Deck 5: Business-Level Strategy

Question 1

Which of the following is an example of a weakness in an organization's SWOT analysis?

A) Competitors with highly skilled employees
B) Money spent on machineries with updated technology
C) Over-dependence on a particular supplier for core materials
D) The increasing number of competitors

Answer 1

C

Question 2

Rivalry among existing competitors is more when:

A) fixed costs are low,and marginal costs are high.
B) exit barriers are low.
C) industry growth is slow.
D) the product is not perishable.

Answer 2

C

Question 3

Which of the following barriers to entry occurs when a buyer's willingness to pay for a product increases as the number of other buyers for the industry's product increases?

A) Supply-side economies of scale
B) Restrictive government policy
C) Demand-side benefits of scale
D) Customer switching costs

Answer 3

C

Question 4

Which of the following forces of the five-forces model will exemplify Wal-mart's ability to buy products from its suppliers at rock-bottom prices?

A) Bargaining power of suppliers
B) Bargaining power of customers
C) Rivalry among existing competitors
D) Threat of substitutes

Question 5

_____ is a tool that allows managers to take a snapshot of their firm's internal strengths and weaknesses as well as the opportunities and threats that are evident in the external environment.

A) Trend analysis
B) Environmental scanning
C) Stakeholder mapping
D) SWOT analysis

Question 6

Which of the following is the best example of a barrier to entry created by a firm's incumbency advantages?

A) A company with superior technology when compared to its competitors
B) A company engaging in extensive advertising to gain consumer loyalty
C) A company that is marked by overcrowded distribution channels
D) A company which manufactures its products in high volumes

Question 7

Which of the following statements is true about the strategies of competitive advantage?

A) A company that engages in a differentiation strategy aims to provide a product at as low a price as possible to a broad audience.
B) In a low-cost focus strategy,a firm attempts to target customers with special needs who have been underserved historically.
C) In a differentiation strategy,a firm seeks to be unique in its industry along a group of dimensions that are valued by consumers.
D) In a cost leadership strategy,the manager must pursue just a single source of lowcost
Advantage to compete effectively.

Question 8

Which of the following statements is true about Porter's five-forces model?

A) The level of threat of entry from competition is generally the same across all industries.
B) Every industry is different in terms of who maintains the power in the firm-supplier relationship.
C) The buyer or customer has no power to force down prices in an industry.
D) Not all companies face the threat of substitutes.

Question 9

Which of the following is one of the generic strategies through which a manager can create a firm's competitive advantage?

A) Global strategy
B) Market-entry strategy
C) Transnational strategy
D) Differentiation strategy

Question 10

In conducting its SWOT analysis,a baseball team notes that most of its players are among the best in the world and that their coach was a distinguished major-league player.Which part of the SWOT analysis is this information pertinent to?

A) Strengths
B) Weaknesses
C) Opportunities
D) Threats

Question 11

John signed a two year contract with Z-Gadget to get a subsidized price on his new iPhone.He had Z-Gadget's service for only 6 months and has been dissatisfied with its service and wanted to cancel the contract.However,he did not do so because he will have to spend a lot for canceling his Z-Gadget contract and signing up for another alternative.Which of the following characteristics of a powerful supplier group does Z-Gadget have with respect to its contract with John?

A) The supplier industry is more concentrated than the industry it sells to
B) Industry participants face switching costs in changing suppliers
C) Suppliers offer differentiated products
D) No substitutes exist for what the supplier group provides

Question 12

A cosmetics company owns a patent for particular kind of shampoo which is a bestseller in the market.It enables the firm to extract a high level of discretion over product pricing.The patent for the shampoo is an example of a firm's _____ resource.

A) tangible
B) human
C) natural
D) intangible

Question 13

The most recognizable resources that a firm uses to manufacture its products,such as raw materials and computing systems,are categorized as _____ resources.

A) tangible
B) human
C) intangible
D) natural

Question 14

Which of the following statements best describes competitive advantage?

A) It refers to the pressure a supplier or buyer can exert on a company.
B) It is the advantage that occurs when a firm offers products to all customers at higher prices.
C) It derives from a firm's ability to create value for its customers that exceeds the cost of producing the product or service.
D) It is the capability to identify and react to changes in the external environment and to mobilize internal resources to deal with those changes.

Question 15

In a differentiation focused approach,a firm attempts to target:

A) cost-conscious customers who have been underserved historically.
B) customers of a firm's competitors in an attempt to increase sales.
C) loyal customers who have been buying a company's products regularly.
D) customers with special needs who have been underserved historically.

Question 16

Which of the following is one of the fundamental questions a manager must answer in developing a business-level strategy?

A) Who do we serve?
B) Who are our competitors?
C) What are our objectives?
D) Where to do business?

Question 17

Which of the following statements is a drawback of Porter's 5-forces model?

A) It cannot be used to evaluate the structural components of an industry.
B) This tool is particularly not useful in helping managers decide where to focus.
C) Evaluating the attractiveness of industries and developing business-level strategy is seldom possible.
D) The 5-forces model typically looks at an industry at one point in time.

Question 18

Which of the following refers to the cost savings achieved when the volume of a product produced by a firm enables it to reduce per unit cost?

A) Economies of scale
B) Return on equity
C) Demand-side benefits scale
D) Tangible resources

Question 19

Supply-side economies of scale arise:

A) when a buyer's willingness to pay for a product increases.
B) when the demand for a firm's product keeps fluctuating.
C) when the number of buyers for a firm's product decreases.
D) when a firm manufactures products in high volumes.

Question 20

Which of the following statements,if true,is a characteristic of a powerful customer group?

A) The group purchases in lesser volumes relative to the supplier
B) The industry's products are clearly differentiated
C) Buyers can integrate backwards to produce the industry's product
D) Buyers face high switching costs in changing vendors

Question 21

A supplier will tend to be powerful when industry participants do not face switching costs in changing suppliers.

Question 22

Outline the features of SWOT analysis.

Question 23

Define value chain analysis.Discuss the two activities of value chain analysis.

Question 24

Supply-side economies of scale arise in situations where a buyer's willingness to pay for a product increases as the number of other buyers for the industry's product increases.

Question 25

In a focus strategy,a firm seeks to be unique in its industry along a dimension or a group of dimensions that are valued by consumers.

Question 26

Which of the following belongs to the primary activities of a firm's value chain?

A) Technological development
B) Human resource management
C) Firm infrastructure
D) Marketing and sales

Question 27

Describe the three strategies of competitive advantage.

Question 28

The idea that a firm is a collection of resources is often referred to as the resource-based view of the firm.

Question 29

Briefly describe the 5-forces model.

Question 30

In setting business-level strategy,a manager evaluates the firm's internal resources to determine how to compete.

Question 31

A buyer will tend to have less power relative to the supplier when the buyer purchases in very large volumes.

Question 32

_____ analysis separates a firm into its various activities to better understand total costs in the system and potential sources of firm differentiation.

A) SWOT
B) Value chain
C) Stakeholder
D) Trend

Question 33

What are the tangible and intangible resources of an organization? Give examples.

Question 34

A substitute could be a competitor's product or some other product that satisfies the same consumer need.

Question 35

Managers must view the firm's value chain in the context of a larger value system that includes the value chains of suppliers and distribution channels.

Question 36

The 5-Forces Model is one of the most important tools for evaluating the attractiveness of industries.

Question 37

First-mover advantage occurs when a firm is first to offer desirable products or services that secure customer loyalty.

Question 38

Primary activities of a firm's value chain refers to:

A) the activities completed to improve a firm's product and the processes used to manufacture it.
B) the activities involved with recruiting,hiring,training,developing,and compensating all personnel.
C) the activities such as general management,planning,finance,accounting,legal support,and governmental relations.
D) the activities involved in the physical creation of a product and its sale and transfer to the buyer.

Question 39

Which of the following belongs to the support activities of a firm's value chain?

A) Marketing
B) Procurement
C) Logistics
D) Service

Question 40

Which of the following firm's can be referred to as being "stuck in the middle"?

A) A firm that masters both low-cost and differentiation focused approach
B) A firm that employs only a single strategy to achieve competitive advantage
C) A firm that engages in numerous strategies but fails to master any one
D) A firm that is in the second stage of strategy formulation