Untitled Flashcards Set

1. What is the difference between market value and book value?

   • Market value is the firm’s value based on intangible assets (e.g., reputation, human capital), while book value is the accounting value of tangible assets.

2. Companies with high intellectual assets (e.g., tech firms like Apple) tend to have a ______ market value compared to their book value.
   A. Higher
   B. Lower
   Answer: A

3. Which of the following is NOT an intellectual asset?
   A. Employee loyalty
   B. Customer relationships
   C. Factory machinery
   D. Brand reputation
   Answer: C

4. Define "knowledge economy."

   • An economy where value is derived from knowledge and intellectual assets rather than physical production.

5. Social capital refers to:
   A. Financial resources
   B. Employee skills
   C. Networks of relationships within an organization
   D. Physical infrastructure

6. The Pied Piper Effect occurs when:
   A. Employees leave a company to join a competitor as a team.
   B. A company uses social media for recruitment.
   Answer: A

7. What is a downside of excessive social capital?
   A. Lower costs
   B. Groupthink
   C. Increased innovation

8. Unilever recruits top talent by:
   A. Offering the highest salaries
   B. Emphasizing purpose-driven work and global opportunities
   C. Ignoring geographical preferences

Chapter 5: Business-Level Strategies

9. A&P’s failure was due to being "stuck in the middle," meaning it:
   A. Focused too narrowly
   B. Failed to achieve either cost leadership or differentiation
   C. Over-invested in R&D

10. Porter’s three generic strategies are:

    • Cost leadership, differentiation, and focus.

11. Which strategy typically generates the highest ROI?
    A. Cost leadership
    B. Differentiation
    C. Focus

12. To achieve cost leadership, a firm might:
    A. Invest in unique advertising
    B. Build efficient-scale facilities and minimize overhead

13. A differentiation strategy requires:
    A. Cost parity with competitors
    B. Ignoring customer preferences

14. An industry profit pool refers to:

    • The total profits earned in an industry across all value chain activities.

15. During the maturity stage of the industry life cycle, firms should focus on:
    A. Efficiency and cost reduction
    B. Aggressive marketing

16. A turnaround strategy involves:
    A. Expanding into new markets
    B. Cutting unprofitable segments and improving productivity

17. The internet harms differentiation strategies by:
    A. Reducing transparency
    B. Increasing price comparisons and commoditization

Chapter 6: Corporate-Level Strategy & Diversification

18. Corporate-level strategy differs from business-level strategy in that it focuses on:
    A. Daily operations
    B. Managing multiple businesses and diversification

19. A core competence must be:

    • Valuable, rare, and difficult to imitate.

20. Vertical integration involves:
    A. Merging with competitors
    B. Controlling suppliers (backward) or distributors (forward)

21. Costco’s acquisition of Innovel Solutions is an example of:
    A. Strategic alliance
    B. Vertical integration

22. The BCG matrix categorizes businesses as:

    • Stars, Question Marks, Cash Cows, Dogs.

23. A divestment is:
    A. Acquiring a new company
    B. Selling off a business unit to refocus resources

24. A key downside of mergers is:
    A. High takeover premiums and cultural clashes
    B. Increased innovation

25. Strategic alliances differ from joint ventures in that joint ventures:
    A. Create a new legal entity
    B. Are temporary partnerships

26. Asset restructuring involves:
    A. Hiring new managers
    B. Selling unproductive assets

27. Intellectual property (IP) includes:
    A. Office furniture
    B. Patents, trademarks, and copyrights