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Capstone 1

100 Questions
Student Quizzes & Trivia

Midterm 1 study guide

Questions and Answers
  • 1. 
     Functional managers
    • A. 

      Are responsible for the specific business functions or operations that constitute a company or one of its divisions.

    • B. 

      Look at the overall picture of a corporation.

    • C. 

      Have no strategic role.

    • D. 

      Formulate generic strategies.

    • E. 

      Execute business-level decisions.

  • 2. 
    An important first step in the process of formulating a company's mission is to
    • A. 

      Describe the technological processor.

    • B. 

      Identify the customer segment served by the company.

    • C. 

      Answer the question, "What is our business?"

    • D. 

      Decide what the company will be like ten years from now.

    • E. 

      Evaluate the company's most recent performance.

  • 3. 
    The primary goal of a SWOT analysis is to
    • A. 

      Benchmark a company's performance.

    • B. 

      Force managers to think creatively rather than analytically.

    • C. 

      Forecast future events.

    • D. 

      Develop short-run goals.

    • E. 

      Create, affirm, or fine-tune a company-specific business model.

  • 4. 
    A component of strategy implementation is
    • A. 

      Designing the best organization structure, culture, and control systems to put a strategy into action.

    • B. 

      Enumerating the number and kind of periodic reports that must be submitted by functional-level managers.

    • C. 

      Analyzing the macroeconomic environment of the company

    • D. 

      Answering the question, "What is our business?"

    • E. 

      E) all of the above. all of the above.

  • 5. 
    The strategies that a company's managers pursue
    • A. 

      Have a major impact on the company's performance relative to its competitors.

    • B. 

      Have little or no effect on overall profitability.

    • C. 

      Typically result in higher per-unit cost of production.

    • D. 

      Result in significant industry structural changes

    • E. 

      None of the above.

  • 6. 
    A sustained competitive advantage
    • A. 

      Enables a company to maintain above-average projects for a number of years.

    • B. 

      Cannot be maintained for more than three years.

    • C. 

      Is seldom possible in today's highly competitive environment.

    • D. 

      Typically arises out of unforeseen economic events.

    • E. 

      A and D.

  • 7. 
    Scenario-based planning is a technique for coping with the problem of
    • A. 

      Uncertainty.

    • B. 

      Planning equilibrium.

    • C. 

      Bottom-up planning.

    • D. 

      Strategic fit.

    • E. 

      Cognitive bias.

  • 8. 
    Aaron planned to cut prices at his bicycle shop, but when a competing shop began to offer free repairs, Aaron decided to copy them. Aaron's new strategy (offer free repairs) is an example of a(n)
    • A. 

      Mistake.

    • B. 

      Emergent strategy.

    • C. 

      Deliberate strategy.

    • D. 

      Intended strategy.

    • E. 

      Unrealized strategy.

  • 9. 
    The fit model of strategy formulation and implementation
    • A. 

      Was proposed and supported by Prahalad and Hamel.

    • B. 

      Is not useful because the future is uncertain.

    • C. 

      Is useful for both intended and emergent strategies.

    • D. 

      Can give a company a sustainable competitive advantage.

    • E. 

      Focuses more on the current situation than on the future situation.

  • 10. 
    The role of corporate-level managers is to
    • A. 

      Define operational-level strategies.

    • B. 

      Outline functional-level strategies and plans.

    • C. 

      Oversee the development of strategies for the whole organization.

    • D. 

      Develop business-level strategies

    • E. 

      Oversee the development of business-level and functional-level strategies

  • 11. 
    Which of the following is not a characteristic of emotional intelligence?
    • A. 

      Self-awareness

    • B. 

      Self-regulation

    • C. 

      Self-esteem

    • D. 

      Empathy

    • E. 

      Social skills

  • 12. 
    A company's mission
    • A. 

      Lays out the desired future state of the company.

    • B. 

      Outlines the manner in which employees and managers should conduct themselves.

    • C. 

      Defines the manner in which strategies will be developed and attained.

    • D. 

      Describes what the company does.

    • E. 

      Answers the question, "What will our business become?"

  • 13. 
    Holly owns a landscape company and is thinking about expanding her services to include outdoor water features (waterfalls, streams, ponds). If, before making this decision, she looks at the experience of similar firms that have added outdoor water features, she is employing
    • A. 

      Wishful thinking

    • B. 

      Aqua-evaluation

    • C. 

      Devil's advocacy

    • D. 

      Outside view

    • E. 

      Dialectic inquiry

  • 14. 
    A competitive advantage is considered to be a sustained competitive advantage when the
    • A. 

      Advantage endures for a long time.

    • B. 

      Firm is able to spread the advantage to all of its business units.

    • C. 

      Advantage is very large.

    • D. 

      Advantage was gained at a low cost.

    • E. 

      Managers who developed the advantage are still employed at the firm.

  • 15. 
    The scenario approach to strategic planning involves
    • A. 

      Devising strategies for coping with a number of different possible future states of the world

    • B. 

      Homing in on a single prediction of future demand conditions using an iterative planning process

    • C. 

      Functional managers setting key corporate objectives

    • D. 

      Using computers to build virtual worlds for top-level managers.

    • E. 

      Making planning the exclusive domain of top-level managers

  • 16. 
    General managers are found
    • A. 

      Only at the corporate level

    • B. 

      Only at the business level.

    • C. 

      Only at the functional and business levels

    • D. 

      At the functional, business, and corporate levels

    • E. 

      Only at the corporate and business levels.

  • 17. 
    Devil's advocacy
    • A. 

      Is simpler than the expert approach

    • B. 

      Is vulnerable to the groupthink phenomenon

    • C. 

      Results in unproductive conflict

    • D. 

      Involves one group member being responsible for questioning the assumptions of a plan.

    • E. 

      Results in a final plan that is a combination of a plan and a counterplan

  • 18. 
    Systematic errors in the decision-making process are caused by
    • A. 

      Inadequate information.

    • B. 

      Information overload.

    • C. 

      Cognitive biases on the part of decisionmakers.

    • D. 

      Poor data collection procedures.

    • E. 

      All of the above.

  • 19. 
    Sam Walton wanted Wal-Mart to keep costs low. Therefore, as an example to others, he drove his own car and furnished his office with plain, steel desks. In this case, Mr. Walton was displaying his
    • A. 

      Commitment.

    • B. 

      Vision.

    • C. 

      Astute use of power.

    • D. 

      Emotional intelligence

    • E. 

      Eloquence

  • 20. 
    Which of the following is not a cognitive bias?
    • A. 

      Escalating commitment

    • B. 

      Reasoning by analogy

    • C. 

      Ivory tower thinking

    • D. 

      Representativeness

    • E. 

      Illusion of control

  • 21. 
    Profit growth is best measured
    • A. 

      By the increase in shareholder value

    • B. 

      By the return on investment

    • C. 

      Month by month

    • D. 

      Over time.

    • E. 

      By increases in liquidity

  • 22. 
    Maximizing shareholder value is
    • A. 

      A byproduct of a company's cost reduction programs.

    • B. 

      Not generally a viable goal for a company

    • C. 

      Not the responsibility of a company's managers

    • D. 

      The ultimate goal of profit-making companies

    • E. 

      Not required to attract risk capital

  • 23. 
    Vice President Chung is responsible for executing decisions about human resources. Mr. Chung is
    • A. 

      A corporate-level general manager

    • B. 

      Both a corporate- and business-level general manager.

    • C. 

      A business-level general manager.

    • D. 

      A functional manager.

    • E. 

      A corporate-level, business-level, and functional manager.

  • 24. 
    An emergent strategy is
    • A. 

      The result of a planned strategy

    • B. 

      An unplanned response to unforeseen circumstances.

    • C. 

      The product of careful top-down planning mechanisms.

    • D. 

      The same as a realized strategy.

    • E. 

      A group response to a problem area.

  • 25. 
    Strategic implementation involves
    • A. 

      Taking actions at the functional, business, and corporate levels.

    • B. 

      Comparing company performance with leading companies in the industry.

    • C. 

      Analyzing the macroenvironment for any last-minute changes that may have occurred

    • D. 

      Only activities at the corporate level.

    • E. 

      All of the above

  • 26. 
    Jeffrey Pfeffer believes that a manager's political power comes from his or her control over
    • A. 

      Employees' paychecks.

    • B. 

      The firm's strategic vision.

    • C. 

      Organizational resources.

    • D. 

      Internal communication channels.

    • E. 

      The company's website.

  • 27. 
    The first step in the strategic management process is to
    • A. 

      Analyze the competitive environment.

    • B. 

      Examine the organizational structure to see what changes may be required.

    • C. 

      Analyze internal strengths.

    • D. 

      Analyze internal weaknesses.

    • E. 

      Select the corporate mission and major corporate goals.

  • 28. 
    Strategy formulation refers to the
    • A. 

      Task of designing organizational structures and control systems.

    • B. 

      Process by which strategies are put into action.

    • C. 

      Top-down planning process that gives rise to the implementation of emergent strategies.

    • D. 

      Task of analyzing an organization's external and internal environment and then selecting an appropriate strategy.

    • E. 

      Process of choosing a realized strategy

  • 29. 
    Competition from industry to industry
    • A. 

      Is normally the same in all industries.

    • B. 

      Is characterized by different competitive conditions in different industries

    • C. 

      Does not vary over time

    • D. 

      Cannot be measured.

    • E. 

      None of the above.

  • 30. 
    In the typical scenario planning exercise,
    • A. 

      Most scenarios are pessimistic.

    • B. 

      Most scenarios are optimistic.

    • C. 

      Some scenarios are optimistic and some scenarios are pessimistic.

    • D. 

      Only worst-case outcomes should be considered.

    • E. 

      Only best-case outcomes should be considered.

  • 31. 
    Well-constructed goals should
    • A. 

      Be precise and measurable.

    • B. 

      Address specific issues.

    • C. 

      Be bounded by a particular time period.

    • D. 

      Be all of the above.

    • E. 

      A and B.

  • 32. 
    Which of the following cognitive biases occurs when decisionmakers commit even more resources if 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

  • 33. 
    Which of the following is the organization's principal general manager?
    • A. 

      Board of directors

    • B. 

      Division head

    • C. 

      CFO

    • D. 

      CEO

    • E. 

      Controller

  • 34. 
    Feelings of personal responsibility for a project are most likely to lead to
    • A. 

      Prior hypothesis biases

    • B. 

      Escalating commitment.

    • C. 

      Reasoning by analogy.

    • D. 

      Representativeness.

    • E. 

      Groupthink.

  • 35. 
    Strategic leadership is about
    • A. 

      Strategy formulation.

    • B. 

      Strategy implementation.

    • C. 

      How to effectively manage a company's strategy and create competitive advantage

    • D. 

      Establishing effective contract processes.

    • E. 

      Reducing a company's operating costs

  • 36. 
    An effective business model
    • A. 

      Involves how a company selects its customers.

    • B. 

      Creates value for its customers.

    • C. 

      Achieves and sustains a high level of profitability.

    • D. 

      Produces goods and services.

    • E. 

      All of the above.

  • 37. 
    Good strategic leaders
    • A. 

      Possess a willingness to delegate and empower subordinates.

    • B. 

      Control all facets of decision making.

    • C. 

      Are confident in their ability to make sound decisions without consulting others

    • D. 

      Assure uniformity of purpose through the exercise of power

    • E. 

      Have the ability to be inconsistent when the situation requires inconsistency

  • 38. 
    Betsy Holden is the head of Kraft Foods, a division of the Philip Morris Company. Which of the following is not likely to be one of Ms. Holden's responsibilities?
    • A. 

      Turning corporate-level strategy into action

    • B. 

      Defining Philip Morris's mission

    • C. 

      Deciding how to compete in the foods industry

    • D. 

      Supervising functional-level managers

    • E. 

      Developing a business-level strategy

  • 39. 
    Matching an organization's structure and control systems to the requirements of a company's strategy is
    • A. 

      Part of strategy implementation

    • B. 

      Part of the SWOT analysis.

    • C. 

      Facilitated through the feedback loop.

    • D. 

      Part of internal analysis.

    • E. 

      All of the above.

  • 40. 
    Within a diversified company, the responsibilities of corporate-level strategic managers include
    • A. 

      Translating the corporate mission statement into concrete strategies for individual business units.

    • B. 

      Closely supervising the formulation of strategies at the functional level that support the company's business- and corporate-level strategies.

    • C. 

      Allocating resources to functions within business units.

    • D. 

      Overseeing the development of strategies for the total organization and allocating resources among its different business areas.

    • E. 

      Identifying and establishing relationships with supplier firms.

  • 41. 
    Due to a recent relaxation in pollution standards, Ford Motors is withdrawing its electric-powered cars from sales in the U.S. market. Ford is responding to a change in which of the following macroenvironmental forces?
    • A. 

      Economic

    • B. 

      Demographic

    • C. 

      Political and legal

    • D. 

      Social

    • E. 

      Strategic

  • 42. 
    The extent of rivalry among established companies is lowest when
    • A. 

      The industry's product is a commodity.

    • B. 

      Demand is growing rapidly.

    • C. 

      Exit barriers are substantial.

    • D. 

      The industry is entering a decline stage.

    • E. 

      The industry is dominated by a small number of large companies.

  • 43. 
    Which of the following is not one of the factors in the economic forces of the macroenvironment?
    • A. 

      Interest rates

    • B. 

      Inflation

    • C. 

      Regulation

    • D. 

      Currency exchange rates

    • E. 

      Economic growth rate

  • 44. 
    The bargaining power of an industry's suppliers is greater when
    • A. 

      The supply industry is fragmented.

    • B. 

      Switching costs are high.

    • C. 

      The industry buys in large quantities.

    • D. 

      Many substitutes are available.

    • E. 

      Firms in the industry can threaten backward vertical integration.

  • 45. 
    Which of the following industry structures consists of a large number of small and medium-sized companies, none of which is in a position to determine industry price?
    • A. 

      Fragmented industry

    • B. 

      Consolidated industry

    • C. 

      Oligopoly

    • D. 

      Monopoly

    • E. 

      Sector

  • 46. 
    Which of the following is not one of Porter's five forces, as proposed in his original model?
    • A. 

      Threat of complementors

    • B. 

      Bargaining power of suppliers

    • C. 

      Rivalry among established companies

    • D. 

      Threat of new entrants

    • E. 

      Threat of market changes

  • 47. 
    A market segment is a group 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 that produce similar goods or services.

    • C. 

      Customers within a market that purchase goods or services in similar quantities.

    • D. 

      Customers within a market that have similar levels of profitability.

    • E. 

      None of the above.

  • 48. 
    Julian is asked to examine the demographic environment facing his employer, a clothing manufacturer. Which of the following should Julian examine?
    • A. 

      Government regulations

    • B. 

      Inflation

    • C. 

      Manufacturing technology

    • D. 

      Aging of the population

    • E. 

      Society's growing interest in exercise

  • 49. 
    Economies of scale may arise from
    • A. 

      Cost reductions gained through mass production

    • B. 

      Discounts on bulk purchases of raw material inputs and component parts.

    • C. 

      Advantages gained by spreading production costs over a large production volume

    • D. 

      Cost savings associated with spreading marketing and advertising costs over a large volume of output.

    • E. 

      All of the above.

  • 50. 
    Which of the following industry structures is dominated by a small number of large companies?
    • A. 

      Fragmented industry

    • B. 

      Consolidated industry

    • C. 

      Oligopoly

    • D. 

      Monopoly

    • E. 

      Sector

  • 51. 
    Entry barriers in the embryonic stage are frequently based on
    • A. 

      Brand loyalty.

    • B. 

      Economies of scale

    • C. 

      Absolute cost advantages

    • D. 

      Economies of scope

    • E. 

      Technological know-how

  • 52. 
    Growth industries
    • A. 

      Typically suffer from high mobility barriers.

    • B. 

      Tend to be characterized by weak rivalry

    • C. 

      Have high rivalry among established companies.

    • D. 

      Increase prices because customers are more aware of the industry's product.

    • E. 

      Provide economies of scale to existing companies.

  • 53. 
    In which of the following arenas would Wal-Mart's Sam's Club stores compete against their closest, most intense rivals?
    • A. 

      The retailing sector

    • B. 

      The discount retailing industry

    • C. 

      The club-store discount retailing strategic group

    • D. 

      Sam's Club stores face no close, intense rivals.

    • E. 

      Sam's Club stores face close, intense rivals in every arena in which they compete.

  • 54. 
    Switching costs may arise when
    • A. 

      Changing from one computer system to another.

    • B. 

      Substitute products are available at a lower unit cost.

    • C. 

      When there are a large number of interchangeable products

    • D. 

      Products are commodity-like in nature

    • E. 

      All of the above.

  • 55. 
    The risk of a price war is greatest in which of the following circumstances?
    • A. 

      A high-growth industry

    • B. 

      An industry characterized by falling demand, high exit barriers, and excess productive capacity

    • C. 

      An industry characterized by a commodity-type product, strong demand, and low exit barriers

    • D. 

      A mature industry during an economic upturn

    • E. 

      An industry characterized by tacit price agreements

  • 56. 
    Mobility barriers
    • A. 

      Prevent movement within a strategic group.

    • B. 

      Inhibit the movement of companies between strategic groups in an industry.

    • C. 

      Inhibit the movement of a company from one industry to another.

    • D. 

      Include exit barriers of the strategic group that a company wants to enter.

    • E. 

      Are low when exit barriers in the strategic group that a company is a member of are high.

  • 57. 
    The competitive force of substitute products tends to be stronger when
    • A. 

      Buyers view the prices of substitutes as too high.

    • B. 

      The costs that buyers face in switching over to substitutes are low.

    • C. 

      The quality and performance of substitutes are relatively low.

    • D. 

      Substitutes do not embody many characteristics that are similar to those of products already serving the market.

    • E. 

      None of the above.

  • 58. 
    As an industry enters the shakeout stage,
    • A. 

      Rivalry among companies declines.

    • B. 

      Demand is still growing at a high rate.

    • C. 

      Prices rise.

    • D. 

      Excess capacity emerges.

    • E. 

      New entrants come into the market.

  • 59. 
    The industry life cycle model includes which of the following stages?
    • A. 

      Growth

    • B. 

      Shakeout

    • C. 

      Maturity

    • D. 

      Decline

    • E. 

      All of the above

  • 60. 
    As a barrier to new entry, absolute cost advantages can be based on
    • A. 

      Continuous advertising of brand and company names

    • B. 

      High product quality, service-oriented innovations, and good after-sales service

    • C. 

      Cost reductions that arise from the mass production of standardized output

    • D. 

      The unique ability of established companies to spread fixed costs over a large volume

    • E. 

      Control over low-cost inputs required for production, be they labor, materials, equipment, or management skills.

  • 61. 
    The threat from new entrants is greatest in the _________ stage of the industry life cycle.
    • A. 

      Embryonic

    • B. 

      Growth

    • C. 

      Shakeout

    • D. 

      Maturity

    • E. 

      Decline

  • 62. 
    A group of firms all make writing implements—pens, pencils, and markers. This group should be referred to as a(n)
    • A. 

      Substitute.

    • B. 

      Market segment.

    • C. 

      Sector.

    • D. 

      Supplier.

    • E. 

      Industry.

  • 63. 
    Historically, government reputation has
    • A. 

      Encouraged new entrants into an industry.

    • B. 

      Constituted a major entry barrier into major industries.

    • C. 

      Neither hampered nor encouraged new entrants into an industry.

    • D. 

      Encouraged the growth of new companies.

    • E. 

      None of the above.

  • 64. 
    What is the impact of shifting industry boundaries on firms within the industry?
    • A. 

      Higher exit barriers

    • B. 

      More competitors

    • C. 

      Reduced threat of substitutes

    • D. 

      Greater bargaining power of suppliers

    • E. 

      Lesser bargaining power of buyers

  • 65. 
    Demand reaches total saturation in the ___________ stage of the industry life cycle.
    • A. 

      Embryonic

    • B. 

      Growth

    • C. 

      Shakeout

    • D. 

      Maturity

    • E. 

      Decline

  • 66. 
    Brand loyalty may be created by
    • A. 

      Continuous advertising.

    • B. 

      Patent protection of products.

    • C. 

      Product innovation achieved through company research and development.

    • D. 

      Emphasis on high product quality.

    • E. 

      All of the above.

  • 67. 
    Which of the following is currently an embryonic industry?
    • A. 

      Personal computers

    • B. 

      Biotechnology

    • C. 

      Internet retailing

    • D. 

      Nanotechnology

    • E. 

      Wireless communications

  • 68. 
    Which of the following is not a determinant of the extent of rivalry among established companies?
    • A. 

      The number and size distribution of companies in the industry

    • B. 

      Demand conditions

    • C. 

      The cost structure of firms in an industry

    • D. 

      Exit barriers

    • E. 

      The power of buyers

  • 69. 
    The competitive structure of an industry refers to the
    • A. 

      Number of segments in the industry.

    • B. 

      Number and size distribution of companies in the industry.

    • C. 

      The number of consumers in the industry.

    • D. 

      Number of competing products in the industry.

    • E. 

      Form that competition in the industry takes.

  • 70. 
    An industry can be defined as a group of
    • A. 

      Companies offering products or services that are close substitutes for each other.

    • B. 

      Twenty or more companies offering products or services that are close substitutes for each other.

    • C. 

      Companies.

    • D. 

      Companies that offer dissimilar products or services.

    • E. 

      Companies that offer products or services to dissimilar customers.

  • 71. 
    Members of a strategic group
    • A. 

      Compete directly with members of other strategic groups.

    • B. 

      Are affected by Porter's five competitive forces to the same degree that members of other strategic groups are affected.

    • C. 

      Follow a business model that is similar to that pursued by other companies in the group.

    • D. 

      Earn the same rate of return.

    • E. 

      Move easily to other groups as desired.

  • 72. 
    In growth industries,
    • A. 

      Replacement demand is increasing rapidly.

    • B. 

      Technological expertise is the most important entry barrier.

    • C. 

      Rivalry is high.

    • D. 

      Distribution channels are poorly developed.

    • E. 

      Buyers are familiar with the industry's product.

  • 73. 
    Sales of complementors' products tend to
    • A. 

      Increase sales of the industry's product.

    • B. 

      Decrease sales of the industry's product.

    • C. 

      Have no effect on sales of the industry's product.

    • D. 

      Increase sales of substitute products.

    • E. 

      Decrease sales of substitute products.

  • 74. 
    If economies of scale are an industry's primary entry barrier, a new entrant's major risk is
    • A. 

      Its inability to access labor and materials.

    • B. 

      The inferior quality of its products.

    • C. 

      Its inability to match the innovation of the established firm.

    • D. 

      Its inability to produce in sufficient volume to match the cost advantages of established producers.

    • E. 

      Its inability to get buyers to switch to its product.

  • 75. 
    Cosmetics makers focus on the unique needs of customers of different ages. The cosmetics makers recognize the importance of
    • A. 

      Shifting industry boundaries.

    • B. 

      The threat of new entrants.

    • C. 

      Sectors.

    • D. 

      Market segments.

    • E. 

      Substitutes.

  • 76. 
    Beverage makers are finding that water sales are increasing due to consumers' preferences for healthy drinks. Which part of the macroenvironment does this represent?
    • A. 

      Economic forces

    • B. 

      Demographic forces

    • C. 

      Embryonic forces

    • D. 

      Political forces

    • E. 

      Social forces

  • 77. 
    Which of the following is not a force within the macroenvironment?
    • A. 

      Level of interest rates

    • B. 

      Currency exchange rates

    • C. 

      Inflation

    • D. 

      Deflation

    • E. 

      Rates of social change

  • 78. 
    Rivalry refers to
    • A. 

      Competition.

    • B. 

      The intensity of competition among established companies within an industry.

    • C. 

      A struggle among firms using price, product design, and advertising.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 79. 
    Eventually most industries enter a decline stage where
    • A. 

      Growth becomes negative.

    • B. 

      Rivalry among established companies usually decreases.

    • C. 

      Competitive pressures abate.

    • D. 

      Excess capacity declines.

    • E. 

      Demand continues to hold steady.

  • 80. 
    United Airlines, Amtrak, and Greyhound are all companies in the transportation
    • A. 

      Industry.

    • B. 

      Sector.

    • C. 

      Game.

    • D. 

      Segment.

    • E. 

      Strategic group.

  • 81. 
    One of the most widely used measures of financial performance is
    • A. 

      Return on invested capital.

    • B. 

      Net profit margin.

    • C. 

      Share value.

    • D. 

      Net sales.

    • E. 

      Productivity.

  • 82. 
    Capabilities are a company's
    • A. 

      Physical plant and equipment.

    • B. 

      Technological know-how.

    • C. 

      Skills at coordinating resources and putting them to productive use.

    • D. 

      Reputation.

    • E. 

      Resources.

  • 83. 
    When companies find it hard to change their strategies and structures to adapt to changing competitive conditions, they suffer from
    • A. 

      Inertia.

    • B. 

      Prior strategic commitments.

    • C. 

      Barriers to mobility.

    • D. 

      Lack of resources.

    • E. 

      Lack of capabilities.

  • 84. 
    Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs. Cost accountants work in which value chain activity?
    • A. 

      Research and development

    • B. 

      Human resources

    • C. 

      Materials management

    • D. 

      Marketing and sales

    • E. 

      Company infrastructure

  • 85. 
    Dale's horseshoeing methods save time and money for his employer, but when Dale suggests that everyone use his method, his boss says, “No. That's not the way we've always done it around here.” Dale's employer is suffering from
    • A. 

      Organizational inertia.

    • B. 

      Prior strategic commitments.

    • C. 

      Barriers to mobility.

    • D. 

      Lack of distinctive competencies.

    • E. 

      The Icarus paradox.

  • 86. 
    The four basic building blocks of competitive advantage are
    • A. 

      Low cost, quality, efficiency, and customer responsiveness.

    • B. 

      Differentiation, quality, innovation, and customer responsiveness.

    • C. 

      Quality, efficiency, differentiation, and customer responsiveness.

    • D. 

      Customer responsiveness, quality, efficiency, and human resources.

    • E. 

      Quality, customer responsiveness, innovation, and efficiency.

  • 87. 
    ___________ can help an organization overcome inertia.
    • A. 

      Power struggles

    • B. 

      Capabilities

    • C. 

      Prior strategic commitments

    • D. 

      A crisis

    • E. 

      The Icarus paradox

  • 88. 
    Competitive advantage is based on
    • A. 

      Distinctive competencies.

    • B. 

      Economic forces external to a company.

    • C. 

      Lack of government regulations controlling a firm's ability to make rapid adjustments in response to its changing environment.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 89. 
    A product can be thought of as a(n)
    • A. 

      Package of possibilities.

    • B. 

      Configuration of parts.

    • C. 

      One-time purchase.

    • D. 

      Package of attributes.

    • E. 

      Series of alternatives.

  • 90. 
    When Rollie's car wash began to lose business to rivals, Rollie read publications for car wash owners to learn the best practices in the industry. Then she implemented the best practices. Rollie is using __________ to improve her car wash.
    • A. 

      Specialized assets

    • B. 

      Benchmarking

    • C. 

      Strategic commitments

    • D. 

      Inertia

    • E. 

      The Icarus paradox

  • 91. 
    A company may find it difficult to change capabilities because of
    • A. 

      Embedded power and influence.

    • B. 

      Turf battles.

    • C. 

      Power struggles and political resistance.

    • D. 

      A and B.

    • E. 

      All of the above.

  • 92. 
    The term value chain refers to the idea that a company is
    • A. 

      One of a series of companies that comprise an industry segment.

    • B. 

      The producer of a series of products that are linked together.

    • C. 

      A chain of activities for transforming inputs into outputs that customers value.

    • D. 

      One of a series of economic functions.

    • E. 

      All of the above.

  • 93. 
    Resources
    • A. 

      Are the tangible assets available to a company

    • B. 

      Can be tangible or intangible.

    • C. 

      Are harder for a company to copy than capabilities are.

    • D. 

      Are the products of a company's control systems.

    • E. 

      Refer to an organization's skills.

  • 94. 
    Which of the following factors does not determine the durability of a company's competitive advantage?
    • A. 

      Barriers to imitation

    • B. 

      A company's prior strategic commitments

    • C. 

      Capability of competitors

    • D. 

      General level of dynamism in the industry

    • E. 

      The rate of product innovation in an industry

  • 95. 
    Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks. Mike works in which value chain activity?
    • A. 

      Research and development

    • B. 

      Human resources

    • C. 

      Materials management

    • D. 

      Production

    • E. 

      Company infrastructure

  • 96. 
    Ford Motors developed the Explorer sports utility vehicle, the number 1 selling sports utility vehicle in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies?
    • A. 

      Research and development

    • B. 

      Human resources

    • C. 

      Materials management

    • D. 

      Marketing and sales

    • E. 

      Company infrastructure

  • 97. 
    A company's strategic commitments
    • A. 

      Allow it to imitate a competitor's advantage rapidly.

    • B. 

      Are a way to avoid failure.

    • C. 

      Occur when an organization is profitable.

    • D. 

      Reduce inertia.

    • E. 

      Allow it to develop a particular set of resources and capabilities.

  • 98. 
    Which of the following distinctive competencies typically has the lowest barrier to imitation?
    • A. 

      Efficient scale manufacturing facilities

    • B. 

      Technological know-how

    • C. 

      Marketing know-how

    • D. 

      Organizational capabilities

    • E. 

      Brand name

  • 99. 
    Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. Donna's profit margin is
    • A. 

      $50.

    • B. 

      $75.

    • C. 

      $100

    • D. 

      $150.

    • E. 

      $225.

  • 100. 
    Research and development activities are concerned with
    • A. 

      Product design.

    • B. 

      Production processes.

    • C. 

      Service activities as well as manufacturing activities.

    • D. 

      Intangible as well as physical products.

    • E. 

      All of the above.