Deck 3: Strategy and Information Systems

Question 1

Porter defines value as the amount of money that a customer is willing to pay for a resource, product, or service.

Answer 1

True

Question 2

A business that selects a differentiation strategy would naturally structure itself around low-cost activities.

Answer 2

False

Question 3

Inbound logistics is a supporting activity in the value chain of a manufacturing firm.

Answer 3

False

Question 4

Organizational strategy begins with the formation of a value chain.

Question 5

According to Porter's five forces model, the intensity of each of the forces determines the characteristics of the industry, how profitable it is, and how sustainable that profitability will be.

Question 6

A generic value chain consists of five primary activities and four support activities.

Question 7

A furniture dealer offering a wide variety of designs to premium customers alone is following an industry-wide cost leadership strategy.

Question 8

The bargaining power of suppliers is a weak force when considering the example of students purchasing gasoline.

Question 9

A telecom service provider focusing on high-end users is following an industry-wide differentiation strategy.

Question 10

A major drawback associated with Porter's five forces model is that it ignores the rivalry among firms in the industry.

Question 11

The bargaining power of grain farmers in a surplus year is an example of a weak market force.

Question 12

The bargaining power of customers of medicinal drugs is enhanced when pharmaceutical companies patent their products.

Question 13

A business with a differentiation strategy will add cost to an activity only as long as the activity has a positive margin.

Question 14

Focused differentiation refers to providing a better product or service within an industry segment.

Question 15

An organization's goals and objectives are determined by its competitive strategy.

Question 16

The difference between the value that an activity generates and the cost of the activity is called revenue.

Question 17

Activities such as collecting, storing, and physically distributing the product to buyers are considered as primary activities in a value chain.

Question 18

An organization responds to the structure of its industry by choosing a competitive strategy.

Question 19

Providing the lowest cost across an industry can be referred to as focused cost-leadership.

Question 20

A major drawback of the five forces model is that it does not analyze the threat of substitutes when forming a corporate strategy.

Question 21

A service company asks its customers to fill out application forms before offering service.This is an example of a supporting business process.

Question 22

Operations refer to transforming inputs into the final product.

Question 23

Streamlining of business processes to increase margin is key to obtaining competitive advantage.

Question 24

Support activities in a value chain include the processes of finding vendors, setting up contractual arrangements, and negotiating prices.

Question 25

Each stage of the generic value chain accumulates costs and adds value to the product.The net result of this process is the total margin of the chain.

Question 26

The central idea of business process design is that organizations should automate or improve their existing functional systems.

Question 27

Unlike the primary activities, the support activities in the generic value chain do not contribute to the production, sale, and service of the product.

Question 28

The cost of the business process is the cost of the inputs plus the cost of the outputs.

Question 29

A furniture manufacturer delivers products to its customers' houses.This is an example of inbound logistics.

Question 30

Outbound logistics refer to transforming inputs into the final product.

Question 31

Each activity in a business process is a business function that receives inputs and produces outputs.

Question 32

In the inbound logistics activity of a value chain, the manufacturer receives, stores, and disseminates inputs to the product.

Question 33

The sales process involves sales and marketing as well as outbound logistics activities.

Question 34

The primary activity of sales and marketing is the collection, storage, and physical distribution of the products to the buyers.

Question 35

A linkage is a network of activities that generate value by transforming inputs into outputs.

Question 36

An inventory of raw materials is an example of a repository.

Question 37

In the value chain, the primary activity of customer service is concerned with inducing the buyers to purchase the product and providing a means for them to do so.

Question 38

Most process design initiatives require people to work in new ways and to follow different procedures.

Question 39

Most of the value in a service company is generated by the customer service activities rather than operations and sales.

Question 40

In a manufacturing business, the materials ordering process transforms cash into a raw materials inventory.

Question 41

Creating a new product to add value to customers is an example of using product implementations to achieve competitive advantage.

Question 42

An organization minimizes the costs associated with the delivery of its products to obtain a competitive advantage.Here, the organization is using a product implementation tactic to obtain competitive advantage.

Question 43

According to Porter's five forces model, which of the following would be most affected by the threat of substitutes?

A) Microsoft Windows OS
B) Boeing jets
C) Southwest Airlines' services
D) Google Adwords

Question 44

The competitive strategy of locking in customers is called establishing high switching costs.

Question 45

A group of grain farmers in a surplus year will have reduced ________.

A) bargaining power
B) threat of substitutes
C) risk of rivalry
D) threat of new entrants

Question 46

The increasing reliance on the Web for information and commerce has created a digital divide between those who have Internet access and those who do not.

Question 47

Bargaining power of customers is likely to be the highest for markets involving ________.

A) public transportation
B) industrial products
C) patented drugs
D) luxury goods

Question 48

A new drug that has shown promise in curing lung cancer has been discovered by a famous chemical laboratory.This is the only drug effective for treatment of this disease.The laboratory obtains a patent for the product and decides to sell it.This situation is characterized by ________.

A) low threat of substitutions
B) high bargaining power of customers
C) high threat of new entrants
D) low bargaining power of suppliers

Question 49

Porter's five forces model is used to assess ________.

A) industry structure
B) market share
C) internal competition
D) lifecycles of products

Question 50

According to Porter's five forces model, which of the following firms would be least affected by the threat of substitutes?

A) a used car dealership in New York
B) a convenience store that sells retail products
C) a firm that sells the only drug for a disease
D) corner latte shops in Atlanta

Question 51

In which of the following would rivalry be considered as a weak force affecting the market?

A) military services
B) used car dealers
C) book sellers
D) packaged food manufacturers

Question 52

The automobile industry is characterized by many manufacturers and intense competition among them.This statement refers to ________.

A) low threat of substitutions
B) high bargaining power of suppliers
C) high levels of rivalry
D) low bargaining power of customers

Question 53

Information systems create competitive advantage by providing support to a product rather than by becoming a part of the product.

Question 54

An organization is using product implementation to achieve competitive advantage when it tries to reduce operational costs.

Question 55

Organizations cannot gain a competitive advantage by enhancing existing products or services.

Question 56

Organizations can lock in customers by making it difficult or expensive for them to move to another product.

Question 57

Which of the following factors determines the structure, features, and functions of the information system used in a company?

A) the competitive strategy
B) the brand value of its brands
C) the size of the company
D) the technology used by competitors

Question 58

Business processes that span value-generating activities determine the scope and requirements of each organization's information systems.

Question 59

In which of the following situations would the bargaining power of suppliers be highest?

A) a single vendor providing raw materials to many department stores
B) a fashion outlet catering to a niche market
C) a bank liquidating during a fire sale
D) a large retailer buying goods from many small suppliers

Question 60

Establishing alliances with other organizations increases the cost of operations, though they do provide competitive advantages.

Question 61

N-joi Ice Cream was facing competition to their flagship brand of "black currant ice cream".The competitor began offering three varieties of "black currant ice cream." N-joi decided to counter the threat by introducing five new varieties of ice creams.Which competitive strategy is N-joi implementing?

A) cost leadership
B) product differentiation
C) cost differentiation in the segment
D) service focus

Question 62

According to Porter's model of business activities, interactions across value activities are called ________.

A) support activities
B) models
C) linkages
D) cross-functionalities

Question 63

ABC Motors is the largest manufacturer of cars.The company purchases raw materials from many small-sized sellers across the globe.In this case, ABC Motors ________.

A) faces very low threat of substitute products
B) has high bargaining power over its suppliers
C) faces very low threat of new entrants to market
D) has very high bargaining power over its customers

Question 64

Which of the following is a primary activity in the value chain?

A) receiving and disseminating inputs to the product
B) negotiating prices with vendors
C) finding suitable vendors to supply raw materials
D) setting up contractual arrangements with various suppliers

Question 65

Focused cost leadership is observed when a product has the lowest cost ________.

A) within an industry segment
B) within the product range offered by a company
C) within an industry
D) within the supply chain of a company

Question 66

Identify the activity in the value chain that involves receiving, storing, and disseminating inputs to the product.

A) inbound logistics
B) procurement
C) operations
D) outbound logistics

Question 67

Which of the following value chain activities involves assisting users to handle the product after sale, thus maintaining and enhancing the product's value?

A) inbound logistics
B) customer service
C) operations
D) outbound logistics

Question 68

Which of the following value chain activities involves transforming raw materials into a finished product or service?

A) operations
B) inbound logistics
C) marketing
D) maintenance

Question 69

An automobile company decides to improve the quality of all its products and bring more variety into its product line.The company has decided to adopt ________.

A) focused cost-leadership
B) industry-wide differentiation
C) industry-wide cost leadership
D) focused differentiation

Question 70

A retail marketing company sells such products as agricultural produce and consumer products.The company procures materials from farmers and local producers.This process of obtaining the inputs needed for a business is called ________.

A) outbound logistics
B) inbound logistics
C) operations
D) internal marketing

Question 71

The net result of the difference between the total value added and the total costs incurred is the ________ of the value chain.

A) actual value
B) total margin
C) gross revenue
D) gross turnover

Question 72

Focused differentiation occurs when ________.

A) a better product is provided within an industry segment
B) there is limited competition in an industry
C) the customers are highly price sensitive
D) product quality improves across an entire industry

Question 73

Lynn, the manager of a transportation company, is going through this week's delivery schedule.She calls her team and assigns territories for each executive.She contacts the fleet supervisor to arrange trucks for transportation.Which activity of the value chain is Lynn executing?

A) inbound logistics
B) marketing
C) customer service
D) outbound logistics

Question 74

Mae manages delivery at a custom-kitchen outlet.Working with her customer's specifications, she contacts Gem Cabinets and places an order for a full-motion wall mount.Which of the following primary activities is Mae performing here?

A) inbound logistics
B) operations
C) customer service
D) marketing

Question 75

Which of the following is considered a support activity in the value chain of a business?

A) operations
B) customer service
C) contract negotiation
D) marketing

Question 76

Which of the following value chain activities involves collecting, storing, and physically distributing the product to buyers?

A) inbound logistics
B) operations
C) customer service
D) outbound logistics

Question 77

Which of the following is a support activity in the value chain?

A) receiving inputs to operationalize the production
B) distributing the products to retailers or buyers directly
C) assisting customers in using the product or service
D) setting up contractual arrangements for procurement

Question 78

Which of the following value chain activities involves inducing buyers to get a product and providing a means for them to do so?

A) inbound logistics
B) operations
C) sales and marketing
D) outbound logistics

Question 79

The difference between the value that an activity generates and the cost of the activity is called the ________.

A) margin
B) turnover
C) revenue
D) value-addition

Question 80

Porter defined value as the ________.

A) amount of money that a customer is willing to pay for an offering
B) extent of after-sale service provided to customers
C) perceived satisfaction of the customers and sellers after a transaction
D) actual money exchanged in return of a product/service