EXAM 2018 Flashcards
Which of the following statements about the board of directors is false?
a) Board members are elected by shareholders
b) The board can be held legally accountable for a company’s actions
c) The board has the legal authority to hire, fire, and compensate employees
d) All directors are full-time employees of the company
e) Inside directors help perform the monitoring function of the board
Inside directors help perform the monitoring function of the board
In carrying out a 5-force competitive analysis on a traditional travel agency, which of the
following would not be a sensible statement?
a) Entry barriers include the need to access one of the major global booking engines
b) Bargaining power is low for corporate buyers, who are too busy to shop for bargains
c) Buyers can use substitute services such as internet booking
d) Airlines as suppliers have been using their bargaining power to reduce agency commissions
e) Rivalry has been reduced in recent years by industry consolidation
Bargaining power is low for corporate buyers, who are too busy to shop for bargains
The concept of strategic groups suggests that
a) A company’s major competitors are those in other groups
b) Companies within a strategic group generally have the same rate of return
c) It is easier for a company to move between groups than within a group
d) A strategic group consists of firms that are similar to one another in terms of two strategic
dimensions
e) Companies within a strategic group gain scale economies and benefit from industry
consolidation
A strategic group consists of firms that are similar to one another in terms of two strategic
dimensions
Firms competing in embryonic industries need to pay attention to which of the following?
a) Establish a cost leadership position, as products at this stage are usually expensive
b) Avoid entering strategic alliances, which can compromise independence and intellectual
property
c) Invest in product innovation so that they avoid falling into the chasm
d) Be sure to invest in new capacity so as to avoid leaving a vacuum
e) Seek early breakeven on their investments
Invest in product innovation so that they avoid falling into the chasm
Henry Mintzberg revised the traditional definition of strategy by suggesting that
a) All intended strategies are realized
b) Strategy is more successful when based on superior combinations of resources within the firm
c) The strategy of most companies is a combination of the intended and the emergent
d) Management should not intervene in the process of emergent strategies
e) Strategies are the outcome of rational planning
The strategy of most companies is a combination of the intended and the emergent
Which of the following is not likely to result in a firm being successful while combining elements
of cost leadership and differentiation strategies simultaneously?
a) When the company has a distinctive competence that supports this strategy
b) When the firm pursues cost efficiency and differentiation in different functional areas
c) When the ‘middle ground’ constitutes much of the market demand
d) When the firm is pursuing a narrow target market
e) When the firm experiences exceptionally intense competitive conditions
When the firm experiences exceptionally intense competitive conditions
Strategy development in organisations has been characterised by scholars in all of the following
ways except:
a) An annualised strategic planning cycle
b) A set of political processes based on power dynamics between managers and units
c) A series of small but reasoned and logical decisions that move the organisation in a direction
over time
d) A staged process involving un-freezing, migrating to a new strategy, and re-freezing
e) Structure and systems that have accumulated over time and have a profound influence on the
process
Structure and systems that have accumulated over time and have a profound influence on the
process
The scenario approach to strategic planning is best characterised as
a) Making planning the exclusive domain of top-level managers
b) Honing in on a prediction of future demand conditions using an iterative planning process
c) Operating managers setting key corporate objectives
d) Using computers to build models for top-level managers
e) Asking executives to devise strategies for coping with a number of different possible future
states of the world
Asking executives to devise strategies for coping with a number of different possible future
states of the world
In a rapidly changing strategic environment, such as when an industry is impacted by new
technological possibilities, which of the following capabilities is reduced in relative importance
to a firm’s competitive advantage?
a) The firm’s ability to sense issues in the rapidly changing strategic environment
b) The firm’s established technological capabilities, products and systems
c) The firm’s ability to seize opportunities by making timely strategic choices
d) The firm’s managerial capabilities that enable it to enter new alliances, develop new products
and so on
e) The firm’s capacity to reconfigure and realign its internal capabilities
The firm’s established technological capabilities, products and systems
Feelings of personal responsibility for a project are most likely to lead to
a) Prior hypothesis bias
b) Escalating commitment
c) Reasoning by analogy
d) Representativeness bias
e) Groupthink
escalating commitment
The value chain concept as used within firms suggests
a) That only primary activities add value to a product or service
b) That only manufacturing firms truly add value via a series of linked activities
c) That all value-creation functions play a role in determining the level of quality, efficiency,
innovation and/or customer responsiveness achieved by the firm
d) That materials management has a primary role
e) All of these apply
That all value-creation functions play a role in determining the level of quality, efficiency,
innovation and/or customer responsiveness achieved by the firm
Which of the following factors does not determine the durability of the competitive advantage a
company can achieve from superior resources and/or capabilities?
a) Barriers to imitation
b) The company’s prior strategic commitments
c) The capabilities of competitors
d) The general level of dynamism in the industry
e) All of these determine the durability of a competitive advantage
The company’s prior strategic commitments
The experience curve most closely reflects the fact that
a) Market share is a function of profitability
b) The larger a company’s accumulated volume is over time, the more experience it has in
producing an item and the lower its unit costs are
c) The longer a company is in business, the larger its market share is because of cost reductions
achieved through experience
d) The company is able to realise diseconomies of scale through lower costs at higher levels of
market share
e) Each time market share is doubled, unit costs decline by some characteristic amount
The larger a company’s accumulated volume is over time, the more experience it has in
producing an item and the lower its unit costs are
When a head office manages a set of constituent businesses using a financial control style, this
means that
a) The head office maintains tight financial controls but otherwise seeks little influence on the
detail of the constituent businesses’ strategy
b) Unit managers have weak direction and accountability
c) Unit managers have responsibility but no control
d) Unit managers have control but no responsibility
e) The head office maintains a high level of centralised planning influence but does not impose
rigid financial targets
The head office maintains tight financial controls but otherwise seeks little influence on the
detail of the constituent businesses’ strategy
The benefits of one corporation taking ownership of another are often debated because
a) Post-merger integration is often not sufficiently challenging
b) The so-called acquisition premium means that synergy gains are often excessive
c) So-called synergy gains can be difficult to realise sufficiently to justify the price paid in the
market
d) It is unfair to the shareholders of the acquired firm
e) It results in the corporation becoming larger in size
So-called synergy gains can be difficult to realise sufficiently to justify the price paid in the
market
