Question 1

Above-average returns

Accepted Answer

returns in excess of what an investor expects to earn from other investments with a similar amount of risk

Question 2

Average returns

Accepted Answer

returns equal to those an investor expects to earn from other investments with a similar amount of risk

Question 3

capability

Accepted Answer

the capacity for a set of resources to perform a task or an activity in an integrative manner

Question 4

competitive advantage

Accepted Answer

a firm has this when it implements a strategy competitors are unable to duplicate or find too costly to imitate

Question 5

core competencies

Accepted Answer

resources and superior capabilities that are sources of competitive advantage for a firm over its rivals

Question 6

global economy

Accepted Answer

one in which goods, services, people, skills, and ideas move freely across geographic borders

Question 7

mission

Accepted Answer

specifies the business or businesses in which the firm intends to compete and the customers it intends to serve

Question 8

vision

Accepted Answer

a picture of what the firm wants to be and what it ultimately wants to achieve, emotional appeal

Question 9

strategy

Accepted Answer

an integrated and coordinated set of actions designed to exploit core competencies and gain a competitive advantage

Question 10

strategic management process

Accepted Answer

the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns

Question 11

strategic leaders

Accepted Answer

people located in different parts of the firm using the strategic management process to help the firm reach its vision and mission

Question 12

strategic flexibility

Accepted Answer

set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment

Question 13

strategic competitiveness

Accepted Answer

achieved when a firm successfully formulates and implements a value-creating strategy

Question 14

stakeholders

Accepted Answer

the individuals and groups who can affect, and are affected by, the strategic outcomes achieved and who have enforceable claims on a firm\'s oerformance

Question 15

risk

Accepted Answer

an investor\'s uncertainty about the economic gains or losses that will result from a particular investment

Question 16

resources

Accepted Answer

inputs into a firm\'s production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers

Question 17

profit pool

Accepted Answer

entails the total profits earned in an industry at all points along the value chain

Question 18

organizational culture

Accepted Answer

refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business

Question 19

When a firm successfully formulates and implements a value-creating strategy, it creates:   a. an above-average profit pool.   b. successful core values.   c. sustainable competitive advantage.   d. strategic competitiveness.

Accepted Answer

d. strategic competitiveness.

Question 20

Above-average returns are:   a. profits greater than the firm earned last year.   b. profits greater than the industry average over the last 3 years.   c. profits greater than an investor expects to earn from a historical pattern of performance of the firm.   d. profits greater than an investor expects to earn from other investments with a similar level of risk.

Accepted Answer

d. profits greater than an investor expects to earn from other investments with a similar level of risk.

Question 21

Apple has reemerged as a significant player in the computer industry, a regeneration attributed mainly to:   a. implementation of strict cost controls.   b. increased economies of scale.   c. the development of capabilities in innovation.   d. the creation of monopoly power.

Accepted Answer

c. the development of capabilities in innovation.

Question 22

One effect of globalization is:   a. lower operational efficiency as firms must transport raw materials and finished goods farther.   b. increasing loyalty of customers for products made domestically.   c. declining returns from investment in research and development.   d. increased product quality.

Accepted Answer

d. increased product quality.

Question 23

The rate of technological diffusion is increasing. Other than the Internet, which of the following was fastest in penetrating 25 percent of homes in the United States market?   a. telephone   b. television   c. personal computer   d. radial tires

Accepted Answer

c. personal computer

Question 24

A central premise of the industrial organization (I/O) model is that:   a. the key factor in success is choosing the correct industry in which to compete.   b. the firm\'s internal resources and capabilities represent the foundation for development of a value creating strategy.   c. the key to earning above-average returns is strategic commitment.   d. the internal structure of the organization must match the industry in which it competes in order to earn above-average returns on investment.

Accepted Answer

a. the key factor in success is choosing the correct industry in which to compete.

Question 25

Firms competing under the resource-based view of the firm:   a. should focus on their homogeneous capabilities to compete against their rivals.   b. argue that the industry environment has a stronger influence on firms\' ability to implement strategies more successfully than does the competitor environment.   c. emphasize that it is difficult to develop and sustain a competitive advantage based on resources alone.   d. suggest that vision and mission are closely linked to sustainable competitive advantage.

Accepted Answer

c. emphasize that it is difficult to develop and sustain a competitive advantage based on resources alone.

Question 26

A firm\'s mission:   a. is a statement of a firm\'s business in which it intends to compete and the customers which it intends to serve.   b. is an internally-focused affirmation of the organization\'s financial, social, and ethical goals.   c. is mainly intended to emotionally inspire employees and other stakeholders.   d. is developed by a firm before the firm develops its vision.

Accepted Answer

a. is a statement of a firm\'s business in which it intends to compete and the customers which it intends to serve.

Question 27

Capital market stakeholders include all of the following EXCEPT:   a. banks.   b. shareholders.   c. former employees.   d. bond holders.

Accepted Answer

c. former employees.

Question 28

A profit pool is:   a. the pool of assets that is distributed to investors.   b. the total profits earned in an industry along all points of the value chain.   c. the profits available to firms which earn above-average returns.   d. the total profits available to be divided up among the competitors within an industry.

Accepted Answer

b. the total profits earned in an industry along all points of the value chain.

Question 29

business-level strategy

Accepted Answer

providing value to customers and gaining competitive advantage by exploiting core competencies in individual (specific) product markets.

Question 30

cost leadership strategy

Accepted Answer

an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors.

Question 31

differentiation strategy

Accepted Answer

an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them.

Question 32

focus strategy

Accepted Answer

an integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment.

Question 33

integrated cost leadership/differentiation strategy

Accepted Answer

involves engaging in primary and support activities that allow a firm to simultaneously pursue low cost and differentiation

Question 34

Market segmentation

Accepted Answer

a process used to cluster people with similar needs into individual and identifiable groups.

Question 35

total quality management (TQM)

Accepted Answer

a managerial innovation that emphasizes an organization\'s total commitment to the customer and to continuous improvement of every process through the use of data-driven, problem-solving approaches based on empowerment of employee groups and teams.

Question 36

Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies:   a. in the selection of industries in which the firm will compete.   b. in specific product markets.   c. for all of the businesses in which the firm operates.   d. for each particular geographic location in which the firm operates.

Accepted Answer

b. in specific product markets.

Question 37

Using Internet technology and e-commerce to increase information volume, Amazon has built a cost effective capability around information exchanges with its customers. This represents which of the three dimensions of service?   a. reach   b. richness   c. affiliation   d. advantage

Accepted Answer

b. richness

Question 38

In order to meet and exceed customer expectations, firms must:   a. constantly manipulate customers\' perceptions of their wants.   b. address the who, what, when, where, how, and why as they apply to need satisfaction.   c. continuously improve, innovate, and upgrade their core competencies.   d. successfully defend their established core competencies to repel innovation and imitation.

Accepted Answer

c. continuously improve, innovate, and upgrade their core competencies.

Question 39

Value creating strategies satisfy customer needs through:   a. firm resources.   b. firm assets.   c. core competencies.   d. capabilities.

Accepted Answer

c. core competencies.

Question 40

A company using a business strategy with a narrow scope:   a. is following a cost leadership business strategy.   b. is focusing on a broad array of geographic markets.   c. seeks to limit the group of customer segments served.   d. faces a decreasing number of activities on its value chain.

Accepted Answer

c. seeks to limit the group of customer segments served.

Question 41

An effective cost leader seeks to continually improve levels of efficiency to enhance profit margins. Which of the following elements of industry structure does this affect most directly?   a. potential entrants   b. substitutes   c. buyer power   d. supplier power

Accepted Answer

a. potential entrants

Question 42

A service that is effectively differentiated from that offered by rivals has qualities that are:   a. perceived as standardized by the customer.   b. perceived by the customer to add value for which they are willing to pay a premium.   c. valued by the typical industry customer.   d. seen as essential attributes.

Accepted Answer

b. perceived by the customer to add value for which they are willing to pay a premium.

Question 43

Which of the following is NOT a common risk associated with the differentiation strategy?   a. Customers find the price gap between the low-cost product and the differentiated product too large.   b. Customers\' experience with other products may narrow their perception of the value of a product\'s differentiated features.   c. Counterfeit goods are widely available to customers.   d. Suppliers of raw materials erode a firm\'s profit margin with price increases.

Accepted Answer

d. Suppliers of raw materials erode a firm\'s profit margin with price increases.

Question 44

Focus strategies:   a. shelter a firm from the risks associated with industry-wide strategies because of their niche focus.   b. allow a firm to avoid global risk by focusing on niches in national or regional markets.   c. face different types of risks than industry-wide strategies.   d. are more likely to fail than industry-wide strategies.

Accepted Answer

c. face different types of risks than industry-wide strategies.

Question 45

The business strategy that benefits the most from investments in TQM is:   a. cost-leadership.   b. integrated cost-leadership/differentiation.   c. focused cost-leadership.   d. focused differentiation.

Accepted Answer

b. integrated cost-leadership/differentiation.

Question 46

Business-level strategies key issues

Accepted Answer

which good or service to provide?  how to manufacture it?  how to distribute it?

Question 47

customers

Accepted Answer

foundation of successful business-level strategy

Question 48

Reach

Accepted Answer

firms\'s success and connection to customers

Question 49

Richness

Accepted Answer

depth and detail of two-way flow of information between the firm and the customer

Question 50

Affiliation

Accepted Answer

facilitation of useful interactions with customers

Question 51

To position itself, the firm must decide whether it intends to

Accepted Answer

perform activities differently  perform different activities as compared to its rivals

Question 52

Types of potential competitive advantage

Accepted Answer

achieving lower overall costs than rivals  possessing the capability to differentiate the firm\'s product or service and command a premium price

Question 53

Broad scope

Accepted Answer

the firm competes in many customer segments

Question 54

narrow scope

Accepted Answer

the firm selects a segment or group of segments in the industry and tailors its strategy to serving them at the exclusion of others

Question 55

5 business-level strategies

Accepted Answer

Broad: cost leadership & differentiation  narrow: focused cost leadership & focused differentiation  both: integrated cost leadership/differentiation

Question 56

cost leadership strategy key aspects (3)

Accepted Answer

Relatively standardized products  Features acceptable to many customers  Lowest competitive price

Question 57

Cost saving actions required by cost leadership strategy

Accepted Answer

Building efficient scale facilities  Tightly controlling production costs and overhead  Minimizing costs of sales, R and service  Building efficient manufacturing facilities  Monitoring costs of activities provided by outsiders  Simplifying production processes

Question 58

How to obtain a cost advantage (determine and Control)

Accepted Answer

cost drivers: alter production process, change in automation, new distribution channel, new advrtising media, direct sales in place of indirect sales

Question 59

how to obtain a cost advantage (reconfigure, if needed)

Accepted Answer

value chain: new raw material, forward integration, backward integration, change location relative to suppliers or buyers

Question 60

Value creating activities for cost leadership

Accepted Answer

Cost-effective MIS  Few management layers  Simplified planning  Consistent policies  Effecting training  Easy-to-use manufacturing technologies  Investments in technologies  Finding low cost raw materials  Monitor suppliers\' performances  Link suppliers\' products to production processes  Economies of scale  Efficient-scale facilities  Effective delivery schedules  Low-cost transportation  Highly trained sales force  Proper pricing

Question 61

competitive risks for cost leadership

Accepted Answer

Processes used to produce and distribute good or service may become obsolete due to competitors\' innovations  Focus on cost reductions may occur at expense of customers\' perceptions of differentiation  Competitors, using their own core competencies, may successfully imitate the cost leader\'s strategy

Question 62

Differentiation strategy aspects

Accepted Answer

Nonstandardized products  Customers value differentiated features more than they value low cost

Question 63

How to obtain a differentiation strategy

Accepted Answer

lower buyers\' costs  raise performance of product or service  create sustainability through: customer perceptions of uniqueness & customer reluctance to switch to non unique product or service

Question 64

Value - Creating activities and Differentiation

Accepted Answer

Highly developed MIS  Emphasis on quality  Worker compensation for creativity/productivity  Use of subjective performance measures  Basic research capability  Technology  High quality raw materials  Delivery of products  High quality replacement parts  Superior handling of incoming raw materials  Attractive products  Rapid response to customer specifications  Order-processing procedures  Customer credit  Personal relationships

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