Deck 6: Defining the Organizations Strategic Direction

Question 1

Ammunition can be considered a complement for firearms.

Answer 1

True

Question 2

According to Porter's five-force model,the degree to which a firm relies on one or a few suppliers will influence its ability to negotiate good terms.

Answer 2

True

Question 3

When demand is increasing,there is less revenue to go around and firms will experience more competitive pressure.

Answer 3

False

Question 4

A strategic stakeholder analysis emphasizes the stakeholder management issues the firm ought to attend to due to their ethical or moral implications.

Question 5

A firm's emphasis on a scientific discipline that is central to its core competency can make the firm less attractive to individuals from other disciplines.

Question 6

Low exit barriers intensify rivalry by making firms reluctant to abandon the industry.

Question 7

In general,the more firms competing that are of comparable size,the more competitive the industry will be.

Question 8

According to Porter's five-force model,the threat of potential entrants is influenced by the height of entry barriers.

Question 9

If a firm's product is undifferentiated,buyers will typically experience lesser bargaining power.

Question 10

The Weekly News bought the paper mill that supplied paper for printing its magazine.This is an example of horizontal integration.

Question 11

A firm's strategic intent helps in the development of new businesses and markets.

Question 12

Resources of a tangible nature that can be readily codified are called tacit resources.

Question 13

According to Prahalad and Hamel,a company that has identified 30 capabilities knows its core competencies.

Question 14

A music downloading software and an MP3 player are substitutes for one another.

Question 15

Dynamic capabilities enable firms to quickly adapt to emerging markets or major technological discontinuities.

Question 16

In Prahalad and Hamel's model,it is possible for a firm to develop core competencies to a set of abilities that enable it to quickly reconfigure its organizational structure and routines in response to new opportunities.

Question 17

Formulating a technological innovation strategy first requires an accurate appraisal of where the firm currently is.

Question 18

The combination and harmonization of multiple abilities make core competencies difficult to imitate.

Question 19

Path dependency refers to those abilities that make a firm more agile and responsive to change.

Question 20

According to Porter's value chain,firm infrastructure is a primary activity.

Question 21

Prahalad and Hamel use the term _____ to refer to a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace.

A) primary activities
B) tacit resources
C) socially complex resources
D) core competencies

Question 22

According to Porter's five-force model,the more suppliers there are,providing similar supplies to a particular industry:

A) the less powerful those suppliers will be.
B) the more powerful those suppliers will be.
C) the higher is the level of vertically integration in the industry.
D) the less powerful buyers will be.

Question 23

Scripts & Scrolls Co.supplies printing paper to select publishing houses.When its customers asked for a discount in the cost of supplies,the company had to oblige fearing that the customers might withdraw pending contracts.This shows the increased:

A) bargaining power of buyers.
B) bargaining power of sellers.
C) threat of substitutes.
D) vertically integration of buyers.

Question 24

Sam's Sugar Co.is a leading cane sugar manufacturer.The company faced a threat of going out of business when a rival company introduced a zero-calorie sweetener to replace the high-calorie cane sugar.According to Porter's five-force model,the two products are:

A) complements.
B) supplements.
C) intermediates.
D) substitutes.

Question 25

Allure Fabrics supplied cotton,linen,and silk fabrics to various designer wear boutiques in and around Florida.The firm recently launched a boutique in Florida,under its brand name,which sells women's fashion apparel.Allure Fabrics is practicing:

A) forward vertical integration.
B) backward vertical integration.
C) horizontal integration.
D) substitution.

Question 26

Ceramic Customs Co.requires a specific type of ceramic to make custom-made tiles.Since only one supplier makes that particular ceramic,the firm is forced to source all of its supplies from it.The firm tried negotiating the price at which it purchases the material,but failed to get any reduction on the cost.This is because:

A) the supplier has more bargaining power than the firm.
B) the supply is unlimited.
C) the supply exceeds the demand.
D) the industry has barriers to entry.

Question 27

According to Michael Porter's model of a value chain,which of the following is a support activity?

A) Accounting activities
B) Outbound logistics
C) Marketing
D) Inbound logistics

Question 28

A resource can be extremely difficult to imitate if:

A) it can be readily codified in written form.
B) it is not path dependent.
C) it arises through the complex interaction of multiple people.
D) it is clear how the resource gives rise to value.

Question 29

Factors that make it difficult or expensive to change suppliers or buyers are referred to as _____ costs.

A) transactional
B) opportunity
C) marginal
D) switching

Question 30

Perfecto Espresso is a coffeehouse located opposite Ching's Kitchen,a restaurant.According to Porter's five-force model,the services and products provided by both are most likely to be classified as:

A) complements.
B) competitors.
C) substitutes.
D) intermediates.

Question 31

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

A) It states that the attractiveness of an industry is unaffected by the industry's degree of rivalry.
B) It fails to acknowledge the role of substitutes.
C) It is often used, in practice, to assess a specific firm's external environment.
D) It emphasizes the stakeholder management issues that are likely to impact the firm's financial performance.

Question 32

Andrew is a gifted musician,with an instinctive knack for composing tunes that catch the public's imagination.The means by which he has does this is unclear and cannot be defined.This makes him a _____ resource.

A) socially complex
B) causally ambiguous
C) logistically outbound
D) logistically inbound

Question 33

According to Porter's five-force model,if a buyer can threaten to backward vertically integrate,it will:

A) decrease the buyer's bargaining power.
B) increase the buyer's bargaining power.
C) increase the supplier's bargaining power.
D) lower the threat of entry into the industry.

Question 34

Many people dream of opening their own restaurant someday and restaurant supply houses provide easy finance options for equipment purchases.Also,a high growth is projected for the restaurant industry sector.According to Porter's five-force model,this is one of the reasons why the _____ in this industry is so high.

A) failure rate
B) exit barrier
C) threat of potential entrants
D) technological breakthrough

Question 35

Mr.Crunchy Inc.is a firm that manufactures potato chips.With more and more people becoming health conscious,it made no profit in the last quarter.But with large initial investment,factories,and the high-technology chips-making machines,the firm found it difficult to abandon the industry.According to Porter's five-force model,the company was facing a(n):

A) vertical integration.
B) exit barrier.
C) horizontal integration.
D) substitute threat.

Question 36

Socially complex resources refer to:

A) resources or activities that emerge through the interaction of multiple individuals.
B) resources that cannot be defined in terms of a numerical value.
C) resources that require public sanction in order to be utilized for profit-making purposes.
D) resources that are shared by different parties thereby necessitating the need for legal intervention.

Question 37

Perfecto Espresso is chain of coffee shops in the United States.Earlier it used to source its coffee from several coffee manufacturers.However,recently it started a coffee manufacturing firm under its own brand name.This is an example of:

A) forward vertical integration.
B) backward vertical integration.
C) horizontal integration.
D) substitution.

Question 38

Which of the following is an example of a socially complex resource?

A) A team of graphic designers who combine their skills to create products.
B) A food preservation technology that is available to most firms in the industry.
C) A pharmaceutical firm which acquires land at a subsidized price from the government.
D) A restaurant that procures its raw materials from a local market.

Question 39

Which of the following would be an example of a tacit resource?

A) An oddsmaker who works for a large casino in Las Vegas and is correct 95 percent of the time.
B) A boutique purchases hand-woven fabrics from local shops.
C) A retail shoe chain that has prime locations in 200 malls across the country.
D) A flashy ad campaign for a malt liquor.

Question 40

The Corner Shop is a leading supermarket in Chicago.According to Michael Porter's model of a value chain,which of the following activities of the firm is a primary activity?

A) A training session for the floor attendants at The Corner Shop outlets.
B) An advertising campaign for a new The Corner Shop outlet.
C) The accounting function at The Corner Shop outlets.
D) The hiring of lawyers to ensure the firm adheres to labor laws.

Question 41

What are core competencies?

Question 42

Recently,three cell phone companies announced the addition of a nationwide "walkie-talkie" service to supplement their regular cell phone service.Will this be a sustainable competitive advantage? Justify your answer.

Question 43

Even though many aerospace manufacturing firms are very profitable,there are very few upcoming firms.Explain the reason using Porter's five-force model.

Question 44

Explain the advantages and disadvantages of rewarding and promoting development of the core competency.

Question 45

What is the danger of not having a strategic intent? In your answer,assume your company operates a hospital in a city with a population of 30,000 people,located about 50 miles away from a large city.

Question 46

How can core competencies be leveraged more effectively?

A) By encouraging exchange of resources across strategic business unit boundaries
B) By binding managers too closely to their respective business units
C) By utilizing the same resources for all types of projects
D) By viewing individuals as being employed by a particular strategic business unit

Question 47

Piezo Tech Solutions supplies hospitals with software to track insurance claims.Since insurance regulations and policies are always changing,its software needs to have the ability to be agile and responsive to change.In other words the software needs:

A) dynamic capabilities.
B) tacit resources.
C) rigid competencies.
D) to be path dependent.

Question 48

Which of the following statements is true of core competencies?

A) A firm's core competency refers to a single ability.
B) A firm's core competency is more than just a core technology.
C) An individual business unit has only one core competency.
D) A firm's core competency is usually easy to imitate.

Question 49

When Western Franchise Services announced that its plans to go international in the next 15 years,it stated its:

A) core competence.
B) inventory of capabilities.
C) strategic intent.
D) supplier bargaining power.

Question 50

When Faslow Medical Center changed its name to Faslow Hospital,it also unveiled a plan to build a medical tower doubling its physical facilities by 100% within the next 10 years.It also announced that its goal was to not only serve Exeter County,but the entire region including the 5 contiguous counties.This is an expression of:

A) vertically integration.
B) strategic intent.
C) core competencies.
D) supplier bargaining power.