Deck 3: Strategy and Information Systems

Question 1

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) a corner latte shop in Atlanta
E) a food vendor at a county fair

Answer 1

C

Question 2

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

A) limited edition apparel
B) industrial products
C) patented drugs
D) vintage cars
E) rare paintings

Answer 2

B

Question 3

According to Porter's five forces model, in which of the following situations would the supplier have the highest bargaining power?

A) a dealer of a patented material for smartphone manufacturers
B) a fashion designer catering to a niche market
C) a restaurant owner who serves only army veterans
D) a retailer who buys finished goods from many small suppliers
E) a defense contractor that only makes products for the U.S. Navy

Answer 3

A

Question 4

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

A) industry structure
B) market share
C) internal competition
D) life cycles of products
E) future product demand

Question 5

The automobile industry is characterized by many manufacturers and intense competition among them. According to Porter's five forces model, this statement illustrates ________.

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

Question 6

A mining company develops a new processing technique using only light and patents the process. 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
E) low threat of new entrants

Question 7

LNG is a large multinational appliance manufacturer. The company gets raw materials from many vendors. In this case, LNG is characterized by ________.

A) very low threat of substitute products
B) high bargaining power over its suppliers
C) very low threat of new entrants in the market
D) very high bargaining power over its customers
E) low bargaining power over its suppliers

Question 8

According to Porter's five forces model, a student's choice of lunch options at a large food court would be an example of a strong force for ________.

A) rivalry
B) threat of new entrants
C) threat of substitutions
D) bargaining power of customers
E) industry power

Question 9

Explain the relation between competitive strategies and information systems.

Question 10

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

A) the competitive strategy
B) the value of its brands
C) the size of the company
D) the number of competitors
E) the company's PE ratio

Question 11

The collective technical capability of an organization determines its competitive strategy.

Question 12

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

A) within an industry segment
B) across the product mix offered by a company
C) across the entire industry
D) among a group of competitors
E) across multiple product categories

Question 13

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

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

Question 14

According to Porter's five forces model, an oil producer will have increased ________ if the supply of oil drops sharply.

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

Question 15

According to Porter's five forces model, in which of the following examples would rivalry be considered as a weak force affecting the market?

A) search engine designers
B) used car dealers
C) holiday tour agents
D) packaged food manufacturers
E) insurance providers

Question 16

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

Question 17

Focused differentiation occurs when ________.

A) better service is provided within an industry segment
B) there is limited competition in an industry
C) customers, of a niche segment, are provided low-cost products
D) product quality improves across an entire industry
E) lowest cost across the industry

Question 18

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

Question 19

I-scream-4 Ice Cream recently faced competition against their flagship brand of "Orange peel ice cream." A competitor made significant in-roads into the market by offering three varieties of "Orange peel ice cream." I-scream-4 Ice Cream decided to counter this threat by introducing five new varieties of ice creams. Which competitive strategy is I-scream-4 Ice Cream implementing?

A) cost leadership
B) product differentiation
C) cost differentiation
D) service focus
E) innovation focus

Question 20

Briefly explain Porter's five forces model.

Question 21

Kai runs a local auto parts store. A customer comes in and asks for special supercharger. Kai orders it from the factory. This activity can be classified under ________.

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

Question 22

Identify the activity in the value chain that involves receiving and handling of raw materials and other inputs to the product.

A) inbound logistics
B) procurement
C) manufacturing
D) outbound logistics
E) optimized ordering

Question 23

Madison, the project manager of a sports apparel company, estimates that the demand for jogging shoes is likely to decline in the coming months. He advises the procurement department to order raw material accordingly to ensure minimum wastage. This intercommunication that facilitates smooth operations is called ________.

A) market research
B) outbound logistics
C) strategizing
D) linkages
E) interoperation

Question 24

Lynn, the manager of a transportation company, goes through the product delivery schedule. She assigns territories to each executive of the delivery team, and also contacts the fleet supervisor to arrange trucks for transportation. Which activity of the value chain is Lynn executing?

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

Question 25

Which of the following statements is consistent with the central idea of business process design?

A) Technology should be used to supplement the existing value chain.
B) Business processes should focus on improving individual functional systems.
C) Organizations should create new business processes instead of improving existing systems.
D) Technology should be used to modify and improve standard business processes.
E) Experimental technology can drive innovative business processes.

Question 26

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
E) sales and marketing

Question 27

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

Question 28

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

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

Question 29

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
E) perceived quality differences across products

Question 30

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) profit
E) quick ratio

Question 31

An automobile manufacturer focusing on low-end buyers is following an industry-wide differentiation strategy.

Question 32

Which of the following employees performs a support activity in the value chain?

A) Jackson is involved in the development of technological infrastructure.
B) Sofia is a member of the recruitment team.
C) Nathaniel is in charge of setting up contractual agreements with vendors.
D) Nora is a financial analyst who rates and gives investment advice.
E) Noah is the corporate accountant who manages tax liabilities.

Question 33

The ________ created by Porter states that firms should create new, more efficient business processes that integrate the activities of all departments involved in a value chain.

A) Six Sigma methodology
B) product differentiation model
C) Lean Manufacturing method
D) business process design
E) Lean Innovation model

Question 34

Which of the following statements best describes the role of operations in a value chain?

A) transforming inputs into the final products
B) collecting, storing, and distributing products to buyers
C) inducing buyers to purchase products and providing a means for them to do so
D) receiving, storing, and disseminating inputs to products
E) assisting customers' use of products

Question 35

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

A) receiving and handling of raw materials and other inputs
B) negotiating prices with vendors
C) finding suitable vendors to supply raw materials
D) setting up contractual arrangements with various suppliers
E) investigating new designs

Question 36

Which of the following paved the way for the creation of a business process design?

A) support activities
B) triggers
C) linkages
D) primary activities
E) electronic data interchanges

Question 37

Which of the following value chain activities involves assisting users with handling of the products after sale, thus maintaining and enhancing the products' value?

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

Question 38

According to Porter's four competitive strategy model, what are the four competitive strategies from which firms can choose?

Question 39

A retail company sells agricultural produce and consumer products. The company procures materials from farmers and local producers. This process is an example of ________.

A) outbound logistics
B) inbound logistics
C) operational management
D) internal marketing
E) customer service

Question 40

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

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

Question 41

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

Question 42

Define the primary activities in a generic value chain.

Question 43

Explain linkages with an example.

Question 44

A(n) ________ is a network of activities that generate worth by transforming inputs into outputs.

A) business process
B) competitive strategy
C) value chain
D) information system
E) linked investment

Question 45

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

Question 46

Which of the following defines a repository?

A) a backup plan of action in case of emergencies
B) a department devoted specifically for market research
C) a place where finished goods undergo a quality check before shipment
D) a collection of something, such as data or raw materials
E) a financial center for storing overnight balances

Question 47

What are the various support activities in a value chain?

Question 48

In a manufacturing business, which of the following transforms finished goods into cash?

A) warehouse operations
B) manufacturing process
C) sales process
D) outbound logistics
E) inbound logistics

Question 49

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

Question 50

Briefly describe the concepts of value, margin, and value chain as defined by Porter.

Question 51

The cost of the business process is the sum of the cost of the inputs and the ________.

A) cost of the activities
B) cost of the outputs
C) value of the outputs
D) value of the products
E) cost of the products

Question 52

Neil creates an application which facilitates the easy storage and access of employee information like name, age, experience, and qualification for his organization. The application is an example of a(n) ________.

A) repository
B) program
C) linkage
D) activity
E) array

Question 53

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

Question 54

Distinguish between the primary and support activities of a value chain.

Question 55

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

Question 56

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

Question 57

The total margin of the value chain is the difference between the total value added and the total costs incurred.

Question 58

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

Question 59

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

Question 60

Explain the concept of business process design.

Question 61

FunText is a company that owns an app used for text messaging. It recently offered a six month membership extension to its existing customers without any additional charges. Which competitive strategy is FunText trying to implement in this scenario?

A) creation of a new service
B) product differentiation
C) locking in customers
D) locking in suppliers
E) enhancing existing products

Question 62

The International Zoological club publishes a monthly magazine for zoology enthusiasts. Members are required to pay an initial fee to cover the first two years of the subscription when registering with the club. In this scenario, the International Zoological club is ________.

A) enhancing services
B) establishing alliances
C) locking in customers
D) standardizing the product
E) creating a new product

Question 63

Streamtech, a manufacturer of automobiles, recently received a patent for an unmanned search boat. By doing this, Streamtech has ________.

A) created an entry barrier
B) introduced product differentiation
C) locked in its suppliers
D) reduced the cost of operations
E) established an alliance

Question 64

Hueblue Software, an application provider to the gaming industry, decided to enhance its portfolio by developing motion-control-enabled games for the mobile gaming industry. In this scenario, which competitive strategy is Hueblue Software implementing?

A) establishment of alliances
B) product differentiation
C) raising barriers to market entry
D) locking in buyers
E) locking in customers

Question 65

What is a business process? How do you determine the cost and margin of a business process?

Question 66

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

Question 67

A large software manufacturer attempts to lock in customers by making it difficult for them to substitute their software with one from another company. The strategy used by the company is referred to as ________.

A) switching costs strategy
B) low cost operation strategy
C) standardization strategy
D) marketing strategy
E) bait-and-switch strategy

Question 68

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

Question 69

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

Question 70

RAC Associates is a car rental company that rents cars to tourists in the United States. The company uses tracking devices and magnetic locks to prevent car theft. These procedures are examples of ________.

A) primary business processes
B) core activities
C) strategic activities
D) supporting business processes
E) premeditated activities

Question 71

Organizations can lock in suppliers either by making it difficult to switch to another organization or by ________.

A) increasing the margin on their products
B) reducing investments in their supply chain
C) making it easy to work with the organization
D) reducing the bargaining power of consumers
E) increasing the complexity of their products

Question 72

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

Question 73

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

Question 74

As the purchasing manager of a company that designs costumes, Natalie orders yards of fabric in preparation for Halloween. Natalie's duties can be classified under the ________ category of a business process.

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

Question 75

Which of the following principles of competitive advantage is associated with product implementations?

A) locking in customers
B) differentiating service offerings
C) locking in suppliers
D) establishing alliances
E) raising barriers to market entry

Question 76

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

Question 77

________ is a means through which an organization can gain a competitive advantage through process implementations.

A) Establishing alliances
B) Creating new products
C) Enhancing products
D) Differentiating services
E) Creating new services

Question 78

Cooper, the owner of a small bicycle manufacturing company, is striving to keep his organization running smoothly while remaining profitable in a highly competitive market. Cooper chooses process implementation to give his company a competitive edge over others. Which of the following principles is he most likely to implement?

A) creating new products
B) enhancing services
C) reducing costs
D) differentiating products
E) redesign existing products

Question 79

Locking in customers by making it difficult or expensive for customers to move to another product is called establishing high ________.

A) entry barriers
B) switching costs
C) product standards
D) brand value
E) technological dependency

Question 80

Which of the following statements is True of business process designs?

A) Most process designs require people to work in new ways.
B) They do not involve the need to follow different procedures.
C) They should be accompanied by a change in management.
D) Process designs very rarely attract employee resistance.
E) Process designs map directly to existing work processes.