MAN 4720 Final

A

What is a generic business strategy?

A. a general way of positioning a firm's business-level strategy within an industry
B. a general way of positioning a firm's business-level strategy to penetrate an international market
C. a general strategy that positions your firm in a competitive position within an industry
D. all of the above

A

What are the two dimensions on which generic business strategies are classified?

A. breadth of competitive scope/source of competitive advantage
B. breadth of product line/source of competitive advantage
C. breadth of competitive scope/extent of vertical integration
D. breadth of product line/extent of vertical integration

D

Which of the following is not a main generic strategies?

A. cost leadership
B. differentiation
C. focused low cost
D. focused penetration

F

Which of the following is an example of one of the main generic strategies?

A. differentiation
B. diversification
C. focused low cost
D. cost abandonment
E. B & C
F. A & C

A

Which generic business strategy is on the intersection of competing on cost and targeting a broad market?

A. cost leadership
B. differentiation
C. focused low cost
D. focused differentiation

T

T/F: The experience curve is known as the decline in unit cost of production as cumulative output increases - based on knowledge/expertise.

F

T/F: Economies of scale refers to an increase in unit cost of production as rate of output increases (based on spreading out fixed costs).

C

All of the following are disadvantages of cost leadership EXCEPT:

A. perceptions of quality
B. relies on volume
C. harder to survive price wars
D. can be too focused on cost

B

Which of the following is a disadvantage of cost leadership:

A. perceptions of service
B. can be focused too much on cost
C. relies on demand
D. none of the above

B

All of the following are advantages of cost leadership EXCEPT:

A. high profits through volume
B. perceptions of quality
C. easier to survive price wars
D. all of the above

F

Which of the following is an advantage of cost leadership?

A. perceptions of cost
B. easier to survive price wars
C. low profits through volume
D. high profits through volume
E. A & C
F. B & D

B

Which generic business strategy is on the intersection of competing on uniqueness and targeting a broad market?

A. cost leadership
B. differentiation
C. focused low cost
D. focused differentiation

T

T/F: Innovation becomes really important with a differentiation business strategy.

F

T/F: Differentiation strategies face threats from knock offs but are not sensitive to price wars.

F

T/F: Differentiation prevents a firm from creating brand loyalty and increasing profit margins.

C

Which generic business strategy is on the intersection of competing on cost and targeting a narrow market?

A. cost leadership
B. differentiation
C. focused low cost
D. focused differentiation

A

Which of the following IS NOT a disadvantage of focused generic business strategies?

A. lower profit margins
B. limited demand
C. niche may change or disappear
D. all of the above

B

Which of the following is a disadvantage of focused generic business strategies?

A. lower profit margins
B. limited demand
C. decreased uniqueness of products
D. hardest strategy to implement

D

Which generic business strategy is on the intersection of competing on uniqueness and targeting a narrow market?

A. cost leadership
B. differentiation
C. focused low cost
D. focused differentiation

C

You are a consultant for Toyota and have determined that in the car manufacturing market, their products are offered at a much lower price than competitors, but are also substantially differentiated from competitors. The most accurate description of Toyota's generic strategy is:

A. Differentiation
B. Overall Cost Leadership
C. Best Cost Strategy
D. Focused Differentiation

T

T/F: Companies will choose a generic business strategy to avoid becoming "stuck in the middle". These firms are the ones that don't try to compete on either differentiation or cost.

D

A company using a best cost strategy may do all of the following EXCEPT:

A. use more than one generic strategy
B. compete on price and uniqueness
C. might consider different strategies for different brands
D. uses the single best strategy possible to obtain the best cost available

C

You are a consultant for Embraer and have determined that in the airplane manufacturing market, their products are significantly cheaper than the competitors, but they're still a little differentiated from the competition. In addition, they seem to target the entire airplane-purchasing market. The most accurate description of Embraer's generic strategy (or lack thereof) is:

A. Stuck in the Middle
B. Differentiation
C. Overall Cost Leadership
D. Focused Low Cost
E. Focused Differentiation

A

Ferns and Flowers sells unique products such as exotic plants, flowers, pots, and plant care services to a narrow market. Which of the following would be true about Ferns and Flowers?

A. The shop can charge very high prices for its unique products.

B. It need not worry about damaging attacks from larger firms.

C. It is protected from the damaging attacks of smaller shops that adopt an even narrower focus.

D. The shop will never have its growth stymied despite the fact that it serves a niche market.

E. The niche, that is the area of operation of Ferns and Flowers, cannot be made to disappear or be taken over by larger competitors.

C

A firm is said to be \_____ if it does not offer features that are unique enough to convince customers to buy its offerings and its prices are too high to effectively compete on based on price.

A. outdated
B. obsolete
C. stuck in the middle
D. stuck in the mud

B

Which of the following is a pro to the first mover advantage?

A. firm assumes the risk of entering a new, untested market
B. firm reaps the marketing benefits of being the first
C. firm assumes the risk of competitors learning and capitalizing off of mistakes made from learning about a new market/product

D

According to the A-M-C framework, competitors are most likely to respond to a competitive action when they are:

A. Aware of the action
B. Motivated to respond
C. Capable of doing something about it
D. all of the above

A

In the A-M-C framework, strategic analysis and environmental scanning, the need to stay on top of what is going on in your industry, and reading the newspaper, trade journals, etc. are all characteristics of:

A. awareness
B. motivation
C. capability
D. attentive
E. market

B

In the A-M-C framework, market commonality, resource similarity, and reputation are all characteristics of:

A. awareness
B. motivation
C. capability
D. attentive
E. market

C

In the A-M-C framework, having the resources to respond effectively refers to:

A. awareness
B. motivation
C. capability
D. connection
E. market

B

In \____________, firms compete in some areas, but cooperate in others.

A. cooperation
B. co-opetition
C. joint allegiance
D. strategic alliance

T

T/F: The Blue Ocean Strategy refers to targeting a different market and reducing market commonality as opposed to competing with rivals.

A

\_____________ refers to combining the resources readily available to you in a unique way to create a new business/product that is very different from others.

A. bricolage
B. co-opetition
C. strategic alliance
D. merger

E

Which of the following IS NOT a component of the BCG Matrix?

A. star
B. question mark
C. cash cow
D. dog
E. cat

B

In the BCG Matrix, a Star has \_____ market growth and \______ market share in its industry. As a result, you should prioritize the Star.

A. high, low
B. high, high
C. low, low
D. low, high

F

T/F: In the BCG Matrix, you should invest in the star.

D

In the BCG Matrix, a Cash Cow has \_____ market growth and \______ market share in its industry. As a result, you should invest in the Cash Cow.

A. high, low
B. high, high
C. low, low
D. low, high

F

T/F: In the BCG Matrix, you should kill the question mark.

T

T/F: In the BCG Matrix, you should invest in the cash cow.

A

In the BCG Matrix, a Question Mark has \_____ market growth and \______ market share in its industry. As a result, you should divest in the Question Mark.

A. high, low
B. high, high
C. low, low
D. low, high

C

In the BCG Matrix, a Dog has \_____ market growth and \______ market share in its industry. As a result, you should kill the Dog. E.g. entertainment & games software)

A. high, low
B. high, high
C. low, low
D. low, high

T

T/F: In the BCG Matrix, you should kill the dog.

F

T/F: In the BCG Matrix, you should kill the question mark.

B

A fellow student tells you that the more people you hire, the more human capital the firm has. Which of the following critiques best conveys the flaw with this logic?

A. Human capital is less concerned with the number of employees than it is with the relationships among employees within the firm and the firm's relationships with external parties.

B. Human capital is more than the number of employees; the knowledge, skills, and abilities contributed by the new employees need to be considered.

C. Human capital is not concerned with the number of employees, it is concerned with their ability to sell products and services

D. Human capital is not concerned with the number of employees, it is concerned with the protection of assets created by individuals in the organization (e.g., patents, trademarks, copyrights).

C

You suggest to a firm's CEO that, from a human capital perspective, the company is not very diverse. Your client becomes offended and says that this is clearly not the case as the firm has people from all different races, sexes, and religions. What is the most appropriate response to this?

A. "Oh, I didn't realize that, I suppose the firm is more diverse than I had originally thought"
B. "Yes, but there are several different protected groups (e.g., age) that you have not listed, depressing the firm's human capital"
C. "From a human capital perspective, protected groups are only one aspect of diversity, it is also important to consider whether/how these individuals contribute diverse knowledge, skills, and abilities"

C

Your friend launched a company two years ago, manufacturing an innovative form of paperclip. When the company was first launched there was considerable waste in terms of scrap metal and plastic and the throughput time for each paperclip was 30 seconds. However, having manufactured over 1 million paperclips since then, the company now wastes considerably less scrap and has improved the throughput time to 5 seconds. As a result, the marginal (per-unit) cost of producing each paperclip has decreased by 75%. This savings is best described as a result of \_________________________.

A. economies of scale
B. economies of scope
C. experience curve
D. business strategy

A

Proctor & Gamble and Johnson & Johnson are both in the consumer goods industry and compete with each other in the Americas, Europe, Asia, and the Middle East. As a consultant, you are analyzing this industry and observe an interesting phenomenon: when one of these two companies takes a competitive action (perhaps in Europe) the other may react not only in Europe, but on a global scale. This phenomenon is best attributed to what strategic management concept?

A. multipoint competition
B. joint allegiance
C. strategic alliance
D. none of the above

B

Chinese manufacturers are beginning to create cell phones at a much "cheaper" cost than Apple and Samsung. These manufacturers are not focused on being a leader in innovation in the cell phone industry. They target the broad set of users that are looking to spend less on their cell phone purchases. Which of the following generic business strategies best describes this firm's strategy?

A. Differentiation
B. Cost Leadership
C. Focused Differentiation
D. Focused Low Cost

A

Which of the following is NOT a disadvantage of the Cost Leadership strategy?

A. It is harder for them to survive price wars
B. Customers may perceive their product to be of inferior quality
C. The firm can become less adaptable to environmental changes
D. They are susceptible to changes in volume

C

A car manufacturer introduces a new car in the market. The car is aimed at the premium segment. It is priced more than any other car in its category, and it offers features that are standard for cars in its category. Thus, the newly launched car can compete neither on the basis of price nor on the basis of any unique feature that can convince customers to buy it. This is the example of a(n) \_____ firm.

A. outdated
B. obsolete
C. stuck in the middle
D. stuck in the mud

A

What arises when there is an inverse relationship between the quantity of a single product produced and per-unit fixed costs?

A. Economies of scale
B. Experience curve
C. Economies of scope
D. Competitive parity

D

Which of the following describes why a company pursuing a Cost Leadership strategy might still want to do some differentiation?

A. Economies of scale
B. Experience curve
C. Economies of scope
D. Competitive parity

B

Direct labor for the manufacturing of surfboards in a plant started at $30/surfboard. Since opening, the plant has now produced over 50,000 surfboards. Having produced so many surfboards, now the cost of direct labor is $10/surfboard because more efficient manufacturing processes have been found. What concept is best demonstrated here?

A. Economies of scale
B. Experience curve
D. Economies of scope
D. Competitive parity

C

Which of the following captures the difference between an experience curve and economies of scale?

A. The experience curve is concerned with the decline in per-unit cost of production whereas economies of scale is concerned with the decline in the total cost of production

B. The experience curve is concerned with the decline in the total cost of production whereas economies of scale is concerned with the decline in per-unit cost of production

C. The experience curve is influenced by the cumulative volume of a product produced whereas economies of scale are influenced by the volume of a product being produced over a period of time.

D. The experience curve is influenced by the volume being produced over a period of time whereas economies of scale is influenced by the cumulative volume produced

C

Which of the following is least likely to be a benefit of social capital within a firm?

A. It can facilitate the building of buy-in on a proposed strategy
B. It can help retain good employees
C. It can offset a bad generic business strategy
D. It can enhance the flow of communication within the company

C

You are launching a surfboard company in San Diego. While you will sell your product to anyone who will pay, your emphasis is on providing the highest quality surfboards catered to the needs of surfing professionals. What generic business strategy best reflects this business?

A. Differentiation
B. Cost Leadership
C. Focused Differentiation
D. Focused Low Cost

B

Which of the following best captures the concept of competitive parity with respect to companies pursuing a differentiation strategy?

A. They need to innovate in inimitable ways
B. They shouldn't completely ignore price
C. They need to assess market commonality
D. They need to innovate in ways that customers value

C

Which of the following is NOT a disadvantage of the focused generic business strategies?

A. Potentially limited demand
B. The niche may change/disappear
C. Inability to customize your product to the needs of the niche
D. Other companies may enter your niche in even more focused ways

A

Which of the following is least likely to reduce the likelihood of managers acting in ways that are damaging to shareholders?

A. Increase the salary of the managers
B.Issue stock/stock options to managers
C.Provide bonuses linked to outcomes that shareholders want to see
D.Maintain an active, involved, and independent board of directors

E

Who of the following is not a formal part of the formal corporate governance process, but might still greatly influence the way the firm is governed?

A. Members of the firm's board of directors
B. Librarians
C. People who own the company's stock
D. The CEO
E. Analysts

A

Consider the following situation: Managers are not managing the company well, so shareholders sell the stock. This sell-off of the company's stock reduces the market value of the company, making the company more attractive for a takeover. This process provides a high-level overview of what strategic management phenomenon?

A. The Market for Corporate Governance
B. Leveraged Buyout
C. Industry Lifecycle
D. Agency Theory

C

Which one of the following groups is not a key participant in corporate governance?

A. board of directors (if publicly-traded)
B. shareholders/owners
C. legislators
D. top management team

A

Which of the following IS NOT a concentration strategy used by firms?

A. service penetration
B. market development
C. market penetration
D. product development

F

Which of the following IS NOT a concentration strategy used by firms?

A. employee development
B. market development
C. market penetration
D. product penetration
E. B & C
F. B & D

T

T/F: Market development involves taking existing products and trying to sell them in new markets.

F

T/F: Product development involves trying to gain additional share of a firm's existing markets using existing products, often by relying on advertising.

T

T/F: Product development involves creating new products to serve in existing markets.

F

T/F/: Vertical Integration can be forward or backward and involves buying out a buyer or rival.

C

Which of the following is a characteristic of forward vertical integration?

A. eliminating bottle-necks
B. reducing costs of inputs
C. unifying systems and making processes more efficient
D. buying your suppliers

B

Which of the following is a characteristic of backward vertical integration?

A. buying your customers
B. buying your suppliers
C. capturing your customer's profits as well as yours
D. better predicting demand

F

T/F: Diversification refers to entering a new market with the same product, launching a new product line, or buying out companies in your current industry to gain market share.

T

T/F: Related diversification refers to entering businesses that are related somehow to your existing businesses.

A

\____________ is a firm's resources that reflect the collective learning in the organization or what the firm knows and does best.

A. economies of scope
B. economies of scale
C. market power
D. collective power

F

T/F: Downsides of unrelated diversification include parenting and restructuring.

B

\_____________ refers to positive contributions of the corporate office to a new business as a result of expertise and support provided.

A. restructuring
B. parenting
C. acquiring
D. strategic alliance

A

\__________ refers to major changes to the organization.

A. restructuring
B. parenting
C. acquiring
D. remodeling

A

Northwest Airlines has been acquired by Delta. This is an example of a \___________ acquisition.

A. horizontal
B. vertical
C. backward vertical
D. forward horizontal

T

T/F: The first step in the acquisition decision making process is target screening.

C

The law firm of Smith, Jones, and Richards, LLC, has entered into an agreement to combine its operations on a relatively equal basis with Garcia, Lopez, and Romero, LLC, another law firm. This transaction is an example of a:

A. strategic alliance
B. joint venture
C. merger
D. acquisition

T

T/F: A merger is the combination of two or more firms into a new company.

C

\__________ of mergers fail to create value.

A. 60-90%
B. 20-50%
C. 50-80%
D. 100%

D

A \____ is a specialized type of acquisition in which the target firm reacts negatively to the acquiring firm's offer.

A. merger
B. seizure
C. joint venture
D. takeover

A

A \___________ is formed when there is a cooperative relationship between two or more firms, but no new company is created.

A. strategic alliance
B. joint venture
C. merger
D. acquisition

B

Glorietta Manufacturing specializes in making luxury leather goods from exotic skins, such as snake, lizard, and alligator. In the last few years it has been increasingly difficult to obtain high quality, unblemished alligator skins. It's main source of alligator skins, Gator-Rama Ranch, has a number of other customers. So, Glorietta's management has decided to enter acquisition negotiations with Gator-Rama in order to gain control over Gator-Rama's output. This is an example of a:

A. horizontal acquisition
B. vertical acquisition
C. business level strategy
D. none of the above

C

In order for an alliance to qualify as \___ it must have the potential to alter a company's competitive advantage.

A. generic
B. corporate
C. strategic
D. international

B

In a \____________, two or more firms contribute equity to form a new legal entity that is owned jointly.

A. strategic alliance
B. joint venture
C. merger
D. acquisition

B

A country may require a company to form a(n) \_________ and provide knowledge and advanced technology in exchange for access to the market.

A. strategic alliance
B. joint venture
C. merger
D. acquisition

B

Organizational structure tries to balance all of the following EXCEPT;

A. the need to divide tasks into meaningful groupings
B. the need to document functions for seamless integration
C. the need to integrate the groupings for efficiency and effectiveness.
D. all of the above

A

Which organization chart shows relationships between supervisors and subordinates?

A. vertical linkages
B. horizontal linkages
C. informal linkages
D. formal linkages

B

Which organization chart shows relationships between peers in an organization?

A. vertical linkages
B. horizontal linkages
C. informal linkages
D. formal linkages

C

Which organization chart shows social network links that do not appear on a formal organization chart?

A. vertical linkages
B. horizontal linkages
C. informal linkages
D. formal linkages

T

T/F: In Simple Structure, coordination of tasks are done through direct supervision and employees may not understand their responsibilities.

F

T/F: In simple structure, there are many rules and regulations.

B

Which of the following is a benefit of functional structures?

A. more efficient use of organization revenue
B. more efficient use of managerial and technical talent
C. more efficient use of performance standards
D. more efficient use of organization leverage

A

All of the following are benefits of functional structure except:

A. enhanced ability to establish uniform performance standards
B. enhanced coordination and control
C. enhanced organizational-level perspective
D. more efficient use of managerial and technical talent
E. all of the above

C

All of the following are disadvantages of functional structure except:

A. impeded communication and coordination due to differences in values and orientations
B. may lead to short-term thinking
C. less coordination and control
D. difficult to establish uniform performance standards
E. all of the above

B

Which of the following is a disadvantage of functional structures?

A. less coordination and control
B. may lead to short term thinking
C. difficult to establish benchmarks
D. inability to combine the use of other structures

T

T/F: Multidivisional Structure is most common among larger organizations.

D

All of the following are benefits of multidivisional structure except:

A. separation of strategic and operating control
B. quick response to important changes in external environment
C. minimal problems of sharing resources across functional departments
D. cost effective structure to implement
E. all of the above

B

All of the following are disadvantages of multidivisional structure except:

A. can be very expensive
B. slow response to important changes in external environment
C. can be dysfunctional competition among divisions
D. differences in image and quality may occur across divisions
E. all of the above