Deck 6: Strategic Choice Options - Business and Functional Levels

Question 1

Strategic Business Unit (SBU) is grouping a firm's similar products/services into meaningful strategic combination.

Answer 1

True

Question 2

Multiple-SBU firm competes with other economy priced lodging establishments within its geographical area.

Answer 2

False

Question 3

In general, Porter suggests that an organization's strategic advantage derives from its ability to satisfy one of its key stakeholders, its suppliers.

Answer 3

False

Question 4

Firms following cost leadership strategy seeks strategic advantage based entirely upon achieving high cost production.

Question 5

Concern for quality is surely a good thing, although too much attention to quality could be disastrous.

Question 6

Cost leadership strategy can be successfully used by companies when their product or service is not very desired by the consumer.

Question 7

An organization following a differentiation strategy seeks to identify and satisfy some market niche, or certain segment of the market.

Question 8

Risk propensity is nothing more than each individual's desire, or willingness, to accept certain degrees of risk comfortably.

Question 9

Both too much risk seeking and risk averse perspective can potentially be dangerous to an organization.

Question 10

Differentiation strategy's primary goal is to satisfy customer needs by providing generic and low cost goods or services.

Question 11

Focus strategy differs from cost leadership and differentiation strategy in terms of its scope.

Question 12

Market segmentation refers to a division of the total target market into relatively heterogeneous subsets.

Question 13

Companies can guarantee success by simply providing a high-tech product in this rapidly changing environment.

Question 14

Managers of the production and operations (POM) are primarily concerned with the "conversion process" of raw materials into a finished good.

Question 15

The variability in the lead time will not influence the amount of safety stock needed for production.

Question 16

Product positioning refers to the perceptions held by consumers about the attributes of a particular product with respect to the competing brands.

Question 17

Economic Order Quantity (EOQ) is an inventory control system, which relates to arranging production so that necessary materials arrive just as they are needed.

Question 18

Just-In-Time (JIT) inventory reduces the amount of raw material inventory, but may necessitate more frequent ordering than the EOQ formula.

Question 19

Just-In-Time (JIT) reduces total inventory holding cost, and hence it is appropriate for all production processes.

Question 20

With respect to inventory control system, finance/accounting function performs two essential activities: acquisition of funds and recording, monitoring, and controlling of the organization's financial results.

Question 21

Financial ratio analysis provides information related to internal and strategic standpoint as indicators of opportunities and threats.

Question 22

Investment decisions are also known as capital budgeting.

Question 23

Financing decisions involve considering where and how the organization should raise additional capital.

Question 24

In many cases, potential creditors would prefer to see a relatively high debt ratio for the borrowing company because of possible liquidation losses.

Question 25

In any firm, nearly all organizational decisions have some impact on their human resources.

Question 26

____________ is a part of any organization that has some identifiable market, competitors within that market, and a specific mission, which is distinct from other parts of the firm.

A) Business level strategy
B) Business unit
C) Single-SBU firm
D) Multiple-SBU firm

Question 27

__________ competes with other economy priced lodging establishments within its geographical area.

A) Business level strategy
B) Business unit
C) Single-SBU firm
D) Multiple-SBU firm

Question 28

The three generic strategies developed by Porter which may be helpful for organizations who wish to compete successfully and profitably includes:

A) Profit leadership, differentiation, and focus
B) Customer leadership, development, and focus
C) Cost leadership, development, and funding
D) Cost leadership, differentiation, and focus

Question 29

Companies following _________ are concerned with differentiating their products or services and making them unique within the industry.

A) Cost leadership strategy
B) Differentiation strategy
C) Focus strategy
D) Cost leadership and focus strategy

Question 30

BMW, Mercedes, and Apple Inc. generally follow _________.

A) Cost leadership strategy
B) Differentiation strategy
C) Focus strategy
D) Cost leadership and focus strategy

Question 31

__________ is often simply not a strategy available to new entrants to a market, unless the process is well developed and well understood.

A) Cost leadership strategy
B) Differentiation strategy
C) Marketing strategy
D) Focus strategy

Question 32

All the following airlines are categorized as low cost carriers except:

A) Air Arabia
B) Flydubai
C) Qatar Airways
D) Jazeera Airways

Question 33

An organization following ___________ strategy seeks to identify and satisfy some market niche, or certain segment of the market.

A) Cost leadership strategy
B) Differentiation strategy
C) Cost and differentiation strategy
D) Focus strategy

Question 34

Companies will occasionally continue to support strategies which are failing to achieve their goal and this can be termed as ___________.

A) Risk Averse behavior
B) Risk Seeking behavior
C) Escalating commitment
D) Risk mitigation

Question 35

___________ deals with the issue of how the organization will go about competing in their particular product/service market.

A) Business unit
B) Single - SBU
C) Multiple - SBU
D) Business level strategy

Question 36

Features of focus strategy include all except:

A) Market segmentation is a core factor.
B) Goal is to meet the demand of the target segment.
C) Low cost objective is a must.
D) Customer loyalty is always attained.

Question 37

____________ is the type of person who would be willing to pursue or take risks in order to resolve problems with uncertain outcomes.

A) Risk seeker
B) Risk avert
C) Risk propensity
D) Risk sharing

Question 38

__________ is a management approach that strives to achieve long-term success through customer satisfaction. All members participate in improving processes, products, services, and the culture in which they work to increase the customer satisfaction.

A) Competitive advantage
B) Customer Relationship Management (CRM)
C) Total Quality Management (TQM)
D) Functional level strategy

Question 39

Features of differentiation strategy includes:
(i) Innovation is a key factor;
(ii) Market research and product development are necessary;
(iii) Low cost objective is a must;
(iv) Market segmentation is a core factor.

A) (i) and (ii) only
B) (i), (ii) and (iii) only
C) (iii) and (iv) only
D) None of the above

Question 40

__________ function deals with identifying new products, new uses for existing products, and new methods of making products.

A) Marketing
B) Research and development (R&D)
C) Distribution
D) Product positioning

Question 41

The time between the initiation and completion of a production process is called __________.

A) Lag time
B) Delivery time
C) Lead time
D) Just in time (JIT)

Question 42

________ is the level of extra stock that is maintained to mitigate risk of stock outs due to fluctuations in demand and supply.

A) Raw material
B) Economic Order Quantity (EOQ)
C) Ending inventory
D) Safety stock

Question 43

Just-in-time inventory (JIT) was first adopted by ________.

A) IBM
B) Toyota Corporation
C) Apple Inc.
D) Ford Motors

Question 44

Benefits from Just-in-time inventory (JIT) include all except:

A) Better utilization of machines and facilities
B) Increased supplier relations
C) Improved product quality
D) Higher production costs

Question 45

Few of the four prerequisite conditions required to achieve optimum benefits from JIT includes:
(i) Stable and level production schedules;
(ii) Large and less focused factories;
(iii) Smaller batch or lot sizes and increased changeover times;
(iv) Non-repetitive manufacturing.

A) All of the above
B) (i) and (ii) only
C) (i) and (iii) only
D) (i) only

Question 46

____________ function could be said to perform two essential activities: the acquisition of funds and the recording, monitoring, and controlling of the organization's financial results.

A) Finance/accounting
B) Marketing
C) Distribution
D) Productions and operations

Question 47

Finance/accounting function is concerned with all the following decisions except:

A) Investment decision
B) Financing decision
C) Hiring decision
D) Dividend decision

Question 48

___________ relates to the determination of the best financing mix or capital structure for the firm.

A) Investment decision
B) Financing decision
C) Hiring decision
D) Dividend decision

Question 49

_____________ involves the issues of the percentage of earnings paid to stockholders, how stable that percentage is to be over time, and the issuance and/or repur?chase of stock.

A) Investment decision
B) Financing decision
C) Shareholder decision
D) Dividend decision

Question 50

_____________ function include decisions that directly affect or influence the people who work for the organization.

A) Investment
B) Human resource
C) Financing
D) Marketing

Question 51

Which has more chances to succeed and sustain its competitive advantage in the current rapidly changing business environment? Single SBU firm or Multiple SBU firm? Elaborate with examples.

Question 52

"Organizations must recognize that in these turbulent, chaotic economic times, strategic advantages of nearly any type may be relatively short-lived." Agree? Disagree? Justify, using relevant examples.

Question 53

Which strategy affects the organization more during a price war? Cost leadership or price leadership? Why?

Question 54

The authors state that cost leadership strategy "can only be successful if the product or service you offer is desired by the consumer." Comment.

Question 55

Identify three challenges and three opportunities for each of these strategies: niche strategy and differentiation strategy.

Question 56

Using concepts from previous chapters, explain the factors a strategist should consider before considering one of Porter's strategic approaches.

Question 57

How can the concept of M&As be related to the concept of risk propensity in strategic decisions?

Question 58

Is it appropriate to say that in case of risk propensity, the phrase "each one to their own" is a part of the strategy formulation for businesses? Justify.

Question 59

"Some industries and occupations tend to encourage greater risk aversion than others." Can organizations minimize the risk of these highly risky industries and occupations? How?

Question 60

Do you think that maintaining ROQ as an integral part of their quality management could sustain the business' competitive advantage? Support your answer with relevant examples.