Which of the following is NOT a critical aspect of Strat or building sustainable competitive advantage?
A. preventing competitors imitation of the firms product or service
B. improving customers perceived value
C. Lowering the costs incurred in making/selling products/service
D. Retaining customers by building switching cost
E. All of the above are critical elements of building sustainable competitive advantage
Which of the following is NOT a good description of a successful strategy
A. The firm needs to focus on increasing the difference between the price and cost of the product.
B. The firm needs to focus on increasing the difference between the cost of the product and its value perceived by customers.
C. Once competitive advantage is created through attracting new customers, the firm should use isolating mechanisms to secure the advantage.
D. Effectively utilizing the firm's unique resources and capabilities is key to creating and sustaining competitive advantage.
Which of the following describes best the firms goal in a competitive world
A. Making more profit
B. creating and capturing more economic value than rivals consistently over time
C. Having the highest market share
D. Being publicly recognized as one of the top 100 companies
Which of the following is NOT a key subject of strategy
A. How does membership in an industry affect a firm’s profitability?
B. How does a firm decide to perform an activity in-house vs. outsource?
C. How is a firm owned and managed by a same group of individuals different from a firm owned by shareholders and managed by professional CEOs?
D. All of the above are key subjects of Strategy
Which of the following is NOT an important factor that affects a firm profitability
A. The firm's unique pool of resources and capabilities
B. Macroeconomic forces
C. The CEO's salary
D. Industry conditions
Which of the following are common managerial decision-making biases?
A. escalation of commitment
B. overconfidence
C. information anchoring
D. all of the above
Which of the following represents a key benchmark for setting a firms financial goals? Check all that apply
A. the firm's historical performance
B. the current performance of competitors in the industry
C. the highest performing firm in a different industry
D. A combination of both the firm's historical performance and its competitors' current performance
Which of the following is NOT a key element of a business-level strategic brand?
A. Industry analysis
B. operating goals
C. SWOT analysis
D. Specific programs
Which of the following is NOT a general category for strategic initiatives?
A. termination or turnaround of underperforming operations
B. top management compensation
C. investments in growth
D. development of risk management and compliance initiatives
Which of the following is a useful question for competitor analysis
A. what are the key macroeconomics forces that affect profits?
B. Has the industry passed through a shakeout
C. where is the firm located in the competitive landscape in terms of its value and cost drivers
D. All of the above
Which of the following is NOT true about generic strategies
A. Firms focusing on cost drivers often bear the challenge of being easily imitable.
B. One challenge for differentiation-type companies is that it is often hard to accurately predict customers' perception of value in the company product.
C. Firms who achieve 'value innovation' effectively implement both differentiation and cost leadership.
D. Firms who pursue cost leadership mostly ignore the value delivered to the customers and strive to attain the lowest cost possible to offer lowest prices.
Which of the following are cost drivers
1. the learning curve
2. economics of scope
3. firm revenues
4. complementary products
A. 1 and 2
B. 3 and 4
C. 1 and 4
D. 1, 3 and 4
Which of the following is NOT true for firms that pursue a differentiation strategy?
A. Raising the price of the product to the extent that the buyer's surplus is greater than the competitor products' buyer surplus can be an effective approach.
B. Charging the same price while increasing value can always attract new customers.
C. This strategy is more attractive when the value-improving investments produce a higher return than the efforts to reduce costs
D. Increasing value entails the challenge of additional costs, possibly reducing the profits (price-cost).
Which of the following are isolating mechanisms
1. Casual ambiguity
2. the learning curve
3. property rights
4. transition costs
A. 1 and 2
B. 3 and 4
C. 1, 3, and 4
D. all of these
Economics of scope occur when:
A. The average cost of making the product goes up as your firm produces more of it today
B. The average cost of making the product goes down as your firms produces more of it over time
C. The variable cost of making the product is less than its average cost
D. The total cost of producing two products is less than the sum of costs to produce them separately
The difference between product value and market price is called
A. the source of customer sensitivity
B. the firm’s profit
C. the buyer’s surplus
D. the firm’s economic contribution
Which of the following statements is FALSE?
A. The cost leader in an industry can be identified by finding the company with the lowest prices.
B. The customer, not the seller, determines the value of the product.
C. Market position is determined by the Value-minus-Cost profile that a firm provides.
D. A firm can occupy a superior market position without having the lowest cost or highest value.
In the field of strategy, an industries boundaries are determined based on:
1. Employees switching between companies
2. technologically similar products
3. highly-correlated stock prices
4. interdependent consumer markets
A. I and III
B. II and IV
C. I, II, and III
D. all of the above
How would a supplier firm reduce the power of one of its buyers
A. Increase the percentage of the firm’s product sold to the buyer.
B. focus on supplying commodity products
C. expand the firm's production capacity
D. vertically integrate into the buyer's industry
Which of the following statements about buyer and supplier power is TRUE
A. Buyer power increases when there are more buyers and the industry is growing quickly.
B. Buyer and supplier power do not matter to small firms, since industry forces are proportional to size.
C. A firm working with weak suppliers and strong buyers will generate high profits.
D. Strong suppliers can achieve high margins even if their buyers operate in markets with intense rivalry.
Which of the following represents the best example of complementary products?
A. Starbucks coffee and Diet Coke
B. a Walmart Supercenter and a Walmart Neighborhood Market
C. an iPhone and the Netflix app
D. Gucci handbags and Zara dresses
Which of the following industry forces have the power to drive profits down?
I. The power of buyers
II. The power of suppliers
III. The strength of substitutes for the industry's products
IV. The potential for entry into the business
V. The strength of competition or rivalry
A. I & II
B. III & IV
C. I, II, III & IV
D. I, II, III, IV & V
The difference between product value and cost is called (single Choice)
A. Buyer's Surplus
B. Firm's Surplus
C. Willingness to Pay
D. Total Economic Contribution of the Firm
A. Yes, a SWOT analysis will identify the Strengths, Weaknesses, Opportunities, and Threats to the firm.
B. No, a SWOT analysis might produce interesting content, but it lacks the structure of a discussion of goals, industry context, strategic initiatives, and programs.
Answer 1: Property Rights
Answer 2: Causal Ambiguity
Answer 3: Learning Curve
Answer 4: Transition Costs
Answer 5: Dedicated Assets
Answer 6: Sunk Costs
What would reduce the bargaining power of incumbent product suppliers in relationship with buyer firms in an industry? (Single Choice)
1. A large number of suppliers
2. Low buyer switching costs
3. Presence of viable substitutes
Answer 1: 1
Answer 2: 2
Answer 3: 1&2
Answer 4: 2&3
Answer 5: All of the above
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