question
Which one of the following options is a primary feature of the Porter's five forces model?
a. It is concerned exclusively about the intensity of rivalry among direct competitors
b. It takes into account a firm's internal resources, capabilities, and core competencies
c. It helps managers determine the changing speed of an industry or the rate of innovation
d. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes
a. It is concerned exclusively about the intensity of rivalry among direct competitors
b. It takes into account a firm's internal resources, capabilities, and core competencies
c. It helps managers determine the changing speed of an industry or the rate of innovation
d. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes
answer
d. It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes
question
Strategic group is
a. an association of companies that lobby with the government
b. a set of companies that compete more directly with each other within an industry
c. a group of companies that have strategic foresight to insure competitive advantage
d. a set of suppliers that provide strategic inputs to the industry firms
a. an association of companies that lobby with the government
b. a set of companies that compete more directly with each other within an industry
c. a group of companies that have strategic foresight to insure competitive advantage
d. a set of suppliers that provide strategic inputs to the industry firms
answer
b. a set of companies that compete more directly with each other within an industry
question
The _______ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro (general) environment
a. VRIO framework
b. SWOT analysis
c. BCG matrix
d. STEP (or PESTEL) framework
a. VRIO framework
b. SWOT analysis
c. BCG matrix
d. STEP (or PESTEL) framework
answer
D. STEP
question
The primary objective of Porter's five forces model is to
a. replace a firm's competitive advantage with competitive parity
b. understand the profit potential of different industries
c. reduce the gap between the value of a firm's product and its cost of production
d. break down a firm's values chain activities into primary and support
a. replace a firm's competitive advantage with competitive parity
b. understand the profit potential of different industries
c. reduce the gap between the value of a firm's product and its cost of production
d. break down a firm's values chain activities into primary and support
answer
b. understand the profit potential of different industries
question
Which of the following options is a feature of an oligopolistic industry structure?
a. Many small sellers (firms)
b. Standardized or undifferentiated products
c. Limited pricing power
d. High entry barriers
a. Many small sellers (firms)
b. Standardized or undifferentiated products
c. Limited pricing power
d. High entry barriers
answer
d. High entry barriers
question
Which of the following options is the sixth force added to the Porter's five forces model?
a. Collaborators
b. Competitors
c. Complementors
d. Suppliers
a. Collaborators
b. Competitors
c. Complementors
d. Suppliers
answer
c. Complementors
question
Which of the following is an implication of low interest rates?
a. Cost of capital for firms will be high
b. Firms will invest less in future growth
c. Economic growth rate will fall
d. Consumer demand will increase
a. Cost of capital for firms will be high
b. Firms will invest less in future growth
c. Economic growth rate will fall
d. Consumer demand will increase
answer
d. Consumer demand will increase
question
Which of the following statements accurately brings out the difference between tangible and intangible resources?
a. Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same
b. Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased
c. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily
d. Tangible assets are difficult to initiate, whereas intangible assets can be easily replicated
a. Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same
b. Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased
c. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily
d. Tangible assets are difficult to initiate, whereas intangible assets can be easily replicated
answer
b. Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased
question
The resource-based view of a firm assumes that the
a. resources of firms are highly scarce and hence the government ensure their equal distribution
b. resources of firms are highly exhaustible and hence they can never contribute to their competitive advantage
c. resource bundles of firms competing in the same industry are unique to some extent and then differ from one another
d. resource bundles of firms competing in the same industry tend to be highly mobile, moving easily from firm to firm
a. resources of firms are highly scarce and hence the government ensure their equal distribution
b. resources of firms are highly exhaustible and hence they can never contribute to their competitive advantage
c. resource bundles of firms competing in the same industry are unique to some extent and then differ from one another
d. resource bundles of firms competing in the same industry tend to be highly mobile, moving easily from firm to firm
answer
c. resource bundles of firms competing in the same industry are unique to some extent and then differ from one another
question
The IO perspective differs from the resource based model in the view that
a. all firms have access to the same resources since it assumes resources are highly mobile
b. accessibility to bundles of resources differ across firms
c. resources tend to be "sticky"
d. competencies differ across firms working in the same industry
a. all firms have access to the same resources since it assumes resources are highly mobile
b. accessibility to bundles of resources differ across firms
c. resources tend to be "sticky"
d. competencies differ across firms working in the same industry
answer
a. all firms have access to the same resources since it assumes resources are highly mobile
question
When the knowledge of a valuable and rare resource diffuses throughout an industry, the
a. firms in the industry will be better positioned to achieve competitive parity
b. ability to sustain a competitive advantage will be restricted to one firm
c. mobility and homogeneity of the resource will decrease
d. structure of the industry will no longer be perfectly competitive
a. firms in the industry will be better positioned to achieve competitive parity
b. ability to sustain a competitive advantage will be restricted to one firm
c. mobility and homogeneity of the resource will decrease
d. structure of the industry will no longer be perfectly competitive
answer
a. firms in the industry will be better positioned to achieve competitive parity
question
A firm's resource is most likely to be an internal strength and a core competency when the resource is
A. valuable but common.
B. valuable and costly to imitate.
C. easily accessible and mobile.
D. easy to substitute.
A. valuable but common.
B. valuable and costly to imitate.
C. easily accessible and mobile.
D. easy to substitute.
answer
B. valuable and costly to imitate.
question
Creating resources that meet the VRIO criteria is strategically important to a firm because it
A. helps the firm curb its resource heterogeneity and resource immobility.
B. facilitates greater knowledge diffusion in the industry.
C. leads to competitive parity within the industry.
D. helps the firm to gain and sustain a competitive advantage.
A. helps the firm curb its resource heterogeneity and resource immobility.
B. facilitates greater knowledge diffusion in the industry.
C. leads to competitive parity within the industry.
D. helps the firm to gain and sustain a competitive advantage.
answer
D. helps the firm to gain and sustain a competitive advantage.
question
A firm is less likely to sustain its competitive advantage when the
a. fit between its internal resources and capabilities and the external environment is static.
b. source of its competitive advantage is causally ambiguous
c. source of its competitive advantage is socially complex
d. resource bundles exhibit heterogeneity and immobility
a. fit between its internal resources and capabilities and the external environment is static.
b. source of its competitive advantage is causally ambiguous
c. source of its competitive advantage is socially complex
d. resource bundles exhibit heterogeneity and immobility
answer
a. fit between its internal resources and capabilities and the external environment is static.
question
Which of the following equations best expresses return on revenue?
a. Net income/revenue
b. revenue - cost
c. Returns/revenue
d. revenue - gross profits
a. Net income/revenue
b. revenue - cost
c. Returns/revenue
d. revenue - gross profits
answer
a. Net income/revenue
question
Unlike the financial ratios based on accounting data, total return to shareholders is
A. backward-looking and historic in nature.
B. an external performance metric.
C. an absolute measure of competitive advantage.
D. unaffected by market volatility or macroeconomic factors.
A. backward-looking and historic in nature.
B. an external performance metric.
C. an absolute measure of competitive advantage.
D. unaffected by market volatility or macroeconomic factors.
answer
B. an external performance metric.
question
competitive advantage goes to the firm that achieves the
a. largest economic value created
b. lowest producer surplus
c. highest payable turnover
d. highest cost of goods sold/revenue ratio
a. largest economic value created
b. lowest producer surplus
c. highest payable turnover
d. highest cost of goods sold/revenue ratio
answer
a. largest economic value created
question
In order to achieve a competitive advantage, a firm should be able to:
a. increase its payable turnover
b. keep its producer surplus low
c. increase the difference between the value created and the cost to produce it
d. increase the difference between consumer surplus and its profits
a. increase its payable turnover
b. keep its producer surplus low
c. increase the difference between the value created and the cost to produce it
d. increase the difference between consumer surplus and its profits
answer
a. increase its payable turnover
question
Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?
A. The economic value creation model
B. The accounting profitability model
C. The shareholder value creation model
D. The balanced scorecard model
A. The economic value creation model
B. The accounting profitability model
C. The shareholder value creation model
D. The balanced scorecard model
answer
D. The balanced scorecard model
question
Which of the following performance measures is highly sensitive a firm's choice of capital structure?
a. return on sales
b. return on invested capital
c. return on equity
d. return on R&D
a. return on sales
b. return on invested capital
c. return on equity
d. return on R&D
answer
c. return on equity
question
In the DuPont analysis, ROE is decomposed into which of the following three components?
a. Return on assets, return on invested capital, net margin
b. Return on R&D, return on sales, return on working capital
c. New margins, asset turnover, and financial leverage
d. return on invested capital, financial leverage, working capital turnover
a. Return on assets, return on invested capital, net margin
b. Return on R&D, return on sales, return on working capital
c. New margins, asset turnover, and financial leverage
d. return on invested capital, financial leverage, working capital turnover
answer
c. New margins, asset turnover, and financial leverage
question
A firm's business strategy will lead to a competitive advantage if it allows the firm to
a. execute the same activities performed by the rivals in a similar manner
b. reduce the value gap
c. perform different activities than its rivals
d. position itself below the productivity frontier
a. execute the same activities performed by the rivals in a similar manner
b. reduce the value gap
c. perform different activities than its rivals
d. position itself below the productivity frontier
answer
c. perform different activities than its rivals
question
When a firm makes choices between a cost or value position to achieve competitive advantage, it is primarily involved in
a. collective bargaining
b. strategic trade-offs
c. arbitration
d. mediation
a. collective bargaining
b. strategic trade-offs
c. arbitration
d. mediation
answer
b. strategic trade-offs
question
Firms pursuing a differentiation strategy primarily seek to
a. keep their cost structures lower than that of the cost leader
b. reduce the value gap to gain a competitive advantage
c. provide products that are a direct imitation of the competitors' products
d. create higher customer perceived value than the value that competitors create
a. keep their cost structures lower than that of the cost leader
b. reduce the value gap to gain a competitive advantage
c. provide products that are a direct imitation of the competitors' products
d. create higher customer perceived value than the value that competitors create
answer
d. create higher customer perceived value than the value that competitors create
question
In a focused cost-leadership strategy, a firm:
a. caters to the segment of the market that is least cost-sensitive
b. provides high-priced products for many different segments of the mass market
c. delivers low-cost products and services to a specific narrow part of the market
d. focuses on reducing the economic value created to drive down costs
a. caters to the segment of the market that is least cost-sensitive
b. provides high-priced products for many different segments of the mass market
c. delivers low-cost products and services to a specific narrow part of the market
d. focuses on reducing the economic value created to drive down costs
answer
c. delivers low-cost products and services to a specific narrow part of the market
question
Value drivers contribute to a firm's competitive advantage only if
a. the increase in value creation exceeds the increase in costs
b. they can shrink the firm's value gap
c. they can restrict the firm from claiming a premium price for its products
d. the decrease in perceived value leads to an increase in costs
a. the increase in value creation exceeds the increase in costs
b. they can shrink the firm's value gap
c. they can restrict the firm from claiming a premium price for its products
d. the decrease in perceived value leads to an increase in costs
answer
a. the increase in value creation exceeds the increase in costs
question
In contrast to a differentiator, a cost leader will
a. charge a premium price for its products and services
b. build an organization culture where creativity and customer responsiveness thrive
c. focus its research and development on process technologies to improve efficiency
d. avoid an organizational structure that relies on strict budget controls
a. charge a premium price for its products and services
b. build an organization culture where creativity and customer responsiveness thrive
c. focus its research and development on process technologies to improve efficiency
d. avoid an organizational structure that relies on strict budget controls
answer
c. focus its research and development on process technologies to improve efficiency
question
An integration strategy differs from a low-cost strategy in that
a. the focus of an integrator is on lowering the economic value created, whereas a cost leader focuses increasing the economic value created
b. the intent of an integration strategy is not to be absolute lowest-cost provider because an integrator must also increase perceived value
c. economies of scale are more important to an integrator, while economies of scope are more important to a cost leader
d. an integrator's research and development focus us on process technologies, and a cost-leader's focus is on product technologies
a. the focus of an integrator is on lowering the economic value created, whereas a cost leader focuses increasing the economic value created
b. the intent of an integration strategy is not to be absolute lowest-cost provider because an integrator must also increase perceived value
c. economies of scale are more important to an integrator, while economies of scope are more important to a cost leader
d. an integrator's research and development focus us on process technologies, and a cost-leader's focus is on product technologies
answer
b. the intent of an integration strategy is not to be absolute lowest-cost provider because an integrator must also increase perceived value
question
Home Cart, Home Essentials, Good Store, and Price King are all departmental stores that compete for advantage against each other through everyday low-pricing and discounts on bulk purchases. All the four stores cater to the needs of highly price-sensitive customers. Thus, together Home Cart, Home Essentials, Good Store, and Price King form a _____.
A. focus group
B. command group
C. strategic group
D. cross-functional group
A. focus group
B. command group
C. strategic group
D. cross-functional group
answer
C. strategic group
question
Maroon Inc. is a leading international apparel company. Competitors across the globe have failed to imitate Maroon Inc.'s production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Maroon Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate?
A) Resource immobility
B) Resource equality
C) Resource perishability
D) Resource homogeneity
A) Resource immobility
B) Resource equality
C) Resource perishability
D) Resource homogeneity
answer
D) Resource homogeneity
question
Competitors have found it extremely difficult to imitate Kamiak Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Kamiak Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company' s product introductions. Kamiak Inc. has been protected from losing its competitive advantage as a result of
A. time compression diseconomies.
B. resource homogeneity.
C. causal ambiguity.
D. path dependence.
A. time compression diseconomies.
B. resource homogeneity.
C. causal ambiguity.
D. path dependence.
answer
C. causal ambiguity.
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