Midterm 1 Study Guide! Capstone 1

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  • 1/100 Questions

     Functional managers

    • Are responsible for the specific business functions or operations that constitute a company or one of its divisions.
    • Look at the overall picture of a corporation.
    • Have no strategic role.
    • Formulate generic strategies.
    • Execute business-level decisions.
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Strategic Management Quizzes & Trivia
About This Quiz

This midterm study guide for Capstone 1 focuses on key management concepts including functional management roles, company mission formulation, SWOT analysis, strategy implementation, and competitive advantages. It assesses understanding vital for maintaining a firm's competitive edge.


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  • 2. 

    The strategies that a company's managers pursue

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

    • Have little or no effect on overall profitability.

    • Typically result in higher per-unit cost of production.

    • Result in significant industry structural changes

    • None of the above.

    Correct Answer
    A. Have a major impact on the company's performance relative to its competitors.
    Explanation
    The correct answer is that the strategies that a company's managers pursue have a major impact on the company's performance relative to its competitors. This means that the decisions and actions taken by managers can significantly influence how well a company performs compared to other companies in the same industry. The strategies can include various aspects such as pricing, marketing, product development, and operational efficiency. By making effective strategic choices, managers can gain a competitive advantage and improve the company's overall performance.

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  • 3. 

    Strategic leadership is about

    • Strategy formulation.

    • Strategy implementation.

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

    • Establishing effective contract processes.

    • Reducing a company's operating costs

    Correct Answer
    A. How to effectively manage a company's strategy and create competitive advantage
    Explanation
    Strategic leadership involves effectively managing a company's strategy and creating a competitive advantage. This means that strategic leaders are responsible for developing and implementing strategies that will help the company succeed in the marketplace. They must understand how to analyze the business environment, identify opportunities and threats, and make decisions that will position the company for success. By effectively managing the company's strategy, strategic leaders can create a competitive advantage that sets the company apart from its competitors and allows it to achieve long-term success.

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  • 4. 

    The industry life cycle model includes which of the following stages?

    • Growth

    • Shakeout

    • Maturity

    • Decline

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The industry life cycle model includes all of the mentioned stages: growth, shakeout, maturity, and decline. This model describes the different stages that an industry goes through from its inception to its eventual decline. During the growth stage, the industry experiences rapid expansion and increasing demand. The shakeout stage is characterized by intense competition and consolidation, leading to the exit of weaker players. The maturity stage is when the industry reaches its peak and growth stabilizes. Finally, the decline stage occurs when the industry starts to decline due to changing market conditions or technological advancements.

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  • 5. 

    A sustained competitive advantage

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

    • Cannot be maintained for more than three years.

    • Is seldom possible in today's highly competitive environment.

    • Typically arises out of unforeseen economic events.

    • A and D.

    Correct Answer
    A. Enables a company to maintain above-average projects for a number of years.
    Explanation
    A sustained competitive advantage refers to a long-term advantage that a company has over its competitors, allowing it to consistently outperform and maintain above-average profits or projects for an extended period of time. This implies that the advantage is not temporary and can be sustained for more than three years. It also suggests that the advantage is not solely reliant on unforeseen economic events, as mentioned in option D. Therefore, the correct answer is that a sustained competitive advantage enables a company to maintain above-average projects for a number of years.

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  • 6. 

    Competition from industry to industry

    • Is normally the same in all industries.

    • Is characterized by different competitive conditions in different industries

    • Does not vary over time

    • Cannot be measured.

    • None of the above.

    Correct Answer
    A. Is characterized by different competitive conditions in different industries
    Explanation
    Competition from industry to industry is characterized by different competitive conditions in different industries. This means that the level of competition and the factors that affect competition can vary across different industries. Some industries may have high levels of competition due to factors such as a large number of competitors, low barriers to entry, or high customer demand. On the other hand, other industries may have lower levels of competition due to factors such as limited competition, high barriers to entry, or niche markets. Therefore, it is important to understand the specific competitive conditions of each industry when analyzing competition.

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  • 7. 

    Capabilities are a company's

    • Physical plant and equipment.

    • Technological know-how.

    • Skills at coordinating resources and putting them to productive use.

    • Reputation.

    • Resources.

    Correct Answer
    A. Skills at coordinating resources and putting them to productive use.
    Explanation
    The correct answer is skills at coordinating resources and putting them to productive use. This answer is supported by the fact that capabilities refer to a company's ability to effectively and efficiently utilize its resources, such as physical plant and equipment, technological know-how, and reputation, in order to achieve productive outcomes. It implies that the company possesses the necessary skills to coordinate these resources and maximize their potential for generating value and achieving success.

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  • 8. 

    Maximizing shareholder value is

    • A byproduct of a company's cost reduction programs.

    • Not generally a viable goal for a company

    • Not the responsibility of a company's managers

    • The ultimate goal of profit-making companies

    • Not required to attract risk capital

    Correct Answer
    A. The ultimate goal of profit-making companies
    Explanation
    The ultimate goal of profit-making companies is to maximize shareholder value. This means that the company aims to generate the highest possible returns for its shareholders, who have invested their capital in the company. By maximizing shareholder value, the company can attract more investors and raise additional capital, which can be used to fund growth and expansion. Additionally, maximizing shareholder value often involves implementing cost reduction programs and improving operational efficiency, which can lead to increased profitability and financial success for the company.

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  • 9. 

    Scenario-based planning is a technique for coping with the problem of

    • Uncertainty.

    • Planning equilibrium.

    • Bottom-up planning.

    • Strategic fit.

    • Cognitive bias.

    Correct Answer
    A. Uncertainty.
    Explanation
    Scenario-based planning is a technique that helps organizations deal with the challenge of uncertainty. By creating and analyzing different scenarios, organizations can anticipate potential future events and develop strategies to effectively respond to them. This approach acknowledges that the future is uncertain and allows organizations to be better prepared for various possibilities. It is a proactive and flexible planning method that helps mitigate the risks associated with uncertainty.

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  • 10. 

    Which of the following is the organization's principal general manager?

    • Board of directors

    • Division head

    • CFO

    • CEO

    • Controller

    Correct Answer
    A. CEO
    Explanation
    The CEO, or Chief Executive Officer, is the highest-ranking executive in an organization and is responsible for making major corporate decisions, managing the overall operations and resources of the company, and acting as the main point of communication between the board of directors and the employees. They are the principal general manager who oversees the entire organization and sets the strategic direction for the company.

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  • 11. 

    An industry can be defined as a group of

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

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

    • Companies.

    • Companies that offer dissimilar products or services.

    • Companies that offer products or services to dissimilar customers.

    Correct Answer
    A. Companies offering products or services that are close substitutes for each other.
    Explanation
    An industry can be defined as a group of companies offering products or services that are close substitutes for each other. This means that the companies within an industry are competing with each other to attract the same customers by providing similar products or services. They may have slight differences, but overall they serve the same purpose and cater to the same target market. This definition helps to differentiate industries from each other based on the similarity of the products or services offered by the companies within them.

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  • 12. 

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

    • Describe the technological processor.

    • Identify the customer segment served by the company.

    • Answer the question, "What is our business?"

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

    • Evaluate the company's most recent performance.

    Correct Answer
    A. Answer the question, "What is our business?"
    Explanation
    The correct answer is to answer the question, "What is our business?" This is an important first step in formulating a company's mission because it helps define the core purpose and focus of the company. By answering this question, the company can clarify its main activities, products, and services, and align its goals and strategies accordingly. This step sets the direction for the company and guides decision-making processes in the future.

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  • 13. 

    In the typical scenario planning exercise,

    • Most scenarios are pessimistic.

    • Most scenarios are optimistic.

    • Some scenarios are optimistic and some scenarios are pessimistic.

    • Only worst-case outcomes should be considered.

    • Only best-case outcomes should be considered.

    Correct Answer
    A. Some scenarios are optimistic and some scenarios are pessimistic.
    Explanation
    In a typical scenario planning exercise, it is common to consider a range of scenarios that include both optimistic and pessimistic outcomes. This approach allows for a more comprehensive analysis of potential future situations, taking into account both positive and negative possibilities. By considering a variety of scenarios, decision-makers can better prepare for different eventualities and make more informed decisions.

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  • 14. 

    A competitive advantage is considered to be a sustained competitive advantage when the

    • Advantage endures for a long time.

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

    • Advantage is very large.

    • Advantage was gained at a low cost.

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

    Correct Answer
    A. Advantage endures for a long time.
    Explanation
    A competitive advantage is considered to be a sustained competitive advantage when it endures for a long time. This means that the advantage is not temporary or easily replicated by competitors. It implies that the firm has a unique set of resources, capabilities, or strategies that allow it to consistently outperform its competitors over an extended period. This sustained advantage gives the firm a stable and long-term position in the market, which can lead to higher profitability and market share.

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  • 15. 

    Brand loyalty may be created by

    • Continuous advertising.

    • Patent protection of products.

    • Product innovation achieved through company research and development.

    • Emphasis on high product quality.

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    Brand loyalty can be created through continuous advertising, as it helps to keep the brand in the minds of consumers and reinforces its value. Patent protection of products can also contribute to brand loyalty, as it prevents competitors from copying the brand's unique features, giving it a competitive advantage. Product innovation achieved through company research and development can attract and retain customers by offering new and improved products. Finally, emphasizing high product quality can build trust and loyalty among consumers who value reliability and consistency. Therefore, all of these factors can contribute to the creation of brand loyalty.

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  • 16. 

    The scenario approach to strategic planning involves

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

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

    • Functional managers setting key corporate objectives

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

    • Making planning the exclusive domain of top-level managers

    Correct Answer
    A. Devising strategies for coping with a number of different possible future states of the world
    Explanation
    The scenario approach to strategic planning involves devising strategies for coping with a number of different possible future states of the world. This means that instead of relying on a single prediction of future demand conditions, the organization considers multiple scenarios and develops strategies to address each one. This approach allows for flexibility and adaptability in the face of uncertainty, as the organization is prepared to handle various potential outcomes. It also encourages strategic thinking and proactive decision-making.

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  • 17. 

    An effective business model

    • Involves how a company selects its customers.

    • Creates value for its customers.

    • Achieves and sustains a high level of profitability.

    • Produces goods and services.

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    An effective business model involves how a company selects its customers, as this determines the target market and the strategies used to attract and retain customers. It also creates value for its customers by offering products or services that meet their needs and provide benefits. Additionally, a successful business model achieves and sustains a high level of profitability by generating revenue that exceeds costs. Finally, a business model involves producing goods and services, as this is the core activity of any business. Therefore, all of the given options are correct and contribute to an effective business model.

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  • 18. 

    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

    • $50.

    • $75.

    • $100

    • $150.

    • $225.

    Correct Answer
    A. $50.
    Explanation
    Donna's profit margin can be calculated by subtracting the cost of making the chair from the selling price of the chair. In this case, the cost of making the chair is $100 and the selling price is $150. Therefore, Donna's profit margin is $150 - $100 = $50.

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  • 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

    • Commitment.

    • Vision.

    • Astute use of power.

    • Emotional intelligence

    • Eloquence

    Correct Answer
    A. Commitment.
    Explanation
    In this scenario, Sam Walton's actions of driving his own car and furnishing his office with plain, steel desks demonstrate his commitment to keeping costs low. This shows that he is dedicated to the goal of maintaining low expenses for Wal-Mart. It reflects his determination and loyalty to the company's mission and objectives.

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  • 20. 

    Resources

    • Are the tangible assets available to a company

    • Can be tangible or intangible.

    • Are harder for a company to copy than capabilities are.

    • Are the products of a company's control systems.

    • Refer to an organization's skills.

    Correct Answer
    A. Can be tangible or intangible.
    Explanation
    Resources can be tangible or intangible. Tangible resources are physical assets that can be seen and touched, such as buildings, equipment, and inventory. On the other hand, intangible resources are non-physical assets that cannot be seen or touched, such as patents, trademarks, and brand reputation. Both types of resources are important for a company as they contribute to its overall value and competitive advantage. Tangible resources provide a foundation for operations, while intangible resources often differentiate a company from its competitors and can be a source of sustainable competitive advantage.

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  • 21. 

    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?

    • Research and development

    • Human resources

    • Materials management

    • Marketing and sales

    • Company infrastructure

    Correct Answer
    A. Research and development
    Explanation
    Ford Motors conducted the extensive study of customer preferences in order to develop the Explorer sports utility vehicle. This indicates that they were involved in the research and development activity of the value chain. Research and development involves activities such as market research, product design, and testing, which aligns with Ford's efforts to understand customer preferences and develop a successful product like the Explorer.

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  • 22. 

    Devil's advocacy

    • Is simpler than the expert approach

    • Is vulnerable to the groupthink phenomenon

    • Results in unproductive conflict

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

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

    Correct Answer
    A. Involves one group member being responsible for questioning the assumptions of a plan.
    Explanation
    Devil's advocacy involves one group member being responsible for questioning the assumptions of a plan. This approach is commonly used in group decision-making processes to ensure that all aspects of a plan are carefully considered and potential flaws or weaknesses are identified. By assigning one person the role of the devil's advocate, the group can benefit from a critical examination of the plan, leading to improved decision-making and potentially avoiding costly mistakes. This approach encourages constructive debate and helps to uncover potential blind spots or biases that may exist within the group.

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  • 23. 

    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?

    • Fragmented industry

    • Consolidated industry

    • Oligopoly

    • Monopoly

    • Sector

    Correct Answer
    A. Fragmented industry
    Explanation
    A fragmented industry is characterized by a large number of small and medium-sized companies, none of which have enough market power to influence industry prices. In such an industry structure, competition is high, and no single company has the ability to dominate the market or set prices. This means that companies in a fragmented industry must compete based on factors such as product differentiation, quality, or cost in order to gain a competitive advantage.

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  • 24. 

    The term value chain refers to the idea that a company is

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

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

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

    • One of a series of economic functions.

    • All of the above.

    Correct Answer
    A. A chain of activities for transforming inputs into outputs that customers value.
    Explanation
    The term value chain refers to a chain of activities that a company engages in to transform inputs into outputs that are valuable to customers. This concept emphasizes the idea that a company's activities are interconnected and that each activity adds value to the final product or service. It recognizes that a company's success is not just dependent on its own operations, but also on the activities of other companies in the industry segment. Therefore, the correct answer is that the term value chain represents a chain of activities for transforming inputs into outputs that customers value.

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  • 25. 

    An emergent strategy is

    • The result of a planned strategy

    • An unplanned response to unforeseen circumstances.

    • The product of careful top-down planning mechanisms.

    • The same as a realized strategy.

    • A group response to a problem area.

    Correct Answer
    A. An unplanned response to unforeseen circumstances.
    Explanation
    An emergent strategy refers to a strategy that emerges spontaneously in response to unforeseen circumstances or events. It is not the result of a planned strategy or careful top-down planning mechanisms. It is also not the same as a realized strategy, which implies that the strategy was intentionally implemented and achieved its intended goals. Instead, an emergent strategy is a group response to a problem area, where individuals or teams come together to address the unexpected situation and develop a strategy on the spot.

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  • 26. 

    Eventually most industries enter a decline stage where

    • Growth becomes negative.

    • Rivalry among established companies usually decreases.

    • Competitive pressures abate.

    • Excess capacity declines.

    • Demand continues to hold steady.

    Correct Answer
    A. Growth becomes negative.
    Explanation
    In the decline stage of an industry, growth becomes negative because the market demand starts to decrease. This decline is usually caused by various factors such as changes in consumer preferences, technological advancements, or the emergence of new competitors. As a result, companies in the industry face challenges in maintaining their market share and profitability. The negative growth indicates a shrinking market and the need for companies to adapt and find new strategies to survive in this stage.

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  • 27. 

    Research and development activities are concerned with

    • Product design.

    • Production processes.

    • Service activities as well as manufacturing activities.

    • Intangible as well as physical products.

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    Research and development activities encompass a wide range of areas including product design, production processes, service activities, and manufacturing activities. These activities are not limited to tangible products but also include intangible products. Therefore, the correct answer is "all of the above" as research and development activities are concerned with all these aspects.

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  • 28. 

    The first step in the strategic management process is to

    • Analyze the competitive environment.

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

    • Analyze internal strengths.

    • Analyze internal weaknesses.

    • Select the corporate mission and major corporate goals.

    Correct Answer
    A. Select the corporate mission and major corporate goals.
    Explanation
    The first step in the strategic management process is to select the corporate mission and major corporate goals. This is because before analyzing the competitive environment, examining the organizational structure, or analyzing internal strengths and weaknesses, a company needs to have a clear understanding of its purpose and objectives. By selecting the corporate mission and major goals, the company sets the direction for its strategic planning and decision-making processes. This step helps align the organization's efforts towards achieving its desired outcomes and ensures that all subsequent strategic actions are in line with the company's overarching mission and goals.

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  • 29. 

    Good strategic leaders

    • Possess a willingness to delegate and empower subordinates.

    • Control all facets of decision making.

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

    • Assure uniformity of purpose through the exercise of power

    • Have the ability to be inconsistent when the situation requires inconsistency

    Correct Answer
    A. Possess a willingness to delegate and empower subordinates.
    Explanation
    Good strategic leaders possess a willingness to delegate and empower subordinates. This means that they trust their team members to take on responsibilities and make decisions, allowing them to grow and excel in their roles. By delegating tasks and empowering subordinates, leaders can focus on higher-level strategic thinking and decision making. This approach also fosters a sense of ownership and accountability among team members, leading to increased motivation and productivity. Additionally, it promotes a collaborative and inclusive work environment, where diverse perspectives and ideas are valued.

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  • 30. 

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

    • Its inability to access labor and materials.

    • The inferior quality of its products.

    • Its inability to match the innovation of the established firm.

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

    • Its inability to get buyers to switch to its product.

    Correct Answer
    A. Its inability to produce in sufficient volume to match the cost advantages of established producers.
    Explanation
    The correct answer is that a new entrant's major risk is its inability to produce in sufficient volume to match the cost advantages of established producers. This is because economies of scale can give established producers a significant cost advantage due to their ability to produce goods in large quantities, which allows them to spread fixed costs over a larger number of units and achieve lower average costs. As a result, new entrants may struggle to compete on price and profitability if they cannot achieve similar levels of production volume.

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  • 31. 

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

    • Economic forces

    • Demographic forces

    • Embryonic forces

    • Political forces

    • Social forces

    Correct Answer
    A. Social forces
    Explanation
    This represents social forces because consumers' preference for healthy drinks is a social trend or influence that is impacting the beverage industry. Social forces refer to the cultural, societal, and lifestyle factors that shape consumer behavior and preferences. In this case, the increasing sales of water can be attributed to the growing awareness and emphasis on health and wellness among consumers.

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  • 32. 

    One of the most widely used measures of financial performance is

    • Return on invested capital.

    • Net profit margin.

    • Share value.

    • Net sales.

    • Productivity.

    Correct Answer
    A. Return on invested capital.
    Explanation
    Return on invested capital is considered one of the most widely used measures of financial performance because it provides insight into how effectively a company is utilizing its capital to generate profits. It measures the return generated by the company's investments in both debt and equity, indicating the efficiency and profitability of its operations. This metric is important for investors and stakeholders as it helps them assess the company's ability to generate returns on the capital invested in it.

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  • 33. 

    A component of strategy implementation is

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

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

    • Analyzing the macroeconomic environment of the company

    • Answering the question, "What is our business?"

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

    Correct Answer
    A. Designing the best organization structure, culture, and control systems to put a strategy into action.
    Explanation
    The correct answer is "designing the best organization structure, culture, and control systems to put a strategy into action." This is because strategy implementation involves determining how to organize the company in order to effectively execute the strategy. This includes designing the appropriate structure, culture, and control systems that align with the strategic goals and objectives. By doing so, the organization can ensure that the strategy is successfully implemented and that the desired outcomes are achieved.

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  • 34. 

    The role of corporate-level managers is to

    • Define operational-level strategies.

    • Outline functional-level strategies and plans.

    • Oversee the development of strategies for the whole organization.

    • Develop business-level strategies

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

    Correct Answer
    A. Oversee the development of strategies for the whole organization.
    Explanation
    Corporate-level managers are responsible for overseeing the development of strategies for the entire organization. This means that they are involved in setting the overall direction and goals of the company, as well as ensuring that the strategies implemented by different departments and functional areas align with the overall organizational strategy. They have a broad perspective and are involved in decision-making that affects the entire organization, rather than focusing on specific operational or functional-level strategies.

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  • 35. 

    Which of the following is not one of the factors in the economic forces of the macroenvironment?

    • Interest rates

    • Inflation

    • Regulation

    • Currency exchange rates

    • Economic growth rate

    Correct Answer
    A. Regulation
    Explanation
    Regulation is not one of the factors in the economic forces of the macroenvironment because it refers to the rules and guidelines set by the government or regulatory bodies to control and govern various aspects of the economy. While regulation does have an impact on the economy, it is not considered a direct economic force like interest rates, inflation, currency exchange rates, and economic growth rate, which directly influence the overall economic conditions and performance.

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  • 36. 

    The bargaining power of an industry's suppliers is greater when

    • The supply industry is fragmented.

    • Switching costs are high.

    • The industry buys in large quantities.

    • Many substitutes are available.

    • Firms in the industry can threaten backward vertical integration.

    Correct Answer
    A. Switching costs are high.
    Explanation
    When switching costs are high, it means that it is difficult and costly for firms in the industry to switch suppliers. This gives the suppliers more bargaining power as they have less competition and can demand higher prices or more favorable terms. High switching costs make it less likely for firms to seek alternative suppliers, making the suppliers more influential in the industry.

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  • 37. 

    A market segment is a group of

    • Customers within a market that can be different from each other on the basis of their distinct attributes and specific demands.

    • Companies that produce similar goods or services.

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

    • Customers within a market that have similar levels of profitability.

    • None of the above.

    Correct Answer
    A. Customers within a market that can be different from each other on the basis of their distinct attributes and specific demands.
    Explanation
    A market segment refers to a group of customers within a larger market who share similar characteristics and preferences. These characteristics can include distinct attributes and specific demands, which differentiate them from other segments within the market. This answer accurately describes the concept of market segmentation and highlights the idea that customers within a segment can be different from each other based on their unique attributes and demands. The other options do not fully capture the essence of market segmentation and its focus on customer differences.

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  • 38. 

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

    • Shifting industry boundaries.

    • The threat of new entrants.

    • Sectors.

    • Market segments.

    • Substitutes.

    Correct Answer
    A. Market segments.
    Explanation
    Cosmetics makers focus on the unique needs of customers of different ages, indicating that they recognize the importance of targeting specific groups within the overall market. By catering to different market segments, cosmetics makers can tailor their products and marketing strategies to meet the preferences and requirements of each age group, thereby increasing their chances of success in the competitive cosmetics industry.

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  • 39. 

    Which of the following is not a force within the macroenvironment?

    • Level of interest rates

    • Currency exchange rates

    • Inflation

    • Deflation

    • Rates of social change

    Correct Answer
    A. Rates of social change
    Explanation
    Rates of social change are not considered a force within the macroenvironment because they do not directly impact the economic factors of a business. The macroenvironment refers to the external factors that can influence a business, such as economic, political, social, and technological factors. While rates of social change can indirectly affect businesses, they are not typically considered a force within the macroenvironment as they do not directly impact economic conditions or business operations.

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  • 40. 

    United Airlines, Amtrak, and Greyhound are all companies in the transportation

    • Industry.

    • Sector.

    • Game.

    • Segment.

    • Strategic group.

    Correct Answer
    A. Industry.
    Explanation
    The correct answer is "industry." This is because United Airlines, Amtrak, and Greyhound are all companies that operate within the transportation industry. They provide transportation services to individuals and businesses, whether it be through air travel, train travel, or bus travel. Therefore, they all fall under the umbrella of the transportation industry.

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  • 41. 

    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.

    • Specialized assets

    • Benchmarking

    • Strategic commitments

    • Inertia

    • The Icarus paradox

    Correct Answer
    A. Benchmarking
    Explanation
    Rollie is using benchmarking to improve her car wash. Benchmarking involves studying and adopting the best practices of industry leaders or competitors to improve one's own business. In this case, Rollie is reading publications for car wash owners to learn the best practices in the industry and then implementing them in her own car wash. This helps her stay competitive and improve her business by incorporating proven strategies and techniques used by successful car wash owners.

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  • 42. 

    The primary goal of a SWOT analysis is to

    • Benchmark a company's performance.

    • Force managers to think creatively rather than analytically.

    • Forecast future events.

    • Develop short-run goals.

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

    Correct Answer
    A. Create, affirm, or fine-tune a company-specific business model.
    Explanation
    The primary goal of a SWOT analysis is to create, affirm, or fine-tune a company-specific business model. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and the analysis helps a company identify and evaluate these factors. By doing so, the company can develop a better understanding of its internal and external environment, and make informed decisions about its business model. This process allows the company to identify areas of improvement, capitalize on opportunities, and minimize threats, ultimately leading to the creation or refinement of a business model that aligns with the company's goals and objectives.

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  • 43. 

    Strategic implementation involves

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

    • Comparing company performance with leading companies in the industry.

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

    • Only activities at the corporate level.

    • All of the above

    Correct Answer
    A. Taking actions at the functional, business, and corporate levels.
    Explanation
    The correct answer is taking actions at the functional, business, and corporate levels. Strategic implementation refers to the process of putting a chosen strategy into action. It involves taking actions and making decisions at different levels of the organization, including functional (departmental), business unit, and corporate levels. This ensures that the strategy is effectively executed throughout the organization and aligns with the overall goals and objectives. This comprehensive approach allows for a coordinated and integrated implementation of the strategy across different levels and functions.

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  • 44. 

    The risk of a price war is greatest in which of the following circumstances?

    • A high-growth industry

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

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

    • A mature industry during an economic upturn

    • An industry characterized by tacit price agreements

    Correct Answer
    A. An industry characterized by falling demand, high exit barriers, and excess productive capacity
    Explanation
    In an industry characterized by falling demand, high exit barriers, and excess productive capacity, there is a higher likelihood of a price war occurring. Falling demand means that there is less demand for the products or services offered by the industry, leading to increased competition among companies to attract customers. High exit barriers make it difficult for companies to leave the industry, forcing them to continue operating even in unfavorable conditions. Excess productive capacity means that there is more supply than demand, creating pressure for companies to lower prices to sell their products or services. All of these factors create a perfect storm for a price war to occur.

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  • 45. 

    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?

    • Turning corporate-level strategy into action

    • Defining Philip Morris's mission

    • Deciding how to compete in the foods industry

    • Supervising functional-level managers

    • Developing a business-level strategy

    Correct Answer
    A. Defining Philip Morris's mission
    Explanation
    As the head of Kraft Foods, Betsy Holden is responsible for the division's operations and strategies. However, defining the mission of the entire Philip Morris Company would be the responsibility of the company's top executives, such as the CEO or the board of directors. Therefore, it is not likely to be one of Ms. Holden's responsibilities.

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  • 46. 

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

    • Embryonic

    • Growth

    • Shakeout

    • Maturity

    • Decline

    Correct Answer
    A. Maturity
    Explanation
    In the maturity stage of the industry life cycle, demand reaches total saturation. This means that the market has reached its peak and there is no further room for growth or expansion. At this stage, most potential customers have already been reached and the market is saturated with competitors offering similar products or services. As a result, demand levels off and remains stable, with little to no growth expected. This stage is characterized by intense competition and companies focusing on maintaining their market share rather than expanding it.

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  • 47. 

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

    • Research and development

    • Human resources

    • Materials management

    • Production

    • Company infrastructure

    Correct Answer
    A. Human resources
    Explanation
    Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks. This indicates that Mike is involved in the training and development of the workforce, which falls under the human resources activity in the value chain. Human resources activities involve recruiting, training, and managing the employees of an organization to ensure they have the necessary skills and knowledge to perform their tasks effectively.

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  • 48. 

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

    • Government regulations

    • Inflation

    • Manufacturing technology

    • Aging of the population

    • Society's growing interest in exercise

    Correct Answer
    A. Aging of the population
    Explanation
    Julian should examine the aging of the population as part of the demographic environment facing his employer, a clothing manufacturer. This is important because the age distribution of the population can impact the demand for different types of clothing. As the population ages, there may be a greater demand for clothing that caters to older individuals, such as comfortable and easy-to-wear designs. Understanding the demographic trend of an aging population can help Julian's employer make informed decisions about their product offerings and marketing strategies.

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  • 49. 

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

    • Inertia.

    • Prior strategic commitments.

    • Barriers to mobility.

    • Lack of resources.

    • Lack of capabilities.

    Correct Answer
    A. Inertia.
    Explanation
    When companies struggle to adapt their strategies and structures to match the changing competitive landscape, they face inertia. Inertia refers to the resistance to change or the inability to take action, which can hinder a company's ability to respond effectively to new market conditions. It implies that the company is stuck in its current ways and is unable to make the necessary adjustments to remain competitive.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

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  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 17, 2011
    Quiz Created by
    Jprohoroff
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