Sm Exam - 2015-12-14
.
- 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
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