COURSE CONCEPT QUIZ Management 449: Seminar in Strategic Management Spring 2013 1.

Value creation is reflected as the difference between _________ and ____________. a. price, cost b. consumer value, price c. consumer value, cost d. price, competitor's price e. All of the above Cost leadership is most appropriate when a. the power of buyers is low and barriers to entry are high. b. economies of scale are relatively unimportant in manufacturing products. c. customers have very different needs and uses for the industry's products. d. product innovation is the key competitive factor. e. industry rivalry is high and customers are very sensitive to prices. Vertical integration can be disadvantageous when a. competitors are vertically integrated. b. demand is stable. c. industry technology is changing rapidly. d. technology is changing slowly. e. competitors are horizontally integrated. In which of the following situations does a differentiation strategy make the most sense? a. The industry is fragmented into different customer groups, each of which has different needs. b. Customer needs are primarily satisfied by the price of the product. c. There is a lot of technological change. d. There are low barriers to entry and exit. e. The industry is in the maturity stage of the life cycle. Which of the following is NOT a principal danger of a cost leadership approach? a. powerful buyers. b. technological change. c. imitation of production techniques. d. changes in consumer tastes. e. rivals lowering their costs. Which of the following is NOT a barrier to entry? a. Economies of scale b. Brand loyalty c. Absolute cost advantages d. High customer bargaining power e. High customer switching costs Which of the following CANNOT be used to grow and consolidate fragmented industries? a. chaining. b. vertical merger. c. franchising. d. horizontal merger. e. using the internet and IT

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COURSE CONCEPT QUIZ Management 449: Seminar in Strategic Management Spring 2013 8. In which of the following is a firm most likely to lose direct control over value-creation activities? a. b. c. d. e. 9. Merger Acquisition Vertical integration Strategic alliance Outsourcing

If economies of scale are an industry's primary entry barrier, a new entrant's major risk is a. its inability to access labor and materials. b. inferior quality of its products. c. its inability to match the innovation of the established firm. d. its inability to produce sufficient volume. e. its inability to get buyers to switch to its product. Which of the following statements concerning vertical integration is NOT correct? Vertical integration a. can reduce a company's overall cost of production. b. allows a company to circumvent powerful buyers and suppliers. c. can be used to protect a company's investments in proprietary technology. d. is a means of implementing just-in-time inventory systems when suppliers are unreliable. e. facilitates the attainment of economies of scope. The bargaining power of an industry's suppliers is greater when a. the supply industry is fragmented. b. switching costs are high. c. the industry buys in large quantities. d. many substitutes are available. e. firms in the industry can threaten backward vertical integration. The concept of strategic groups suggests that a. a company's major competitors are those in other groups. b. companies within a strategic group have the same rate of return. c. it is easier for a company to move between groups than within a group. d. different strategic groups have different standings with respect to each of Porter's five forces. e. each company in the group pursues a unique basic strategy. 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. d. the industry is stable and there are many capable competitors. e. the industry is stable and barriers to imitation are low. Which of the following is a tactical step for getting down the experience curve ahead of competitors? a. Premium pricing to create an image of uniqueness in consumers' minds b. Pursuing a distinctive competence in focused marketing c. Constructing a manufacturing plant of less than minimum efficient scale d. Using aggressive pricing and promotions to expand sales volume as rapidly as possible e. Making the assembly of the product as complex as possible, because this results in greater learning effects

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COURSE CONCEPT QUIZ Management 449: Seminar in Strategic Management Spring 2013 15. Which of the following factors does NOT lead to slow growth of demand in embryonic industries? a. the poor quality of the first products. b. the lack of complementary products. c. the lack of venture capital for innovative products. d. high production costs of the products. e. the lack of distribution channels for the products. Which of the following is NOT a danger when pursuing a focused strategy? a. competition from differentiators. b. a change in consumer tastes. c. potentially higher manufacturing costs. d. potential loss of customer goodwill. e. changes in technology. Which of the following does NOT cause excess industry capacity? a. widely deployed cost reducing technological developments. b. industry competitive factors. c. new entrants into the industry. d. declining customer demand. e. powerful suppliers. Which of the following statements is generally NOT TRUE of a diversification strategy based on the realization of economies of scope? a. The head office evaluates each business unit as a stand-alone operation. b. The strategy allows a company to realize cost economies from sharing manufacturing facilities, distribution channels, advertising campaigns, and R&D costs among business units. c. The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale. d. Managers must be aware of the costs of coordination. e. The strategy requires close coordination among different business units. 19. When companies find it hard to change their strategies and structures to adapt to changing competitive conditions, they suffer from a. inertia. b. prior strategic commitments. c, barriers to mobility. d, lack of resources. e. lack of capabilities. Which of the following is NOT one of the benefits that first movers enjoy? a. Earlier benefits from economies of scale b. Ability to create customer switching costs c. First to obtain brand loyalty d. Ability to accumulate knowledge about the market e. Lower pioneering costs

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COURSE CONCEPT QUIZ Management 449: Seminar in Strategic Management Spring 2013 21. A competitive advantage is sustainable when a. the advantage was gained at a low cost. b. the firm is able to spread the advantage to all of its business units. c. the advantage is very large. d. the advantage is expected to endure for a long time. e. the managers who developed the advantage will remain employed at the firm. Adam's boss tells him that their company is pursuing a strategy of horizontal integration. Which of the following should Adam expect? His company will a. acquire one of its suppliers. b. buy one of its rivals. c. begin to distribute its own products. d. re-organize into fewer business units. e. centralize all of its support functions. The risk of a price war is greatest in which of the following circumstances? An industry a. experiencing high-growth. b. characterized by falling demand, high exit barriers, and excess productive capacity. c. characterized by a "commodity-type" product, strong demand, and low exit barriers. d. that is mature and experiencing an economic upturn. e. characterized by tacit price agreements. The competitive force of substitute products tends to be stronger when a. buyers view the prices of substitutes as too high. b. buyers face low costs in switching to substitutes. c. the quality and performance of substitutes are relatively low. d. substitutes serve different customer needs from those presently served by industry products. e. buyers face high costs in switching to substitutes. A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies? a. Joint ventures b. New ventures c. Acquisitions d. Long-term contracting e. Taper integration

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