MBA800 Strategic Management

Question 1.1. Apple's iPod and iPad are examples of: (Points : 1)

the march of globalization

rapid technological diffusion

disruptive technologies

products that were not imitated by competitors

Question 2.2. Essentially, ____________has become one of the world's largest markets with 700 million potential consumers. (Points : 1)

the European Union

the United States



Question 3.3. The five forces model suggests that an industry's profitability is a function of all the following factors except: (Points : 1)


competitive rivalry


the economic environment

Question 4.4. Generally speaking, product market stakeholders are satisfied when: (Points : 1)

a firm's profit margin yields the lowest return to capital market stakeholders that is acceptable to them.

a firm's profit margin yields an above-average return to its capital market stakeholders.

the interests of the firm's organizational stakeholders have been maximized.

the interests of all stakeholders have been at least minimally satisfied.

Question 5.5. A competitive advantage: (Points : 1)

can be permanent if the firm has successfully implemented the strategic management process.

entails reducing investors' risk to near zero.

can be identified only if it has been unsuccessfully challenged by competitors.

exists when competing firms are unable to find investors.

Question 6.6. The likelihood of entry of new competitors is affected by _________and__________. (Points : 1)

barriers to entry, expected retaliation of current industry organizations.

the power of existing suppliers, buyers.

the profitability of the industry, the market share of its leading firm.

the demand for the product, the profitability of the competitors.

Question 7.7. New entrants to an industry are more likely when: (Points : 1)

it is difficult to gain access to distribution channels.

economies of scale in the industry are high.

product differentiation in the industry is low.

capital requirements in the industry are high.

Question 8.8. In the airline industry, consolidation among fuel providers serving airport facilities would be considered as ____________________factor in the five forces model of competition. (Points : 1)

a reduction of the airlines' abilities to enjoy economies of scale.

an increase in switching costs because the airlines have no choice but to use jet fuel and other oil products.

an increase in the bargaining power of suppliers of a critical input.

an increase in the intensity of rivalry among airlines for scarce resources.

Question 9.9. By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of: (Points : 1)

intangible resources.

their primary activities.

firm-specific differences.

efficiency of production.

Question 10.10. Competitive advantage typically comes from: (Points : 1)

individual resources.

one unique resource.

several outstanding resources used independently.

the unique bundling of several resources.

Question 11.11. Organizational culture is: (Points : 1)

amorphous and changeable.

not easily imitable.

so difficult to analyze that most firms should choose to ignore it.

typically fragile in the face of changes in the external environment.

Question 12.12. Outsourcing is the: (Points : 1)

spinning off of a a value-creating activity to create a new firm.

selling of a value-creating activity to other firms.

purchase of a value-creating activity from an external supplier.

use of computers to obtain value-creating data from the Internet.

Question 13.13. PetSmart provides services and products for pet owners which are not available through other outlets. PetSmart's business level strategy is best described as: (Points : 1)

focused cost leadership.

cost leadership.



Question 14.14. Business-level strategies are concerned specifically with: (Points : 1)

creating differences between the firm's position and its rivals.

selecting the industries in which the firm will compete.

how functional areas will be organized within the firm.

how a business with multiple physical locations will operate one of those locations.

Question 15.15. Michael Porter points out that strategic fit among activities is fundamental to: (Points : 1)

the development of core competencies for a firm.

the breath of competitive scope for a firm.

sustainability of a firm's competitive advantage.

the integrity of the firm's value chain.

Question 16.16. All of the following are considered generic business-level strategies EXCEPT: (Points : 1)

product diversification.

cost leadership.

focused differentiation.

integrated cost leadership/differentiation.

Question 17.17. When the cost of supplies increase in an industry, the low-cost leader: (Points : 1)

may continue competing with rivals on the basis of product features.

will lose customers as a result of price increases.

will be unable to absorb higher costs because cost-leaders operate on very narrow profit margins.

may be the only firm able to pay the higher prices and continue to earn above-average returns.

Question 18.18. A firm successfully implementing a differentiation strategy would expect: (Points : 1)

customers to be sensitive to price increases.

to charge premium prices.

customers to perceive the products as standard.

to have high levels of power over suppliers.

Question 19.19. First movers are: (Points : 1)

entrepreneurs who lead in the establishment of new industries.

firms that are first to exit a declining industry.

firms that take an initial competitive action.

individuals who move frequently as employment opportunities change in a locale.

Question 20.20. All competitive advantages do not accrue to large-sized firms. A major advantage of small firms is that they: (Points : 1)

are more likely to have organizational slack.

can launch competitive actions more quickly.

have more loyal and diverse workforces.

can wait for large firms to make mistakes in introducing innovative products.

Question 21.21. Walt Disney's focus on ___________ is typical of a slow-cycle market. (Points : 1)


total quality.

proprietary rights.

economies of scale.

Question 22.22. Lawsuits over patent and copyright infringement are more common and intense in: (Points : 1)

fast-cycle markets, because the market is innovation-driven.

standard-cycle markets, because the firm's brand name is such an important competitive advantage.

slow-cycle markets, because of the ability to shelter the company from imitation of its competitive advantage.

standard-cycle markets, because innovation is rare, and so gives the innovating firm a significant competitive advantage.

Question 23.23. The ultimate test of the value of a corporate-level strategy is whether the: (Points : 1)

corporation earns a great deal of money.

top-management team is satisfied with the corporation's performance.

businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.

businesses in the portfolio increase the firm's financial returns.

Question 24.24. GE has reorganized from eleven businesses down to six core businesses. The purpose of this reorganization was to transfer core competencies in different types of technologies among GE's businesses. This is an example of: (Points : 1)

increasing market power through vertical integration.

efficient internal capital allocation.

a focus on financial economies.

increasing corporate relatedness.

Question 25.25. Firms that have selected a related diversification corporate-level strategy seek to exploit: (Points : 1)

control shared among business-unit managers.

economies of scope between business units.

the favorable demand of buyers.

market power.

Question 26.26. External incentives to diversify include: (Points : 1)

the fact that other firms in an industry are diversifying.

pressure from stockholders who are demanding that the firm diversify.

changes in antitrust regulations and tax laws.

a firm's low performance.

Question 27.27. The more sharing of resources and activities among businesses, the more __________ is the relatedness of diversification. (Points : 1)





Question 28.28. There are few true mergers because: (Points : 1)

few firms have complementary resources.

integration problems are more severe than in outright acquisitions.

one firm usually dominates in terms of market share or firm size.

of managerial resistance. True mergers result in significant managerial-level layoffs.

Question 29.29. A primary reason for a firm to pursue an acquisition is to: (Points : 1)

avoid increased government regulation.

achieve greater market power.

exit a hyper-competitive market.

achieve greater financial returns in the short run.

Question 30.30. The fastest and easiest way for a firm to diversify its portfolio of business is through acquisition because: (Points : 1)

of barriers to entry in many industries.

it is difficult and time intensive for companies to develop products that differ from their current product line.

innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition.

unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before the acquisition.

Question 31.31. An effective vision statement will specify the market to be served. (Points : 1)



Question 32.32. Organizational vision and mission statements serve as emotional tools for the firm, and, as such, have little impact on firm performance. (Points : 1)



Question 33.33. Although organizational cultures vary considerably, one cannot make an objective judgment that some organizational cultures are more or less functional than others. (Points : 1)



Question 34.34. An organization's willingness to tolerate or encourage unethical behavior is a reflection of its core values. (Points : 1)



Question 35.35. The objective of assessing the external environment is to determine the timing and significance of the effects of environmental changes and trends on the strategic management of the firm. (Points : 1)



Question 36.36. Because the health of a nation's economy affects the performance of individual firms and industries, companies study the economic environment to identify changes, trends, and their strategic implications. (Points : 1)



Question 37.37. Early adopters of new technology often achieve higher market shares and higher returns than later adopters of the technology. (Points : 1)



Question 38.38. Generally, the stronger the competitive forces, the higher the profit potential of an industry. (Points : 1)



Question 39.39. Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist. (Points : 1)



Question 40.40. In the long run, if an organization does not change it will fail. (Points : 1)



Question 41.41. Outsourcing can add value to the product provided to the customers. (Points : 1)



Question 42.42. A competitive advantage can be created when several resources are bundled together in a unique fashion. (Points : 1)



Question 43.43. The fundamental object of business level strategy is to earn above-average returns. (Points : 1)



Question 44.44. To position itself differently from competitors, a firm must decide to either perform activities differently or to perform different activities. (Points : 1)



Question 45.45. The best of the generic business strategies is the integrated cost leadership/differentiation strategy. (Points : 1)



Question 46.46. A low-cost leader may create entry barriers to potential entrants by continually improving its levels of efficiency. (Points : 1)



Question 47.47. It is much easier for a firm to implement strategic actions than tactical actions. (Points : 1)



Question 48.48. Firms in a slow-cycle market are shielded from imitators for long periods of time. (Points : 1)



Question 49.49. The drivers of competitive behavior are awareness of the competitor, motivation to take action or respond, and the organization''s ability in terms of resources and flexibility. (Points : 1)



Question 50.50. Economies of scope are cost savings resulting from a firm successfully leveraging, either through sharing or transferring, some of its capabilities and competencies developed in one business to another business. (Points : 1)



Question 51.51. Many manufacturing firms are de-integrating and moving to independent supplier networks. (Points : 1)



Question 52.52. Related diversification by a firm tends to reduce a manager's executive compensation, whereas unrelated diversification tends to increase it because the firm has moved into new industries. (Points : 1)



Question 53.53. Evidence suggests that acquisitions usually lead to favorable financial outcomes, especially for the acquiring firm. (Points : 1)



Question 54.54. Evidence suggests that returns to shareholders of acquired firms are greater than those for acquiring firms. (Points : 1)



Question 55.55. Most acquisitions that are designed to achieve greater market power entail buying a competitor, a supplier, a distributor, or a business in a highly related industry. (Points : 1)



Question 56.56. GE is an example of a firm following the related constrained diversification strategy. (Points : 1)



Question 57. 57. What is the value to the firm of having a specified mission and vision? (Points : 3)

Question 58. 58. How does an organization identify internal strengths and weaknesses? (Points : 3)

Question 59. 59. Describe the different business-level strategies. (Points : 3)

Question 60. 60. What do we mean by slow-cycle, fast-cycle, and standard-cycle markets? (Points : 3)

Question 61. 61. Provide an example of a first mover and a second mover, and discuss how they have affected one another over time. (Points : 3)

Question 62. 62. What do we mean by operational and corporate relatedness? (Points : 3)

Question 63. 63. Describe the differences in mergers, acquisitions, and takeovers. (Points : 3)

Question 64. 64. What are some reasons why acquisitions may or may not be successful? (Points : 3)

Question 65. 65. Define restructuring and provide an example. (Points : 3)