Sm Exam - 2015-12-14

40 Questions | Total Attempts: 151

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Sm Exam - 2015-12-14 - Quiz

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Questions and Answers
  • 1. 
    The difference between a firm’s geographical scope and its vertical scope is
    • A. 

      The first describes the regions of the world where the firm is present and the second the stages of the industry value chain, which the firm performs itself

    • B. 

      The first describes the number of countries in which the firm operates and the second describes the number of businesses in which the firm is present

    • C. 

      The two are highly inter-related

    • D. 

      It’s not always clear what the difference is

  • 2. 
    The main concepts that assist us to analyze the scope of a firm’s activities are
    • A. 

      Economies of scope

    • B. 

      Transaction costs

    • C. 

      Corporate costs

    • D. 

      All three of the above concepts are relevant

  • 3. 
    A strategy of unrelated diversification is
    • A. 

      Always a mistake

    • B. 

      Likely to be less risky than related diversification

    • C. 

      Not always as unrelated as it may seem e.g. the businesses may share some common attributes which can be exploited

    • D. 

      Always the last resort

  • 4. 
    The most often cited benefits of diversification are
    • A. 

      Growth, risk reduction and value creation

    • B. 

      Risk, reduction and economies of scope

    • C. 

      Value creation and cost reduction

    • D. 

      Cash balancing and risk reduction

  • 5. 
    Which of these is NOT a factor to be included in “industry attractiveness” in the GE/McKinsey Matrix?
    • A. 

      Market growth rate

    • B. 

      International potential

    • C. 

      The cyclical nature of the industry

    • D. 

      Relative market share

  • 6. 
    Change in an industry is the result of
    • A. 

      The forces of technology, consumer preferences, and economic growth

    • B. 

      Both external forces and the incumbents competitive strategies

    • C. 

      The effect of the “5 forces” model of competition

    • D. 

      Economic and psychological factors

  • 7. 
    The decline phase of the industry life cycle is cause by
    • A. 

      The emergence of a radically better substitute product, representing a new industry

    • B. 

      Tired old firms running out of new ideas

    • C. 

      Existing firms leaving the industry to move to a more profitable one

    • D. 

      Excessive market saturation

  • 8. 
    A new industry life cycle begins when
    • A. 

      A very large gap in the market emerges

    • B. 

      Another industry dies

    • C. 

      New knowledge manifests itself in the guise of a sufficiently radical product innovation

    • D. 

      There are sufficient entrepreneurs

  • 9. 
    The different stages of the industry life cycles are characterized by
    • A. 

      The evolution of the industry growth rate over time

    • B. 

      The evolution of the competition in the industry

    • C. 

      The evolution of a firm’s market share

    • D. 

      None of the above

  • 10. 
    Michael Porter’s “attractiveness test” means that a firm considering diversifying into another industry should
    • A. 

      See that the barriers to entry to that industry are low

    • B. 

      Be able to see a way to make superior profits in that industry

    • C. 

      Consider how unattractive their existing industry is, by comparison

    • D. 

      See that some firms in that industry have left, leaving space for newcomers

  • 11. 
    Of Michael Porter’s 3 tests of whether a proposed diversification will create value, the most important one is usually
    • A. 

      None, they are equally important

    • B. 

      The “attractiveness” test

    • C. 

      The “cost of entry” test

    • D. 

      The “better off” test

  • 12. 
    Gaining the advantage from economies of scope requires that
    • A. 

      A company must internally expand its scope

    • B. 

      A company must usually enter into a license arrangement

    • C. 

      A company must usually acquire a company who is expert in an additional business

    • D. 

      The firm is be able to spread common, either by performing the additional activity internally, or by licensing the resource

  • 13. 
    An industry life cycle
    • A. 

      Always follow the theoretical pattern

    • B. 

      May never enter the decline phase in industries supplying basic essential products or services

    • C. 

      Must be the same everywhere, due to globalization

    • D. 

      Can never really experience a resurgence

  • 14. 
    In Porter’s five forces framework, the term “industry attractiveness” refers to
    • A. 

      The appeal of the industry to a particular firm

    • B. 

      Overall industry profitability

    • C. 

      The extent to which the industry draws in new entrants

    • D. 

      The potential for one firm to dominate the industry

  • 15. 
    In an industry, the profits earned by firms are determined by
    • A. 

      The overall economic situation, and the intensity of rivalry between established firms

    • B. 

      The degree of concentration of the industry and the availability of substitutes

    • C. 

      The existence of barriers to entry in the industry

    • D. 

      The value of the product for customers, the intensity of competition, and the relative bargaining power of producers, their suppliers and their buyers

  • 16. 
    Reputation in the context of an organization’s resources can provide competitive advantage because
    • A. 

      It is difficult to copy

    • B. 

      It is based on word-of-mouth

    • C. 

      It is essential for a firm to do business

    • D. 

      It is easily destroyed by bad publicity

  • 17. 
    When valuing a firm’s tangible resources
    • A. 

      We should take the historic cost book value

    • B. 

      We must update historic cost assets to current cost (modern replacement cost) assets

    • C. 

      We need to understand their potential for creating competitive advantage

    • D. 

      We need to rely on the services of professional accountants

  • 18. 
    Threshold capabilities enable a firm to do what every firm in its industry must do. Distinctive or core competences
    • A. 

      Enable it to earn higher profits or greater market share than its competitors in the same industry

    • B. 

      Are its unique selling point

    • C. 

      Are those product features that stop non-customers from buying the product

    • D. 

      Are captured in logos, trademarks etc.

  • 19. 
    Which of the following is typically viewed as a functional area of firm activity
    • A. 

      Financial control

    • B. 

      Research and development

    • C. 

      Marketing

    • D. 

      All of the above

  • 20. 
    To stop rivals acquiring a core resource or capability
    • A. 

      Is foolish: a firm cannot stop its rivals doing things they want to

    • B. 

      Firms must make that resource or capability immobile

    • C. 

      Firms have to rely on patent and copyright legislation

    • D. 

      Everyone involved in this activity must be paid at a higher rate than that offered by rivals

  • 21. 
    Three characteristics of resources and capabilities determine the sustainability of the competitive advantage they offer
    • A. 

      Durability, transferability and replicability

    • B. 

      Scarcity, relevance and property rights

    • C. 

      Property rights, relative bargaining power and embeddedness

    • D. 

      None of the above

  • 22. 
    A team based organizational structure is characterised by
    • A. 

      Flat hierarchy

    • B. 

      Little formalization

    • C. 

      Self directed work teams

    • D. 

      All of the above

  • 23. 
    A network organizational structure is characterised by
    • A. 

      Its focus on clear directives and controls

    • B. 

      Its reliance on central directives to achieve integration

    • C. 

      Coordination through bilateral and multilateral adjustment

    • D. 

      Both b and c

  • 24. 
    The difference between organizational culture and corporate culture is
    • A. 

      Corporate culture refers to the attitudes and values that managers wish to encourage and organizational culture refers the attitudes and values that exist in the informal organizational

    • B. 

      Corporate culture refers to the culture within a particular company whereas organizational culture refers to the cultural patterns shared by companies in a particular region or country

    • C. 

      There is no difference, these terms are used interchangeably

    • D. 

      Option 4

  • 25. 
    Strategy formulation and implementation
    • A. 

      Are highly independent

    • B. 

      Are highly interdependent

    • C. 

      Are distinct and separate processes

    • D. 

      Both a and c