Chapter 6
Which of the following is not a characteristic of a fragmented industry? |
a. Low barriers to entry b. Diseconomies of scale c. Brand loyalty in the industry that may primarily be local d. Very specialized customer needs e. Large mass-production operation |
e.
Large mass-production operation
_____ are applications or uses of a new technology or product that are so compelling that customers adopt them in droves, curbing the demand for competing formats. |
a. Killer applications b. Razor and blade applications c. Technical standards d. Network effects e. Concurrency control applications |
a.
Killer applications
|
a. Tapered integration b. Vertical integration c. Horizontal integration d. Franchising e. Diversification |
c.
Horizontal integration
The purpose of governance mechanisms in corporations is to: |
a. centralize company resources to the top management. b. reduce the scope and frequency of the agency problems. c. satisfy the requirements of the Securities and Exchange Commission (SEC). d. limit corporate growth to manageable rates. e. monitor the performance of the Board of Directors. |
b.
reduce the scope and frequency of the agency problems.
Which of the following statements is true of declining industries? |
a. Typically, not all segments of an industry decline at the same rate. b. A declining industry should ideally use the leadership strategy when it does not have any strengths and the competition is low. c. Divestment strategy is when a company in a declining industry tries to improve sales by improving product quality. d. The greater the exit barriers of a declining industry, the lower the intensity of competition. e. The intensity of competition lower in declining industries that sell commodity-like products. |
a.
Typically, not all segments of an industry decline at the same rate.
To compete in the fragmented restaurant industry, Starbucks built, and now operates hundreds of restaurants across the United States and Canada. Which of the following strategies is Starbucks using ? |
a. Acquisitions b. Horizontal mergers c. Franchising d. Licensing e. Chaining |
e.
Chaining
Which of the following statements is true about technological paradigm shifts? |
a. They often do not change the nature of competition in an industry. b. They occur when government regulations restrict the use of certain technologies. c. They have the potential to threaten the survival of established industries. d. They can often be handled by established companies without adopting new strategies. e. They strongly deter new entrants. |
c.
They have the potential to threaten the survival of established industries.
Which of the following problems is associated with the strategy of vertical integration? |
a. Decrease in cost structure b. Increase in industry competition c. Vulnerability to unpredictable demand d. Assured conflict with the antitrust authorities e. Lack of bureaucratic costs |
c.
Vulnerability to unpredictable demand
Organizational culture is: |
a. the norms and value systems that are shared among the employees of an organization. b. the means through which a company assigns employees to specific tasks and roles and specifies how these tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to customers. c. the process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully. d. the clear and unambiguous chain of command that defines each manager’s relative authority from the CEO down through top, middle, to first-line managers. e. the principle that a company should design its hierarchy with the fewest levels of authority necessary to use organizational resources effectively. |
a.
the norms and value systems that are shared among the employees of an organization
The first group of customers to enter the market for a new product are called: |
a. laggards. b. late majority. c. innovators. d. early majority. e. passive shoppers. |
c.
innovators.
Which of the following is not a risk of exporting? |
a. Tariff barriers b. Transportation costs c. Location diseconomies d. High manufacturing costs e. Delegation of marketing activities to a local agent |
d.
High manufacturing costs
Horizontal integration may be thought of as: |
a. moving into a new unrelated industry. b. giving control to suppliers. c. gaining control of distributors. d. staying inside the industry in which the company currently operates. e. combining functional units within the company. |
d.
staying inside the industry in which the company currently operates.
Members of the Board of Directors are supposed to be agents for: |
a. stockholders. b. employees. c. executive officers. d. customers. e. suppliers. |
a.
stockholders.
Customers who have a practical interest in using a new technology in the future and who are willing to experiment and envision new uses for the technology are called: |
a. early adopters. b. the early majority. c. innovators. d. laggards. e. the late majority. |
a.
early adopters.
Which of the following statements is true about establishing technical standards? |
a. Companies in an industry cannot lobby the government to mandate an industry standard. b. Technical standards are often set by cooperation among businesses, without government help. c. Companies cannot adopt technical standards that are in the public domain. d. Market demand is not taken into consideration when it comes to establishing technical standards. e. The strategy and business model a company has developed for promoting its technological standard holds little importance when it comes to establishing standards. |
b.
Technical standards are often set by cooperation among businesses, without government help.
Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity? |
a. A technology acquisition strategy b. Related diversification c. A restructuring strategy d. Total diversification e. A taper diversification strategy |
b.
Related diversification
Which of the following is true of stakeholders? |
a. Creditors are examples of internal stakeholders. b. Stakeholders do not engage in an exchange relationship with their company c. Stockholders are internal stakeholders that provide an enterprise with risk capital. d. The goals of different stakeholder groups within a company are the same, and therefore do not lead to any conflicts. e. It is mandatory for a company to satisfy the claims of all stakeholders. |
c.
Stockholders are internal stakeholders that provide an enterprise with risk capital.
A market growth factor that explains customers' perceptions of a new product as better at satisfying their needs than the product it replaces is called: |
a. complexity b. relative advantage c. compatibility d. trialability e. observability |
b.
relative advantage
Which of the following statements is true about international strategy? |
a. It is usually adopted by companies that face intense cost pressures due to competition. b. It makes most sense when the pressures for local responsiveness are very intense. c. It often involves the head office retaining tight control over marketing and product strategy. d. It often involves decentralizing product development functions such as R&D to different subsidiaries. e. It involves extensive scope for localization and product differentiation. |
c.
It often involves the head office retaining tight control over marketing and product strategy.
Miller Brewing, which was acquired by Philip Morris, was related to the parent company's tobacco business because it was possible to create important marketing commonalities: both beer and tobacco are mass market consumer goods in which brand positioning, advertising, and product development skills are crucial to create successful new products. This is an example of which of the following? |
a. Transferring competencies b. Leveraging competencies c. General organizational competencies d. Economies of scope e. Organizational design skills |
a.
Transferring competencies
When managers of a firm seek to unilaterally rewrite the terms of contracts with suppliers, buyers, or complement providers in a way that is more favorable to their firm, they are engaging in: |
a. opportunistic exploitation. b. information manipulation. c. downsizing. d. greenmail. e. self-dealing. |
a.
opportunistic exploitation.