MGNT 428 Mid Term – Flashcards
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A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy....?
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analysis
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Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period of time?
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sustainable competitive advantage
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Revved Rider Inc., a motorcycle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Revved Rider Inc. from this scenario?
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It has a competitive advantage over the other firms
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Which of the following statements about competitive advantage is not true?
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A firm's competitive advantage is always absolute, not relative.
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A firm is likely to have a competitive advantage when it
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provides services that consumers will value more than those of its rivals.
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The greater the difference between value creation and cost, the...?
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greater a firm's economic contribution and the more likely it will gain competitive advantage
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When a firm integrates the competitive strategies of cost-leadership and differentiation, it will most likely result in...?
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trade-offs that work against each other.
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How has Threadless staked out a unique strategic position?
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by providing customers a voice in product design
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Which of the following has contributed to Twitter's loss of a competitive advantage?
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Twitter does not allow advertisers to target their online ads precisely enough.
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Quick Eats is a fast-food restaurant that has recently entered the hospitality industry. Since most of its competitors are pursuing a low-cost position and doing well, Quick Eats also wants to adopt the same strategy. Which of the following will be a likely implication of this decision?
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Quick Eats will face low profit potential.
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Which of the following statements is true of strategy?
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Actions that allow a firm to address a competitive challenge are strategy.
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Which of the following statements with regard to determining firm performance is true?
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External analysis will help understand the industry effects that determine a firm's performance.
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Which of the following forces are most closely related to firm effects within a pharmaceutical industry?
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the strategic actions taken by managers of a firm in the industry
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The metaphor of a black swan best applies to...?
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events that are considered highly unexpected and highly impactful when they do occur.
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The black swan events in the past have demonstrated that..?
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stakeholders can affect or be affected by a firm's actions.
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Widgets Inc. is a vendor who supplies machine parts to an appliance manufacturing company. In return, Widgets Inc. relies on the company for its revenue and is affected by any decisions taken by the company. In this scenario, Widgets Inc. is a(n) _____ for the appliance manufacturing company.
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external stakeholder
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Which of the following groups is most likely to be considered a firm's internal stakeholder?
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board members
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Which of the following groups will not be considered a company's internal stakeholder?
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suppliers
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Which of the following statements related to a firm's stakeholders is not true?
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While external stakeholders are those who make contributions toward the firm, internal stakeholders are those who reap all the benefits.
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Which of the following is a stakeholder attribute that managers should consider at every step in a stakeholder impact analysis?
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legitimacy
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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?
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shareholders
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Why are black swan events often bad for business?
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They erode the implicit trust between the corporate world and society
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Which of the following is a philanthropic responsibility of a firm?
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corporate citizenship
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Which of the following would be most likely to directly put an organization like BP at a major competitive disadvantage?
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the Environmental Protection Agency (EPA) banning BP from any new contracts with the U.S. government
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Which of the following statements will effectively guide a strategist?
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The principles of strategic management can be applied universally to all organizations
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The process through which executives attempt to program future success. In this approach, all strategic intelligence and decision-making responsibilities are concentrated in the office of the CEO
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top-down strategic planning
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A company's vision primarily states..?
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what the company wants to accomplish ultimately.
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describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete
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Mission
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Which of the following statements accurately brings out the difference between an organization's vision and mission?
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Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished
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Product-oriented vision statements provide managers with?
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service goals
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What is a strategic commitment?
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actions that are costly, long-term oriented, and difficult to reverse
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Which of the following statements is true of customer-oriented visions?
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They define a business in terms of providing solutions to people's needs
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If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be its implication?
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The company will tend to be more flexible when adapting to changing environments
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Which of the following questions does the values espoused by a company primarily answer?
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How do we accomplish our goals
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____ is best described as the behaviors and styles of executives that influence others to achieve an organization's vision and mission.
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Strategic leadership
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According to the upper-echelons theory...?
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organizational outcomes reflect the values of the top management team
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According to the Level-5 leadership pyramid, the Level 2 manager is a(n)?
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contributing team member
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Which of the following statements is true of the Level-5 leadership pyramid?
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Each level of leadership builds upon the previous one in the pyramid.
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The level 4 leaders...?
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present compelling vision and mission to guide groups toward superior performance
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Which of the following questions would a firm's business strategy ideally answer?
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How to compete
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What is corporate strategy?
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Corporate executives at headquarters formulate corporate strategy
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A firm's _____ is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy...?
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intended strategy
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What is a bottoms up strategy?
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any unplanned strategic initiative undertaken by mid-level employees of their own volition
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What does the political environment describe of the PESTEL framework?
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the processes and actions of government bodies that can influence the decisions and behavior of firms
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_____ is best described as the amount that savers are paid for use of their money and the amount that borrowers pay for that use...?
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Interest rate
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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?
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They can demand better terms from their suppliers.
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____ describe the positive externality that one user of a product or service has on the value of that product or service for other users..?
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Network effects
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The relative bargaining power of suppliers is most likely low when...?
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incumbent firms face low switching costs when changing suppliers.
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What does a fragmented firm consist of?
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many small firms and tends to generate low profitability.
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What is a perfectly competitive industry characterized as?
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fragmented and has many small firms, a commodity product, ease of entry, and little or no ability for each individual firm to raise its prices.
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Which of the following statements is true of an oligopoly?
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An oligopoly is often analyzed using game theory.
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How do complements affect a primary product or service?
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They increase the demand for the primary product.
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A consolidated industry turns into a fragmented industry when...?
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restrictive government policies are introduced in the industry
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Strategic group mapping establishes that...?
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competitive rivalry is strongest between firms that are within the same strategic group.
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What are core competencies?
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unique strengths, embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost
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A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers.
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Activities
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What does a firms capabilities include?
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skills involved in training and managing a workforce
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Which of the following statements accurately brings out the distinction between a firm's resources and capabilities?
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While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.
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What are examples of intangible resources?
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a firm's culture, its knowledge, brand equity, reputation, and intellectual property
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What is resource heterogeneity?
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bundles of resources, capabilities, and competencies differ across firms.
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In a perfectly competitive industry structure
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any competitive advantage that one firm has will be short-lived
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In the context of the VRIO framework, a resource is said to be valuable if it..?
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allows a firm to take advantage of an external opportunity.
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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...?
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a temporary competitive advantage
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Which of the following explains how dynamic capabilities are different from the resource-based view?
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Dynamic capabilities deal with applying resources over time
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For an asset or a capability to be included in a firm's resource stock, it should be?
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built through investments over time
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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..?
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resource flow
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Using the _______, managers can see how competitive advantage flows from a firm's distinct set of activities.
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value chain analysis
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According to the value chain analysis, which of the following is a support activity?
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research and development
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The _____ describes the internal activities a firm engages in when transforming inputs into outputs
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value chain view
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In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?
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decreasing government interference in the target market
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In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by..?
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eliminating an internal weakness to mitigate an external threat
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Which of the following financial ratios typically indicates a company's efficiency in extending credit, as well as collecting debts?
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receivables turnover
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Higher ratios of receivables turnover indicate?
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shorter durations of interest-free loans to customers
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Which of the following is an advantage of accounting data?
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Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.
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The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the what?
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efficient-market hypothesis.
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What is market capitalization?
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captures the total dollar market value of a company's outstanding shares at any given point in time (Market cap = Number of outstanding shares × Share price)
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Economic contribution is created when the..?
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price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it
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What is consumer surplus?
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the difference between the value a consumer attaches to a good or service (V) and what he or she paid for it (P)
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The sum of consumer surplus and producer surplus for a good or service equals the...?
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economic value created.
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When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?
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What intangible assets do we need?
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Which of the following is not a disadvantage of the balanced scorecard approach?
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It fails to allow managers to prepare the company for future growth.
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Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance?
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It provides only limited guidance about which performance metrics to choose
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The tenet behind the triple bottom line is that..?
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a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.
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What is the freemium business model?
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a model in which the basic features of a product or service are provided free of charge, but the user must pay for premium services such as advanced features or add-ons.
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There exist important trade-offs between value creation and low cost because value creation and cost tend to be what?
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positively correlated.
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Firms pursuing a cost-leadership strategy seek to...?
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deliver products or services at a lower cost than competitors.
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In a focused differentiation strategy, a firm seeks to..?
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deliver products or services with unique features to a specific, narrow part of the market.
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Costs being equal, when a firm has a higher value gap than its competitor, it can be inferred that the firm..?
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can charge a premium price for its products and services
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All of the following are tools primarily used to achieve cost-leadership except..?
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offering products at a premium price.
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Which of the following statements accurately brings out the difference between economies of scale and learning effects?
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Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased
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An experience curve attempts to capture both...?
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learning effects and process improvements.
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A firm that follows the differentiation strategy is protected from the threat of new entrants primarily due to its?
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reputation for quality.
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A Blue Ocean strategy typically allows a firm to?
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offer a differentiated product or service at low cost.
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In the _____, firms change the underlying technology while holding cumulative output constant.
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experience curve
