Capstone 1 Part 2

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Capstone Quizzes & Trivia

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Questions and Answers
  • 1. 

    Kim's T-shirt factory was expert at providing unique, high-quality, but costly to make shirts. Even though the designs were very nice and the amount of detail increased over time, the high price meant that few customers bought shirts from her and her factory went bankrupt. Kim's factory failed due to

    • A.

      Inertia.

    • B.

      Prior strategic commitments.

    • C.

      The Icarus paradox.

    • D.

      Lack of distinctive competencies.

    • E.

      Lack of capabilities.

    Correct Answer
    C. The Icarus paradox.
    Explanation
    The Icarus paradox refers to the phenomenon where a company's success and strengths eventually lead to its downfall. In this case, Kim's T-shirt factory had unique and high-quality designs, but the high cost of production made it difficult for customers to afford them. As a result, the factory failed because it was unable to adapt and find a balance between maintaining its distinctive competencies and meeting the demands of the market. The Icarus paradox highlights the danger of becoming too successful and complacent, ultimately leading to failure.

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  • 2. 

    When a firm produces products that customers perceive as having higher utility than those of its rivals, this firm's source of competitive advantage is

    • A.

      Design.

    • B.

      Low innovation.

    • C.

      Superior quality.

    • D.

      Efficiency.

    • E.

      Customer responsiveness.

    Correct Answer
    C. Superior quality.
    Explanation
    When a firm produces products that customers perceive as having higher utility than those of its rivals, it means that the firm's products are of superior quality. This means that the firm's products are better in terms of features, performance, durability, and overall satisfaction compared to its competitors. This competitive advantage is derived from the firm's ability to consistently deliver high-quality products that meet or exceed customer expectations, leading to customer loyalty, positive word-of-mouth, and ultimately, a larger market share.

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  • 3. 

    Factors that help a company to build and sustain competitive advantage include which of the following?

    • A.

      Superior efficiency

    • B.

      Product quality

    • C.

      Innovation

    • D.

      Customer responsiveness

    • E.

      All of the above

    Correct Answer
    E. All of the above
    Explanation
    The factors that help a company to build and sustain competitive advantage include superior efficiency, product quality, innovation, and customer responsiveness. Superior efficiency allows a company to operate more effectively and efficiently than its competitors, leading to cost savings and higher productivity. Product quality ensures that the company's offerings meet or exceed customer expectations, leading to customer satisfaction and loyalty. Innovation allows a company to stay ahead of the competition by developing new and improved products or processes. Customer responsiveness involves understanding and meeting the needs and preferences of customers, leading to increased customer satisfaction and loyalty. All of these factors combined contribute to a company's ability to gain a competitive advantage and maintain it over time.

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  • 4. 

    Efficiency is

    • A.

      Defined as the time it takes to produce a product.

    • B.

      Defined as the cost of inputs required to produce a given output.

    • C.

      Pursued only by cost leaders.

    • D.

      Measured by looking at a product's price.

    • E.

      Lower when the output is high-quality.

    Correct Answer
    B. Defined as the cost of inputs required to produce a given output.
    Explanation
    Efficiency is defined as the cost of inputs required to produce a given output. This means that efficiency is measured by how efficiently resources are used in the production process. It focuses on minimizing the cost of inputs while maximizing the output. By reducing wastage and optimizing production methods, businesses can improve their efficiency and lower their costs. This definition of efficiency is widely accepted in economics and business management.

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  • 5. 

    Which primary activity in the value chain is concerned with the design of products and production processes?

    • A.

      Research and development

    • B.

      Marketing and sales

    • C.

      Materials management

    • D.

      Production

    • E.

      Company infrastructure

    Correct Answer
    A. Research and development
    Explanation
    Research and development is the primary activity in the value chain that is concerned with the design of products and production processes. This involves conducting research to identify new product ideas and technologies, and developing and testing prototypes. It also includes designing efficient production processes and finding ways to improve existing products. Research and development plays a crucial role in ensuring that products meet customer needs and are produced in the most effective and efficient manner.

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  • 6. 

    The concept of quality applies to

    • A.

      All products.

    • B.

      The products consumers believe to be high-quality products.

    • C.

      Products with a high per-unit cost.

    • D.

      Custom-made products only.

    • E.

      Only those products that have been redesigned

    Correct Answer
    A. All products.
    Explanation
    The concept of quality applies to all products because quality is a measure of how well a product meets the needs and expectations of the consumer. Whether it is a low-cost or high-cost product, mass-produced or custom-made, all products should strive to meet certain standards of quality to ensure customer satisfaction. Quality is not limited to specific types of products or only those that have been redesigned; it is a universal concept that applies to all goods and services.

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  • 7. 

    A company's competitive advantage will not endure for long when that competitive advantage can be

    • A.

      Quickly or easily duplicated by other companies.

    • B.

      Protected by patents.

    • C.

      Protected by significant barriers to imitation.

    • D.

      Shared with other companies in the industry.

    • E.

      Shielded by copyrights.

    Correct Answer
    A. Quickly or easily duplicated by other companies.
    Explanation
    When a company's competitive advantage can be quickly or easily duplicated by other companies, it means that competitors can easily replicate or imitate the advantage, thereby reducing its uniqueness and value. This implies that the advantage is not sustainable in the long run and can be easily eroded by competitors. Therefore, the company's competitive advantage will not endure for long in such a scenario.

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  • 8. 

    The Icarus paradox suggests that

    • A.

      Companies should stick to a narrowly defined line of products.

    • B.

      Better-than-average profitability is an elusive goal.

    • C.

      Companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success.

    • D.

      Companies often pursue too many strategies at once.

    • E.

      Companies should change strategies before strategies need changing.

    Correct Answer
    C. Companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success.
    Explanation
    The Icarus paradox suggests that companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success. This means that companies often become overconfident and fail to adapt their strategies when needed. They become complacent and assume that their past success guarantees future success, which can lead to their downfall. This paradox highlights the importance of continuously evaluating and adjusting strategies to stay competitive in the ever-changing business environment.

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  • 9. 

    Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?

    • A.

      Research and development

    • B.

      Marketing and sales

    • C.

      After-sales service and support

    • D.

      Production

    • E.

      Human resources

    Correct Answer
    C. After-sales service and support
    Explanation
    After-sales service and support is performed last in the value chain model as it involves providing assistance and addressing customer needs after the product has been sold. This activity comes after the production process, marketing and sales efforts, and even after human resources have been involved in hiring and training employees. After-sales service and support focuses on ensuring customer satisfaction and maintaining relationships with customers, making it the final step in the transformation of inputs into outputs.

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  • 10. 

    A company's competitive advantage is more durable when

    • A.

      Barriers to imitation are low and there are few capable competitors.

    • B.

      Barriers to imitation are high and there are many capable competitors.

    • C.

      Barriers to imitation are high.

    • D.

      The industry is stable and there are many capable competitors.

    • E.

      The industry is stable and barriers to imitation are low.

    Correct Answer
    C. Barriers to imitation are high.
    Explanation
    When barriers to imitation are high, it means that it is difficult for other companies to replicate or copy the company's competitive advantage. This could be due to factors such as unique technology, patents, brand reputation, or exclusive access to resources. With high barriers to imitation, the company is able to maintain its competitive advantage for a longer period of time, as other competitors are unable to easily replicate or surpass the company's offerings.

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  • 11. 

    Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs?

    • A.

      Research and development

    • B.

      Marketing and sales

    • C.

      Human resources

    • D.

      Production

    • E.

      After-sales service and support

    Correct Answer
    A. Research and development
    Explanation
    Research and development is the primary activity that is performed first in the value chain model. This is because research and development involves activities such as market research, product design, and technology development that are necessary for creating new products or improving existing ones. These activities are typically carried out before any other primary activities, such as production, marketing and sales, human resources, or after-sales service and support, can take place. Therefore, research and development is the initial step in transforming inputs into outputs in the value chain model.

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  • 12. 

    Industry dynamism refers to

    • A.

      The gradual erosion of a company's customer base over time.

    • B.

      Shifts in product profitability.

    • C.

      A rapidly changing industry environment.

    • D.

      Increasing per-unit costs.

    • E.

      None of the above.

    Correct Answer
    C. A rapidly changing industry environment.
    Explanation
    The correct answer is a rapidly changing industry environment. Industry dynamism refers to the constant and rapid changes that occur within an industry, such as advancements in technology, shifts in consumer preferences, and new market entrants. These changes can have a significant impact on companies operating within the industry, requiring them to adapt and innovate in order to remain competitive. The other options, such as the erosion of a company's customer base or shifts in product profitability, do not fully capture the concept of industry dynamism.

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  • 13. 

    Capabilities refer to a company's

    • A.

      Tangible resources.

    • B.

      Intangible resources.

    • C.

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

    • D.

      Strategy as expressed in the firm's business model.

    • E.

      Policies.

    Correct Answer
    C. Skills at coordinating its resources and putting them to productive use.
    Explanation
    The correct answer is "skills at coordinating its resources and putting them to productive use." This answer is supported by the fact that capabilities are defined as a company's ability to effectively and efficiently utilize its resources. It implies that the company has the necessary skills and expertise to coordinate its resources and use them in a productive manner to achieve its goals. Capabilities can include both tangible resources, such as physical assets and technology, as well as intangible resources, such as knowledge, expertise, and organizational culture.

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  • 14. 

    Cost of goods sold is determined by examining which of the following?

    • A.

      The balance sheet

    • B.

      Sources and uses of the financial statement

    • C.

      The cash budget

    • D.

      The income statement

    • E.

      The overhead and administrative expense statement

    Correct Answer
    D. The income statement
    Explanation
    The cost of goods sold is determined by examining the income statement. This statement shows the revenues, expenses, and net income or loss for a specific period, including the cost of goods sold. It provides a breakdown of the direct costs associated with the production or purchase of goods that were sold during the period. By analyzing the income statement, one can calculate the cost of goods sold and assess the profitability of the business.

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  • 15. 

    The intellectual property of an organization is a(n)

    • A.

      Tangible resource.

    • B.

      Tangible competence.

    • C.

      Tangible capability.

    • D.

      Intangible capability.

    • E.

      Intangible resource.

    Correct Answer
    E. Intangible resource.
    Explanation
    The intellectual property of an organization refers to the intangible assets that are legally protected, such as patents, trademarks, copyrights, and trade secrets. These assets cannot be physically touched or seen but hold significant value for the organization. They provide a competitive advantage, as they are unique to the organization and cannot be easily replicated by competitors. Therefore, the correct answer is "intangible resource."

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  • 16. 

    The Icarus paradox can be overcome if a company

    • A.

      Achieves superior innovation.

    • B.

      Balances its pursuit of distinctive competencies.

    • C.

      Develops its marketing expertise.

    • D.

      Pursues a growth strategy.

    • E.

      Achieves superior quality at a low cost.

    Correct Answer
    B. Balances its pursuit of distinctive competencies.
    Explanation
    The Icarus paradox refers to the concept that a company's success can lead to its downfall if it becomes too complacent or overconfident. To overcome this paradox, a company needs to balance its pursuit of distinctive competencies. This means that while it should continue to build on its strengths and unique capabilities, it should also be mindful of not neglecting other important aspects such as innovation, marketing expertise, growth strategy, and quality at a low cost. By striking a balance, the company can avoid becoming too focused on one area and ensure long-term success.

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  • 17. 

    Which of the following is not a way that companies can avoid failure?

    • A.

      Benchmarking

    • B.

      Continuous learning

    • C.

      Developing distinctive competencies

    • D.

      Exploiting luck

    • E.

      Investing in specialized assets

    Correct Answer
    E. Investing in specialized assets
    Explanation
    Investing in specialized assets is not a way that companies can avoid failure because it can be a risky strategy. Specialized assets may have limited use and may not provide a competitive advantage in the long run. Companies that solely rely on specialized assets may face difficulties if market conditions change or if there is a decline in demand for those assets. It is important for companies to focus on other strategies such as benchmarking, continuous learning, developing distinctive competencies, and exploiting luck to increase their chances of success and avoid failure.

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  • 18. 

    __________ is a way to avoid failure.

    • A.

      Benchmarking

    • B.

      Gaining access to resources

    • C.

      Ignoring prior strategic commitments

    • D.

      Avoiding organizational commitments

    • E.

      The Icarus paradox

    Correct Answer
    A. Benchmarking
    Explanation
    Benchmarking is a way to avoid failure because it involves comparing an organization's performance, processes, and practices with those of industry leaders or competitors. By identifying best practices and areas for improvement, benchmarking allows organizations to learn from others' successes and failures, ultimately enhancing their own performance and reducing the risk of failure.

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  • 19. 

    Which of the follow support activities in the value chain refers to the companywide context within which all the other value creation activities take place?

    • A.

      Human resources

    • B.

      Information systems

    • C.

      Company infrastructure

    • D.

      Materials management

    • E.

      Operations

    Correct Answer
    C. Company infrastructure
    Explanation
    Company infrastructure refers to the companywide context within which all the other value creation activities take place. It includes the organizational structure, culture, and support systems that enable the efficient operation of the business. This includes functions such as finance, accounting, legal, and quality management, which provide the necessary support and resources for the other activities in the value chain to function effectively.

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  • 20. 

    Innovation refers to the act of

    • A.

      Seeking patent protection for new products.

    • B.

      Creating new products and processes.

    • C.

      Repackaging current products to make them more appealing to consumers.

    • D.

      All of the above.

    • E.

      None of the above.

    Correct Answer
    B. Creating new products and processes.
    Explanation
    The correct answer is creating new products and processes. Innovation involves generating novel ideas and developing new products or processes that offer unique solutions or improvements. Seeking patent protection for new products is just one aspect of the innovation process, as it helps to protect intellectual property rights. Repackaging current products to make them more appealing to consumers is not necessarily innovation, as it does not involve the creation of new products or processes. Therefore, the answer "creating new products and processes" encompasses the essence of innovation.

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  • 21. 

    Traditional manufacturing

    • A.

      Is no longer used.

    • B.

      Requires a tradeoff between unit costs and product variety.

    • C.

      Has higher unit costs than does flexible manufacturing.

    • D.

      Produces a variety of products in high volume.

    • E.

      Has higher unit costs than does flexible manufacturing and requires a tradeoff between unit costs and product variety.

    Correct Answer
    E. Has higher unit costs than does flexible manufacturing and requires a tradeoff between unit costs and product variety.
    Explanation
    Traditional manufacturing is characterized by higher unit costs compared to flexible manufacturing. This is because traditional manufacturing typically involves mass production of a limited range of products, which leads to economies of scale but limited product variety. On the other hand, flexible manufacturing allows for a greater variety of products but at lower unit costs due to the ability to customize production processes. Therefore, traditional manufacturing requires a tradeoff between unit costs and product variety, making the given answer the correct choice.

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  • 22. 

    Customer defection rates are

    • A.

      A reflection of customer loyalty.

    • B.

      An indication of a company's ability to satisfy its customers.

    • C.

      Important to consider because of their potential impact on advertising and marketing costs.

    • D.

      An important consideration because of their effect on sales volumes.

    • E.

      All of the above.

    Correct Answer
    E. All of the above.
    Explanation
    The correct answer is "all of the above." Customer defection rates can reflect customer loyalty because if customers are defecting at a high rate, it indicates that they are not loyal to the company. It is also an indication of a company's ability to satisfy its customers because if customers are leaving, it suggests that the company is not meeting their needs or expectations. Additionally, customer defection rates are important to consider because they can impact advertising and marketing costs. If customers are leaving, the company may need to invest more in advertising and marketing to attract new customers. Lastly, customer defection rates can also have an effect on sales volumes as losing customers means losing potential sales.

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  • 23. 

    Which of the following recommendations would not be appropriate for a manager who was starting a cross-functional product-development team?

    • A.

      Let the team members co-manage the team.

    • B.

      Locate team members in the same physical space.

    • C.

      Allow the team to develop its own communication and conflict resolution processes.

    • D.

      Compose the team with members from each of the key functional areas.

    • E.

      Give the team the task of developing one project all the way from initial idea to market introduction.

    Correct Answer
    A. Let the team members co-manage the team.
    Explanation
    The recommendation to let the team members co-manage the team would not be appropriate for a manager starting a cross-functional product-development team. In this type of team, it is important for the manager to provide clear leadership and direction to ensure that the team stays focused and aligned with organizational goals. Allowing team members to co-manage the team may lead to confusion and lack of accountability. The manager should instead take the responsibility of managing the team and making final decisions while still promoting collaboration and input from team members.

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  • 24. 

    The resources and capabilities that lead to the formation of distinctive competencies are mostly created at which level of the organization?

    • A.

      Business

    • B.

      Functional

    • C.

      Corporate

    • D.

      Global

    • E.

      Industry

    Correct Answer
    B. Functional
    Explanation
    The resources and capabilities that lead to the formation of distinctive competencies are mostly created at the functional level of the organization. This is because functional areas, such as marketing, operations, finance, and human resources, are responsible for developing and leveraging specific skills, knowledge, and expertise that contribute to the organization's competitive advantage. By focusing on their respective functions, employees can specialize and excel in their areas, leading to the creation of distinctive competencies that set the organization apart from its competitors.

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  • 25. 

    Quality can best be thought of as

    • A.

      Product usefulness.

    • B.

      Quality as reliability and quality as excellence.

    • C.

      Product innovation.

    • D.

      A matter for a company's managers to decide for themselves without external input.

    • E.

      A matter for the marketing function of a company to decide.

    Correct Answer
    B. Quality as reliability and quality as excellence.
    Explanation
    The correct answer is quality as reliability and quality as excellence. This answer suggests that quality can be understood in two ways: as reliability, meaning that the product consistently performs its intended function without errors or failures, and as excellence, meaning that the product surpasses expectations and provides superior performance or features. This explanation implies that quality encompasses both the dependability and the exceptional attributes of a product.

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  • 26. 

    Which of the following is not correct concerning self-managed teams?

    • A.

      Increased responsibility and empowerment are seen as motivators.

    • B.

      Performance bonuses linked to team production and quality targets are seen as motivators.

    • C.

      Cost savings arise from eliminating supervisors.

    • D.

      A flatter organizational hierarchy is created.

    • E.

      All of the above.

    Correct Answer
    E. All of the above.
    Explanation
    All of the statements mentioned in the options are correct concerning self-managed teams. Increased responsibility and empowerment are indeed seen as motivators for self-managed teams. Performance bonuses linked to team production and quality targets are also considered as motivators. Cost savings do arise from eliminating supervisors in self-managed teams. Additionally, self-managed teams also contribute to creating a flatter organizational hierarchy. Therefore, all of the above statements are correct.

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  • 27. 

    Formulating a plan to close the quality gap

    • A.

      Requires a strong customer focus.

    • B.

      Is the exclusive responsibility of top management.

    • C.

      Is an example of finding ways to measure quality.

    • D.

      Is the responsibility of manufacturing.

    • E.

      Should be done by qualified TQM consultants.

    Correct Answer
    A. Requires a strong customer focus.
    Explanation
    The correct answer is "requires a strong customer focus." This is because formulating a plan to close the quality gap involves understanding the needs and expectations of the customers. By having a strong customer focus, the organization can gather feedback and data from customers to identify areas where improvements are needed and develop a plan to address those gaps. This ensures that the organization is meeting customer requirements and delivering high-quality products or services.

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  • 28. 

    Which of the following is a tactical step for getting down the experience curve ahead of competitors?

    • A.

      Premium pricing to create an image of uniqueness in consumers' minds

    • B.

      Pursuing a distinctive competence in focused marketing

    • C.

      Constructing a manufacturing plant of less than minimum efficient scale

    • D.

      Using aggressive pricing and promotions to expand sales volume as rapidly as possible

    • E.

      Making the assembly of the product as complex as possible because this results in greater learning effects

    Correct Answer
    D. Using aggressive pricing and promotions to expand sales volume as rapidly as possible
    Explanation
    Using aggressive pricing and promotions to expand sales volume as rapidly as possible is a tactical step for getting down the experience curve ahead of competitors. By offering competitive prices and promoting the product extensively, a company can attract more customers and increase its sales volume. This increased sales volume allows the company to gain more experience in producing and delivering the product, which leads to cost reductions and efficiency improvements over time. By getting down the experience curve faster than its competitors, the company can achieve a competitive advantage in terms of lower costs and higher profitability.

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  • 29. 

    According to the TQM philosophy, who should be the primary evaluator of product quality?

    • A.

      Top management

    • B.

      Manufacturing workers

    • C.

      Quality consultants

    • D.

      The federal government

    • E.

      Customers

    Correct Answer
    A. Top management
    Explanation
    According to the TQM philosophy, top management should be the primary evaluator of product quality. This is because top management is responsible for setting the overall quality goals and objectives of the organization. They have the authority and power to allocate resources, establish quality control processes, and ensure that quality standards are met. Top management's involvement and commitment to quality are crucial in creating a culture of continuous improvement and driving the organization towards achieving high product quality.

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  • 30. 

    When a company successfully implements Six Sigma quality, how many units will be defective?

    • A.

      17% (one-sixth of the units)

    • B.

      6%

    • C.

      0.6%

    • D.

      Three per million

    • E.

      Three per 10 million

    Correct Answer
    D. Three per million
    Explanation
    When a company successfully implements Six Sigma quality, the goal is to have only 3 defects per million units produced. This level of quality is achieved by reducing variation and eliminating defects in the production process. It signifies a high level of efficiency and effectiveness in delivering products or services with minimal defects.

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  • 31. 

    Economies of scale may be found

    • A.

      In several of a company's departments.

    • B.

      Only in manufacturing operations.

    • C.

      Principally in research and development activities.

    • D.

      Primarily in administrative areas of a company.

    • E.

      None of the above.

    Correct Answer
    A. In several of a company's departments.
    Explanation
    Economies of scale refer to the cost advantages that a company can achieve when it produces goods or services on a larger scale. This can result in lower average costs per unit and increased profitability. The given answer states that economies of scale may be found in several of a company's departments, which means that cost advantages can be realized in various areas of the company's operations, not just limited to manufacturing, research and development, or administrative activities. This suggests that economies of scale can be achieved through efficient processes, resource allocation, and coordination across different departments within the company.

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  • 32. 

    Quality circles are a valuable tool for TQM because they

    • A.

      Solicit employee suggestions for improvement.

    • B.

      Identify and rework defective products.

    • C.

      Are used by top managers to communicate their intentions to workers.

    • D.

      Design high-quality products.

    • E.

      Survey customer attitudes about quality.

    Correct Answer
    A. Solicit employee suggestions for improvement.
    Explanation
    Quality circles are a valuable tool for Total Quality Management (TQM) because they involve employees in the process of continuous improvement. By soliciting employee suggestions for improvement, quality circles encourage participation and engagement from all levels of the organization. This helps to identify areas of improvement and implement effective solutions, leading to enhanced quality and efficiency in the organization.

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  • 33. 

    Self-managing work teams

    • A.

      Increase per-unit costs of manufactured items.

    • B.

      Perform all workplace tasks except the making of hiring decisions.

    • C.

      Increase the cycle time of manufacturing items.

    • D.

      Require greater task specialization by members of the team.

    • E.

      Tend to increase productivity.

    Correct Answer
    E. Tend to increase productivity.
    Explanation
    Self-managing work teams tend to increase productivity. This is because these teams have the autonomy to make decisions and manage their own work processes, which can lead to increased motivation and efficiency. They are able to collaborate and problem-solve effectively, resulting in improved productivity and performance. Additionally, self-managing teams can adapt quickly to changes and make decisions in a timely manner, further enhancing productivity.

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  • 34. 

    Just-in-time inventory systems

    • A.

      Are used only by manufacturing firms.

    • B.

      Are implemented primarily by the manufacturing function.

    • C.

      Have components arrive at a manufacturing plant just in time to enter the production process.

    • D.

      Are valuable when there is a labor dispute with a key supplier.

    • E.

      Always keep extra inventory on hand for emergencies.

    Correct Answer
    C. Have components arrive at a manufacturing plant just in time to enter the production process.
    Explanation
    Just-in-time inventory systems are designed to have components arrive at a manufacturing plant just in time to enter the production process. This approach aims to minimize inventory holding costs and reduce waste by ensuring that materials are delivered exactly when they are needed for production. It is not limited to manufacturing firms only, as other industries can also benefit from this system. The implementation of just-in-time inventory systems is not solely the responsibility of the manufacturing function, as it requires coordination and collaboration among various departments such as procurement, logistics, and production.

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  • 35. 

    ______________ refers to unit cost increases associated with a large scale of output.

    • A.

      Economies of scale

    • B.

      Learning effects

    • C.

      Diseconomies of scale

    • D.

      Flexible manufacturing

    • E.

      Mass customization

    Correct Answer
    C. Diseconomies of scale
    Explanation
    Diseconomies of scale refers to unit cost increases associated with a large scale of output. As production increases, the cost per unit may start to rise due to various factors such as inefficiencies, coordination issues, and increased complexity. This can lead to higher costs and reduced profitability for the firm.

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  • 36. 

    The concept of the development funnel suggests that*

    • A.

      Senior managers should decide whether to accept or reject a project at the end of the idea generation phase.

    • B.

      Senior managers should decide whether to accept or reject a project at the end of the project refinement phase.

    • C.

      Cross-functional teams should decide whether to accept or reject a project at the end of the idea generation phase.

    • D.

      Cross-functional teams should decide whether to accept or reject a project at the end of the project refinement phase.

    • E.

      Project proposals should be implemented by the marketing function.

    Correct Answer
    C. Cross-functional teams should decide whether to accept or reject a project at the end of the idea generation phase.
    Explanation
    The concept of the development funnel suggests that cross-functional teams should decide whether to accept or reject a project at the end of the idea generation phase. This is because the development funnel is a process that involves multiple stages, starting from generating ideas and ending with project implementation. During the idea generation phase, cross-functional teams come together to brainstorm and evaluate potential project ideas. At this stage, it is important for the teams to assess the feasibility and viability of the ideas before moving forward. Therefore, the decision to accept or reject a project should be made by cross-functional teams at the end of the idea generation phase.

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  • 37. 

    Effective employee training within an organization

    • A.

      Results in more productive employees.

    • B.

      Increases employee efficiency.

    • C.

      Raises employee skill levels.

    • D.

      Enables employees to perform tasks faster.

    • E.

      All of the above.

    Correct Answer
    E. All of the above.
    Explanation
    Effective employee training within an organization can result in more productive employees because it equips them with the necessary skills and knowledge to perform their tasks efficiently. This increased efficiency can lead to higher levels of productivity. Additionally, training can also raise employee skill levels by enhancing their capabilities and enabling them to perform tasks faster. Therefore, all of the given options are correct as they highlight the positive outcomes of effective employee training.

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  • 38. 

    Which of the following is one of the important skills required for effective project management?

    • A.

      Ability to generate as many good ideas as possible

    • B.

      Ability to select among competing projects at an early stage of development so that the most promising receive funding and potential costly failures are killed off

    • C.

      Ability to minimize time to market

    • D.

      All of the above

    • E.

      None of the above

    Correct Answer
    D. All of the above
    Explanation
    The ability to generate as many good ideas as possible is important for effective project management because it allows for a wide range of options and potential solutions to be considered. The ability to select among competing projects at an early stage of development is also crucial as it ensures that resources are allocated to the most promising projects and prevents wasting time and money on projects that are unlikely to succeed. Additionally, the ability to minimize time to market is important as it helps to ensure that the project is delivered to the market in a timely manner, maximizing its potential impact and success. Therefore, all of these skills are important for effective project management.

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  • 39. 

    The experience curve refers to the

    • A.

      Learning by doing technique.

    • B.

      Company's overall experience in a particular industry.

    • C.

      Systematic lowering of the cost structure and unit cost reductions.

    • D.

      Diseconomies of scale caused by inexperienced workers.

    • E.

      Increases in unit costs experienced over time.

    Correct Answer
    C. Systematic lowering of the cost structure and unit cost reductions.
    Explanation
    The experience curve refers to the systematic lowering of the cost structure and unit cost reductions. This concept suggests that as a company gains experience and expertise in a particular industry, it becomes more efficient and effective in its operations, leading to cost savings. This is achieved through various factors such as improved processes, economies of scale, better utilization of resources, and learning from past mistakes. As a result, the company is able to reduce its overall cost structure and achieve lower unit costs over time.

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  • 40. 

    The philosophy underlying TQM includes which of the following?

    • A.

      Improved quality results in cost decreases.

    • B.

      Better quality leads to higher market share.

    • C.

      Better quality increases a company's profitability.

    • D.

      Management should create an environment in which employees do not fear expressing themselves.

    • E.

      All of the above.

    Correct Answer
    E. All of the above.
    Explanation
    The philosophy underlying TQM (Total Quality Management) includes all of the given options. Improved quality results in cost decreases because it reduces the need for rework and customer complaints. Better quality leads to higher market share as customers are more likely to choose products or services that meet their expectations. Better quality also increases a company's profitability by reducing costs and attracting more customers. Finally, management should create an environment in which employees do not fear expressing themselves to encourage open communication and continuous improvement. Therefore, all of the options are part of the philosophy underlying TQM.

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  • 41. 

    The use of self-managing teams

    • A.

      Is limited to only very large organizations.

    • B.

      Requires members to coordinate their own activities and make decisions.

    • C.

      Typically increases the need for supervisors.

    • D.

      All of the above.

    • E.

      None of the above.

    Correct Answer
    B. Requires members to coordinate their own activities and make decisions.
    Explanation
    The correct answer is "requires members to coordinate their own activities and make decisions." This answer is supported by the use of the term "self-managing teams," which implies that the teams are responsible for managing themselves and taking ownership of their activities and decisions. This suggests that members within these teams must coordinate with each other and make their own decisions without relying on external supervision. The other options, such as being limited to large organizations or increasing the need for supervisors, are not mentioned in the question and are therefore not applicable.

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  • 42. 

    A company's infrastructure includes the company's

    • A.

      Organization structure, culture, and style of leadership.

    • B.

      Organization structure and morale level.

    • C.

      Culture and productivity levels.

    • D.

      Overall profitability levels.

    • E.

      Short-run objectives.

    Correct Answer
    A. Organization structure, culture, and style of leadership.
    Explanation
    The correct answer is organization structure, culture, and style of leadership. A company's infrastructure refers to the underlying framework that supports its operations. This includes the organization structure, which determines how tasks and responsibilities are divided and coordinated within the company. The culture of a company refers to the shared values, beliefs, and behaviors that shape the work environment. The style of leadership refers to the approach and behaviors exhibited by top management in guiding and influencing employees. These three elements are crucial in shaping the overall functioning and effectiveness of a company.

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  • 43. 

    Managers should not become complacent about efficiency-based cost advantages because

    • A.

      Neither learning effects nor economics of scale go on forever.

    • B.

      The experience curve is likely to bottom out at some point.

    • C.

      Cost advantages gained from experience effects can be made obsolete by the development of new technologies.

    • D.

      All of the above.

    • E.

      None of the above.

    Correct Answer
    D. All of the above.
    Explanation
    Managers should not become complacent about efficiency-based cost advantages because all of the above reasons are true. Learning effects and economies of scale do not continue indefinitely, and the experience curve is likely to reach a point where it no longer provides cost advantages. Additionally, cost advantages gained from experience effects can be rendered obsolete by the emergence of new technologies. Therefore, managers should constantly strive for improvement and innovation to maintain their competitive edge.

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  • 44. 

    Which of the following is not one of the principles commonly found in companies that have successfully embraced the TQM philosophy?

    • A.

      Building an organizational commitment to quality

    • B.

      Finding ways to measure quality

    • C.

      A strong customer focus

    • D.

      Close supplier relations

    • E.

      Creating a separate quality department within the firm

    Correct Answer
    E. Creating a separate quality department within the firm
    Explanation
    Creating a separate quality department within the firm is not one of the principles commonly found in companies that have successfully embraced the TQM philosophy. TQM emphasizes the involvement and responsibility of all employees in ensuring quality, rather than relying on a separate department to handle quality control. The focus is on building an organizational commitment to quality, finding ways to measure quality, maintaining a strong customer focus, and establishing close supplier relations.

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  • 45. 

    Instead of completing one task before starting another, Perry's team begins each task as soon as possible, allowing tasks to overlap where possible. Perry's team is using

    • A.

      A self-managing team.

    • B.

      A sequential process.

    • C.

      TQM.

    • D.

      Customization.

    • E.

      A partly parallel process.

    Correct Answer
    E. A partly parallel process.
    Explanation
    Perry's team is using a partly parallel process because they begin each task as soon as possible, allowing tasks to overlap where possible. This indicates that they are not strictly following a sequential process where tasks are completed one after the other. Instead, they are adopting a partly parallel approach where multiple tasks are being worked on simultaneously to increase efficiency and productivity. This approach allows for better utilization of resources and faster completion of tasks.

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  • 46. 

    Poor commercialization of new products

    • A.

      Is the result of inefficient manufacturing technology.

    • B.

      Occurs when a company markets a product for which there is not enough demand.

    • C.

      Occurs when a product is not well adapted to a customer's needs.

    • D.

      Is due to poor quality.

    • E.

      Is the result of uncertainty.

    Correct Answer
    C. Occurs when a product is not well adapted to a customer's needs.
    Explanation
    Poor commercialization of new products refers to the failure in effectively marketing and selling new products to customers. This can happen when a product is not well adapted to a customer's needs, meaning it does not meet their preferences, requirements, or expectations. When a product fails to address the specific needs of the target customers, it is less likely to generate sufficient demand and achieve commercial success. Therefore, the statement "occurs when a product is not well adapted to a customer's needs" best explains the given answer.

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  • 47. 

    Which of the following statements about customer focus is false?

    • A.

      It must start at the top of the organization.

    • B.

      It is a central part of TQM.

    • C.

      It can be facilitated by soliciting feedback from the customer.

    • D.

      It requires that all employees see the customer as the focus of their activity.

    • E.

      It can be achieved by mass customization.

    Correct Answer
    E. It can be achieved by mass customization.
    Explanation
    Customer focus cannot be achieved solely through mass customization. While mass customization can be a strategy to meet individual customer needs and preferences, it is not the only factor in achieving customer focus. Customer focus requires a holistic approach that involves top-down commitment from the organization, integrating customer feedback into decision-making processes, and ensuring that all employees prioritize the customer in their activities.

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  • 48. 

    Pay for performance tends to

    • A.

      Increase per-unit costs.

    • B.

      Decrease employee output.

    • C.

      Increase employee output.

    • D.

      Have little effect on employee output.

    • E.

      Be used only for individual workers, not for teams.

    Correct Answer
    C. Increase employee output.
    Explanation
    Pay for performance refers to a compensation system where employees are rewarded based on their performance and productivity. This system creates a direct link between employee output and financial incentives, motivating individuals to work harder and achieve better results. By offering financial rewards for high performance, employees are encouraged to increase their output, leading to improved productivity and efficiency. Therefore, pay for performance tends to increase employee output rather than decrease it.

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  • 49. 

    Marina's new paint formulation builds on other product innovations to create paint with fewer toxic fumes. Marina's new paint is

    • A.

      Lower cost.

    • B.

      Poorly commercialized.

    • C.

      Efficient.

    • D.

      A quantum innovation.

    • E.

      An incremental innovation.

    Correct Answer
    E. An incremental innovation.
    Explanation
    The given information states that Marina's new paint formulation builds on other product innovations to create paint with fewer toxic fumes. This suggests that Marina's new paint is not a completely new or groundbreaking innovation, but rather an improvement or enhancement of existing paint formulations. Therefore, it can be categorized as an incremental innovation, as it builds upon existing knowledge and technology to make gradual improvements.

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  • 50. 

    Flexible manufacturing technologies allow companies to

    • A.

      Mass-produce a standardized output at a low delivered cost.

    • B.

      Avoid plant-level diseconomies of scale.

    • C.

      Produce small batches of high-quality customized products at a high cost.

    • D.

      Ride down the experience curve more rapidly than competitors.

    • E.

      Produce small batches of customized products at a relatively low cost.

    Correct Answer
    E. Produce small batches of customized products at a relatively low cost.
    Explanation
    Flexible manufacturing technologies enable companies to produce small batches of customized products at a relatively low cost. This is because these technologies allow for efficient and flexible production processes, which can quickly adapt to changing customer demands and specifications. By producing small batches, companies can cater to individual customer preferences while minimizing waste and reducing production costs. Additionally, the use of flexible manufacturing technologies can lead to improved productivity and shorter production cycles, allowing companies to achieve cost savings and maintain a competitive edge in the market.

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