Q&A Hero

Q: (p. 164) Which of the following is NOT a basic resource for any firm? A. Tangible assets B. Core outputs C. Intangible assets D. Organizational capabilities

Q: When a firm operates in multiple industries simultaneously it is said to be implementing a geographic market diversification strategy.

Q: (p. 163) What is the underlying premise of the resource-based view? A. Firms generally have very similar capabilities stemming from almost identical resources B. Imitation of resources is the best way to achieve competitive advantages C. Firms differ in fundamental ways because each firm possesses a unique bundle of resources D. Firms' intangible resources can be very difficult to imitate

Q: A firm implements a corporate diversification strategy when it operates in multiple industries or markets simultaneously.

Q: (p. 163) The _______ is a new perspective on understanding a firm's success based on how well the firm uses its internal resources. A. Resource-based view B. Value chain view C. Corporate view D. Functional view

Q: A firm engages in backward vertical integration when it incorporates more stages of the value chain within its boundaries and those stages bring it closer to gaining access to raw materials.

Q: (p. 163) The _______ underlying premise is that firms differ in fundamental ways because each firm possesses a unique bundle of resources. A. Resource-based views B. Value chain views C. Corporate views D. Functional views

Q: More vertically integrated firms accomplish fewer stages of the value chain within their boundaries than less vertically integrated firms.

Q: (p. 155) _____ is an internal analysis technique wherein strategists examine customers needs, company offerings, and competitors offerings to more clearly articulate what their companys competitive advantage is and how it differs from those of competitors. A. Resource-based view B. Three-circles analysis C. SWOT analysis D. Value chain analysis

Q: A firm's level of vertical integration is the number of steps in its value chain that the firm accomplishes within its boundaries.

Q: (p. 161) It is especially important that managers take into account their level of ________ when comparing their cost structure for activities on their value chain with those of key competitors. A. Competition B. Horizontal integration C. Vertical integration D. Concentric diversification

Q: Decisions about whether or not to vertically integrate often determine whether or not a firm is operating in a single business or industry or multiple businesses or industries.

Q: (p. 161) Which of the following considerations is critical at the examination stage of the value chain analysis? A. All primary activities differentiate the firm B. The managers' choice of activities to be examined influences the mission statement of the firm C. The nature of value chains and the relative importance of the activities within them are standard across industries D. The relative importance of value activities can vary by a company's position in a broader value system that includes the value chains of its upstream suppliers and downstream customers or partners

Q: Business strategy is a firm's theory of how to gain competitive advantage by operating in several businesses simultaneously.

Q: (p. 159) Which of the following is usually true about a firm's value chain? A. Scrutinizing a firm's value chain may bring attention to several sources of differentiation advantage relative to competitors B. Scrutinizing a firm's value chain does not usually reveal cost advantages or disadvantages C. Scrutinizing the firm's value chain can minimize the activities that are critical to buyer satisfaction D. Analysis of the firm's value chain can lead a firm to limit its market success

Q: What type of compensation approach goes best with the flexibility explanation of vertical integration?

Q: (p. 158) In VCA, which method of cost accounting is preferred? A. Activity-based cost accounting B. Value-based cost accounting C. Traditional cost accounting D. Financial cost accounting

Q: Discuss the role of the budgeting process as a control mechanism in vertically integrated U-form organizations, the potential unintended negative consequence budgets can have, and three things CEOs can do to counter this potential consequence.

Q: (p. 157) The initial step in value chain analysis is to: A. Allocate costs to different activities within the value chain B. Identify the firm's strengths and weaknesses C. Divide a company's operations into specific activities or processes D. Identify the firm's key resources and capabilities

Q: Identify the organizational structure that is used to implement a vertical integration strategy and why from a CEO's perspective coordinating functional specialists to implement a vertical integration strategy almost always involves conflict resolution and how this conflict can be resolved.

Q: (p. 156) Those activities in a firm that are involved in the physical creation of the product, marketing and transfer to the buyer and after-sales support are called: A. Operational activities B. Support activities C. Secondary activities D. Primary activities

Q: Identify three reasons why a firm may be able to create value through vertical integration when most of its competitors are not able to create value through vertical integration.

Q: (p. 156) Which of the following is an example of support activities in the typical firm? A. Operations B. Procurement C. Marketing and sales D. Service

Q: Within the flexibility-based approach to vertical integration when should firms engage in strategic alliances instead of vertical integration, and what are the advantages of alliances under these conditions?

Q: (p. 156) Which of the following is an example of a primary activity in the typical firm? A. Human resources management B. Research, technology and systems development C. General administration D. Logistics

Q: Discuss the flexibility-based explanation of vertical integration. In discussing this explanation be sure to define flexibility, the role of uncertainty in this explanation, and identify when, under this explanation, firms should engage in vertical integration.

Q: (p. 155) In the value chain framework, there are ____ primary and ____ support activities. A. 4, 5 B. 5, 4 C. 5, 3 D. 3, 5

Q: Discuss the firm capabilities-based explanation of how vertical integration can create value. In your discussion identify the two broad implications of this approach and when, under this approach, firms should engage in vertical integration.

Q: (p. 155) VCA disaggregates the business into a set of activities that occur A. outside the business B. within the business C. within the industry D. outside the industry

Q: Discuss the opportunism-based explanation of vertical integration value creation and identify when, under this explanation, firms should vertically integrate. In your answer be sure to clearly define opportunism and the role that transaction-specific investments play in the opportunism-based explanation.

Q: (p. 155) Which method of internal analysis disaggregates the business into sets of activities that occur within the business, starting with inputs and finishing with the firm's products and after-service sales? A. Resource-based view B. Value chain analysis C. SWOT analysis D. Porter's generic strategies

Q: Identify the three fundamental explanations of how vertical integration can create value and discuss how value is created under each.

Q: (p. 155) Value chain analysis takes a: A. Process point of view B. Functional point of view C. Horizontal point of view D. Corporate point of view

Q: Define vertical integration and differentiate between forward vertical integration and backward vertical integration.

Q: (p. 155) Which of the following is NOT an example of a basic source from which customer value is derived? A. Activities that differentiate the product B. Activities that lower its cost C. Activities that add to product complexity D. Activities that meet the customer's need more quickly

Q: If TerraLoc wanted to expand into selling its GPS units through company-owned retail stores, this would be an example of ________ A) forward vertical integration. B) backward vertical integration. C) opportunism. D) a joint venture.

Q: (p. 155) A perspective in which business is seen as a chain of activities that transforms inputs into outputs that customers value is called: A. Value chain B. Value chain analysis C. Resource-base D. Process division

Q: (p. 155) Which of the following statements is true? A. A strength is not always a source of competitive advantage B. Strengths are synonymous with competitive advantage C. Every company resource or capability is a strength and leads to competitive advantage D. Strengths are always inimitable

Q: If TerraLoc were to use a U-form organizational structure and the CEO decided to use budgets as a management control but wanted to make sure that the managers did not become too focused on the short term, the CEO should do all of the following except A) use an open process in developing budgets. B) determine budgets for her managers and allow them to focus only on meeting the budgets. C) use both quantitative and qualitative evaluations of managers' performance. D) make sure that the process used in developing budgets reflects the economic reality facing the firm's managers.

Q: (p. 154) A strength is _______ a source of competitive advantage. A. not necessarily B. always C. never D. seldom

Q: TerraLoc competes in the market for global positioning devices and services. The company manufactures its own GPS units, which are smaller than those of any other competitor and include a proprietary battery that lasts 200% longer than any other competitor's battery and that TerraLoc manufacturers on-site. TerraLoc also has developed proprietary software that is much faster and more precise than that of any competitor. When developing the proprietary battery, TerraLoc decided to manufacturer the battery in-house to reduce the possibility that the company it outsourced the battery manufacturing to might reverse engineer the battery and sell a similar product to competitors. This possibility was especially troubling given that the company expected a significant increase in demand due to the improved battery life. Additionally, TerraLoc sells its products and services through its own direct sales force to ensure that its representatives highlight the longer battery life of TerraLoc's units.TerraLoc is most likely to use the ________ organizational structure.A) matrixB) product-based multidivisionalC) functionalD) geography-based multidivisional

Q: (p. 154) Critics of ______ warn that it is a one-time view of a changing, or moving, situation. A. SWOT analysis B. Core competency analysis C. Distinctive competency analysis D. Strategic analysis

Q: (p. 154) One of the limitations of the SWOT analysis is that it can be _______. A. static B. dynamic C. simple D. complex

Q: (p. 154) One of the limitations of the SWOT analysis is that it can ______ internal strengths and ______ external threats. A. overemphasize; downplay B. underemphasize; downplay C. overemphasize; enhance D. underemphasize; enhance

Q: Digipics is an assembler of digital cameras. As an assembler, Digipics' operations are limited to purchasing all of the components necessary to assemble the cameras and then selling these cameras to wholesalers who, in turn, sell them through online stores and in retail electronics stores.The fact that it would be very costly for Digipics to alter its operations if the large customer referred to in the previous question decided to stop doing business with Digipics suggests that Digipics has ________ in this situation.A) low flexibilityB) low opportunismC) high flexibilityD) high opportunism

Q: (p. 154) What makes SWOT analysis susceptible to key limitations? A. Its narrow focus on external factors B. Its broad conceptual approach C. Its vastly limited applicability D. Its portrayal of the essence of sound strategy formulation

Q: (p. 153) In the SWOT analysis diagram, which cell presents the least favorable situation? A. Cell 2 B. Cell 1 C. Cell 4 D. Cell 3

Q: (p. 153) Which of the following describes the situation for a firm in Cell 2? A. The firm faces several environmental opportunities and has numerous strengths that encourage pursuit of those opportunities B. The firm faces major environmental threats from a weak resource position C. The firm has identified several key strengths, but faces an unfavorable environment D. The firm faces impressive market opportunity, but is constrained by weak internal resources

Q: (p. 153) Which cell supports a turnaround-oriented strategy? A. Cell 2 B. Cell 3 C. Cell 4 D. Cell 1

Q: (p. 153) ________ represents the least favorable situation, with the firm facing major environmental threats from a weak resource position. A. Cell 1 B. Cell 2 C. Cell 3 D. Cell 4

Q: (p. 153) Which cell in the SWOT analysis diagram is the most favorable situation? A. Cell 1 B. Cell 2 C. Cell 3 D. Cell 4

Q: Firm-specific investments are a type of ________ investments. A) operational B) contingent C) transaction-specific D) horizontal

Q: (p. 153) The cells on the left side of the SWOT diagram are both characterized by: A. Substantial internal strengths B. Numerous environmental opportunities C. Critical internal weaknesses D. Major environmental threats

Q: The ________ logic suggests that compensation that has a fixed and known downside risk and significant upside potential is important for firms implementing vertical integration strategies. A) opportunism B) strategic C) capabilities D) flexibility.

Q: (p. 153) According to a SWOT analysis diagram, what strategy does Cell 1 support? A. Aggressive B. Turnaround C. Defensive D. Diversification

Q: (p. 151) Consider e-Pixels, a company that produces miniature digital video cameras that feature easy downloads and uplinks to computers. Which of the following represents a potential strength for the firm? A. Brand name B. Digitalization of most types of media C. Growing global computer companies with similar technology D. Limited experience with video technology

Q: Compensation that focuses on groups of employees such as cash bonuses and stock grants are best suited for ________ explanations of vertical integration. A) flexibility-based. B) capabilities-based. C) strategically-based. D) opportunism-based

Q: The ________ explanations call for compensation that focuses on individual employees, such as cash bonuses for individual performance. A) capabilities-based B) strategically-based C) flexibility-based D) opportunism-based

Q: (p. 151) A(n) _______ is a limitation or deficiency in one or more of a firm's resources or capabilities relative to its competitors that creates a disadvantage in effectively meeting customer needs. A. Weakness B. Threat C. Competitive limit D. Marginal resource

Q: ________ are when employees are given the right, but not the obligation, to purchase stock at predetermined prices. A) Flexibility grants B) Stock grants C) Stock options D) Grant options

Q: (p. 151) A(n) ______ is a resource or capability controlled by or available to a firm that gives it an advantage relative to its competitors in meeting the needs of the customers it serves. A. Competence B. Strength C. Opportunity D. Competitive advantage

Q: (p. 150) Which of the following is NOT an example of an opportunity for the firm? A. Identification of a previously overlooked market segment B. Improved buyer or supplier relationships C. Positive changes in regulatory circumstances D. Strong reputation and image with a key demographic

Q: ________ are payments to employees in a firm's stock. A) Stock grants B) Cash grants C) Flexibility grants D) Option grants

Q: (p. 151) A(n) ______ is a major unfavorable situation in a firm's environment. A. Weakness B. Core strength C. Competitive disadvantage D. Threat

Q: According to the flexibility-based explanations of vertical integration, which of the following would be the most appropriate type of compensation to support strategy implementation? A) Stock options for individual performance B) Stock grants for individual performance C) Stock grants for corporate performance D) Cash bonuses for individual performance

Q: (p. 150) A(n) ________ is a major favorable situation in a firm's environment. A. Value chain B. Strength C. Opportunity D. Capability

Q: According to the capabilities-based explanations of vertical integration, which of the following would be the most appropriate type of compensation to support strategy implementation? A) Salary B) Cash bonuses for corporate performance C) Cash bonuses for individual performance D) Stock grants for individual performance

Q: (p. 149) ________ is a historically popular technique through which managers create a quick overview of a company's strategic situationit is based on achieving a sound fit between internal resources and the external situation. A. Internal analysis B. External analysis C. Value chain analysis D. SWOT analysis

Q: According to the opportunism-based explanations of vertical integration, which of the following would be the most appropriate type of compensation to support strategy implementation? A) Cash bonuses for corporate performance B) Cash bonuses for group performance C) Stock options for individual performance D) Stock grants for individual performance

Q: (p. 149) Common to all the approaches to internal analysis is: A. The use of meaningful standards for comparison in internal analysis B. The use of external factors of analysis C. The process point of view D. Management market myopia

Q: Investments made by employees that have more value in a particular company than in alternative companies are known as A) firm-specific investments. B) individual-specific investments. C) group-specific investments. D) corporate-specific investments.

Q: (p. 155) _______ views a firm as a sequential process of value-creating activities. A. Resource-based analysis B. Value chain analysis C. SWOT analysis D. Primary internal analysis

Q: Which committee in a U-form organization meets weekly and reviews the performance of the firm on a weekly basis and typically consists of a CEO and two or three functional senior managers? A) Top management team B) Executive committee C) Operations committee D) Functional committee

Q: (p. 149) SWOT analysis is based on the assumption that an effective strategy derives from a sound fit between a firms _________ and its ________. A. strengths and opportunities; weaknesses and threats B. strengths and weaknesses; opportunities and threats C. strengths and threats; weaknesses and opportunities D. strengths and opportunities; opportunities and threats

Q: Which committee in a U-form organization meets monthly and usually consists of the CEO and each of the heads of the functional areas included in a firm? A) Executive committee B) Functional committee C) Operations committee D) Managerial committee

Q: Differentiate between foreign branching, equity investment and wholly owned subsidiaries. What risks firms face with foreign subsidiary strategy? Explain.

Q: Evaluating a functional manager's performance relative to budgets can be an effective control when A) the process used in developing budgets is open and participative. B) the process reflects the economic best-case scenario developed by the functional manager. C) the process reflects the economic worst-case scenario developed by the functional manager. D) the process relies solely on quantitative criteria to evaluate the functional manager's performance.

Q: Compare and contrast licensing and franchising.

Q: If Brenda Thompson, Tom Mix's supervisor, wanted to use a budgeting process to help evaluate Tom's performance but wanted to ensure that using a budget did not encourage Tom to focus on short-term behaviors at the expense of long-term results, she should A) develop the budget herself using realistic goals based on the economic reality facing Tom's function and use both quantitative and qualitative evaluations of the performance of Tom's function and then give the budget to Tom to follow. B) work with Tom in an open and participative process to develop the budget based on the most optimistic scenario possible and use both quantitative and qualitative evaluations of the performance of Tom's function. C) develop the budget herself based on the most pessimistic scenario possible and use both quantitative and qualitative evaluations of the performance of Tom's function and then give the budget to Tom to follow. D) work with Tom in an open and participative process to develop the budget based on the economic reality facing Tom's function and use both quantitative and qualitative evaluations of the performance of Tom's function.

Q: Identify and briefly explain the lowest to the highest commitment strategies a firm may have to international markets.