BUS-485 Midterm

1. Southwest Airlines' tightly integrated activities make its cost leadership strategy more vulnerable to imitation than if its activities were loosely integrated.

a.

True

b.

False

ANSWER:

False

2. The new CEO of Opacity Enterprises is determined to make the long-established firm strategically flexible. The CEO should understand that the task is not easy, largely because of inertia that can build up over time.

a.

True

b.

False

ANSWER:

True

3. Walmart's change in strategy to attract more upscale customers will likely succeed because cost leaders are good at differentiating.

a.

True

b.

False

ANSWER:

False

4. An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his spouse's company transferred her to St. Paul. The decorator is distressed because the customers in his target market have, in his words, "banal and bourgeois taste." Which of the following is the decorator's problem?

a.

The decorator does not understand that customer needs are neither right nor wrong, and neither good nor bad.

b.

The decorator has no core competencies that will transfer to his new geographic market.

c.

The decorator should choose a strategy of cost leadership in this environment.

d.

The decorator is highly affiliated with the new target market and understands how he can create value for it.

ANSWER:

a

5. A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are:

a.

causally ambiguous.

b.

unobservable.

c.

imitable.

d.

common.

ANSWER:

c

6. Consolidation among fuel providers serving airport facilities is viewed in the five forces model of competition as a(n):

a.

reduction of the airlines' ability to benefit from economies of scale.

b.

increase in switching costs because the airlines have no choice but to use jet fuel and other oil products.

c.

increase in the bargaining power of suppliers of a critical input.

d.

increase in the intensity of rivalry among airlines for scarce resources.

ANSWER:

c

7. The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an example of a __________ barrier to entry.

a.

cost disadvantages independent of scale

b.

government policy

c.

capital requirements

d.

product differentiation

ANSWER:

b

Quiz 2 Week 5

1. Two firms, such as a small local, family-owned Italian restaurant and Olive Garden, share few markets and have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors.

a.

True

b.

False

ANSWER:

False

2. Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action.

a.

True

b.

False

ANSWER:

False

3. It is more likely that locally owned, one-location cafes in a small town will respond more rapidly to tactical actions by each other than they will to strategic actions by the Burger King franchise that has recently moved to their town.

a.

True

b.

False

ANSWER:

True

4. Carl has just graduated with a management degree. He has a good understanding of his personal strengths and weaknesses and knows he would fit best in a stable organizational environment. In his job search, Carl should target firms in slow-cycle markets.

a.

True

b.

False

ANSWER:

True

5. New markets created by the technologies underlying the development of products such as iPods, iPads, and Wi-Fi are a result of:

a.

disruptive technologies.

b.

global competition.

c.

knowledge intensity.

d.

hypercompetition.

ANSWER:

a

12. Chelsea Milling Company makes Jiffy packaged baking mixes. It was established in 1930. It has never spent one cent on advertising, which is one reason it is able to pursue a(n) __________ strategy.

a.

differentiation

b.

focused differentiation

c.

integrated cost leadership/differentiation

d.

cost leadership

ANSWER:

d

6. If Southwest Airlines’ employees lost their high enthusiasm and commitment to the company:

a.

the airline could continue without problems because its cost leadership strategy is dependent on its efficient internal procedures.

b.

replacement employees could be hired from rival airlines that are laying off employees and easily be merged into the Southwest culture.

c.

there would be no impact on Southwest's profitability because Southwest's customers value the low fares rather than being "entertained" by the employees.

d.

Southwest would have lost one of its competitive advantages, and its performance would be threatened.

ANSWER:

d

7. Which of the following would NOT be identified in an analysis of the economic portion of the general environment?

a.

The willingness of Chrysler's buyers to purchase large vehicles in light of an increase in oil prices

b.

The ability of Ford to issue new debt in light of its recent financial performance

c.

The ability of BMW's buyers to finance car purchases in light of a change in interest rates

d.

The willingness of GM buyers to purchase new vehicles in light of the threat of recession

ANSWER:

b

8. Which of the following is a true statement about capabilities?

a.

Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.

b.

Valuable capabilities are based almost entirely on tangible resources.

c.

Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated.

d.

The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources.

ANSWER:

a

9. All of the following are examples of efforts by firms to address the physical segment of the general environment EXCEPT the:

a.

development of sustainable packaging by McDonald's.

b.

reduction in carbon dioxide emissions by Procter & Gamble.

c.

reduction in water usage in plants by Unilever.

d.

increase in hiring of women and minorities at Microsoft.

ANSWER:

d

10. Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an example of the:

a.

perception of perceived prestige and status as a means of differentiating a product.

b.

importance of high-quality raw materials when using the differentiation strategy.

c.

risk of product imitation by competitors.

d.

danger counterfeiting holds for firms pursuing the differentiation strategy.

ANSWER:

a

11. A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive:

a.

advantage.

b.

parity.

c.

disadvantage.

d.

neutrality.

ANSWER:

b