate and collaborate extensively with other organizations.

Answer 13

B. Most nonprofit organizations have a concealed profit motive.

Question 14

Government funding for​ technology-based innovation is often the only source of funding available for​ high-risk projects that private investors may avoid. For which of the following projects is government funding most​ critical?

A. A scheme to improve the financial status of a company
B. An infrastructure project that should be completed in one year
C. A project to launch a​ new, low-cost, and​ fuel-efficient car
D. A project to develop a more​ disease-resistant orange tree
E. A research project on hybrid oil

Answer 14

E. A research project on hybrid oil

Question 15

Xerox, a company that sells business services and document technology​ products, sustains its investment in technological​ innovation, particularly in areas such as color​ science, digital​ imaging, and nanotechnology. These strategic​ investments, made only in specific​ areas, keep the company ahead of the competition. Which of the following messages does this example​ convey?

A. IT investments must be made on the most modern technology available in the market.
B. The ability to extract the value of technology requires human imagination and innovation.
C. Xerox will not be able to compete effectively without IT investments in all areas of the company.
D. Large IT investments are essential for the success of a company in​ today’s business environment.
E. IT investments should not be focused on certain aspects and should have a broad outlook.

Answer 15

B. The ability to extract the value of technology requires human imagination and innovation.

Question 16

Haliburton Manufacturing Corporation makes industrial air conditioning units for large organizations. Last year the company spent more than​ $5 million on new technology designed to make its employees more productive and streamline its business processes. The expected return on​ investment, however, was much lower than the company​ expected, and production of new air conditioners was not improving. What economic theory helps explain the reason Haliburton is not getting an immediate return on its IT​ investment?

A. Rational choice theory
B. Productivity paradox
C. Productivity theory
D. Business performance theory
E. Agency theory

Answer 16

B. Productivity paradox

Question 17

Columbus Flight​ Services, Inc. offers charter flights serving small to medium cities. They are evaluating the possibility of expanding into the corporate jet leasing industry. As part of the planning​ process, they are using​ Porter’s Five Competitive Forces model to evaluate the​ ________.

A. industry
B. market
C. competition
D. investment
E. product

Answer 17

A. industry

Question 18

A wireless provider is currently offering customers who buy a new iPhone with a​ two-year contract a special package that includes a leather​ case, extra car​ charger, and earphones. In terms of​ Porter’s Five​ Forces, what is this company trying to do with this special​ promotion?

A. Increase the threat of new entrants.
B. Increase the threat of substitutes.
C. Decrease the power of suppliers.
D. Decrease buyer power.
E. Increase buyer power.

Answer 18

D. Decrease buyer power.

Question 19

Hibbett Sports offers a reward card that gives customers coupons and incentives for store purchases that they can redeem for additional merchandise. This is an example of a​ ________.

A. customer service system
B. marketing program
C. digital coupon
D. bonus program
E. loyalty program

Answer 19

E. loyalty program

Question 20

A pharmaceutical company that invests heavily in research and development​ (R&D) and has several​ new, patented products ready for market would be operating in an industry with​ ________.

A. low supplier power
B. high buyer power
C. high threat of new entrants
D. high threat of substitute products
E. low threat of new entrants

Answer 20

E. low threat of new entrants

Question 21

​Pharma, Inc. recently started selling a​ new, patented drug for high cholesterol called Terazatin. Sales of Terazatin are so successful that Pharma has decided to raise the price from​ $12 a pill to​ $20 a pill. Which of the following forces is Pharma using to increase the price of​ Terazatin?

A. Threat of new entrants
B. Buyer power
C. Threat of new products
D. Supplier power
E. Rivalry among existing competitors

Answer 21

D. Supplier power

Question 22

Which of​ Porter’s Five Forces is high when it is easy for competitors to enter a market and low when there are high capital investment costs to compete in the​ market?

A. Buyer power
B. Threat of new entrants
C. Rivalry among existing competitors
D. Threat of substitutes
E. Supplier power

Answer 22

B. Threat of new entrants

Question 23

Which of the following businesses is an example of where rivalry among existing competitors is strong and buyers have​ power?

A. Lawn care business
B. English antiques store
C. Dude ranch vacation
D. Commercial-grade kitchen appliances
E. Customized motorcycles

Answer 23

A. Lawn care business

Question 24

Cingular​ Cell, Inc. charges its customers a high contract termination fee if they cancel their cell phone contract before the expiration date. The termination fee is an example of a​ ________.

A. switching cost
B. customer service penalty
C. customer retention fee
D. customer service fee
E. loyalty cost

Answer 24

A. switching cost