CIS 243- Ch. 3

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False
answer

Customer service falls under the category of supporting activities in a value chain.
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Firm infrastructure
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________ includes general management, finance, accounting, legal, and government affairs.
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True
answer

According to Porter, all information systems in the organization must facilitate the organization’s competitive strategy to be effective.
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False
answer

According to Porter’s five forces model, a company is profitable if all the five forces are strong.
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True
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Business processes implement value chains or portions of value chains.
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accumulates costs
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Each stage of the value chain not only adds value to the product but also ________.
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False
answer

Firm infrastructure excludes general management, finance, accounting, legal, and government affairs.
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Customers are likely to switch to competitors’ products
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Which of the following is true if the threat from a substitute is strong?
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True
answer

The support activities in the generic value chain facilitate the primary activities and contribute only indirectly to the production, sale, and service of the product.
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False
answer

Procurement falls under the category of primary activities in a value chain.
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True
answer

Establishing alliances with other organizations promotes product awareness.
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True
answer

Value chain analysis has a direct application to manufacturing businesses.
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False
answer

The strength of bargaining power of the customer does not depend on the availability of substitutes.
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False
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A business that selects a differentiation strategy will always structure itself around least-cost activities.
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True
answer

Value chains exist in service-oriented companies.
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True
answer

The availability of substitutes plays a role in determining the bargaining power of suppliers for industrial clients.
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True
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The threat of substitution in Porter’s model concerns the danger of customers taking their business elsewhere.
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False
answer

An information system can be part of a product, but it cannot provide support for a product or service.
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False
answer

Receiving, storing, and disseminating inputs to a product is an operations management activity.
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False
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Each stage of the generic value chain reduces the value of the product.
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the lack of internal technical expertise
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Substitutions may not be viable options for some industrial clients due to ________ or physical distance limitations.
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False
answer

Porter originally developed the five forces model in order to understand organizations’ workforce.
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True
answer

An organization can choose to either minimize cost or maximize differentiation to gain a competitive advantage.
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strategy
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According to Porter, to be effective, an organization’s goals, objectives, culture, and activities must be consistent with the organization’s ________.
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True
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If the costs of switching to another vendor are high, then the bargaining power of the customer is low.
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False
answer

It is easier to calculate the margin of supporting activities than primary activities.
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True
answer

A company uses the outbound logistics activity to deliver the finished product to a customer.
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False
answer

Manufacturing systems avoid linkages to reduce inventory costs.
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True
answer

Organizations analyze the structure of their industry and use that analysis to formulate a competitive strategy.
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outbound logistics
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Which of the following primary activities describes collecting, storing, and physically distributing products to buyers?
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True
answer

Each value chain is supported by one or more business processes.
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False
answer

Enhancing existing products and services is a competitive advantage created by the implementation of business processes.
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False
answer

Porter’s definition of technology is narrow because it includes only research and development.
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customers
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The bargaining power of ________ is one of the five competitive forces in Porter’s five forces model.
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True
answer

If a value chain’s margin is negative, the company must reduce the cost of the value chain.
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False
answer

Porter identified the bargaining power of competitors as one of the forces in his five forces model.
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False
answer

Two companies with the same value chain activities will have the same business processes.
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True
answer

Competitive strategy determines an organization’s value chain.
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True
answer

A business with a differentiation strategy will add cost to an activity only as long as the activity has a positive margin.
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True
answer

Surplus of a product serves as an example of weak force for the bargaining power of suppliers.
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The availability of raw materials is limited
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Which of the following statements describes a scenario in which the bargaining power of a supplier is strong?
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True
answer

Porter’s model of business activities includes linkages, which are interactions across value activities.
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focusing on product differentiation within an industry-segment
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Which of the following competitive strategies does a company follow if it produces a uniquely formulated anti-aging face cream targeted at women above the age of forty?
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enhance existing products or services
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Which of the following is a product implementation principle of competitive advantage?
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False
answer

Inbound and outbound logistics are the primary value generators in a service-oriented company.
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False
answer

Focused differentiation is a strategy in which a product is unique and is used by a wide range of consumers.
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False
answer

Typically, as an individual, a customer has substantial bargaining power over a large manufacturing industry.
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False
answer

The difference between the value that an activity generates and the value of its competitor is called the margin.
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False
answer

Support activities are business functions that relate directly to the production of the organization’s products or services.
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sales and marketing
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Which of the following primary value chain activities induce buyers to purchase a product and provide a means for them to do so?
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False
answer

Raising barriers to market entry is a product implementation principle.
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assisting customers with the use of the product
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Which of the following statements describes a customer service activity?
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True
answer

Value chain activities are not dependent on the competitive strategies used by organizations.
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???
answer

Which of the following statements is true of business processes?
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threat from the substitute is strong
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If the price of an alternative is lower than the price of an existing product, and customers perceive similar benefits from both the products, then the ________.
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competitive
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An organization responds to the structure of its industry by choosing a ________ strategy.
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adds cost to an activity, provided it has a positive margin
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A business that selects a differentiation strategy ________.
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structure
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The competitive strategy followed by an organization is derived from the ________ of its industry.
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create sufficient value to cover their costs
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According to Porter, the processes and systems in an organization pursuing differentiation strategy must ________ to avoid negative margins.
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margin
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The difference between the value that an activity generates and the cost of the activity is called the ________.
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enhance existing products or services
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Which of the following is a product implementation principle of competitive advantage?
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delivering products to consumers
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Which of the following is a primary activity in the value chain?
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bargaining
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Porter’s five competitive forces can be grouped into forces related to competition and forces related to supply chain ________ power.
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the threat posed by Roger’s Landscapes, a new competitor
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e’s Lawn Services decides to offer two free mowing services for all customers who booked garden landscaping in the fall. Which of the following forces is Simpson’s Lawn Services addressing?
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value chain
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The competitive strategy of an organization determines its ________.
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potential profitability of an industry
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Porter developed the five forces model to help organizations determine the ________.
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increment of purchasing costs
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Which of the following is least likely to be an outcome of organizations forming alliances with each other?
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when switching costs are high
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In which of the following situations is the strength of competitive forces low?
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establishing alliances with other organizations
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Which of the following is a process implementation principle of competitive advantage?
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It is a network of value-creating activities.
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Which of the following is true of a value chain?
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???
answer

A manufacturing system uses sales forecasts to plan production. It uses the production plan to determine raw material needs and then uses the material needs to schedule purchases. This ultimately leads to reduced inventory costs. Which of the following is being used to reduce the inventory cost?
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linkages
answer

Porter’s model of business activities includes ________, which are interactions across value activities.
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value
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Porter defined ________ as the amount of money that a customer is willing to pay for a resource, product, or service.
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the availability of a substitute is limited
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The bargaining power of a customer is weak if ________.
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focused low cost
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A firm introduces a new range of laptops that concentrate on delivering good graphics performance. Which of the following competitive strategies has the firm adopted if these laptops have relatively low prices?
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launching a unique product targeted at a section of consumers
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Which of the following is an example of a competitive strategy employed by a firm?
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Negotiation of prices is considered as a supporting activity.
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Which of the following is true of supporting activities?
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how sustainable that profitability will be
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In Porter’s five forces model, the intensity of each of the five forces determines the characteristics of the industry, how profitable it is, and ________.
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saving the delivery addresses
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Jupiter Shop is an online store. Customers have to create an online account to purchase products. The purchased products are delivered free of cost. The address of delivery is stored, so that customers can choose the same address for future purchases. Jupiter Shop features seasonal discounts and exchange offers. It also accumulates redeemable points for regular shoppers. Which of the following statements describes the use of information systems (IS) by Jupiter Shop to lock in customers?
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locking in customers
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Which of the following strategies is also called establishing high switching costs?
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They can capture the market with new and innovative services.
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Which of the following is true of new entrants?
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coffee planters during a season of frost that decreases production
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Which of the following describes suppliers in a position of strong bargaining power?

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