Deck 6: Defining the Organizations Strategic Direction

Question 1

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

Answer 1

False

Question 2

Mr.Crunchy Inc.is a firm experiencing severe losses.However,with large initial investment in manufacturing equipment and infrastructure,the firm is finding it difficult to abandon the industry.According to Porter's five-force model,the company is facing a(n):

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

Answer 2

B

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

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

Question 5

According to 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 6

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

Question 7

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

Question 8

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

Question 9

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.

Question 10

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

Question 11

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 12

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 for customers.
C) It is often used in practice to assess a specific firm's external environment.
D) It states that oligopolistic industries are less competitive if firms choose to engage in price wars.

Question 13

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 14

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

Question 15

Ceramic Customs Corp.required a specific type of ceramic to make its tiles.Since there was only one supplier for that particular ceramic,the firm was forced to source all of its supplies from it.The firm tried negotiating the price of the material but failed to get any reduction on the cost.This was because:

A) the supplier had more bargaining power than the firm.
B) the supply was unlimited.
C) the supply exceeded the demand.
D) the industry had barriers to entry.

Question 16

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

Question 17

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

Question 18

Ammunition can be considered a complement for firearms.

Question 19

According to Porter's five-force model,if suppliers of a particular good are very abundant,_____.

A) their bargaining power will be less
B) their level of differentiation will be very high
C) their level of vertical integration in the industry will be high
D) their annual employee turnover rates will be less

Question 20

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

Question 21

Scripts & Scrolls Corp.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 suppliers.
C) threat of substitutes.
D) vertical integration of buyers.

Question 22

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) Hand-woven fabrics made by local shops
C) Chipset manufacturing machine bought by an electronics company
D) A distiller used to make malt liquor

Question 23

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 24

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

A) transactional costs
B) monopoly costs
C) marginal costs
D) switching costs

Question 25

The Corner Shop Corp.is a leading supermarket chain 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 that the firm adheres to labor laws

Question 26

Socially complex resources are:

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 making them easily imitable.

Question 27

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 28

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

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

Question 29

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

A) vertical integration.
B) strategic intent.
C) monopoly rent.
D) supplier bargaining power.

Question 30

What properties must resources have to be a potential source of sustainable competitive advantage?

Question 31

The relationship between a _____ resource and the outcome it produces is poorly understood.

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

Question 32

Sam's Sugar Corp.,a leading cane sugar manufacturer,faces a threat of going out of business when a rival company introduces 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 33

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

Question 34

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 35

Ample Espresso Corp.is a coffeehouse located across from Tian's Kitchen,a restaurant.According to Porter's five-force model,the services and products provided by both are most accurately classified as:

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

Question 36

What are core competencies?

Question 37

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 38

Piezo Tech Solutions supplies hospitals with software to track insurance claims.As 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 39

Explain the influences on the threat of potential entrants into a market according to Porter's five-force model.

Question 40

Perfecto Espresso Corp.is a chain of coffee shops in the United States.Earlier it used to source its coffee from several coffee suppliers.However,recently it started its own coffee plantation to supply its coffee shops.This is an example of:

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