Chapter 1
Which of the following best defines shareholder value?
a.
It refers to the returns that shareholders earn from purchasing shares in a company.
b.
It refers to the capital invested in a company by the shareholders.
c.
It refers to the efforts taken by a company to sell its shares to prospective shareholders.
d.
It refers to the efforts taken by a company to buy back its shares from its shareholders.
e.
It refers to the non-monetary benefits that a company provides to its shareholders.
a.
It refers to the returns that shareholders earn from purchasing shares in a company.
Market segments are groups of:
a.
customers within a market that can be different from each other on the basis of their distinct attributes and specific demands.
b.
companies within a market that produce similar goods or services which are close substitutes of each other.
c.
companies that follow a similar business model and cater to the needs of similar customers.
d.
closely related industries.
e.
large companies that are in a position to determine industry price.
a.
customers within a market that can be different from each other on the basis of their distinct attributes and specific demands.
Which of the following is not true regarding a company's distinctive competencies?
a.
They represent the unique strengths of the company.
b.
They refer to company strengths that competitors cannot easily match or imitate.
c.
They form the bedrock of a company's strategy.
d.
They can be based in any of the value creation functions of the company.
e.
They are shared by many firms in an industry.
e.
They are shared by many firms in an industry.
Which of the following is not a product attribute?
a.
Form
b.
Features
c.
Style
d.
Price
e.
Reliability
d.
Price
Which of the following is NOT a generic business-level strategy?
a.
Broad differentiation strategy
b.
Broad low-cost strategy
c.
Focused low-cost strategy
d.
Focused differentiation strategy
e.
Focused innovation strategy
e.
Focused innovation strategy
The Four Building Blocks of Competitive Advantage Are:
Superior:
Efficiency
Quality
Innovation
Customer responsiveness
Which of the following cognitive biases occurs when decision-makers allocate even more resources to a project after they receive feedback that the project is failing?
a.
Prior hypothesis bias
b.
Reasoning by analogy
c.
Illusion of control
d.
Escalating commitment
e.
Representativeness
d.
Escalating commitment
Members of a strategic group:
a.
compete only with members of other strategic groups.
b.
are affected by Porter's five competitive forces in the same way and to the same degree as the members of other strategic groups.
c.
follow a business model that is similar to that pursued by other companies in the group.
d.
face no threat of product substitutes from other members.
e.
move easily between groups without barriers.
c.
follow a business model that is similar to that pursued by other companies in the group.
Which of the following is an important attribute for a product from a quality-as-reliability perspective?
a.
Styling
b.
Aesthetic appeal
c.
Wait time at the point of sale
d.
Features
e.
Performance
e.
Performance
The experience curve refers to the:
a.
learning by doing technique.
b.
company's overall experience in a particular industry.
c.
systematic lowering of the cost structure and unit cost reductions.
d.
diseconomies of scale caused by inexperienced workers.
e.
increases in unit costs experienced over time.
c.
systematic lowering of the cost structure and unit cost reductions.
Which of the following allows a company to lower cost through functional strategy and organization?
a.
Implementing just-in-time inventory control systems
b.
Customizing the product offering and marketing mix to different market segments
c.
Focusing marketing efforts on brand building and perceived differentiation from rivals
d.
Designing strategies to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world
e.
Adopting rigid manufacturing technologies
a.
Implementing just-in-time inventory control systems
Which of the following dimensions is encompassed by a company's business model?
a.
Configuring resources
b.
Avoiding focus on acquiring new customers
c.
Reducing emphasis on product quality
d.
Maintaining high costs
e.
Restricting growth
a.
Configuring resources
An industry's buyers have high bargaining power when:
a.
they purchase in small quantities.
b.
switching costs are low.
c.
it is economically impossible for them to purchase an input from several companies at once.
d.
the supply industry depends upon buyers for a very small percentage of its total orders.
e.
the industry is a monopoly.
b.
switching costs are low.
The term value chain refers to the idea that a company is:
a.
one of a series of units that comprise an industry segment.
b.
the producer of a series of customer-valued products that are linked together.
c.
a series of activities that transform inputs into products that customers value.
d.
one of a series of economic functions.
e.
a collection of various products and their attributes.
c.
a series of activities that transform inputs into products that customers value.
Cream Cups bakes cakes in several varieties dedicated to special occasions. It also allows its customers to personalize the cakes according to their personal preferences. This is an example of:
a.
learning effects.
b.
just-in-time inventory.
c.
customer defection.
d.
mass customization.
e.
diseconomies of scale.
d.
mass customization.
The basic proposition of the blue ocean strategy is that many successful companies have built their competitive advantage by:
a.
redefining their product offering through value innovation and creating a new market space.
b.
initiating a price war in order to grow volume and drive its weaker rivals out of the industry.
c.
developing brand loyalty to protect them from intense price rivalry within their industry.
d.
charging premium prices for their goods or services.
e.
adopting lean production and flexible manufacturing technologies.
a.
redefining their product offering through value innovation and creating a new market space.
Which of the following statements is true about a SWOT analysis?
a.
It does not encompass the analysis of an organization's external environment.
b.
It essentially results in the generation of a single strategy that deals with one particular internal function of an organization.
c.
It does not encompass functional-level strategies directed at improving the effectiveness of operations within a company.
d.
It essentially produces strategies that are incongruent with each other.
e.
It is a methodology for choosing between competing business models.
e.
It is a methodology for choosing between competing business models.
The bargaining power of an industry's suppliers is greater when:
a.
the supply industry is fragmented.
b.
switching costs are minimal for companies because of little difference among products offered by different suppliers.
c.
the industry buys in large quantities.
d.
the product that suppliers sell has many substitutes and is not vital to the companies.
e.
the industry is not an important customer to the suppliers.
c.
the industry buys in large quantities.
The intellectual property of an organization is a(n):
a.
tangible resource.
b.
strategic commitment.
c.
tangible capability.
d.
barrier to change.
e.
intangible resource.
e.
intangible resource.
When Amber first started working at a car manufacturing plant assembling car doors, she was slower at the task than her co-workers. As time passed, her speed at assembling the doors increased and she even taught others how to perform the task more quickly. As a result of increased employee productivity, this particular plant experienced cost savings. These cost savings can be attributed to learning effects.
True
False
True
Focus strategy can be defined as:
a.
the strategy of merging with an established company in order to gain monopoly over the market.
b.
the strategy a company uses when it decides to allocate the company resources equally among all the marketing segments
c.
the strategy a company uses when it decides to serve a limited number of segments, or just one segment of the market.
d.
the strategy a company uses when it decides to ignore the different needs of different market segments, and produce one standardized product for all the customers.
e.
the strategy of closing down one or more business units in order to minimize the losses.
c.
the strategy a company uses when it decides to serve a limited number of segments, or just one segment of the market.
Which of the following statements is true about competitive advantage?
a.
It is unaffected by the strategies taken by the company.
b.
It is considered to be sustained when it lasts for three months.
c.
It exists only when the company's profitability is greater than the ten highest grossing firms in the world.
d.
It exists only when the company's profitability is greater than the average profitability and profit growth of its rivals.
e.
It is seldom affected by the business model of the company.
d.
It exists only when the company's profitability is greater than the average profitability and profit growth of its rivals.
A consolidated industry structure:
a.
consists of a large number of small companies.
b.
can be seen in agriculture, dry cleaning, health clubs, and real estate brokerage.
c.
consists of few companies that are in a position to determine industry price.
d.
provides no scope for oligopoly to exist.
e.
is characterized by low-entry barriers and commodity-type products.
c.
consists of few companies that are in a position to determine industry price.
The concept of efficiency as a building block of competitive advantage applies to:
a.
all products produced by a firm.
b.
products consumers believe to be high-quality; not low-quality.
c.
only those products of a firm popular among a large customer base.
d.
custom-made products only.
e.
only those products that have been redesigned.
a.
all products produced by a firm.
The marketing strategy that a company adopts:
a.
has little impact on the company's efficiency and cost structure.
b.
aims at attaining superior efficiency of the company's operations.
c.
should not take into account the impact the strategy has on the company's cost structure.
d.
aims at automating much of the work in the production process.
e.
refers to the position that the company takes with regard to a product's pricing and distribution.
e.
refers to the position that the company takes with regard to a product's pricing and distribution.
Differentiation allows a company to:
a.
respond to demands of deep price demands from powerful buyers and still make money.
b.
lower its cost structure.
c.
charge a premium price for its good or service.
d.
charge low prices and still make profits.
e.
initiate a price war in order to grow volume and drive its weaker rivals out of the industry.
c.
charge a premium price for its good or service.