Question 1

Identify the project for which governmental funding is most critical.

Accepted Answer

A)   a project to launch a new, low-cost car
B)   a scheme to improve the financial status of a company
C)   a research project on hybrid oil
D)   an infrastructure project that should be completed in one year C

Question 2

Which of the following is a valid observation on price-based rivalry among existing competitors?

Accepted Answer

A)   It is damaging for the competitors and the industry in which they operate.
B)   It leads to quality-based competition and innovation.
C)   It results in hidden losses for the customers.
D)   It decreases the price sensitivity of customers. A

Question 3

What are switching costs?

Accepted Answer

Switching costs are the costs customers incur when they change suppliers. Royalty programs and initial costs, among other strategies, increase the costs of switching. For example, switching costs are high in the software industry.

Question 4

Roland Inc. is a fashion apparels retailer in the U.S. It wants to measure how its investment is helping create value in comparison with its competitors. Which of the following metrics used by Roland can be classified as a benchmark in this scenario?

Accepted Answer

A)   the number of leaves taken by employees
B)   the total number of brand outlets
C)   the average number of sales made per day
D)   the number of customers on a sales promotion list

Question 5

Explain the power of suppliers with an example.

Accepted Answer

The answer of Explain the power of suppliers with an...

Question 6

Which of the following is a shortcoming of the extended value chain?

Accepted Answer

A)   It is difficult to allocate responsibility in the event of a mishap.
B)   It reduces the strategic advantages offered by a shorter chain.
C)   It alienates customers by not taking their opinions into account.
D)   It cannot be expanded beyond the support activities of a company.

Question 7

How can a company avoid the trap of competing only on price?

Accepted Answer

A)   by keeping the price at a level higher than the competitors
B)   by following a pricing strategy inconsistent with the market equilibrium
C)   by differentiating the products or services that it offers
D)   by selling at a price much lower than the competition

Question 8

Which of the following best illustrates the strategic use of IT?

Accepted Answer

A)   maintaining the IT systems of a company
B)   establishing a data center to store key information
C)   transforming the business model of an organization
D)   licensing the software that a company will use

Question 9

Which of the following statements is true about the use of IT in nonprofit organizations?

Accepted Answer

A)   Nonprofit organizations have no shareholders and do not require a dedicated IT strategy.
B)   Nonprofit organizations do not require significant IT support unless they are transformational in nature.
C)   Nonprofit organizations need IT support and strategy to achieve their objectives.
D)   Nonprofit organizations need not invest in IT if their organization objectives are not directly related to IT.

Question 10

Which of the following statements is true of a strategic enabler?

Accepted Answer

A)   It enables research and innovation in an organization.
B)   It reduces expenses in the day-to-day operations of a business.
C)   It transforms a business or helps build a new business model.
D)   It differentiates a product or services from a competitor's offerings.

Question 11

"Total value transfer of tangible goods happens at the point of sale." Which of the following statements contradicts this judgment?

Accepted Answer

A)   The drive to reduce costs can lead to ethically questionable decisions.
B)   Events in the external parts of the chain can also offer strategic opportunities.
C)   The value chain does not end when the buyer pays for the product or service.
D)   As the extended value chain lengthens, responsibility for harmful consequences becomes more diffuse.

Question 12

Which of the following is true of creative destruction?

Accepted Answer

A)   It makes use of illegal innovations and techniques to displace established businesses.
B)   It presents newcomers with an opportunity to succeed against incumbents in an industry.
C)   It happens when technologies that provide process-streamlining advantages come to the fore.
D)   It increases the operational costs of the entire industry and reduces profits.

Question 13

Which of the following is true of IT spending in an organization?

Accepted Answer

A)   Increased IT spending is usually associated with investor dissatisfaction and reduces companies' market value.
B)   The funds used to run a business are mainly for the kinds of IT resources that now fall into the commodity category
C)   Since IT is only an operational requirement and not a strategy enabler, companies should seek to reduce IT spending.
D)   Organizations should spend money on things that create a comparative advantage rather than on IT.

Question 14

A substitute poses a greater threat when it ________.

Accepted Answer

A)   operates in a different market in comparison with the focal product
B)   has a similar nature to the focal product but operates in a different target market
C)   provides the same focal product or service through different means
D)   does not directly impact the profitability of another product or service

Question 15

"The information and communications technology (ICT) component is at the very heart of the company's competitive advantage." Which of the following statements is the most accurate justification of this claim?

Accepted Answer

A)   Companies benefit from the cost savings made possible through information systems.
B)   Cost of implementing technology has increased over a period of time.
C)   Most businesses are involved in the sale of technical or technological services.
D)   Established players in a market favor creative destruction over sustaining technologies.

Question 16

Durall is a leading manufacturer of decorative crafts in Canada. Which of the following, if true, will indicate that the threat of new entrants is high for Durall?

Accepted Answer

A)   Durall has a patent for its manufacturing process.
B)   The crafts that Durall manufactures are low-priced.
C)   The process of manufacturing the crafts is labor intensive.
D)   The decorative crafts industry is capital intensive.

Question 17

Which of the following is commonly used by organizations to influence the operation of Porter's five forces?

Accepted Answer

A)   evasion of taxes
B)   selling at prices below the existing market price
C)   lobbying for governmental action
D)   selling at prices above the existing market price

Question 18

According to Porter's model, cost of transportation is one of the five forces that influence industry competition.

Accepted Answer

A) True 
 B)False

Question 19

Competition is not severe in the telecommunication industry in Brazil. More than ninety percent of the market is dominated by four large players. Which of the following will increase the rivalry among these four players?

Accepted Answer

A)   a government regulation hindering the entry of new players
B)   a significant slowdown in market growth
C)   a decision by one of the dominant players to launch its products in Argentina
D)   a ban on Internet telephony

Question 20

List Porter's five forces.

Accepted Answer

The answer of List Porter's five forces....

Exam 2: Information Systems and Strategy