Principles Of Management MCQ Quiz!

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Principles Of Management MCQ Quiz! - Quiz

What do you know about the principles of management? Would you be interested in taking this quiz? Management entails organization and delegation of duties. It is creating and maintaining such a business environment wherein members of the organization can work in synergy. Management serves as an example of how to conduct yourself as an employee. If you want to learn more about the principles of management, complete this quiz.


Questions and Answers
  • 1. 

    ​Based on the VRIO framework, a resource can be considered a source of competitive advantage if it is:

    • A.

      ​shared by most companies in an industry.

    • B.

      ​rare, valuable, difficult to imitate and organized or managed by the company.

    • C.

      ​the foundation of a company’s strategy.

    • D.

      ​kept as a trade secret rather than as a patent.

    • E.

      ​increases the cost of producing the product and therefore the price charged to customers.

    Correct Answer
    B. ​rare, valuable, difficult to imitate and organized or managed by the company.
    Explanation
    According to the VRIO framework, a resource can be considered a source of competitive advantage if it is rare, valuable, difficult to imitate, and organized or managed by the company. This means that the resource is not commonly available in the industry, it provides value to the company, it is difficult for competitors to replicate, and the company has the ability to effectively organize and manage it. This combination of characteristics allows the company to have a unique and sustainable advantage over its competitors.

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  • 2. 

    When a resource is said to be organized, this means that the company:

    • A.

      ​identified the resource as a resource.

    • B.

      ​built a department to execute its operations using the resource.

    • C.

      ​takes the resource for granted and assumes its value.

    • D.

      ​has made it difficult to copy or imitate.

    • E.

      ​has developed a method for making sure it gets the most out of its unique strengths.

    Correct Answer
    E. ​has developed a method for making sure it gets the most out of its unique strengths.
    Explanation
    The correct answer suggests that when a resource is said to be organized, it means that the company has developed a method for making sure it gets the most out of its unique strengths. This implies that the company has a systematic approach or strategy in place to effectively utilize and maximize the value of its resources. It indicates that the company recognizes the importance of its resources and has implemented measures to optimize their potential.

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  • 3. 

    When conducting an internal analysis, strategic managers should:

    • A.

      ​identify its internal resources and evaluate the quality of those resources.

    • B.

      ​only count something as a resource if the company is actively managing it.

    • C.

      ​always file for patents and trademarks on intellectual property.

    • D.

      ​exclude any resource as a source of competitive advantage if it isn’t rare.

    • E.

      ​identify as many resources as possible, regardless of their value or rarity.

    Correct Answer
    A. ​identify its internal resources and evaluate the quality of those resources.
    Explanation
    When conducting an internal analysis, strategic managers should identify the internal resources of the company and evaluate their quality. This means that they need to identify all the resources that the company has at its disposal, such as physical assets, human capital, and intellectual property. They should then assess the quality of these resources, considering factors such as their uniqueness, value, and rarity. This is important because it helps the managers understand the company's strengths and weaknesses, and determine how these resources can be leveraged to gain a competitive advantage in the market.

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  • 4. 

     Which of the following is not true regarding a company's distinctive competencies?

    • A.

      They represent the unique strengths of the company.

    • B.

      They refer to company strengths that competitors cannot easily match or imitate.

    • C.

      They form the bedrock of a company's strategy.

    • D.

      They can be based in any of the value creation functions of the company.

    • E.

      They are shared by many firms in an industry.

    Correct Answer
    E. They are shared by many firms in an industry.
    Explanation
    Distinctive competencies are unique strengths that a company possesses, which competitors cannot easily match or imitate. These competencies form the foundation of a company's strategy and can be based in any of the value creation functions of the company. However, they are not shared by many firms in an industry.

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  • 5. 

    Resources:

    • A.

      are only the tangible assets available to a company.

    • B.

      can be both tangible and intangible.

    • C.

      are harder for a company to copy than capabilities are.

    • D.

      do not include patents, copyrights, and trademarks.

    • E.

      are considered valuable only if they increase a company's costs.

    Correct Answer
    B. can be both tangible and intangible.
    Explanation
    Resources can include both tangible assets (such as physical equipment, inventory, and property) as well as intangible assets (such as intellectual property, brand reputation, and human capital). The answer states that resources can be both tangible and intangible, which is a correct statement.

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  • 6. 

    Competitive advantage is based on:

    • A.

      distinctive competencies.

    • B.

      the Icarus paradox.

    • C.

      higher cost structure.

    • D.

      prior strategic commitments.

    • E.

      barriers to change in a company.

    Correct Answer
    A. distinctive competencies.
    Explanation
    Competitive advantage is based on distinctive competencies. Distinctive competencies refer to unique strengths or capabilities that a company possesses, which sets it apart from its competitors and allows it to outperform them in the market. These competencies can include specialized knowledge, resources, technologies, or processes that give the company a competitive edge. By leveraging these distinctive competencies, a company can differentiate its products or services, attract customers, and achieve superior performance in the industry.

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  • 7. 

    Competitive advantage typically leads to:

    • A.

      a defective business model.

    • B.

      average profitability within an industry.

    • C.

      superior profitability.

    • D.

      the Icarus paradox.

    • E.

      barriers to changes in the organization.

    Correct Answer
    C. superior profitability.
    Explanation
    Competitive advantage typically leads to superior profitability. This means that when a company has a competitive advantage, it is able to outperform its competitors and generate higher profits. This can be achieved through various means such as offering unique products or services, having a strong brand reputation, or having cost advantages over competitors. Superior profitability is a key outcome of having a sustainable competitive advantage in the market.

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  • 8. 

    Which of the following is true of the impact of high product quality on competitive advantage?

    • A.

      It decreases the utility of the products.

    • B.

      It lowers unit costs of the products.

    • C.

      It adversely affects employee productivity.

    • D.

      It limits the company's ability to differentiate its products.

    • E.

      It increases the need for after sales services.

    Correct Answer
    B. It lowers unit costs of the products.
    Explanation
    High product quality can lower unit costs of the products because when products are of high quality, they are less likely to have defects or require repairs. This reduces the need for additional costs associated with fixing or replacing faulty products. Additionally, high product quality can lead to increased customer satisfaction and loyalty, which can result in repeat purchases and positive word-of-mouth, ultimately driving sales volume and economies of scale.

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  • 9. 

    The intellectual property of an organization is a(n):

    • A.

      tangible resource.

    • B.

      strategic commitment.

    • C.

      tangible capability.

    • D.

      barrier to change.

    • E.

      intangible resource.

    Correct Answer
    E. intangible resource.
    Explanation
    The correct answer is "intangible resource." Intellectual property refers to creations of the mind, such as inventions, designs, or artistic works, that are protected by law. These creations are not physical or tangible in nature, but they hold value for an organization as they can be used to gain a competitive advantage, generate revenue, or enhance the organization's reputation. Therefore, intellectual property is considered an intangible resource.

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  • 10. 

    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. In this case, the consumer surplus is:

    • A.

      $50.

    • B.

      $75.

    • C.

      $125.

    • D.

      $150.

    • E.

      $225.

    Correct Answer
    B. $75.
    Explanation
    Consumer surplus is the difference between the price that consumers are willing to pay for a product and the price they actually pay. In this case, customers perceive the chair to be worth $225, but they only have to pay $150 to buy it. Therefore, the consumer surplus is $75 ($225 - $150).

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  • 11. 

    Anna bakes cookies for about $10 per batch, she charges customers $15 to a batch, and customers perceive that the cookies are worth $25 per batch. Anna's profit margin is:

    • A.

      $5.

    • B.

      $7.5.

    • C.

      $10.

    • D.

      $15.

    • E.

      $25.

    Correct Answer
    A. $5.
    Explanation
    Anna's profit margin is $5 because she charges customers $15 per batch and her cost to bake the cookies is $10 per batch. Therefore, her profit per batch is $5.

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  • 12. 

    Kodak possesses the leading imaging technology. This technology has allowed the company to differentiate its products from those offered by rivals. Imaging technology is Kodak’s:

    • A.

      distinctive competence.

    • B.

      profit.

    • C.

      support activity.

    • D.

      value chain.

    • E.

      retired product.

    Correct Answer
    A. distinctive competence.
    Explanation
    The correct answer is "distinctive competence." Kodak's leading imaging technology sets it apart from its competitors and allows the company to offer unique products. This distinctive competence gives Kodak a competitive advantage in the market.

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  • 13. 

    The simplest measure of efficiency is:

    • A.

      the amount of money the company has to work with in the short term.

    • B.

      the ratio of revenues divided by invested capital.

    • C.

      the net profit expressed as a percentage of sales.

    • D.

      the total costs of producing products.

    • E.

      the quantity of inputs that it takes to produce a given output.

    Correct Answer
    E. the quantity of inputs that it takes to produce a given output.
    Explanation
    The simplest measure of efficiency is the quantity of inputs that it takes to produce a given output. This means that the more efficient a company is, the fewer resources it needs to achieve a certain level of output. This measure allows companies to identify and improve their production processes, reducing waste and increasing productivity. By minimizing the inputs required, a company can optimize its resources and improve its overall efficiency.

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  • 14. 

    According to the text, one of the basic building blocks of competitive advantage is:

    • A.

      quantity.

    • B.

      logistics.

    • C.

      variety.

    • D.

      distribution.

    • E.

      innovation.

    Correct Answer
    E. innovation.
    Explanation
    The text suggests that one of the basic building blocks of competitive advantage is innovation. This means that being able to come up with new and creative ideas, products, or processes can give a company an edge over its competitors. By constantly innovating and staying ahead of the curve, a company can differentiate itself and attract customers who are looking for something new and unique. Innovation can lead to improved efficiency, increased productivity, and ultimately, higher profits.

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  • 15. 

    Efficiency is:

    • A.

      defined as the time it takes to produce a product.

    • B.

      the quantity of inputs required to produce an output.

    • C.

      independent of customers' perception of a product's value.

    • D.

      measured by looking at a product's price.

    • E.

      lower when the output is high-quality.

    Correct Answer
    B. the quantity of inputs required to produce an output.
    Explanation
    Efficiency is defined as the quantity of inputs required to produce an output. It refers to how effectively resources are used in the production process. The less inputs required to produce a given output, the more efficient the process is considered to be. This definition focuses on the relationship between inputs and outputs, rather than the time it takes to produce a product or the perception of its value by customers. The quality of the output is not directly related to efficiency, although it can indirectly affect it.

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  • 16. 

     Customer response time is:

    • A.

      the time taken for value to be placed on a company's products by customers.

    • B.

      the time taken for development of a new process for producing products and delivering them to customers.

    • C.

      the time taken for given inputs to be converted into an output.

    • D.

      the time taken for development of products that have superior attributes to existing products.

    • E.

      the time taken for a good to be delivered or a service to be performed.

    Correct Answer
    E. the time taken for a good to be delivered or a service to be performed.
    Explanation
    Customer response time refers to the time it takes for a good to be delivered or a service to be performed. This means that it measures the speed at which a company is able to fulfill customer orders or requests. It is an important metric for businesses as it directly impacts customer satisfaction and loyalty. A shorter response time indicates efficient and prompt service, while a longer response time may lead to customer dissatisfaction. Therefore, reducing customer response time is crucial for companies to meet customer expectations and maintain a competitive edge in the market.

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  • 17. 

    The concept of efficiency as a building block of competitive advantage applies to:

    • A.

      all products produced by a firm.

    • B.

      products consumers believe to be high-quality; not low-quality.

    • C.

      only those products of a firm popular among a large customer base.

    • D.

      custom-made products only.

    • E.

      only those products that have been redesigned.

    Correct Answer
    A. all products produced by a firm.
    Explanation
    The concept of efficiency as a building block of competitive advantage applies to all products produced by a firm. This means that in order for a firm to gain a competitive advantage, it must ensure that all of its products are produced efficiently. Efficiency can help a firm reduce costs, improve productivity, and deliver products to the market faster. By applying efficiency to all products, a firm can differentiate itself from competitors and attract customers with better quality and value.

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  • 18. 

    Which of the following is an important attribute for a product from a quality-as-reliability perspective?

    • A.

      Styling

    • B.

      Aesthetic appeal

    • C.

      Wait time at the point of sale

    • D.

      Features

    • E.

      Performance

    Correct Answer
    E. Performance
    Explanation
    Performance is an important attribute for a product from a quality-as-reliability perspective because it refers to how well the product functions and meets the expectations of the user. A reliable product should consistently perform its intended function without any issues or failures. This attribute is crucial for ensuring customer satisfaction and building trust in the product's reliability.

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  • 19. 

     Intel’s invention of the microprocessor in the early 1970s, Cisco’s development of the router for routing data over the Internet in the mid-1980s, and Apple’s development of the iPod, iPhone, and iPad in the 2000s can be referred to as _____ innovations.

    • A.

      process

    • B.

      product

    • C.

      customer

    • D.

      sector

    • E.

      absorptive

    Correct Answer
    B. product
    Explanation
    Intel's invention of the microprocessor, Cisco's development of the router, and Apple's development of the iPod, iPhone, and iPad are all examples of product innovations. These innovations involve the creation and introduction of new and improved products into the market.

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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.

      measuring time taken for a service to be provided.

    • D.

      measuring the output produced by an employee.

    • E.

      identifying and satisfying the needs of a customer.

    Correct Answer
    B. creating new products and processes.
    Explanation
    Innovation refers to the act of creating new products and processes. This involves developing and introducing something new or improved that adds value to the market or society. Seeking patent protection for new products is a possible action that can be taken during the innovation process, but it is not the definition of innovation itself. Similarly, measuring time taken for a service or the output produced by an employee are not directly related to the act of innovation. Identifying and satisfying the needs of a customer can be a result of innovation, but it does not fully capture the concept of innovation itself.

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  • 21. 

     Which of the following best describes product innovation?

    • A.

      Transforming a quantity of inputs into a given output

    • B.

      Identifying and satisfying a customer's needs

    • C.

      Creating products that have superior attributes than existing products.

    • D.

      Developing a new process that focuses on quantity rather than quality.

    • E.

      Measuring the quantity of outputs produced per employee

    Correct Answer
    C. Creating products that have superior attributes than existing products.
    Explanation
    Product innovation involves creating new products or improving existing ones to have superior attributes compared to existing products. This can include introducing new features, improving performance, enhancing quality, or providing unique benefits that differentiate the product from competitors. The focus is on creating value for customers by meeting their needs and offering them something better than what is currently available in the market. It is about bringing something new and improved to the market that can attract and satisfy customers.

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  • 22. 

    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, experimenting, and developing new ideas and technologies to create innovative products and improve production processes. Research and development plays a crucial role in driving product innovation and improving efficiency in the production process.

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  • 23. 

     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.

      Logistics

    • D.

      Production

    • E.

      Service and support

    Correct Answer
    A. Research and development
    Explanation
    In the value chain model, research and development is performed first as it involves activities related to creating and designing new products or improving existing ones. This stage is where inputs are transformed into outputs through innovation and technological advancements. Once the research and development phase is completed, the outputs can then move on to other primary activities such as production, marketing and sales, logistics, and service and support.

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  • 24. 

    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.

      Service and support

    • D.

      Production

    • E.

      Human resources

    Correct Answer
    C. Service and support
    Explanation
    In the value chain model, primary activities are the activities that are directly involved in the creation and delivery of a product or service. These activities include inbound logistics, operations, outbound logistics, marketing and sales, and service and support. Among these activities, service and support is performed last as it involves providing after-sales service and support to customers. This activity occurs after the product has been produced and sold, and it focuses on maintaining customer satisfaction and addressing any issues or concerns that may arise. Therefore, service and support is the correct answer for the primary activity that is performed last in the value chain model.

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  • 25. 

    Ford Motors developed the Explorer sports utility vehicle in 1990, and it is still in the top ten best-selling sports utility vehicles in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies?

    • A.

      Research and development

    • B.

      Human resources

    • C.

      Materials management

    • D.

      Marketing and sales

    • E.

      Company infrastructure

    Correct Answer
    D. Marketing and sales
    Explanation
    Ford Motors conducted customer preference studies as part of their marketing and sales activities. This would involve researching and understanding customer preferences in order to develop and market products that meet their needs and desires.

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  • 26. 

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

    • A.

      Research and development

    • B.

      Human resources

    • C.

      Materials management

    • D.

      Production

    • E.

      Company infrastructure

    Correct Answer
    B. 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 employees, which falls under the human resources activity of the value chain.

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  • 27. 

     Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs. In which value chain activity do cost accountants work?

    • A.

      Research and development

    • B.

      Human resources

    • C.

      Materials management

    • D.

      Marketing and sales

    • E.

      Company infrastructure

    Correct Answer
    E. Company infrastructure
    Explanation
    Cost accountants work in the value chain activity of company infrastructure. They are responsible for gathering and monitoring data used for controlling the organization's costs, which is an essential part of the company's infrastructure.

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  • 28. 

    Which of the following support activities in the value chain refers to the transmission of physical materials from procurement through production and into distribution?

    • A.

      Human resources

    • B.

      Information systems

    • C.

      Research and Development

    • D.

      Logistics

    • E.

      Operations

    Correct Answer
    D. Logistics
    Explanation
    Logistics refers to the support activity in the value chain that involves the transmission of physical materials from procurement through production and into distribution. It includes activities such as transportation, warehousing, inventory management, and order fulfillment. Human resources, information systems, research and development, and operations are all important support activities in the value chain, but they do not specifically involve the transmission of physical materials.

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  • 29. 

    _____ consists of the electronic systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries.

    • A.

      Information systems

    • B.

      Logistics

    • C.

      Barriers to imitation

    • D.

      Benchmark

    • E.

      Materials management

    Correct Answer
    A. Information systems
    Explanation
    Information systems consist of the electronic systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries.

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  • 30. 

     Research and development activities are concerned with:

    • A.

      design of products.

    • B.

      distribution of goods.

    • C.

      customer services.

    • D.

      analyzing financial performance.

    • E.

      marketing of products.

    Correct Answer
    A. design of products.
    Explanation
    Research and development activities are concerned with the design of products. This involves conducting research to identify market needs and trends, developing new product concepts, and designing prototypes. Research and development teams work to improve existing products and create new ones that meet customer demands and preferences. They use various methods and techniques to test and refine product designs before they are launched into the market. The goal of research and development is to create innovative and competitive products that satisfy customer needs and drive business growth.

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  • 31. 

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

    • A.

      one of a series of units that comprise an industry segment.

    • B.

      the producer of a series of customer-valued products that are linked together.

    • C.

      a series of activities that transform inputs into products that customers value.

    • D.

      one of a series of economic functions.

    • E.

      a collection of various products and their attributes.

    Correct Answer
    C. a series of activities that transform inputs into products that customers value.
    Explanation
    The term value chain refers to a series of activities that transform inputs into products that customers value. This means that a company goes through a series of processes and activities to create a product that is valuable to its customers. The value chain includes activities such as sourcing raw materials, manufacturing, marketing, and distribution. By effectively managing the value chain, a company can create value for its customers and gain a competitive advantage in the market.

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  • 32. 

    Ray, a toymaker, knits a stuffed unicorn for Belle. Which function of the value chain is illustrated in this scenario?

    • A.

      Marketing

    • B.

      Distribution

    • C.

      Research

    • D.

      Production

    • E.

      Sales

    Correct Answer
    D. Production
    Explanation
    The correct answer is Production. In this scenario, Ray, the toymaker, is knitting a stuffed unicorn for Belle. This activity of knitting the stuffed unicorn falls under the production function of the value chain. Production involves the creation and assembly of goods or services, and in this case, Ray is producing the stuffed unicorn.

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  • 33. 

    The ratio of net profit to invested capital is known as:

    • A.

      return on invested capital.

    • B.

      return on sales.

    • C.

      capital turnover.

    • D.

      cost of goods sold.

    • E.

      sales, general, and administrative expenses.

    Correct Answer
    A. return on invested capital.
    Explanation
    The ratio of net profit to invested capital is known as return on invested capital. This ratio measures the profitability of a company's investments and indicates how effectively the company is using its capital to generate profits. A higher return on invested capital indicates better profitability and efficiency in utilizing capital.

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  • 34. 

    One of the most widely used measures of financial performance in an internal analysis is:

    • A.

      return on invested capital.

    • B.

      net profit margin.

    • C.

      share value.

    • D.

      net sales.

    • E.

      productivity.

    Correct Answer
    A. return on invested capital.
    Explanation
    Return on invested capital (ROIC) is a widely used measure of financial performance in an internal analysis because it provides insight into how effectively a company is utilizing its capital investments to generate profits. ROIC measures the return that a company generates on the capital invested in its operations, including both debt and equity. It is a comprehensive measure that takes into account both the profitability and efficiency of a company's operations. By comparing ROIC to the cost of capital, a company can determine if it is generating sufficient returns to justify the investments made. This measure is commonly used by managers and investors to assess the financial performance and efficiency of a company.

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  • 35. 

    Which of the following reports includes the cost of goods sold?

    • A.

      The balance sheet

    • B.

      The financial position statement

    • C.

      The cash budget

    • D.

      The income statement

    • E.

      The overhead expense statement

    Correct Answer
    D. The income statement
    Explanation
    The income statement includes the cost of goods sold. It is a financial statement that shows the revenue, expenses, and net income or loss of a company for a specific period of time. The cost of goods sold is an expense that represents the direct costs incurred in producing the goods or services that a company sells. It includes the cost of the materials used, direct labor, and overhead costs directly associated with the production process. Therefore, the income statement is the correct report that includes the cost of goods sold.

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  • 36. 

    Ted is an accountant at ABC Company. He calculates the difference between total revenues and total costs before tax. Ted calculates the:

    • A.

      net profit.

    • B.

      capital turnover.

    • C.

      cost of goods sold.

    • D.

      return on sales.

    • E.

      invested capital.

    Correct Answer
    A. net profit.
    Explanation
    Ted calculates the difference between total revenues and total costs before tax, which is the definition of net profit. Net profit is the amount of money left over after all expenses and taxes have been deducted from total revenue.

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  • 37. 

     Factors that make it difficult for a competitor to copy a company’s distinctive competencies are known as:

    • A.

      barriers to imitation.

    • B.

      marketing know-how.

    • C.

      technological know-how.

    • D.

      support activities.

    • E.

      capabilities.

    Correct Answer
    A. barriers to imitation.
    Explanation
    Distinctive competencies are unique strengths or capabilities that a company possesses, which sets it apart from its competitors. These competencies can include factors such as proprietary technology, specialized knowledge, strong brand reputation, or unique business processes. Barriers to imitation refer to the factors that make it difficult for competitors to replicate or imitate these distinctive competencies. These barriers can include factors such as high entry costs, complex technology, strong customer loyalty, or exclusive supplier relationships. By having barriers to imitation, a company can maintain a competitive advantage and prevent competitors from easily copying its strengths.

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  • 38. 

    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 and the industry is stable.

    • 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 and the industry is stable.
    Explanation
    When barriers to imitation are high, it becomes difficult for competitors to replicate a company's products, services, or business model. This gives the company a competitive advantage because it can maintain its unique offering in the market. Additionally, when the industry is stable, there is less disruption and uncertainty, allowing the company to focus on maintaining its advantage and building customer loyalty. Therefore, a combination of high barriers to imitation and a stable industry creates a more durable competitive advantage for a company.

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  • 39. 

     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
    A company's competitive advantage refers to the unique qualities or resources that give it an edge over its competitors. If this advantage can be quickly or easily duplicated by other companies, it means that the company's uniqueness can be easily replicated, diminishing its competitive advantage. This suggests that the advantage is not sustainable in the long run.

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  • 40. 

    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.

      a company's difficulty in changing its strategies and structure.

    Correct Answer
    C. a rapidly changing industry environment.
    Explanation
    Industry dynamism refers to a rapidly changing industry environment. This means that the industry is constantly evolving and experiencing significant shifts and changes in various aspects such as technology, competition, customer preferences, and market trends. Companies operating in a dynamically changing industry need to adapt quickly to these changes in order to stay competitive and relevant. This can include adjusting their strategies, products, services, and organizational structure to keep up with the evolving industry landscape.

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  • 41. 

    Dale's methods of fitting horseshoes save time and money for his employer at the local ranch. However, when Dale suggests that everyone use his method, his boss, Cedric, says, "No. That's not the way we've always done it around here." Cedric's resistance to change illustrates:

    • A.

      organizational inertia.

    • B.

      prior strategic commitments.

    • C.

      barriers to mobility.

    • D.

      lack of distinctive competencies.

    • E.

      the Icarus paradox.

    Correct Answer
    A. organizational inertia.
    Explanation
    Cedric's resistance to change, despite the potential benefits of Dale's method, demonstrates organizational inertia. Organizational inertia refers to the tendency of established organizations to resist change and stick to traditional ways of doing things. Cedric's response of "That's not the way we've always done it around here" indicates a resistance to adopting new methods, even if they could save time and money. This resistance to change can hinder innovation and prevent organizations from adapting to new circumstances or improving their processes.

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  • 42. 

     Benchmarking can be defined as the practice of:

    • A.

      monitoring activities related to the design, creation, and delivery of a product, its marketing, and its support and after-sales service.

    • B.

      developing products that are new to the world or have superior attributes to existing products in the market.

    • C.

      measuring the time that it takes for a good to be delivered or a service to be performed.

    • D.

      measuring a company against the products, practices, and services of some of its most efficient global competitors.

    • E.

      analyzing the financial position of a company and creating the income statements and the balance sheets.

    Correct Answer
    D. measuring a company against the products, practices, and services of some of its most efficient global competitors.
    Explanation
    Benchmarking is the practice of measuring a company against its most efficient global competitors in terms of products, practices, and services. This involves comparing and analyzing various aspects of the company's performance, such as quality, efficiency, and customer satisfaction, to identify areas for improvement and best practices to adopt. By benchmarking against top competitors, companies can strive to achieve higher levels of performance and competitiveness in the market.

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  • 43. 

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

    • A.

      specialized assets

    • B.

      benchmarking

    • C.

      strategic commitments

    • D.

      inertia

    • E.

      the Icarus paradox

    Correct Answer
    B. benchmarking
    Explanation
    Rollie is using benchmarking to improve her car wash. Benchmarking is the process of comparing one's business practices and performance against industry standards or competitors in order to identify areas for improvement. By reading publications for car wash owners and implementing the best practices she learned, Rollie is using benchmarking to stay competitive and improve her business.

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  • 44. 

    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.

      Following rigid business processes

    Correct Answer
    E. Following rigid business processes
    Explanation
    Following rigid business processes is not a way that companies can avoid failure. Rigid business processes can hinder a company's ability to adapt and respond to changing market conditions and customer needs. Companies need to be flexible and agile in order to stay competitive and avoid failure.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 25, 2020
    Quiz Created by
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