Question 1

The black swan events in the past have demonstrated that  a) capitalism as an economic system is highly reliable.  b) companies can successfully integrate cost-leadership and differentiation strategies.  c) globalization has reduced the need for standardized corporate ethics.  d) stakeholders can affect or be affected by a firm\'s actions.

Accepted Answer

d) stakeholders can affect or be affected by a firm\'s actions.

Question 2

A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy  a) formulation.  b) analysis.  c) implementation.  d) control.

Accepted Answer

b) analysis.

Question 3

Which of the following groups will not be considered a company\'s internal stakeholder?  a) suppliers  b) board members  c) shareholders  d) managers

Accepted Answer

a) suppliers

Question 4

Which of the following statements is true of strategy?  a) Tactical tools that are a part of a firm\'s functional and global initiatives are strategy.  b) Actions that allow a firm to address a competitive challenge are strategy.  c) Statements of desire, on their own, are strategy.  d) Operational effectiveness and competitive benchmarking are strategy.

Accepted Answer

b) Actions that allow a firm to address a competitive challenge are strategy.

Question 5

The annual net profit after taxes for RSL Corp., a multinational conglomerate, is $5.5 billion. As legal owners, which of the following stakeholder groups has the most legitimate claim on this profit?  a) managers  b) government  c) shareholders  d) local communities

Accepted Answer

c) shareholders

Question 6

The metaphor of a black swan best applies to  a) small businesses that become successful enough to raise capital through initial public offering.  b) highly profitable business units in low growth markets that are to be sustained solely for revenue generation.  c) events that are considered highly unexpected and highly impactful when they do occur.  d) low profitable strategic business units within a large enterprise that are best divested or liquidated.

Accepted Answer

c) events that are considered highly unexpected and highly impactful when they do occur.

Question 7

Which of the following statements with regard to determining firm performance is true?  a) Firm and industry effects are independent of each other.  b) External analysis will help understand the industry effects that determine a firm\'s performance.  c) Industry effects attribute firm performance to the actions managers take within a chosen industry.  d) Industry effects are more important than firm effects in determining a firm\'s performance.

Accepted Answer

b) External analysis will help understand the industry effects that determine a firm\'s performance.

Question 8

Which of the following groups is most likely to be considered a firm\'s internal stakeholder?  a) alliance partners  b) board members  c) creditors  d) customers

Accepted Answer

b) board members

Question 9

Which of the following statements related to a firm\'s stakeholders is not true?  a) If internal or external stakeholders withhold participation in the firm\'s exchange relationships, it can have severe negative performance implications.  b) Effective stakeholder management is an example of the actions managers can take in order to enhance a firm\'s competitive advantage.  c) While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.  d) A firm\'s stakeholders include organizations and groups along with individuals who can affect or be affected by the firm\'s actions.

Accepted Answer

c) While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.

Question 10

Which of the following has contributed to Twitter\'s loss of a competitive advantage?  a) Twitter delivers ads in real time, as opposed to competitors such as Facebook.  b) Individuals pay nothing to use Twitter, which gives Twitter free user-generated content.  c) Core users of Twitter are unable to stay connected permanently.  d) Twitter does not allow advertisers to target their online ads precisely enough.

Accepted Answer

d) Twitter does not allow advertisers to target their online ads precisely enough.

Question 11

Which of the following is a stakeholder attribute that managers should consider at every step in a stakeholder impact analysis?  a) solvency  b) literacy  c) supremacy  d) legitimacy

Accepted Answer

d) legitimacy

Question 12

Which of the following statements about competitive advantage is not true?  a) A firm\'s competitive advantage is always absolute, not relative.  b) A firm can gain a competitive advantage by providing goods similar to its competitors\' goods at a lower price.  c) A firm\'s past performance does not guarantee its future performance.  d) A firm will have a sustainable competitive advantage when it outperforms its competitors over a prolonged period of time.

Accepted Answer

a) A firm\'s competitive advantage is always absolute, not relative.

Question 13

When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in  a) trade-offs that work against each other.  b) competitive parity with firms that have adopted either of the strategies.  c) a competitive advantage through superior performance.  d) an increase in the firm\'s economic contribution.

Accepted Answer

a) trade-offs that work against each other.

Question 14

Which of the following questions would a firm\'s business strategy ideally answer?  a) Where to compete?  b) How to implement the functional strategy?  c) How to compete?  d) Why should we compete?

Accepted Answer

c) How to compete?

Question 15

Which of the following questions does the values espoused by a company primarily answer?  a) Which of the value chain activities are primary?  b) What is the company\'s customer lifetime value?  c) How do we accomplish our goals?  d) What is the value added to a good or service at each step in the production?

Accepted Answer

c) How do we accomplish our goals?

Question 16

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication?  a) The company will have a short-term, unidirectional focus.  b) The company will fail to establish a positive relationship between its vision statement and performance.  c) The company will tend to be more flexible when adapting to changing environments.  d) The company will clearly define how it means to satisfy a customer need.

Accepted Answer

c) The company will tend to be more flexible when adapting to changing environments.

Question 17

Evaluating the data collected from environmental analysis, the corporate executives of F;S Pharma Inc. realized that it was the right time to expand the business. The company\'s vision was accordingly adjusted from \"To Be the Best in the Pharmaceutical Industry\" to \"To Make Good Health Accessible to Everyone around the Globe.\" To support the new vision, the executives decided that the company would first enter the Asian market where its growth potential would be huge. To further support these decisions, the general managers of different SBUs and the functional managers formulated their own strategies. Which of the following approaches to the development of strategy does this best illustrate?  a) scenario planning  b) reverse mentoring  c) bottom-up strategic approach  d) top-down strategic planning

Accepted Answer

d) top-down strategic planning

Question 18

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation\'s position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel\'s production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ___________ emerged as a consequence of the firm\'s resource allocation process.  a) strategic alliance  b) intended strategy  c) unrealized strategy  d) bottom-up strategy

Accepted Answer

d) bottom-up strategy

Question 19

Larry has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss\'s assessment that Larry is capable of conveying the company\'s vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Larry is currently at _____ of the Level-5 leadership pyramid.  a) Level 4  b)Level 1  c) Level 5  d) Level 3

Accepted Answer

a) Level 4

Question 20

An organization\'s ____________ describes what the organization actually doesâthe products and services it plans to provide, and the markets in which it will compete.  1) promissory note  2) code of conduct  3) mission  4) vision

Accepted Answer

3) mission

Question 21

The board of directors of Best Digital Inc., a company that has a large product mix, has decided to get actively involved in research and development for the next three financial years. Budget for each business unit under the company will be allocated from the headquarters in proportion to its previous performance. The board has also decided to liquidate those units that have failed to perform so far. Which of the following strategies does this scenario best illustrate?  a) business strategy  b) functional strategy  c) divisional strategy  d) corporate strategy

Accepted Answer

d) corporate strategy

Question 22

Which of the following statements is true of customer-oriented visions?  a) They tend to force managers to take a myopic view of the business environment.  b) They are inflexible with regard to adapting to changing environments.  c) They state an organization\'s goals in terms of a good or service provided to customers.  d) They define a business in terms of providing solutions to people\'s needs.

Accepted Answer

d) They define a business in terms of providing solutions to people\'s needs.

Question 23

A company\'s vision primarily states  a) how the company plans to compete in its industry.  b) what the company actually does to generate revenues.  c) how the company plans to accomplish its goals.  d) what the company wants to accomplish ultimately.

Accepted Answer

d) what the company wants to accomplish ultimately.

Question 24

Which of the following actions of an automobile firm will be considered as a strategic commitment?  a) the firm launching an existing model of a car in red as a limited edition for six months  b) the firm spending $100,000 on renting a manufacturing facility to meet the temporary demand for its cars  c) the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future  d) the firm promoting its new model of coupe through a free Europe trip worth $15,000 to be won as an early bird offer

Accepted Answer

c) the firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

Question 25

_____ is best described as the behaviors and styles of executives that influence others to achieve an organization\'s vision and mission.  a) Venture capitalism  b) Strategic leadership  c) Machiavellianism  d) Intrapreneurship

Accepted Answer

b) Strategic leadership

Question 26

Which of the following statements is true of an oligopoly?  a) In an oligopoly, price-competition is the preferred mode of competition.  b) An oligopoly is often analyzed using game theory.  c) An oligopoly is characterized by low entry barriers.  d) In an oligopoly, competing firms are most often independent of each other.

Accepted Answer

b) An oligopoly is often analyzed using game theory.

Question 27

Red Think Inc. is a company that supplies microprocessors to Osion Inc., a computer hardware company.  When Osion Inc. demands lower prices for the microprocessors, Red Think Inc. makes it clear that it would profit more from launching its own brand of laptops and desktops in the market. Fearing the competition it would then face from Red Think Inc., Osion Inc. decides to buy the microprocessors at the quoted price itself. In this scenario, Red Think Inc., as a supplier, has exercised its bargaining power by threatening to  a) crowdsource.  b) forward integrate.  c) outsource.  d) backward integrate.

Accepted Answer

d) backward integrate.

Question 28

Restrictions imposed by the government, such as export quotas on certain products, are a part of the _______ environment of the PESTEL framework.  a) sociocultural  b) economic  c) ecological  d) political

Accepted Answer

d) political

Question 29

Aura Software Inc. has been operating in the country of New Fernsland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Aura Software Inc.?  a) Aura Software Inc. will have to expand its operations to meet the increasing consumer demand.  b) Aura Software Inc. will find it easier to secure capital to finance future growth.  c) Aura Software Inc. will have better access to highly skilled human capital at a lower cost.  d) Aura Software Inc. will experience lower competition from rival companies.

Accepted Answer

c) Aura Software Inc. will have better access to highly skilled human capital at a lower cost.

Question 30

Owners of coffee plantations in the country of Matterstein grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from each other. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Matterstein best illustrates a(n)___ structure.  a) oligopolistic  b) monopolistically competitive  c) monopolistic  d) perfectly competitive

Accepted Answer

d) perfectly competitive

Question 31

_____ describe the positive externality that one user of a product or service has on the value of that product or service for other users.  a) Economies of scope  b) Network effects  c) Economies of scale  d) Experience effects

Accepted Answer

b) Network effects

Question 32

In the restaurant industry, a large number of restaurants cater to the similar food-related needs of customers.  However, each restaurant makes its product unique by offering a different cuisine, a different ambience, or different services like home delivery and organic ingredients. This differentiation allows each restaurant to set its own prices. Thus, the restaurant industry best illustrates a(n)  a) monopolistically competitive structure.  b) monogopoly.  c) perfectly competitive structure.  d) oligopoly.

Accepted Answer

a) monopolistically competitive structure.

Question 33

A consolidated industry turns into a fragmented industry when  a) restrictive government policies are introduced in the industry.  b) firms reduce competition within the industry through mergers and acquisitions.  c) network effects enjoyed by incumbent firms within the industry become stronger.  d) technological advances lead to industry convergence.

Accepted Answer

a) restrictive government policies are introduced in the industry.

Question 34

Which of the following statements about the five forces in the U.S. airline industry is true?  a) Substitutes are not readily available since customers cannot use other means of transport.  b) Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry.  c) The combination of the competitive forces leads to intense rivalry among existing airlines.  d) Entry barriers in the airline industry are relatively high because of the high costs involved.

Accepted Answer

b) Taken together, the competitive forces are quite unfavorable for generating a profit potential in the airline industry.

Question 35

Which of the following statements best supports the fact that even during a period of low demand in the U.S. automotive industry, excess capacity remained?  a) GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.  b) Other American automakers of plug-in hybrid sports cars, like Fisker Automotive, filed for bankruptcy.  c) Suppliers in the automotive industry had low bargaining power.  d) Complementary products and services like battery charging and service stations were pervasive.

Accepted Answer

a) GM and Chrysler, despite their bankruptcy, restructured instead of exiting the industry.

Question 36

How do complements affect a primary product or service?  a) They increase the demand for the primary product.  b) They reduce the value of the primary product.  c) They lower the utility of the primary product.  d) They act as the strategic equivalent of the primary product.

Accepted Answer

a) They increase the demand for the primary product.

Question 37

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?  a) They cannot employ technology efficiently.  b) They benefit from a less specialized division of labor.  c) They can spread fixed costs over lesser units.  d) They can demand better terms from their suppliers.

Accepted Answer

d) They can demand better terms from their suppliers.

Question 38

Which of the following firms most likely has the lowest bargaining power as a buyer?  a) a cell phone company that requires highly customized software for its phones  b) a fast food chain that has multiple suppliers for processed meat  c) an automobile company that can backwardly integrate to produce its own component parts  d) a government agency that buys large quantities of cement from a private supplier

Accepted Answer

a) a cell phone company that requires highly customized software for its phones

Question 39

Which of the following companies would most likely benefit from an economic recession?  a) Top Grill Inc., which offers expensive steaks and other meats  b) Fast Chow Inc., which specializes in selling low-cost Asian food  c) Luxury Suites Inc., which provides luxurious hotel accommodations  d) Fancy Jewelers Inc., which sells top-end gold and platinum jewelry

Accepted Answer

b) Fast Chow Inc., which specializes in selling low-cost Asian food

Question 40

Spark Electronics Inc., One Digital Inc., and Esco Products Corp. are all companies that manufacture and sell consumer electronics. They procure their component parts from the same set of suppliers in China and sell the final product to customers with similar needs. Thus, the three companies together are a part of a(n)  a) industry.  b) occupational group.  c) focus group.  d) plant.

Accepted Answer

a) industry.

Question 41

What are network effects?  a) the positive cost effects that standardized commodities have on incumbent industries  b) the positive effect that one user of a product or service has on the value of that product or service for other users  c) the positive effect that the high price of the entry ticket has on incumbent industries  d) the positive cost effects that accrue for firms with larger output because they can spread fixed costs over more units

Accepted Answer

b) the positive effect that one user of a product or service has on the value of that product or service for other users

Question 42

In which of the following situations is the power of suppliers high in an industry?  a) Suppliers depend heavily on the industry for their revenues.  b) Suppliers offer products that are undifferentiated.  c) Suppliers can credibly threaten to backward integrate into the industry.  d) Suppliers\' industry is more concentrated than the industry it sells to.

Accepted Answer

d) Suppliers\' industry is more concentrated than the industry it sells to.

Question 43

In a firm\'s external environment, _____ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.  a) economic trends  b) political trends  c) demographic trends  d) ecological trends

Accepted Answer

c) demographic trends

Question 44

Economies of scale are cost advantages that accrue for firms with  a) low employee turnover.  b) high fixed costs.  c) larger output.  d) high capital risks.

Accepted Answer

c) larger output.

Question 45

A company is best described as a _____ to an existing company if customers value the existing company\'s product or service offering more when they are able to combine it with the other company\'s product or service.  a) competitor  b) strategic equivalent  c) shareholder  d) complementor

Accepted Answer

d) complementor

Question 46

What is the rule of thumb behind Porter\'s five forces model?  a) The stronger the five forces, the greater the industry\'s profit potentialâmaking the industry less attractive.  b) The weaker the five forces, the greater the industry\'s profit potentialâmaking the industry more attractive.  c) The weaker the five forces, the lower the industry\'s profit potentialâmaking the industry less attractive.  d) The stronger the five forces, the lower the industry\'s profit potentialâmaking the industry more attractive.

Accepted Answer

b) The weaker the five forces, the greater the industry\'s profit potentialâmaking the industry more attractive.

Question 47

The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm\'s macro environment.  a) SWOT analysis  b) PESTEL framework  c) BCG matrix  d) VRIO framework

Accepted Answer

b) PESTEL framework

Question 48

In an industry, the rivalry among existing competitors is high when  a) fixed costs are low and marginal costs are high.  b) incumbent firms are highly committed to the business.  c) exit barriers are low.  d) industry growth is high.

Accepted Answer

b) incumbent firms are highly committed to the business.

Question 49

Which of the following is the best characterization of sociocultural forces?  a) a firm\'s culture, norms, and values  b) a focus group\'s culture, norms, and values  c) a society\'s culture, norms, and values  d) a competitor\'s culture, norms, and values

Accepted Answer

c) a society\'s culture, norms, and values

Question 50

In the _____ developed by Michael Porter, competition is not defined narrowly as a firm\'s closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.  a) PESTEL framework  b) five forces model  c) value chain analysis  d) VRIO framework

Accepted Answer

b) five forces model

Question 51

Which of the following is an example of a firm\'s capabilities?  a) assets such as plant and machinery owned by the firm  b) routine activities performed in the firm, like physical delivery of products  c) specific tasks involved in the invoicing of customers  d) skills involved in training and managing a workforce

Accepted Answer

d) skills involved in training and managing a workforce

Question 52

In the context of the VRIO framework, a resource is said to be valuable if it  a) results in a perfectly competitive industry structure.  b) helps a firm increase its costs.  c) leads to competitive parity within an industry.  d) allows a firm to take advantage of an external opportunity.

Accepted Answer

d) allows a firm to take advantage of an external opportunity.

Question 53

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is  a) direct imitation.  b) strategic equivalence.  c) a temporary competitive advantage.  d) a state of perfect competition.

Accepted Answer

c) a temporary competitive advantage.

Question 54

In a perfectly competitive industry structure  a) resource heterogeneity is high.  b) any competitive advantage that one firm has will be short-lived.  c) resource immobility is high.  d) competitors cannot move quickly to acquire resources that are utilized by the current market leader.

Accepted Answer

b) any competitive advantage that one firm has will be short-lived.

Question 55

The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment?  a) the company\'s headquarters  b) the company\'s cash reserves  c) the company\'s brand equity  d) the company\'s plant and equipment

Accepted Answer

c) the company\'s brand equity

Question 56

A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. In this scenario, the $20,000 would most likely be referred to as the firm\'s  a) resource flow.  b) marginal utility.  c) frozen asset.  d) capital gain.

Accepted Answer

a) resource flow.

Question 57

Which of the following will most likely be considered as an automobile company\'s core competency?  a) the company\'s ability to follow federal laws just like its competitors  b) the company\'s ability to start distributing its cars in areas where a competitor is the market leader  c) the company\'s ability to make its cars more fuel efficient than most of its competitors  d) the company\'s ability to manufacture cars at a cost that is average in the industry

Accepted Answer

c) the company\'s ability to make its cars more fuel efficient than most of its competitors

Question 58

Which of the following statements accurately brings out the distinction between a firm\'s resources and capabilities?  a) While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.  b) Unlike capabilities, resources of the firm cannot be imitated by its competitors.  c) Unlike resources, capabilities do not find their expression in the firm\'s structure, routines, and culture.  d) While a firm\'s resources are always tangible, its capabilities are by nature intangible.

Accepted Answer

a) While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

Question 59

Patents, designs, copyrights, trademarks, and trade secrets are five forms of  a) causal ambiguity.  b) path dependence.  c) social complexity.  d) intellectual property.

Accepted Answer

d) intellectual property.

Question 60

In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by  a) using an internal strength to exploit an external opportunity.  b) leveraging an external opportunity to overcome an internal threat.  c) eliminating an internal weakness to mitigate an external threat.  d) maximizing an external weakness to exploit an internal opportunity.

Accepted Answer

c) eliminating an internal weakness to mitigate an external threat.

Question 61

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?  a) decreasing employee attrition within the firm  b) increasing inflation rates in the target market  c) increasing productivity of the employees  d) decreasing government interference in the target market

Accepted Answer

c) increasing productivity of the employees  d) decreasing government interference in the target market

Question 62

Which of the following explains how dynamic capabilities are different from the resource-based view?  a) Dynamic capabilities deal with intangible resources.  b) Dynamic capabilities deal with tangible resources.  c) Dynamic capabilities deal with applying resources over time.  d) Dynamic capabilities deal with resource heterogeneity.

Accepted Answer

c) Dynamic capabilities deal with applying resources over time.

Question 63

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo\'s competitive advantage?  a) The resource neutralizes external opportunities.  b) The resource is costly to imitate.  c) The resource is easy to replicate.  d) The resource decreases the perceived value of its products.

Accepted Answer

b) The resource is costly to imitate.

Question 64

Chat Room is an instant messaging mobile application. Initially, users were not charged. However, after a period of six months, the users had to pay for a fee to use the upgraded version of the application with advanced features. Which of the following business models does this best illustrate?  a) subscription-based  b) freemium  c) pay-as-you-go  d) razor-razor-blade

Accepted Answer

b) freemium

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