Test 1 Ch 1,2,3,4,5,6 Flashcards
1
Q
32. (p. 5) The text addresses two perspectives of leadership as well as their implications. These two perspectives are A. romantic and unromantic. B. romantic and internal control. C. external control and unromantic. D. romantic and external control.
A
D. romantic and external control.
2
Q
33. (p. 5) A CEO made a lot of mistakes such as committing errors in assessing the market and competitive conditions and improperly redesigning the organization into numerous business units. Such errors led to significant performance declines. According to the text, this example illustrates the \_\_\_\_\_\_\_\_\_\_ perspective of leadership. A. external control B. romantic C. internal mechanism D. operational
A
B. romantic
3
Q
- (p. 8) According to the text, the strategic management process entails three ongoing processes:
A. analyses, actions, and synthesis.
B. analyses, decisions, and actions.
C. analyses, evaluation, and critique.
D. analyses, synthesis, and antithesis.
The strategic management of an organization entails three ongoing processes: analyses, decisions, and actions.
A
B. analyses, decisions, and actions.
4
Q
- (p. 8) Management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because
A. companies that have implemented these techniques have lost money.
B. there is no proof that these techniques work.
C. they cost too much money and effort to implement.
D. every company is trying to implement them and hence it does not make a company different from others.
A
D. every company is trying to implement them and hence it does not make a company different from others.
5
Q
- (p. 9) The “organizational versus individual rationality” perspective suggests that
A. what is good for a functional area is always good for the organization.
B. what is good for the organization is always good for a functional area.
C. what is best for a functional area may not be best for the organization.
D. the “incremental” perspective may be best for functional areas while the “rational” perspective may be best for the organization.
A
C. what is best for a functional area may not be best for the organization.
6
Q
- (p. 9) The four key attributes of strategic management include the idea that
A. strategy must be directed toward overall organizational goals and objectives.
B. strategy must be focused on long-term objectives.
C. strategy must be focused on one specific area of an organization.
D. strategy must focus on competitor strengths.
A
A. strategy must be directed toward overall organizational goals and objectives.
7
Q
- (p. 9) The four key attributes of strategic management include all of the following EXCEPT:
A. including multiple stakeholder interests in decision making.
B. incorporating both short-term and long-term perspectives.
C. recognizing the trade-offs between effectiveness and efficiency.
D. emphasis on the attainment of short-term objectives.
A
D. emphasis on the attainment of short-term objectives.
8
Q
39. (p. 10) "Effectiveness" is often defined as A. doing things right. B. stakeholder satisfaction. C. doing the right thing. D. productivity enhancement.
A
C. doing the right thing.
9
Q
- (p. 11) All of the following are ambidextrous behaviors EXCEPT:
A. taking initiative and being alert to opportunities beyond the confines of one’s own job.
B. being cooperative and seeking opportunities to combine one’s efforts with others.
C. intensely focusing on one’s own responsibilities and maximizing the output of one’s department in an organization.
D. being brokers, always looking to build internal linkages.
A
C. intensely focusing on one’s own responsibilities and maximizing the output of one’s department in an organization.
10
Q
- (p. 12) According to Henry Mintzberg, the realized strategies of a firm
A. are a combination of deliberate and emergent strategies.
B. are a combination of deliberate and differentiation strategies.
C. must be based on a company’s strategic plan.
D. must be kept confidential for competitive reasons.
A
A. are a combination of deliberate and emergent strategies.
11
Q
42. (p. 11-12) According to Henry Mintzberg, decisions following from a firm's strategic analysis are its A. emergent strategy. B. deliberate strategy. C. intended strategy. D. realized strategy.
A
C. intended strategy.
12
Q
43. (p. 12) \_\_\_\_\_\_\_\_\_\_ may be considered the "advance work" that must be done in order to effectively formulate and implement strategies. A. Goal setting B. Corporate entrepreneurship C. Strategy analysis D. Organizational design
A
C. Strategy analysis
13
Q
44. (p. 14) \_\_\_\_\_\_\_\_\_\_ involves ensuring proper strategic controls and organizational designs. A. Corporate governance B. Corporate-level strategy C. Strategy implementation D. Business-level strategy
A
C. Strategy implementation
14
Q
- (p. 15) The three participants in corporate governance are
A. the shareholders, board of directors, and employees.
B. the shareholders, labor unions, and employees.
C. the shareholders, board of directors, and management.
D. the shareholders, banks and lending institutions, and management.
A
C. the shareholders, board of directors, and management.
15
Q
- (p. 15) While working to prioritize and fulfill their responsibilities, members of an organization’s board of directors should
A. represent their own interests.
B. represent the interests of the shareholders.
C. direct all actions of the CEO.
D. emphasize the importance of short-term goals.
A
B. represent the interests of the shareholders.
16
Q
- (p. 15) Members of Boards of Directors are
A. appointed by the Securities and Exchange Commission.
B. elected by the shareholders as their representatives.
C. elected by the public.
D. only allowed to serve one term of four years.
A
B. elected by the shareholders as their representatives.
17
Q
- (p. 16) An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that
A. interests of the stockholders are not the only interests that matter.
B. stakeholders are second in importance to the stockholders.
C. stakeholders and managers inevitably work at cross-purposes.
D. all stakeholders receive financial rewards.
A
A. interests of the stockholders are not the only interests that matter.
18
Q
- (p. 17) Stakeholders are
A. a new way to describe stockholders.
B. individuals, groups, and organizations who have a stake in the success of the organization.
C. creditors who hold a lien on the assets of the organization.
D. attorneys and their clients who sue the organization.
A
B. individuals, groups, and organizations who have a stake in the success of the organization.
19
Q
- (p. 18) Outback Steakhouse has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of __________
A. zero-sum relationship among stakeholders.
B. stakeholder symbiosis.
C. rewarding stakeholders.
D. emphasizing financial returns.
A
B. stakeholder symbiosis.
20
Q
- (p. 17) There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum thinking means that
A. all parts of the organization gain at no loss.
B. in order for someone to gain others must experience no gain or benefit.
C. one can only gain at the expense of someone else.
D. everyone in the organization shares gains and losses equally.
A
C. one can only gain at the expense of someone else.
21
Q
- (p. 18) Managers should do more than just focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that
A. stakeholders are dependent on each other for their success.
B. stakeholders look out for their individual interests.
C. one can only gain at the expense of someone else.
D. all stakeholders want to maximize shareholder returns.
A
A. stakeholders are dependent on each other for their success.
22
Q
- (p. 18) Crowdsourcing can be defined as
A. using surveys to get supplier input.
B. using multiple sources for a firm’s raw material inputs.
C. tapping the latent talent of the online crowd.
D. addressing strategic issues directly with managers and employees.
A
C. tapping the latent talent of the online crowd.
23
Q
- (p. 21) Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is
A. the expectation that business will strive to improve the overall welfare of society.
B. the idea that organizations are solely responsible to local citizens.
C. the fact that court costs could impact the financial bottom line.
D. the idea that businesses are responsible to maintain a healthy social climate for their employees.
A
A. the expectation that business will strive to improve the overall welfare of society.
24
Q
- (p. 23) According to the text, the “triple bottom line” approach to corporate accounting includes three components:
A. financial, environmental, and customer.
B. financial, organizational, and customer.
C. financial, environmental, and social.
D. financial, organizational, and psychological.
A
C. financial, environmental, and social.
25
56. (p. 24) Many organizations have a large number of functional areas with very diverse, and sometimes competing, interests. Such organizations will be most effective if
A. each functional area focuses on achieving their own goals.
B. functional areas work together to attain overall goals.
C. goals are defined at the bottom and implemented at the top.
D. management and employees have separate goals.
B. functional areas work together to attain overall goals.
26
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57. (p. 25) Strategy formulation and implementation is a challenging ongoing process. To be effective, it should involve
A. the CEO and the board of directors.
B. the board of directors, CEO, and CFO.
C. line and staff managers.
D. all of these.
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D. all of these.
27
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58. (p. 25) The text argues that a strategic perspective in an organization should be emphasized
A. at the top of the organization.
B. at the middle of the organization.
C. throughout the organization.
D. from the bottom up.
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C. throughout the organization.
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59. (p. 25) Peter Senge, of MIT, recognized three types of leaders. __________ are individuals that, although having little positional power and formal authority, generate their power through the conviction and clarity of their ideas.
A. Local line leaders
B. Executive leaders
C. Internal networkers
D. Shop floor leaders
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C. Internal networkers
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60. (p. 25) Peter Senge, of MIT, recognized three types of leaders. __________ champion and guide ideas, create a learning infrastructure, and establish a domain for taking action.
A. Local line leaders
B. Executive leaders
C. Internal networkers
D. Shop floor leaders
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B. Executive leaders
30
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61. (p. 25) Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization?
A. only at the top
B. in the middle
C. throughout the organization
D. only during times of change
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C. throughout the organization
31
62. (p. 26) The hierarchy of organizational goals is in this order (least specific to most specific):
A. vision statements, strategic objectives, mission statements.
B. mission statements, strategic objectives, vision statements.
C. vision statements, mission statements, strategic objectives.
D. mission statements, vision statements, strategic objectives.
C. vision statements, mission statements, strategic objectives.
32
63. (p. 26) Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements
A. are very specific.
B. provide specific objectives.
C. set organizational structure.
D. evoke powerful and compelling mental images.
D. evoke powerful and compelling mental images.
33
64. (p. 26) Effective vision statements include
A. all strategic directions of the organization.
B. a brief statement of the company's direction.
C. strategic posturing and future objectives
D. financial objectives and projected figures.
B. a brief statement of the company's direction.
34
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65. (p. 28) Examples of __________ include: "To be the happiest place on earth" (Disneyland), and "Restoring patients to full life" (Medtronic).
A. vision statements
B. mission statements
C. strategic objectives
D. operational objectives
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A. vision statements
35
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66. (p. 28-29) WellPoint Health Network states: "WellPoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future." This is an example of a
A. strategic objective.
B. vision statement.
C. vague statement of direction.
D. line manager's individual goal.
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B. vision statement.
36
67. (p. 29) In contrast to an organization's vision, its mission should
A. be shorter in length.
B. encompass both the purpose of the company as well as the basis of competition.
C. encompass all the major rules and regulations of the corporate work force.
D. be less detailed.
B. encompass both the purpose of the company as well as the basis of competition.
37
68. (p. 30) An organization's mission statement and vision statement set the overall direction of the organization. Strategic objectives
A. operationalize the mission statement.
B. modify the mission statement.
C. are a shorter version of the mission statement.
D. are only clarified by the board of directors.
A. operationalize the mission statement.
38
69. (p. 31) Successful organizations are effective in motivating people. Employees work best when
A. they are asked to "do their best."
B. work requirements are vague and unclear.
C. they are striving toward specific goals.
D. they are guided by an abstract mission statement.
C. they are striving toward specific goals.
39
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70. (p. 30) Fortune Brands states they will "cut corporate overhead costs by $30 million a year." This is an example of a
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.
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B. financial strategic objective.
40
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71. (p. 30) "We want to be the top-ranked supplier to our customers." (PPG) This is an example of a
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.
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A. nonfinancial strategic objective.
41
72. (p. 32) In large organizations, conflicts can arise between functional areas. In order to resolve these conflicts, strategic objectives
A. put financial objectives above human considerations.
B. align departments toward departmental goals.
C. help resolve conflicts through their common purpose.
D. cause debate and increase conflict.
C. help resolve conflicts through their common purpose.
42
37. (p. 41) Two of the key inputs to developing forecasts discussed in the text are
A. environmental scanning and stakeholder identification.
B. environmental scanning and competitor intelligence.
C. assessing internal strengths and environmental scanning.
D. environmental scanning and a SWOT analysis.
B. environmental scanning and competitor intelligence.
43
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38. (p. 42) _____________ tracks the evolution of environmental trends, sequences of events, or streams of activities.
A. Environmental scanning
B. Environmental monitoring
C. Environmental surveying
D. Competitive intelligence
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B. Environmental monitoring
44
39. (p. 41) Scanning the general environment would identify information on
A. substitute goods.
B. the aging population and ethnic shifts.
C. customer and firm bargaining power.
D. competitive rivalry.
B. the aging population and ethnic shifts.
45
40. (p. 42) Gathering "competitive intelligence"
A. is good business practice.
B. is illegal.
C. is considered unethical.
D. minimizes the need to obtain information in the public domain.
A. is good business practice.
46
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41. (p. 44) Environmental forecasting involves developing plausible projections about the ________ of environmental change.
A. direction
B. scope
C. speed
D. all of these
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D. all of these
47
42. (p. 45) A danger of forecasting discussed in the text is that
A. in most cases, the expense of collecting the necessary data exceeds the benefit.
B. forecasting's retrospective nature provides little information about the future.
C. managers may view uncertainty as "black and white" while ignoring important "gray areas."
D. it can create legal problems for the firm if regulators discover the company is making forecasts.
C. managers may view uncertainty as "black and white" while ignoring important "gray areas."
48
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43. (p. 47) The aging of the population, changes in ethnic composition, and effects of the baby boom are
A. macroeconomic changes.
B. demographic changes.
C. global changes.
D. sociocultural changes.
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B. demographic changes.
49
44. (p. 49) Increasingly larger numbers of women entering the work force since the early 1970s is an example of
A. demographic changes.
B. political and legal environmental changes.
C. sociocultural changes.
D. technological developments.
C. sociocultural changes.
50
45. (p. 49-50) Emerging sociocultural changes in the environment include
A. changes in the ethnic composition.
B. the increasing educational attainment of women in the past decade.
C. progressively less disposable income by consumers.
D. changes in the geographic distribution of the population.
B. the increasing educational attainment of women in the past decade.
51
46. (p. 50) All of the following are important elements of the political/legal segment of the general environment EXCEPT
A. the deregulation of utilities.
B. the Americans with Disabilities Act (ADA).
C. the increased use of Internet technology.
D. increases in the federally mandated minimum wage.
C. the increased use of Internet technology.
52
47. (p. 47) Which of the following would be considered part of a firm's general environment?
A. Decreased entry barriers.
B. Higher unemployment rates.
C. Increased bargaining power of the firm's suppliers.
D. Increased competitive intensity.
B. Higher unemployment rates.
53
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48. (p. 51) Interest-rate increases have a __________ impact on the residential home construction industry and a __________ effect on industries that produce consumer necessities such as prescription drugs or basic grocery items.
A. positive; negligible
B. negative; negligible
C. negative; positive
D. positive; negative
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B. negative; negligible
54
49. (p. 51) To illustrate interrelationships among different segments of the general environment: The persistence of large U.S. trade deficits (__________) has led to greater demand for protectionist measures, such as trade barriers and quotas (__________). These measures lead to higher prices for U.S. consumers and fuel inflation (__________).
A. macroeconomic, sociocultural, political/legal
B. macroeconomic, political/legal, economic
C. macroeconomic, technological, economic
D. macroeconomic, global, economic
B. macroeconomic, political/legal, economic
55
50. (p. 55) Which is considered a force in the "Five-Forces" model?
A. Increased deregulation in an industry.
B. The threat of government intervention.
C. Rivalry among competing firms.
D. Recent technological innovation.
C. Rivalry among competing firms.
56
51. (p. 60) Which of the following firms would likely pose the least competitive threat?
A. A firm in the same industry and in the same strategic group.
B. A firm that produces substitute goods to your product line.
C. A competitor to your product where a high switching cost exists.
D. A firm in the same industry and in the nearest strategic group looking to join your group.
C. A competitor to your product where a high switching cost exists.
57
52. (p. 56) The threat of new entrants is high when there are
A. low economies of scale.
B. high capital requirements.
C. high switching costs.
D. high differentiation among competitors' products and services.
A. low economies of scale.
58
53. (p. 56) Product differentiation by incumbents act as an entry barrier because
A. new entrants cannot differentiate their products.
B. incumbents will take legal action if new entrants do not differentiate their products.
C. new entrants will have to spend heavily to overcome existing customer loyalties.
D. it helps a firm to derive greater economies of scale.
C. new entrants will have to spend heavily to overcome existing customer loyalties.
59
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54. (p. 56) Which of the following would be an entry barrier?
A. large economies of scale
B. low switching costs
C. easy access to raw materials
D. low capital requirements
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A. large economies of scale
60
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55. (p. 55) A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of
A. backward integration.
B. economies of scale.
C. forward integration.
D. product differentiation.
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A. backward integration.
61
56. (p. 57) The bargaining power of the buyer is greater than that of the supplier when
A. volume of purchase is low.
B. threat of backward integration by buyers is low.
C. cost savings from the supplier's product are minimal.
D. the buyer's profit margin is low.
D. the buyer's profit margin is low.
62
57. (p. 57) Buyer power will be greater when
A. the products purchased are highly differentiated.
B. there are high switching costs.
C. the industry's product is very important to the quality of the buyer's end products or services.
D. it is concentrated or purchases large volumes relative to seller sales.
D. it is concentrated or purchases large volumes relative to seller sales.
63
58. (p. 58-59) The bargaining power of suppliers increases as
A. more suppliers enter the market.
B. importance of buyers to supplier group increases.
C. switching costs for buyers decrease.
D. threat of forward integration by suppliers increases.
D. threat of forward integration by suppliers increases.
64
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59. (p. 55) An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of
A. threat of entry.
B. backward integration.
C. forward integration.
D. threat of substitute products.
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C. forward integration.
65
60. (p. 58-59) The bargaining power of suppliers is enhanced under the following market condition:
A. no threat of forward integration.
B. low differentiation of the suppliers' products.
C. greater availability of substitute products.
D. dominance by a few suppliers.
D. dominance by a few suppliers.
66
61. (p. 58-59) In Porter's Five-Forces model, conditions under which a supplier group can be powerful include all the following EXCEPT
A. lack of importance of the buyer to the supplier group.
B. high differentiation by the supplier.
C. dominance by a few suppliers.
D. readily available substitute products.
D. readily available substitute products.
67
62. (p. 58-59) A supplier group would be most powerful when there is/are
A. many suppliers.
B. few substitute products.
C. low differentiation of products supplied.
D. high threat of backward integration by the buyers.
B. few substitute products.
68
63. (p. 59) Threat of substitute products comes from
A. other companies in the same industry.
B. foreign companies which can use cheap labor in their countries.
C. firms in other industries that produce products or services that satisfy the same customer need.
D. all of these.
C. firms in other industries that produce products or services that satisfy the same customer need.
69
64. (p. 59-60) Firms would be most likely to face intense rivalry with competitors when they
A. are in a high growth industry with low fixed costs.
B. are in a protected market.
C. have high fixed costs, in a slow growth industry with high exit barriers.
D. have low exit barriers for easy transition to another industry.
C. have high fixed costs, in a slow growth industry with high exit barriers.
70
65. (p. 59-60) The most intense rivalry results from
A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs.
C. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers.
D. a high level of differentiation.
A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs.
71
66. (p. 60) Exit barriers arise from
A. specialized assets with no alternative use.
B. governmental and social pressures.
C. strategic interrelationships with other business units within the same company.
D. all of these.
D. all of these.
72
67. (p. 61) Because the Internet lowers barriers to entry in most industries, it
A. decreases the threat of new entrants.
B. increases the threat of new entrants.
C. makes it easier to build customer loyalty.
D. increases supplier power.
B. increases the threat of new entrants.
73
68. (p. 63) End users are
A. the final consumers in a distribution channel.
B. usually the C in B2C.
C. likely to have greater bargaining power because of the Internet.
D. all of these.
D. all of these.
74
69. (p. 63) Incumbent firms may enjoy increased bargaining power because the Internet
A. focuses marketing efforts on end users.
B. diminishes the power of many distribution channel intermediaries.
C. increases channel conflict.
D. has reduced the number of wholesalers and distributors.
B. diminishes the power of many distribution channel intermediaries.
75
70. (p. 63) Supplier power has increased because of the Internet for all of the following reasons EXCEPT
A. the growth of new Web-based businesses has created more outlets for suppliers to sell to.
B. some suppliers have created Web-based purchasing systems that encourage switching.
C. the process of disintermediation makes it possible for some suppliers to reach end users directly.
D. software that links buyers to a supplier's website has created rapid, low-cost order capabilities.
B. some suppliers have created Web-based purchasing systems that encourage switching.
76
71. (p. 64) In general, the threat of substitutes is heightened because the Internet
A. introduces new ways to accomplish the same task.
B. lowers switching costs.
C. lowers barriers to entry.
D. increases output per unit of cost.
A. introduces new ways to accomplish the same task.
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72. (p. 65) How do infomediaries and consumer information websites increase the intensity of competitive rivalry?
A. by shifting customers away from issues of price
B. by making competitors in cyberspace seem less equally balanced
C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over
D. by highlighting a firm's unique selling advantages
C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over
78
73. (p. 67) The value net is a game-theoretic approach that
A. extends the value chain analysis.
B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to generate and appropriate value.
C. helps us to understand the evolution of the five forces over time.
D. uses network analysis to understand the relationships among different companies.
B. is a way to analyze all the players in a game and analyze how their interactions affect a firm's ability to generate and appropriate value.
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74. (p. 67) In the value net analysis, complementors are
A. firms that produce substitute products.
B. customers who compliment the company for their good products and services.
C. firms that produce products or services that have a positive impact on the value of a firm's products or services.
D. firms that supply critical inputs to a company.
C. firms that produce products or services that have a positive impact on the value of a firm's products or services.
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75. (p. 68) Strategic groups consist of
A. a group of top executives who make strategies for a company.
B. a group of firms within an industry that follow similar strategies.
C. a group of executives drawn from different companies within an industry that makes decisions on industry standards.
D. a group of firms within an industry that decide to collude rather than compete with each other so that they can increase their profits.
B. a group of firms within an industry that follow similar strategies.
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76. (p. 68-69) Which of the following statements about strategic groups is FALSE?
A. Two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same.
B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups.
C. Strategic groups help chart the future directions of firms' strategies.
D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole.
B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups.
82
35. (p. 82) Which of the following is NOT a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis?
A. Organizational strengths may not lead to competitive advantage.
B. SWOT's focus on the external environment is too broad and integrative.
C. SWOT gives a one-shot view of a moving target.
D. SWOT overemphasizes a single dimension of strategy.
B. SWOT's focus on the external environment is too broad and integrative.
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36. (p. 81, 86) In value-chain analysis, the activities of an organization are divided into two major categories of value activities: primary and support. Which of the following is a primary activity?
A. Purchasing key inputs.
B. Recruiting and training employees.
C. Repairing the product for the consumer.
D. Monitoring the cost of producing the product through a cost accounting system.
C. Repairing the product for the consumer.
84
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37. (p. 83) Inbound logistics include
A. machining and packaging.
B. warehousing and inventory control.
C. repair and parts supply.
D. promotion and packaging.
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B. warehousing and inventory control.
85
38. (p. 81, 84) In assessing its primary activities, an airline would examine
A. employee training programs.
B. baggage handling.
C. criteria for lease versus purchase decisions.
D. the effectiveness of its lobbying activities.
B. baggage handling.
86
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39. (p. 81, 83-85) Advertising is a __________ activity. Supply of replacement parts is a __________ activity.
A. primary; primary
B. support; primary
C. support; secondary
D. primary; support
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A. primary; primary
87
40. (p. 83) Which of the following examples demonstrates how successful organizations manage their primary activities?
A. By employing JIT inventory systems, Hewlett Packard has been able to cut lead time from five days to one.
B. Motorola has revised its compensation system to reward employees who learn a variety of skills.
C. National Steel improved its efficiency by consolidating, reducing the number of job classifications, and broadening worker responsibilities.
D. Walmart implemented a sophisticated information system that resulted in reduced inventory carrying costs and shortened customer response time.
A. By employing JIT inventory systems, Hewlett Packard has been able to cut lead time from five days to one.
88
41. (p. 83) Which of the following is not an advantage of Just-In-Time inventory systems?
A. Reduced raw material storage costs.
B. Minimized idle production facilities and workers.
C. Reduced work-in-process inventories.
D. Reduced dependence on suppliers.
D. Reduced dependence on suppliers.
89
```
42. (p. 83) XYZ Corp. is focusing on the objective of low-cost, high quality, on-time production by minimizing idle productive facilities and workers. The XYZ Corp. is taking advantage of a __________ system.
A. Last In, First Out (LIFO)
B. Just-in-time (JIT)
C. First In, First Out (FIFO)
D. Highly mechanized
```
B. Just-in-time (JIT)
90
```
43. (p. 84) ___________ is/are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling.
A. Services
B. Inbound logistics
C. Outbound logistics
D. Operations
```
C. Outbound logistics
91
```
44. (p. 86) Customer service would include
A. product promotion.
B. product distribution.
C. parts supply.
D. procurement of critical supplies.
```
C. parts supply.
92
```
45. (p. 86-87) Which of the following is a support activity?
A. Inbound logistics.
B. Operations.
C. Technology development.
D. Customer service.
```
C. Technology development.
93
46. (p. 86-87) Which of the following lists consists of support activities?
A. Human resource management, technology development, customer service, and procurement.
B. Human resource management, customer service, marketing and sales, and operations.
C. Human resource management, technology development, procurement, and firm infrastructure.
D. Customer service, information systems, technology development, and procurement.
C. Human resource management, technology development, procurement, and firm infrastructure.
94
47. (p. 88) Human resource management consists of activities involved in recruiting, hiring, training, development, and compensation of all types of personnel. It
A. supports only individual primary activities.
B. supports only individual support activities.
C. supports both individual primary and support activities and the entire value chain.
D. supports mostly support activities but does have some impact on primary activities.
C. supports both individual primary and support activities and the entire value chain.
95
```
48. (p. 89) According to value-chain analysis, which of the following would be considered part of a firm's general administration?
A. Human resource management.
B. Information systems.
C. Technology development.
D. Procurement.
```
B. Information systems.
96
49. (p. 89) Although general administration is often viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following EXCEPT
A. negotiating and maintaining ongoing relations with regulatory bodies.
B. effective information systems contributing significantly to a firm's overall cost leadership strategy.
C. marketing expertise increasing a firm's revenues and enabling it to enter new markets.
D. top management providing a key role in collaborating with important customers.
C. marketing expertise increasing a firm's revenues and enabling it to enter new markets.
97
```
50. (p. 89) For firm's such as Walgreen Co. (a chain of drugstores), information systems have been a source of competitive advantage by enabling them to
A. differentiate service.
B. automate some operations.
C. respond to consumer needs.
D. all of these.
```
D. all of these.
98
51. (p. 89-90) A marketing department that promises delivery faster than the production department's ability to produce is an example of a lack of understanding of the
A. interrelationships among functional areas and firm strategies.
B. need to maintain the reputation of the company.
C. organizational culture and leadership.
D. synergy of the business units.
A. interrelationships among functional areas and firm strategies.
99
52. (p. 93) The resource-based view (RBV) of the firm combines two perspectives:
A. the primary and support activities of the firm.
B. the interrelationships among the primary activities of the firm and corporate management.
C. the internal analysis of the firm as well as the external analysis of the industry and competitive environment.
D. the industry and the competitive environment.
C. the internal analysis of the firm as well as the external analysis of the industry and competitive environment.
100
53. (p. 93-94) The three key types of resources that are central to the resource-based view of the firm's are
A. tangible resources, intangible resources, and organizational structure.
B. culture, tangible resources, intangible resources.
C. tangible resources, intangible resources, and organizational capabilities.
D. tangible resources, intangible resources, and top management.
C. tangible resources, intangible resources, and organizational capabilities.
101
54. (p. 94) Examples of tangible resources (in the resource-based view of the firm) include:
A. financial resources, human resources, and firm competencies.
B. financial resources, physical resources, and the capacity to combine intangible resources.
C. financial resources, physical resources, and technological resources.
D. outstanding customer service, innovativeness of products, and reputation.
C. financial resources, physical resources, and technological resources.
102
```
55. (p. 95) __________ are typically embedded in unique routines and practices that have evolved and accumulated over time - such as trust and effective work teams.
A. Tangible resources
B. Intangible resources
C. Reputational resources
D. Organizational capabilities
```
B. Intangible resources
103
```
56. (p. 95) Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of their
A. tangible resources.
B. intangible resources.
C. organizational capabilities.
D. strong primary activities.
```
C. organizational capabilities.
104
```
57. (p. 95) __________ are the competencies or skills that a firm employs to transform inputs into outputs.
A. Tangible resources
B. Intangible resources
C. Reputational resources
D. Organizational capabilities
```
D. Organizational capabilities
105
```
58. (p. 95-96) For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes?
A. Rare.
B. Easy for competitors to substitute.
C. Valuable.
D. Difficult for competitors to imitate.
```
B. Easy for competitors to substitute.
106
59. (p. 97-98) A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics:
A. physical uniqueness, path dependency, causal ambiguity, and social complexity.
B. psychographic uniqueness, path dependency, causal ambiguity, and substitutability.
C. rarity, path dependency, causal ambiguity, and social substitutability.
D. geographic uniqueness, cause dependency, social ambiguity, and path complexity.
A. physical uniqueness, path dependency, causal ambiguity, and social complexity.
107
```
60. (p. 98) A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of
A. social complexity.
B. path dependency.
C. physical uniqueness.
D. causal ambiguity.
```
B. path dependency.
108
```
61. (p. 98) A variety of firm's resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon
A. social complexity.
B. path dependency.
C. physical uniqueness.
D. tangible resources.
```
A. social complexity.
109
62. (p. 98) The following are examples of socially complex organizational phenomena EXCEPT
A. a firm's culture.
B. interpersonal relations among a firm's managers.
C. complex physical technology.
D. leadership and trust.
C. complex physical technology.
110
```
63. (p. 100-101) A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain
A. no competitive advantage.
B. competitive parity.
C. a temporary competitive advantage.
D. a sustainable competitive advantage.
```
C. a temporary competitive advantage.
111
64. (p. 103) Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if
A. suppliers are loyal to the firm.
B. the cost to the firm of replacing them is high.
C. their expertise is firm-specific.
D. the firm's resources are path dependent.
B. the cost to the firm of replacing them is high.
112
65. (p. 106) Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading
A. if the overall strategy of the firm is the same.
B. in periods of recession or economic boom.
C. if the firm shows constant growth.
D. if the firm's stock is publicly traded.
B. in periods of recession or economic boom.
113
```
66. (p. 105) The best measure of a company's ability to meet imminent financial obligations is known as the
A. current ratio.
B. total asset turnover.
C. debt ratio.
D. profit margin.
```
A. current ratio.
114
67. (p. 105) Which of the following would be most difficult to assess?
A. The liquidity position of a firm.
B. The legitimacy and reputation of a firm.
C. Market share growth.
D. The efficiency with which a firm utilizes its assets.
B. The legitimacy and reputation of a firm.
115
```
68. (p. 105) Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?
A. Leverage ratios.
B. Profitability ratios.
C. Activity ratios.
D. Liquidity ratios.
```
D. Liquidity ratios.
116
```
69. (p. 105) Ratios that reflect whether or not a firm is efficiently using its resources are known as
A. turnover ratios.
B. leverage ratios.
C. liquidity ratios.
D. profitability ratios.
```
A. turnover ratios.
117
```
70. (p. 107) The "balanced scorecard" provides top managers with a __________ view of the business.
A. detailed and complex
B. fast but comprehensive
C. simple and routine
D. long-term financial
```
B. fast but comprehensive
118
71. (p. 108) The "balanced scorecard" developed by Kaplan and Norton helps to integrate
A. financial analysis and a firm's reputation.
B. intangible resources and operational measures.
C. financial analysis and stakeholder perspectives.
D. short-term perspectives and strategic positioning.
C. financial analysis and stakeholder perspectives.
119
```
72. (p. 108) The balanced scorecard enables managers to consider their business from all of the following perspectives EXCEPT
A. customer perspective.
B. internal perspective.
C. innovation and learning perspective.
D. ethical perspective.
```
D. ethical perspective.
120
73. (p. 109) An important implication of the "balanced scorecard" approach is that
A. managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss.
B. the key emphasis on customer satisfaction and financial goals are only a means to that end.
C. managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously.
D. gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction.
C. managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously.
121
74. (p. 116-117) Four Internet-based activities that are enhancing firms' capabilities to use the Internet to add value include
A. outsourcing, problem-solving, bill-paying, and delivery.
B. evaluating, bill-paying, customizing, and returning.
C. search, rescue, repair, return.
D. search, evaluation, problem-solving, and transaction.
D. search, evaluation, problem-solving, and transaction.
122
```
75. (p. 117) Internet search activities include
A. generating action plans.
B. considering alternatives.
C. gathering information.
D. making payments and taking delivery.
```
C. gathering information.
123
76. (p. 117) The value-adding activity known as problem-solving
A. involves streamlining operations.
B. is typically used in the context of providing unique services.
C. refers to comparing the costs and benefits of various options.
D. creates access to products ratings and price comparisons.
B. is typically used in the context of providing unique services.
124
77. (p. 116-117) Unique content will not add value to an Internet website under the following condition(s):
A. the cost of developing the content exceeds the benefits gained.
B. visitors to the website do not value or use the content.
C. the content is unreliable.
D. all of these.
D. all of these.
125
```
78. (p. 118) Examples of value-adding content often found on websites include all of the following except
A. customer feedback.
B. advertising.
C. expertise.
D. entertainment programming.
```
B. advertising.
126
79. (p. 119) Internet business models
A. outline methods that online businesses use to create value.
B. cannot be used by traditional businesses.
C. outline specific actions a firm needs to take to be profitable.
D. cannot be combined to create additional competitive advantages.
A. outline methods that online businesses use to create value.
127
```
80. (p. 119) All of the following are examples of Internet business models EXCEPT
A. referral-based model.
B. subscription-based model.
C. prescription-based model.
D. production-based model.
```
C. prescription-based model.
128
```
36. (p. 125) The makeup of goods and services in the Gross Domestic Products of developed countries has changed over the last decade. More than 50% of the value of GDP of developed countries is based on
A. clothing and apparel.
B. capital accumulation.
C. financial management.
D. knowledge.
```
D. knowledge.
129
37. (p. 124-125) As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently, strategic management has moved from focusing on
A. intangible resources to tangible resources.
B. tangible resources to intangible resources.
C. working capital to fixed capital.
D. fixed capital to working capital.
B. tangible resources to intangible resources.
130
```
38. (p. 125) Changes in our economy have forced firms to be more concerned with protecting their
A. knowledge workers.
B. social capital.
C. intellectual capital.
D. all of these.
```
D. all of these.
131
```
39. (p. 126) In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets.
A. be equal to
B. be smaller than
C. be larger than
D. not be correlated with
```
C. be larger than
132
40. (p. 126) According to the text, intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by
A. increasing retention of below average workers.
B. attracting and retaining knowledgeable workers.
C. decreasing labor costs.
D. increasing the turnover of employees.
B. attracting and retaining knowledgeable workers.
133
```
41. (p. 126) Which of the following firms would you expect to have the highest ratio of market value to book value?
A. Union Pacific (railroad)
B. Google
C. International Paper
D. Nucor (steel)
```
B. Google
134
42. (p. 126) Human capital includes
A. an individual's capabilities, knowledge, and skills.
B. the relationships between people.
C. the output from assembly line employees.
D. an improved product.
A. an individual's capabilities, knowledge, and skills.
135
```
43. (p. 126) __________ includes creativity and problem solving ability.
A. Physical capital
B. Human capital
C. Social capital
D. Emotional capital
```
B. Human capital
136
```
44. (p. 126) __________ can be defined as the "network of relationships that individuals have throughout the organization."
A. Human capital
B. Social capital
C. Intellectual capital
D. Tacit knowledge
```
B. Social capital
137
45. (p. 127) Tacit knowledge
A. is the same as explicit knowledge.
B. is found mostly at the lower levels of the organization.
C. can be codified but not reproduced.
D. can be accessed only with the consent of the employees because it is in the minds of the employees.
D. can be accessed only with the consent of the employees because it is in the minds of the employees.
138
```
46. (p. 127) New knowledge involves the continual interaction between __________ and __________ knowledge.
A. intellectual; pragmatic
B. theoretical; practical
C. tacit; explicit
D. detailed; tacit
```
C. tacit; explicit
139
```
47. (p. 127) Recently, a knowledge worker's loyalty to his or her employing firm has __________ compared to his or her loyalty to his or her profession and colleagues.
A. increased
B. decreased
C. remained the same
D. no correlation when
```
B. decreased
140
```
48. (p. 127) The text discusses three areas a firm must be concerned with in order to keep their best and brightest employees from leaving. These include all of the following EXCEPT
A. hiring/selecting.
B. sorting/absorbing.
C. developing.
D. retaining.
```
B. sorting/absorbing.
141
49. (p. 128) Managing a knowledge intensive workforce is very challenging. The best way for a firm to manage its workforce is to
A. retain knowledge workers.
B. attract the brightest employees.
C. balance efforts in the attraction, selection, and retention of top talent.
D. ensure that it pays higher salaries than its rivals.
C. balance efforts in the attraction, selection, and retention of top talent.
142
50. (p. 129-130) Firms must compete for top talent. When attracting and selecting employees, firms must strive to select the best fit for both the employee and the firm. In an effort to reduce wasted time and effort in interviewing too many candidates while assuring a good candidate pool, a firm should
A. run employment ads in the newspaper.
B. use a pre-interview quiz or "bozo filter" (e.g., Cooper Software).
C. only let lower level employees interview job candidates.
D. refrain from hiring by referrals from present employees.
B. use a pre-interview quiz or "bozo filter" (e.g., Cooper Software).
143
51. (p. 130) Many companies use referrals by current employees as a source for new hiring and even monetarily reward them for the following reasons:
A. it is less expensive than the fees paid to headhunters.
B. current employees are normally very careful in recommending someone because their credibility is on the line.
C. it is a good test of employee loyalty.
D. both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters.
D. both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters.
144
```
52. (p. 130) ABC, Incorporated desires to have the most qualified people in every position throughout its organization. This is an example of a concern for
A. developing human capital.
B. developing social networks.
C. decreasing labor intensive training.
D. leveraging organizational structure.
```
A. developing human capital.
145
```
53. (p. 130) Developing human capital is essential to maintaining a competitive advantage in today's knowledge economy. Efforts and initiatives to develop human capital should be directed
A. at top managers.
B. at human resource departments.
C. at the employees themselves.
D. throughout the firm at all levels.
```
D. throughout the firm at all levels.
146
```
54. (p. 132) Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has
A. increased.
B. decreased.
C. become less important.
D. remained the same.
```
A. increased.
147
```
55. (p. 133) In a 360-degree evaluation and feedback system, __________ rate a person's skill and performance.
A. superiors
B. direct reports
C. colleagues
D. all of these
```
D. all of these
148
56. (p. 133) Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should
A. focus on increased recruiting.
B. decrease money spent on human capital.
C. make their work environment less stimulating.
D. adopt effective retention strategies.
D. adopt effective retention strategies.
149
57. (p. 133) In order to take advantage of investment in human capital, a firm should
A. rotate workers through functions in the company as quickly as possible.
B. refrain from training individual employees.
C. establish practices that will enhance employee retention.
D. none of these.
C. establish practices that will enhance employee retention.
150
58. (p. 133) The least effective way to retain human capital is
A. encouraging employee identification with organizational mission and goals.
B. requiring employees to sign agreements that prevent them from working for competitors in the future.
C. providing employees with a challenging and stimulating work environment.
D. providing employees with financial and nonfinancial rewards and incentives.
B. requiring employees to sign agreements that prevent them from working for competitors in the future.
151
59. (p. 134) Generally, employees are most likely to stay with an organization if
A. the employer provides high salaries to technology professionals.
B. the organization's mission and values align with the employee's mission and values.
C. the firm is in a high tech industry.
D. the mission and values of the organization change often.
B. the organization's mission and values align with the employee's mission and values.
152
60. (p. 135) Many successful firms use internal labor markets. The most important reason they do this is because
A. they want to encourage job rotation.
B. if an employee is in the same department for too long, he/she would become indispensable.
C. they want to keep highly mobile employees motivated and challenged.
D. an employee who moves too much can be identified as unreliable and eliminated.
C. they want to keep highly mobile employees motivated and challenged.
153
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61. (p. 136) All of the following are the benefits of diversity in a firm's workforce except:
A. Creativity Argument.
B. Problem-Solving Argument.
C. Resource Acquisition Argument.
D. Similarity in Perspectives Argument.
```
D. Similarity in Perspectives Argument.
154
62. (p. 137) Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished through
A. requiring workers to work independently of each other.
B. decreasing the interaction of departments within the firm.
C. encouraging the sharing of ideas between employees in the firm.
D. structuring the firm with rigid departmental and employee divisions.
C. encouraging the sharing of ideas between employees in the firm.
155
```
63. (p. 137) In an effort to capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed
A. the "Columbus effect."
B. the "Pied Piper effect."
C. strategically competitive hiring.
D. knowledge integration.
```
B. the "Pied Piper effect."
156
64. (p. 137) Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm's social capital is based on
A. an employee's individual abilities.
B. the relationships among a firm's employees.
C. a firm's allocation of financial resources.
D. an individual's knowledge.
B. the relationships among a firm's employees.
157
65. (p. 138) Social network analysis is helpful because the configuration of group members' social ties within and outside the group affects the extent to which members connect to individuals who do all of the following EXCEPT:
A. convey needed resources.
B. ensure that everyone has the same perspective on strategic and operational issues.
C. have the opportunity to exchange information and support.
D. have the motivation to treat each other in positive ways.
B. ensure that everyone has the same perspective on strategic and operational issues.
158
```
66. (p. 140) In social network analysis __________ stress(es) the importance of ties connecting heterogeneous people, helping to ensure a wide range of diversity in information and perspective.
A. closure
B. redundancy
C. bridging relationships
D. social supports
```
C. bridging relationships
159
```
67. (p. 140) In social network analysis, high levels of __________ often come at a price. For example, groups can become too insular and fail to share what they have learned with people outside the group.
A. bridging relationships
B. intellect
C. closure
D. diverse knowledge
```
C. closure
160
68. (p. 142) Advantages of effective social networks for career success include all of the following EXCEPT
A. access to private information.
B. access to diverse skill sets.
C. greater power.
D. greater redundancy in knowledge sources.
D. greater redundancy in knowledge sources.
161
69. (p. 143-144) Among the downsides of social capital is/are:
A. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs.
B. socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive.
C. individuals may become less willing to collaborate on joint projects.
D. social capital may both breed "groupthink" and the socialization processes to create it (orientation, training, etc.) can be expensive.
D. social capital may both breed "groupthink" and the socialization processes to create it (orientation, training, etc.) can be expensive.
162
70. (p. 143-144) Social capital has many potential benefits. However, according to the text, social capital
A. is always beneficial to a firm.
B. may or may not be beneficial to a firm.
C. usually restricts the productivity of employees.
D. always hurts firm performance.
B. may or may not be beneficial to a firm.
163
71. (p. 145) The use of information technology (e.g., e-mail) has increased in recent years in many organizations. This has helped to
A. communicate information efficiently.
B. make more effective use of time in every situation.
C. restrict social network growth.
D. create smaller social networks.
A. communicate information efficiently.
164
72. (p. 147) The creation of knowledge assets is typically characterized by
A. high upfront costs and subsequent high variable costs.
B. high fixed costs and high variable costs.
C. low upfront costs and high variable costs.
D. high upfront costs and low variable costs.
D. high upfront costs and low variable costs.
165
73. (p. 147) Mary Stinson was required to take over a project after the entire team left the company. She was able to reconstruct what the team had accomplished through reading e-mails exchanged by the previous team's members. This is an example of
A. using explicit knowledge.
B. inefficient use of information management.
C. using tacit knowledge.
D. all of these.
A. using explicit knowledge.
166
74. (p. 149) The management of intellectual property involves all of the following EXCEPT
A. patents.
B. contracts with confidentiality and noncompete clauses.
C. converting explicit knowledge to tacit knowledge.
D. copyrights and trademarks.
C. converting explicit knowledge to tacit knowledge.
167
75. (p. 151) Dynamic capabilities include all of the following EXCEPT:
A. learning and innovating.
B. the ability of an organization to challenge the conventional industry in its industry and market.
C. becoming more efficient in operational processes.
D. continuously adopting new ways of serving the evolving needs of the market.
C. becoming more efficient in operational processes.
168
35. (p. 161) The primary aim of strategic management at the business level is
A. maximizing risk-return tradeoffs through diversification.
B. achieving a low cost position.
C. maximizing differentiation of products and/or services.
D. achieving competitive advantage(s).
D. achieving competitive advantage(s).
169
```
36. (p. 164) Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?
A. differentiation
B. overall cost leadership
C. differentiation focus
D. stuck-in-the-middle
```
B. overall cost leadership
170
37. (p. 165) A manufacturing business pursuing cost leadership will likely
A. focus on a narrow market segment.
B. rely on experience effects to raise efficiency.
C. use advertising to build brand image.
D. put heavy emphasis on product engineering.
B. rely on experience effects to raise efficiency.
171
38. (p. 165) One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by
A. hiring more experienced personnel.
B. repeating a process until a task becomes easier.
C. spreading out a given expense or investment over a greater volume.
D. competing in an industry for a long time.
B. repeating a process until a task becomes easier.
172
39. (p. 165) The experience curve suggests that cutting prices is a good strategy
A. if it can induce greater demand and thereby help a firm travel down the experience curve faster.
B. in industries characterized by high economies of scale.
C. in the maturity stage of the industry life cycle.
D. in the decline stage of the industry life cycle.
A. if it can induce greater demand and thereby help a firm travel down the experience curve faster.
173
```
40. (p. 168) Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
A. Overall cost leadership.
B. Differentiation.
C. Differentiation focus.
D. Cost leadership focus.
```
A. Overall cost leadership.
174
41. (p. 168-169) Which of the following is a risk (or potential pitfall) of cost leadership?
A. Cost cutting may lead to the loss of desirable features.
B. Attempts to stay ahead of the competition may lead to gold plating.
C. Cost differences increase as the market matures.
D. Producers are more able to withstand increases in suppliers' cost.
A. Cost cutting may lead to the loss of desirable features.
175
42. (p. 169) A firm can achieve differentiation through all of the following means EXCEPT
A. improving brand image.
B. better customer service.
C. offering lower prices to frequent customers.
D. adding additional product features.
C. offering lower prices to frequent customers.
176
```
43. (p. 170) Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy?
A. Differentiation.
B. Overall cost leadership.
C. Differentiation focus.
D. Stuck-in-the middle.
```
A. Differentiation.
177
44. (p. 171) High product differentiation is generally accompanied by
A. higher market share.
B. decreased emphasis on competition based on price.
C. higher profit margins and lower costs.
D. significant economies of scale.
B. decreased emphasis on competition based on price.
178
45. (p. 171) Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position vis-à-vis Porter's five forces?
A. By increasing a firm's margins, it avoids the need for a low cost position.
B. It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives.
C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs.
D. Firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors.
C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs.
179
46. (p. 171) A differentiation strategy enables a business to address the five competitive forces by
A. lessening competitive rivalry by distinguishing itself.
B. having brand-loyal customers become more sensitive to prices.
C. increasing economies of scale.
D. serving a broader market segment.
A. lessening competitive rivalry by distinguishing itself.
180
47. (p. 172-174) All of the following are potential pitfalls of a differentiation strategy EXCEPT:
A. uniqueness that is not valuable.
B. too high a price premium.
C. all rivals share a common input or raw material.
D. perceptions of differentiation may vary between buyers and sellers.
C. all rivals share a common input or raw material.
181
48. (p. 174) Which statement regarding competitive advantages is true?
A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.
B. With an overall cost leadership strategy, firms need not be concerned with parity on differentiation.
C. In the long run, a business with one or more competitive advantages is probably destined to earn normal profits.
D. Attaining multiple types of competitive advantage is a recipe for failure.
A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.
182
49. (p. 174-175) A narrow market focus is to a differentiation-based strategy as a
A. broadly-defined target market is to a cost leadership strategy.
B. growth market is to a differentiation-based strategy.
C. growth market is to a cost-based strategy.
D. technological innovation is to a cost-based strategy.
A. broadly-defined target market is to a cost leadership strategy.
183
50. (p. 174) A firm following a focus strategy
A. must focus on governmental regulations.
B. must focus on a market segment or group of segments.
C. must focus on the rising cost of inputs.
D. must avoid entering international markets.
B. must focus on a market segment or group of segments.
184
51. (p. 175-176) All of the following are potential pitfalls of a focus strategy EXCEPT
A. erosion of cost advantages within the narrow segment.
B. all rivals share a common input or raw material.
C. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation.
D. focusers can become too focused to satisfy buyer needs.
B. all rivals share a common input or raw material.
185
52. (p. 163) Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform
A. at about the same level as firms that achieve either cost or differentiation advantages.
B. about the same as firms that are "stuck-in-the-middle."
C. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages.
D. higher than firms that achieve either a cost or a differentiation advantage.
D. higher than firms that achieve either a cost or a differentiation advantage.
186
53. (p. 176-178) The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following EXCEPT
A. automated and flexible manufacturing systems.
B. exploiting the profit pool concept for competitive advantage.
C. coordinating the "extended" value chain by way of information technology.
D. deriving benefits from highly focused and high technology markets.
D. deriving benefits from highly focused and high technology markets.
187
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54. (p. 177) A __________ can be defined as the total profits in an industry at all points along the industry's value chain.
A. profit maximizer
B. revenue enhancer
C. profit pool
D. profit outsourcing
```
C. profit pool
188
55. (p. 178-179) All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy EXCEPT:
A. firms that fail to attain both strategies may end up with neither and become "stuck-in-the-middle."
B. targeting too large a market that causes unit costs to increase.
C. underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain.
D. miscalculating sources of revenue and profit pools in the firm's industry.
B. targeting too large a market that causes unit costs to increase.
189
56. (p. 183) Which of the following is NOT one of the ways the Internet is lowering transaction costs?
A. eliminating supply chain intermediaries
B. evaluating employee performance
C. minimizing office expenses
D. reducing business travel
B. evaluating employee performance
190
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57. (p. 183) Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of
A. electronic data interchange.
B. knowledge management.
C. collaborative design.
D. mass customization.
```
D. mass customization.
191
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58. (p. 183) Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies?
A. celebrity endorsements
B. prestige packaging
C. exceptional service
D. mass customization
```
D. mass customization
192
59. (p. 184) Which of the following phrases best completes this sentence: Because of the Internet, firms that use a focus strategy have new opportunities to
A. respond quickly to customer requests.
B. provide more services and features.
C. access markets less expensively.
D. access niche markets in a highly specialized fashion.
D. access niche markets in a highly specialized fashion.
193
60. (p. 185) One of the reasons the Internet is eroding sustainable competitive advantages is
A. incumbent firms are entering market segments that they previously considered to be too small.
B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.
C. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success.
D. firms are ignoring opportunities to offer high-end services in niche markets.
B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.
194
61. (p. 187) Which of these statements regarding the industry life cycle is correct?
A. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device.
B. Trends suggested by the market life cycle model are generally not reversible or repeatable.
C. It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives.
D. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.
C. It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives.
195
62. (p. 187) Which of the following statements about the introduction stage of the market life cycle is TRUE?
A. It produces relatively large, positive cash flows.
B. Strong brand recognition seldom serves as an important switching cost.
C. Market share gains by pioneers are usually easily sustained for many years.
D. Products or services offered by pioneers may be perceived as differentiated simply because they are new.
D. Products or services offered by pioneers may be perceived as differentiated simply because they are new.
196
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63. (p. 187) In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low.
A. introduction
B. growth
C. maturity
D. decline
```
A. introduction
197
64. (p. 189) The growth stage of the industry life cycle is characterized by
A. "in-kind" competition (from the same type of product).
B. premium pricing.
C. a growing trend to compete on the basis of price.
D. retaliation by competitors whose customers are stolen.
A. "in-kind" competition (from the same type of product).
198
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65. (p. 188) In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.
A. introduction
B. growth
C. maturity
D. decline
```
C. maturity
199
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66. (p. 189) In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in?
A. introduction
B. growth
C. maturity
D. decline
```
C. maturity
200
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67. (p. 189) A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage?
A. introduction
B. growth
C. maturity
D. decline
```
C. maturity
201
68. (p. 189) As markets mature,
A. costs continue to increase.
B. application for patents increase.
C. differentiation opportunities increase.
D. there is increasing emphasis on efficiency.
D. there is increasing emphasis on efficiency.
202
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69. (p. 189) The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?
A. introduction
B. growth
C. maturity
D. decline
```
C. maturity
203
70. (p. 189) Which of the following is most often true of mature markets?
A. Some competitors enjoy a significant operating advantage due to increasing experience effects.
B. The market supports premium pricing, which attracts additional competitors.
C. Advantages that cannot be duplicated by other competitors are difficult to achieve.
D. The magnitude of pricing differences and product differentiation is larger than in the growth stage.
C. Advantages that cannot be duplicated by other competitors are difficult to achieve.
204
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71. (p. 191) In the __________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance.
A. introduction
B. growth
C. maturity
D. decline
```
D. decline
205
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72. (p. 191) The most likely time to pursue a harvest strategy is in a situation of
A. high growth.
B. strong competitive advantage.
C. mergers and acquisitions.
D. decline in the market life cycle.
```
D. decline in the market life cycle.
206
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73. (p. 192) During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly.
A. maintaining
B. harvesting
C. exiting
D. consolidating
```
B. harvesting
207
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74. (p. 193) Research shows that the following are all strategies used by firms engaged in successful turnarounds EXCEPT
A. asset and cost surgery.
B. selective product and market pruning.
C. global expansion.
D. piecemeal productivity improvements.
```
C. global expansion.
208
75. (p. 193) Piecemeal productivity improvements during a turnaround typically does NOT involve
A. business process reengineering.
B. increased capacity utilization.
C. benchmarking.
D. expansion of a firm's product market scope.
D. expansion of a firm's product market scope.
209
31. (p. 201) Corporate-level strategy addresses two related issues:
A. how to compete in a given business; the application of technology.
B. what businesses to compete in; how these businesses can achieve synergy.
C. how to integrate primary activities; increase shareholder wealth.
D. how to improve a firm's infrastructure; how to maintain ethical behavior.
B. what businesses to compete in; how these businesses can achieve synergy.
210
32. (p. 204) Individual investors are dependent upon the corporation's managers to
A. diversify the stockholder's investments in order to reduce risk.
B. add value to their investments in a way that the stockholders could not accomplish on their own.
C. achieve risk reduction at a lower cost than stockholders could obtain on their own.
D. maximize short-term returns in the form of dividends.
B. add value to their investments in a way that the stockholders could not accomplish on their own.
211
33. (p. 205) McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of
A. achieving economies of scope through related diversification.
B. achieving market power through related diversification.
C. attaining the benefits of restructuring through unrelated diversification.
D. attaining the benefits of parenting through unrelated diversification.
A. achieving economies of scope through related diversification.
212
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34. (p. 206) Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as
A. utilizing common infrastructures.
B. capitalizing on core competencies.
C. reducing corporate risk.
D. using portfolio analysis.
```
B. capitalizing on core competencies.
213
35. (p. 205) The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. This is an example of
A. achieving economies of scope through related diversification.
B. achieving market power through related diversification.
C. attaining the benefits of horizontal integration.
D. attaining the benefits of parenting through unrelated diversification.
D. attaining the benefits of parenting through unrelated diversification.
214
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36. (p. 206) __________ reflect(s) the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.
A. Primary value chain activities
B. Culture
C. Core competencies
D. Horizontal integration
```
C. Core competencies
215
37. (p. 206-207) For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?
A. The competence must help the business gain strength relative to its competition.
B. The new business must be similar to existing businesses to benefit from a core competence.
C. The collection of competencies should be unique, so that they cannot be easily imitated.
D. The new business must have an established large market share.
D. The new business must have an established large market share.
216
38. (p. 207) Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that
A. the similarity required for sharing core competencies must be in the value chain, not in the product.
B. the products use similar distribution channels.
C. the target market is the same, even if the products are very different.
D. the methods of production are the same.
A. the similarity required for sharing core competencies must be in the value chain, not in the product.
217
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39. (p. 208) When management uses common production facilities or purchasing procedures to distribute different but related products, they are
A. building on core competencies.
B. sharing activities.
C. achieving process gains.
D. using portfolio analysis.
```
B. sharing activities.
218
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40. (p. 210) Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of
A. leveraging core competencies.
B. sharing activities.
C. vertical integration.
D. pooled negotiating power.
```
C. vertical integration.
219
41. (p. 212) The risks of vertical integration include all of the following EXCEPT
A. costs and expenses associated with increased overhead and capital expenditures.
B. lack of control over valuable assets.
C. problems associated with unbalanced capacities along the value chain.
D. additional administrative costs associated with managing a more complex set of activities.
B. lack of control over valuable assets.
220
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42. (p. 212) Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with
A. strategic alliances.
B. divestment.
C. vertical integration.
D. horizontal integration.
```
C. vertical integration.
221
43. (p. 213) A firm should consider vertical integration when
A. the competitive situation is highly volatile.
B. customer needs are evolving.
C. the firm's suppliers willingly cooperate with the firm.
D. the firm's suppliers of raw materials are often unable to maintain quality standards.
D. the firm's suppliers of raw materials are often unable to maintain quality standards.
222
44. (p. 214) It may be advantageous to vertically integrate when
A. lower transaction costs and improved coordination are vital and achievable through vertical integration.
B. the minimum efficient scales of two corporations are different.
C. flexibility is reduced, providing a more stationary position in the competitive environment.
D. various segregated specializations will be combined.
A. lower transaction costs and improved coordination are vital and achievable through vertical integration.
223
```
45. (p. 213) Transaction costs include all of the following costs EXCEPT
A. search costs.
B. negotiating costs.
C. monitoring costs.
D. agency costs.
```
D. agency costs.
224
46. (p. 214) Vertical integration is attractive when
A. transaction costs are higher than internal administrative costs.
B. internal administrative costs are higher than transaction costs.
C. transaction costs and internal administrative costs are equal.
D. search costs are higher than monitoring costs.
A. transaction costs are higher than internal administrative costs.
225
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47. (p. 214-215) __________ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures.
A. Parenting
B. Restructuring
C. Leveraging core competencies
D. Increasing market power
```
acquisitions, divestures, and new ventures.
| A. Parenting
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48. (p. 215) __________ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.
A. Parenting
B. Restructuring
C. Leveraging core competencies
D. Sharing activities
```
B. Restructuring
227
49. (p. 215) According to the text, corporate restructuring includes
A. capital restructuring, asset restructuring, and technology restructuring.
B. global diversification, capital restructuring, and asset restructuring.
C. management restructuring, financial restructuring, and procurement restructuring.
D. capital restructuring, asset restructuring, and management restructuring.
D. capital restructuring, asset restructuring, and management restructuring.
228
```
50. (p. 216) Portfolio management matrices are applied to what level of strategy?
A. Departmental level
B. Business level
C. Corporate level
D. International level
```
C. Corporate level
229
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51. (p. 217) When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a
A. cow.
B. dog.
C. problem child.
D. star.
```
D. star.
230
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52. (p. 217) In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a
A. star.
B. question mark.
C. cash cow.
D. dog.
```
B. question mark.
231
53. (p. 219) Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics?
A. Grid dimensions are based on external environments and internal capabilities/market positions.
B. Businesses are plotted on a 3-dimensional grid.
C. Position in the matrix suggests a need for, or ability to share, infrastructures or build on core competences.
D. They are most helpful in helping businesses develop types of competitive advantage.
A. Grid dimensions are based on external environments and internal capabilities/market positions.
232
54. (p. 217) A "cash cow," referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has
A. low market growth and relatively high market share.
B. relatively low market share and low market growth.
C. relatively low market share and high market growth.
D. high market growth and relatively high market share.
A. low market growth and relatively high market share.
233
55. (p. 217) In managing a firm's portfolio, the BCG matrix would suggest that
A. "dogs" should be invested in to increase market share and become cash cows.
B. "stars" are in low growth markets and can provide excess cash to fund other opportunities.
C. "question marks" can represent future "stars" if their market share is increased.
D. "cash cows" require substantial cash outlays to maintain market share.
C. "question marks" can represent future "stars" if their market share is increased.
234
56. (p. 217) In the Boston Consulting Group's (BCG) Growth Share Matrix, the suggested strategy for "stars" is to
A. milk them to finance other businesses.
B. invest large sums to gain a good market share.
C. not invest in them and to shift cash flow to other businesses.
D. maintain position and after the market growth slows use the business to provide cash flow.
D. maintain position and after the market growth slows use the business to provide cash flow.
235
57. (p. 218) All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT
A. every business cannot be accurately measured and compared on the two dimensions.
B. it views each business as a stand-alone entity and ignores the potential for synergies across businesses.
C. it takes a dynamic view of competition which can lead to overly complex analyses.
D. while easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic prescriptions.
C. it takes a dynamic view of competition which can lead to overly complex analyses.
236
58. (p. 220) The three primary means by which a firm can diversify are:
A. mergers and acquisitions; joint ventures and strategic alliances; internal development.
B. mergers and acquisitions; differentiation; overall cost leadership.
C. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital.
D. mergers and acquisitions; internal development; differentiation.
A. mergers and acquisitions; joint ventures and strategic alliances; internal development.
237
59. (p. 223-224) The downsides or limitations of mergers and acquisitions include all of the following EXCEPT:
A. expensive premiums that are frequently paid to acquire a business.
B. difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations.
C. it is a slow means to enter new markets and acquire skills and competences.
D. there can be many cultural issues that can doom an otherwise promising acquisition.
C. it is a slow means to enter new markets and acquire skills and competences.
238
60. (p. 225) Divesting businesses can accomplish many different objectives, including
A. enabling managers to focus their efforts more directly on the firm's core businesses.
B. providing the firm with more resources to spend on more attractive alternatives.
C. raising cash to help fund existing businesses.
D. all of these.
D. all of these.
239
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61. (p. 227) A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of
A. joint diversification.
B. strategic alliance.
C. divestment.
D. global integration.
```
B. strategic alliance.
240
62. (p. 226) Cooperative relationships such as __________ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.
A. joint ventures
B. mergers and acquisitions
C. strategic alliances
D. both joint ventures and strategic alliances
D. both joint ventures and strategic alliances
241
63. (p. 228) All of the following are guidelines for managing strategic alliances EXCEPT
A. establishing a clear understanding between partners.
B. relying primarily on a contract to make the joint venture work.
C. not shortchanging your partner.
D. working hard to ensure a collaborative relationship between partners.
B. relying primarily on a contract to make the joint venture work.
242
64. (p. 228) Which of the following statements regarding internal development as a means of diversification is FALSE?
A. Many companies use internal development to extend their product lines or add to their service offerings.
B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.
C. The firm is able to capture the wealth created without having to "share the wealth" with alliance partners.
D. Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.
B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.
243
65. (p. 228) __________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.
A. Strategic alliances; joint ventures; internal development
B. Internal development; mergers; acquisitions
C. Strategic alliances; mergers; joint ventures
D. Mergers; internal development; strategic alliances
B. Internal development; mergers; acquisitions
244
66. (p. 229) According to Michael Porter: "There's a tremendous allure to __________. It's the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets."
A. strategic alliances and joint ventures
B. mergers and acquisitions
C. internal development
D. differentiation strategies
B. mergers and acquisitions
245
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67. (p. 232) An antitakeover tactic called (a) __________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.
A. golden parachute
B. greenmail
C. poison pill
D. scorched earth
```
B. greenmail
246
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68. (p. 232) An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called
A. greenmail.
B. a poison pill.
C. a golden parachute.
D. scorched earth.
```
B. a poison pill.
247
69. (p. 232) The term "golden parachutes" refers to
A. a clause requiring that huge dividend payments be made upon takeover.
B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
C. managers of a firm involved in a hostile takeover approaching a third party about making the acquisition.
D. pay given to executives fired because of a takeover.
D. pay given to executives fired because of a takeover.
248
```
70. (p. 232) Antitakeover tactics include all of the following EXCEPT
A. greenmail.
B. golden parachutes.
C. golden handcuffs.
D. poison pills.
```
C. golden handcuffs.
