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Name____________________________________ CSUID__________________________ THIS QUIZ MUST BE TURNED IN WITH YOUR ANSWER SHEET. Answer all questions.
There are a total of 40 questions to answer. Questions 1-37 are worth 2 points Question # 38
is worth 5 points Question #39 is 8 points Question #40 is worth 15 points (100 points in
total).
GOOD LUCK 1. Outsourcing is the:
a. spinning off of a value-creating activity to create a new firm.
b. selling of a value-creating activity to other firms.
c. purchase of a value-creating activity from an external supplier.
d. use of computers to obtain value-creating data from the Internet.
2. Which of the following is NOT a value-creating activity associated with the differentiation
strategy?
a. intensive training programs to improve employee efficiency
b. strong capability in new product development.
c. rapid and timely deliveries to customers.
d. procurement systems focused on finding the highest quality raw materials. 3. A certain marble quarry provides a unique type of marble that is richly colored and strikingly
veined. It has been used for churches and public buildings throughout the world. The
architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of
this marble, and this marble only, for this project. Which of the following statements is most
likely to be true?
a. The cost of the marble will be expensive because of the bargaining power of the supplier.
b. The cost of the marble will be moderate because of the bargaining power of the buyer.
c. The cost of the marble will be moderate because of economies of scale.
d. The cost of the marble will be expensive because of the high strategic stakes involved.
4. The threat of new entrants is increased if:
a. access to distribution channels is hard to gain.
b. economies of scale in the industry are high.
1 c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
5. A river barge company can offer cheaper, although slower, per pound transportation of
products to companies when compared with transportation by air, truck, or rail. The river
barge company should first target customers whose companies use
a. the integrated cost leadership/differentiation strategy.
b. either of the focus strategies.
c. the cost-leadership strategy.
d. any of the strategies except the focused differentiation strategy.
6. To have the potential to become sources of competitive advantage, resources and capabilities
must be valuable, __________, and __________.
a. common, easy to imitate.
b. easy to imitate, difficult to implement.
c. rare, costly to imitate.
d. easy to implement, costly to imitate.
7. Primary activities in the value chain are:
a. the activities most likely to be imitated by competitors.
b. involved in a product's physical creation, its distribution, and its service after the sale.
c. the activities involved when companies are initially established.
d. the activities that the top management team most values. 8. A cost leadership strategy provides goods or services with features that are:
a. acceptable to customers.
b. unique to the customer.
c. highly valued by the customer.
d. able to meet unique needs of the customer.
9. Value chain analysis is a tool used to:
a. analyze a firm's external environment for value-creating opportunities.
b. concentrate on a firm's internal environment without exercising concern about the actions
of those companies with which the firm competes.
c. understand the parts of the firm's organization that create value and those that do not.
d. determine how long an opportunity in a firm's external environment can be expected to
last. 2 10. In 2012 Pets and Vets as Partners, a Philadelphia PA veterinary practice, added PetMedSpa, a
pet weight loss and rehabilitation facility that included the most advanced orthopedic
rehabilitation equipment within 80 miles. Pets and Vets also added new highly trained staff to
run the Spa. By opening the Spa PVP seeks:
a. A competitive advantage
b. Competitive parity
c. To create an entry barrier for new veterinary practices providing boarding
d. To reduce the power of suppliers
11. The value chain divides all activities into two classes as primary and support activities.
Which of the following is NOT a primary activity?
a. Inbound logistics
c. Human resources
b. After sale service
d. Operations
12. Acquisition vs. Alliance is one of the important strategic decision companies make.
Companies should choose acquisition over alliance when….
a. there is high uncertainty about the outcome
b. the risk of opportunistic behavior of potential partner is low
c. company want to get access to soft resources, which are difficult to value
d. the company needs full control 13. Intensity of competition in an industry is usually the most powerful of the five forces. Threat
of “destructive” competition in an industry is lower when
a. there are higher fixed costs
c. there are few switching costs
b. rivals compete on different dimensions
d. firms cannot exit the market easily
14. As seen in Porter's Five Forces model, conditions under which a supplier group can be
powerful include all the following except.
a. lack of importance of the buyer to the supplier group
b. high differentiation by the supplier
c. readily available substitute products
d. dominance by a few suppliers 3 15. Mary, a teenager, gets $8 per hour for babysitting. Steven lives two doors down and turns 15
next month. Mary is worried that Steven may want to start earning extra money by
babysitting, too, and may charge less money. This is a problem of:
a. bargaining power of suppliers
b. rivalry among existing firms
c. threat of new entrants
d. threat of substitutions
16. Southwest Airlines is known for its low fares. In fact, Southwest has lowered its cost base to
the point that it is now cheaper to fly from Los Angeles to Phoenix than it is to take a bus or
rent a car. The decline in Southwest’s cost structure affects the long distance bus industry
(e.g. Greyhound) in terms of …..
a. higher competition within the industry
b. increasing threat of substitute
c. increasing threat of new entrant
d. increasing power of supplier
17. A major pharmaceutical firm recently received FDA approval and patents on a new drug
designed to treat heart disease. What is the most important implication of getting this patent?
a. Increasing competition within the industry
b. increasing threat of substitute
c. increasing entry barrier and lowering threat of new entrant
d. increasing power of buyers 18. Firms in the industry have incurred major costs by purchasing specialized equipment that
cannot be converted to other uses. What is the implication of this for the industry?
a. Powerful buyers
b. High threat of substitute products
c. High bargaining power for suppliers
d. High exit barriers
19. Work is divided into specialized jobs (division of labor) because:
a. It potentially increases work efficiency.
b. Less time is wasted changing from one task to another.
c. Training costs are reduced
d. All of the above
20. Cost reduction is crucial for the low-cost strategy. Which of the following is not a method of
achieving cost reduction?
a. The experience curve.
4 b. Economies of scale.
c. Customization
d. Bulk buying raw materials
21. Which of the following would NOT be a reason for management carrying out a PEST
analysis?
a. to consider how organizational strategy should take account of changes in the outside world
b. to determine strengths of the company
c. to determine the external factors most likely to impact upon the organization
d. to identify potential influences (e.g. trends about consumers) on the future of the organization
22. What is meant by the term 'economies of scope'?
a. Cost reductions arising from the greater sales volumes achieved from serving many market
segments
b. Cost reductions resulting from two or more products sharing the same resources in their
production and/or distribution
c. Cost savings that arise from having more products in the portfolio, thus enabling the firm to
use its larger advertising budget to negotiate lower media costs
d. None of the above 23. Which of the following is the best example of competing on low-cost leadership?
a. a firm produces its product with less raw material waste than its competitors
b. a firm offers more reliable products than its competitors
c. a firm's products are introduced into the market faster than its competitors'
d. a firm's research and development department generates many ideas for new products
24. Companies with an organic structure have a:
a. low specialization.
b. little formalization.
c. decentralized decision making.
d. high level of hierarchy 25: Which of the following is the correct sequence of stages/activities in the strategic
management process?
a. Strategy analysis strategy implementation strategy formulation
b. Strategy formulation strategy analysis strategy implementation
5 c. Strategy analysis strategy formulation strategy implementation
d. Strategy formulation strategy implementation strategy analysis
26: The final realized strategy of a firm is a combination of:
a. deliberate and emergent strategies.
b. deliberate and unrealized strategies.
c. deliberate and differentiation strategies.
d. deliberate and cost-leadership strategies. 27: Environmental scanning involves surveillance of the internal environment of a firm to
predict environmental changes and detect changes already under way.
True False 28: Airlines changing hundreds of fares daily in response to other airlines’ fares would be an
example of competitive intelligence.
True False 29: Gathering competitive intelligence: 6 a. is illegal
b. provides sustainable competitive advantage
c. is considered unethical
d. is a tool for benchmarking 30: Scanning the general environment would identify information on:
a. substitute goods
b. the aging population and ethnic shifts
c. customer and firm bargaining power
d. competitive rivalry 31: In the general environment, many relationships exist among the various elements. General
environmental trends can have positive and negative impacts on various industries. For example,
the aging population might have a ______ impact on the health care industry and a ______
impact on the baby product industry. These are called _____________ impacts.
a. negative; positive; economic
b. positive; negative; economic
c. positive; negative; demographic
d. negative; positive; demographic
32: How many of the following statement(s) is (are) true about Porter’s five forces model?
I. Porter’s five-forces model is designed to help us understand how social attitudes and cultural
values impact U.S. businesses.
II. Porter’s five-forces model helps to determine the profit potential for an industry.
III. A buyer group is more powerful when it purchases large volumes relative to seller sales.
a. 0 b. 1 c. 2 d. 3 7 33: A supplier group will have little power when:
a. The supplier group is dominated by a few companies
b. The supplier product is an important input to the buyer’s business
c. Both of the above
d. None of the above 34: Which of the following statement(s) is (are) false?
a. According to Porter’s five forces analysis, rivalry will be less intense when industry growth is
low.
b. The same environmental trend or event may have a very different impact on different strategic
groups within the same industry.
c. Both of the above
d. None of the above 35: Which of the following firms would likely pose the least competitive threat?
a. a firm in the same industry and in the same strategic group
b. a competitor to your product where a high switching cost exists
c. a firm that produces substitute goods to your product line
d. a firm in the same industry and in the nearest strategic group looking to join your group 36: Which of the following is always considered as a support activity in the value chain analysis?
a. Inbound logistics
b. Customer service
d. None of the above c. Technology development 8 37: Campbell Soup uses an electronic network to facilitate its continuous-replenishment program
with its most progressive retailers. This is known as an operations primary activity in the value
chain.
True False 38: (5 points): Define what an ecosystem is. Please give me a set of examples for each from an
ecosystem you identify. What is the difference between compartments and complements while
pursuing a network strategy during building an ecosystem? 39: Short answer question (8 points): Imagine that you are the CEO of a publicly traded
organization (e.g., Chevron, Exxon Mobil) that operates in the oil & gas. Due to the declining
crude oil price and intense competition, the industry growth is declining in your industry. In
addition, and your industry is subject to several criticisms from media and or even politicians
that encourage renewable energy uses. As the CEO, what would you do to regain the support of
several stakeholders such as the community at large and the disappointed stockholders whose
returns have substantially declined. Please write two steps that you would take.
Step #1: Step #2: 9 40: Short answer question (13 points): Imagine that you are a strategic management consultant
to a firm who is struggling to maintain its competitive advantage. If you had to perform an
internal analysis as a consultant to this firm, which frameworks would you choose and why?
How are these different frameworks connected? Please justify your answer. 10
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