MBA800 Strategic Management
Question 1.1. Apple’s iPod and iPad are examples of: (Points
: 1)
the march of
globalization
rapid
technological diffusion
disruptive technologies
products that
were not imitated by competitors

Question 2.2. Essentially, ____________has become one of the
world’s largest markets with 700 million potential consumers. (Points : 1)
the European Union
the United
States
China
Japan

Question 3.3. The five forces model suggests that an
industry’s profitability is a function of all the following factors except: (Points
: 1)
buyers
competitive
rivalry
suppliers
the economic environment

Question 4.4. Generally speaking, product market
stakeholders are satisfied when: (Points : 1)
a firm’s profit margin yields
the lowest return to capital market stakeholders that is acceptable to them.
a firm’s profit
margin yields an above-average return to its capital market stakeholders.
the interests
of the firm’s organizational stakeholders have been maximized.
the interests
of all stakeholders have been at least minimally satisfied.

Question 5.5. A competitive advantage: (Points : 1)
can be
permanent if the firm has successfully implemented the strategic management
process.
entails
reducing investors’ risk to near zero.
can be identified only if it has
been unsuccessfully challenged by competitors.
exists when
competing firms are unable to find investors.

Question 6.6. The likelihood of entry of new competitors is
affected by _________and__________. (Points : 1)
barriers to entry, expected
retaliation of current industry organizations.
the power of
existing suppliers, buyers.
the
profitability of the industry, the market share of its leading firm.
the demand for
the product, the profitability of the competitors.

Question 7.7. New entrants to an industry are more likely
when: (Points : 1)
it is difficult
to gain access to distribution channels.
economies of
scale in the industry are high.
product differentiation in the
industry is low.
capital
requirements in the industry are high.

Question 8.8. In the airline industry, consolidation among
fuel providers serving airport facilities would be considered as
____________________factor in the five forces model of competition. (Points :
1)
a reduction of
the airlines’ abilities to enjoy economies of scale.
an increase in
switching costs because the airlines have no choice but to use jet fuel and
other oil products.
an increase in
the bargaining power of suppliers of a critical input.
an increase in
the intensity of rivalry among airlines for scarce resources.

Question 9.9. By emphasizing core competencies when
formulating strategies, companies learn to compete primarily on the basis of:
(Points : 1)
intangible
resources.
their primary
activities.
firm-specific
differences.
efficiency of
production.

Question 10.10. Competitive advantage typically comes from:
(Points : 1)
individual
resources.
one unique
resource.
several
outstanding resources used independently.
the unique
bundling of several resources.

Question 11.11. Organizational culture is: (Points : 1)
amorphous and
changeable.
not easily
imitable.
so difficult to
analyze that most firms should choose to ignore it.
typically
fragile in the face of changes in the external environment.

Question 12.12. Outsourcing is the: (Points : 1)
spinning off of
a a value-creating activity to create a new firm.
selling of a
value-creating activity to other firms.
purchase of a
value-creating activity from an external supplier.
use of
computers to obtain value-creating data from the Internet.

Question 13.13. PetSmart provides services and products for
pet owners which are not available through other outlets. PetSmart’s business level strategy is best
described as: (Points : 1)
focused cost
leadership.
cost
leadership.

differentiation.

stuck-in-the-middle.

Question 14.14. Business-level strategies are concerned
specifically with: (Points : 1)
creating
differences between the firm’s position and its rivals.
selecting the
industries in which the firm will compete.
how functional
areas will be organized within the firm.
how a business
with multiple physical locations will operate one of those locations.

Question 15.15. Michael Porter points out that strategic fit
among activities is fundamental to: (Points : 1)
the development
of core competencies for a firm.
the breath of
competitive scope for a firm.
sustainability of a firm’s competitive
advantage.
the integrity
of the firm’s value chain.

Question 16.16. All of the following are considered generic
business-level strategies EXCEPT: (Points : 1)
product
diversification.
cost leadership.
focused
differentiation.
integrated cost
leadership/differentiation.

Question 17.17. When the cost of supplies increase in an
industry, the low-cost leader: (Points : 1)
may continue
competing with rivals on the basis of product features.
will lose
customers as a result of price increases.
will be unable
to absorb higher costs because cost-leaders operate on very narrow profit
margins.
may be the only
firm able to pay the higher prices and continue to earn above-average returns.

Question 18.18. A firm successfully implementing a
differentiation strategy would expect: (Points : 1)
customers to be
sensitive to price increases.
to charge
premium prices.
customers to
perceive the products as standard.
to have high
levels of power over suppliers.

Question 19.19. First movers are: (Points : 1)
entrepreneurs
who lead in the establishment of new industries.
firms that are
first to exit a declining industry.
firms that take
an initial competitive action.
individuals who
move frequently as employment opportunities change in a locale.

Question 20.20. All competitive advantages do not accrue to
large-sized firms. A major advantage of
small firms is that they: (Points : 1)
are more likely
to have organizational slack.
can launch
competitive actions more quickly.
have more loyal
and diverse workforces.
can wait for
large firms to make mistakes in introducing innovative products.

Question 21.21. Walt Disney’s focus on ___________ is
typical of a slow-cycle market. (Points : 1)
innovation.
total quality.
proprietary
rights.
economies of
scale.

Question 22.22. Lawsuits over patent and copyright
infringement are more common and intense in: (Points : 1)
fast-cycle
markets, because the market is innovation-driven.
standard-cycle
markets, because the firm’s brand name is such an important competitive
advantage.
slow-cycle
markets, because of the ability to shelter the company from imitation of its competitive advantage.
standard-cycle
markets, because innovation is rare, and so gives the innovating firm a
significant competitive advantage.

Question 23.23. The ultimate test of the value of a
corporate-level strategy is whether the: (Points : 1)
corporation
earns a great deal of money.
top-management
team is satisfied with the corporation’s performance.
businesses in
the portfolio are worth more under the management of the company in question
than they would be under any other ownership.
businesses in
the portfolio increase the firm’s financial returns.

Question 24.24. GE has reorganized from eleven businesses
down to six core businesses. The purpose
of this reorganization was to transfer core competencies in different types of
technologies among GE’s businesses. This
is an example of: (Points : 1)
increasing
market power through vertical integration.
efficient
internal capital allocation.
a focus on
financial economies.
increasing
corporate relatedness.

Question 25.25. Firms
that have selected a related diversification corporate-level strategy
seek to exploit: (Points : 1)
control shared
among business-unit managers.
economies of
scope between business units.
the favorable
demand of buyers.
market power.

Question 26.26. External incentives to diversify include:
(Points : 1)
the fact that
other firms in an industry are diversifying.
pressure from
stockholders who are demanding that the firm diversify.
changes in
antitrust regulations and tax laws.
a firm’s low
performance.

Question 27.27. The more sharing of resources and activities
among businesses, the more __________ is the relatedness of diversification.
(Points : 1)
linked
constrained
integrated
intense

Question 28.28. There are few true mergers because: (Points
: 1)
few firms have
complementary resources.
integration
problems are more severe than in outright acquisitions.
one firm
usually dominates in terms of market
share or firm size.
of managerial
resistance. True mergers result in
significant managerial-level layoffs.

Question 29.29. A primary reason for a firm to pursue an
acquisition is to: (Points : 1)
avoid increased
government regulation.
achieve greater
market power.
exit a
hyper-competitive market.
achieve greater
financial returns in the short run.

Question 30.30. The fastest and easiest way for a firm to
diversify its portfolio of business is through acquisition because: (Points :
1)
of barriers to
entry in many industries.
it is difficult
and time intensive for companies to develop products that differ from their
current product line.
innovation in
both the acquired and the acquiring firm is enhanced by the exchange of
competencies resulting from acquisition.
unrelated
acquisitions are usually uncomplicated because the acquired firm is allowed to
continue to function independently as it did before the acquisition.

Question 31.31. An effective vision statement will specify
the market to be served. (Points : 1)
True
False

Question 32.32. Organizational vision and mission statements
serve as emotional tools for the firm, and, as such, have little impact on firm
performance. (Points : 1)
True
False

Question 33.33. Although organizational cultures vary
considerably, one cannot make an objective judgment that some organizational
cultures are more or less functional than others. (Points : 1)
True
False

Question 34.34. An organization’s willingness to tolerate or
encourage unethical behavior is a reflection of its core values. (Points : 1)
True
False

Question 35.35. The objective of assessing the external
environment is to determine the timing and significance of the effects of
environmental changes and trends on the strategic management of the firm.
(Points : 1)
True
False

Question 36.36. Because the health of a nation’s economy
affects the performance of individual firms and industries, companies study the
economic environment to identify changes, trends, and their strategic
implications. (Points : 1)
True
False

Question 37.37. Early adopters of new technology often
achieve higher market shares and higher returns than later adopters of the
technology. (Points : 1)
True
False

Question 38.38. Generally, the stronger the competitive
forces, the higher the profit potential of an industry. (Points : 1)
True
False

Question 39.39. Analyzing the internal environment enables a
firm to determine what it might do by identifying what opportunities and
threats exist. (Points : 1)
True
False

Question 40.40. In the long run, if an organization does not
change it will fail. (Points : 1)
True
False

Question 41.41. Outsourcing can add value to the product
provided to the customers. (Points : 1)
True
False

Question 42.42. A competitive advantage can be created when
several resources are bundled together in a unique fashion. (Points : 1)
True
False

Question 43.43. The fundamental object of business level
strategy is to earn above-average returns. (Points : 1)
True
False

Question 44.44. To position itself differently from
competitors, a firm must decide to either perform activities differently or to
perform different activities. (Points : 1)
True
False

Question 45.45. The best of the generic business strategies
is the integrated cost leadership/differentiation strategy. (Points : 1)
True
False

Question 46.46. A low-cost leader may create entry barriers
to potential entrants by continually improving its levels of efficiency.
(Points : 1)
True
False

Question 47.47. It is much easier for a firm to implement
strategic actions than tactical actions. (Points : 1)
True
False

Question 48.48. Firms in a slow-cycle market are shielded
from imitators for long periods of time. (Points : 1)
True
False

Question 49.49. The drivers of competitive behavior are
awareness of the competitor, motivation to take action or respond, and the
organization”s ability in terms of resources and flexibility. (Points : 1)
True
False

Question 50.50. Economies of scope are cost savings
resulting from a firm successfully leveraging, either through sharing or
transferring, some of its capabilities and competencies developed in one
business to another business. (Points : 1)
True
False

Question 51.51. Many manufacturing firms are de-integrating
and moving to independent supplier networks. (Points : 1)
True
False

Question 52.52. Related diversification by a firm tends to
reduce a manager’s executive compensation, whereas unrelated diversification
tends to increase it because the firm has moved into new industries. (Points :
1)
True
False

Question 53.53. Evidence suggests that acquisitions usually
lead to favorable financial outcomes, especially for the acquiring firm. (Points : 1)
True
False

Question 54.54. Evidence suggests that returns to
shareholders of acquired firms are greater than those for acquiring firms.
(Points : 1)
True
False

Question 55.55. Most acquisitions that are designed to
achieve greater market power entail buying a competitor, a supplier, a
distributor, or a business in a highly related industry. (Points : 1)
True
False

Question 56.56. GE is an example of a firm following the
related constrained diversification strategy. (Points : 1)
True
False

Question 57. 57. What is the value to the firm of having a
specified mission and vision? (Points : 3)

Question 58. 58. How does an organization identify internal
strengths and weaknesses? (Points : 3)

Question 59. 59. Describe the different business-level
strategies. (Points : 3)

Question 60. 60. What do we mean by slow-cycle, fast-cycle,
and standard-cycle markets? (Points : 3)

Question 61. 61. Provide an example of a first mover and a
second mover, and discuss how they have affected one another over time. (Points
: 3)

Question 62. 62. What do we mean by operational and
corporate relatedness? (Points : 3)

Question 63. 63. Describe the differences in mergers,
acquisitions, and takeovers. (Points : 3)

Question 64. 64. What are some reasons why acquisitions may
or may not be successful? (Points : 3)

Question 65. 65. Define restructuring and provide an
example. (Points : 3)

Question 1.1. Apple’s iPod and iPad are examples of: (Points
: 1) the march of
globalization rapid
technological diffusion disruptive technologies products that
were not imitated by competitorsQuestion 2.2. Essentially, ____________has become one of the
world’s largest markets with 700 million potential consumers. (Points : 1) the European Union the United
States China JapanQuestion 3.3. The five forces model suggests that an
industry’s profitability is a function of all the following factors except: (Points
: 1) buyers competitive
rivalry suppliers the economic environmentQuestion 4.4. Generally speaking, product market
stakeholders are satisfied when: (Points : 1) a firm’s profit margin yields
the lowest return to capital market stakeholders that is acceptable to them. a firm’s profit
margin yields an above-average return to its capital market stakeholders. the interests
of the firm’s organizational stakeholders have been maximized. the interests
of all stakeholders have been at least minimally satisfied.Question 5.5. A competitive advantage: (Points : 1) can be
permanent if the firm has successfully implemented the strategic management
process. entails
reducing investors’ risk to near zero. can be identified only if it has
been unsuccessfully challenged by competitors. exists when
competing firms are unable to find investors.Question 6.6. The likelihood of entry of new competitors is
affected by _________and__________. (Points : 1) barriers to entry, expected
retaliation of current industry organizations. the power of
existing suppliers, buyers. the
profitability of the industry, the market share of its leading firm. the demand for
the product, the profitability of the competitors.Question 7.7. New entrants to an industry are more likely
when: (Points : 1) it is difficult
to gain access to distribution channels. economies of
scale in the industry are high. product differentiation in the
industry is low. capital
requirements in the industry are high.Question 8.8. In the airline industry, consolidation among
fuel providers serving airport facilities would be considered as
____________________factor in the five forces model of competition. (Points :
1) a reduction of
the airlines’ abilities to enjoy economies of scale. an increase in
switching costs because the airlines have no choice but to use jet fuel and
other oil products. an increase in
the bargaining power of suppliers of a critical input. an increase in
the intensity of rivalry among airlines for scarce resources.Question 9.9. By emphasizing core competencies when
formulating strategies, companies learn to compete primarily on the basis of:
(Points : 1) intangible
resources. their primary
activities. firm-specific
differences. efficiency of
production.Question 10.10. Competitive advantage typically comes from:
(Points : 1) individual
resources. one unique
resource. several
outstanding resources used independently. the unique
bundling of several resources.Question 11.11. Organizational culture is: (Points : 1) amorphous and
changeable. not easily
imitable. so difficult to
analyze that most firms should choose to ignore it. typically
fragile in the face of changes in the external environment.Question 12.12. Outsourcing is the: (Points : 1) spinning off of
a a value-creating activity to create a new firm. selling of a
value-creating activity to other firms. purchase of a
value-creating activity from an external supplier. use of
computers to obtain value-creating data from the Internet.Question 13.13. PetSmart provides services and products for
pet owners which are not available through other outlets. PetSmart’s business level strategy is best
described as: (Points : 1) focused cost
leadership. cost
leadership.
differentiation.
stuck-in-the-middle.Question 14.14. Business-level strategies are concerned
specifically with: (Points : 1) creating
differences between the firm’s position and its rivals. selecting the
industries in which the firm will compete. how functional
areas will be organized within the firm. how a business
with multiple physical locations will operate one of those locations.Question 15.15. Michael Porter points out that strategic fit
among activities is fundamental to: (Points : 1) the development
of core competencies for a firm. the breath of
competitive scope for a firm. sustainability of a firm’s competitive
advantage. the integrity
of the firm’s value chain.Question 16.16. All of the following are considered generic
business-level strategies EXCEPT: (Points : 1) product
diversification. cost leadership. focused
differentiation. integrated cost
leadership/differentiation.Question 17.17. When the cost of supplies increase in an
industry, the low-cost leader: (Points : 1) may continue
competing with rivals on the basis of product features. will lose
customers as a result of price increases. will be unable
to absorb higher costs because cost-leaders operate on very narrow profit
margins. may be the only
firm able to pay the higher prices and continue to earn above-average returns.Question 18.18. A firm successfully implementing a
differentiation strategy would expect: (Points : 1) customers to be
sensitive to price increases. to charge
premium prices. customers to
perceive the products as standard. to have high
levels of power over suppliers.Question 19.19. First movers are: (Points : 1) entrepreneurs
who lead in the establishment of new industries. firms that are
first to exit a declining industry. firms that take
an initial competitive action. individuals who
move frequently as employment opportunities change in a locale.Question 20.20. All competitive advantages do not accrue to
large-sized firms. A major advantage of
small firms is that they: (Points : 1) are more likely
to have organizational slack. can launch
competitive actions more quickly. have more loyal
and diverse workforces. can wait for
large firms to make mistakes in introducing innovative products.Question 21.21. Walt Disney’s focus on ___________ is
typical of a slow-cycle market. (Points : 1) innovation. total quality. proprietary
rights. economies of
scale.Question 22.22. Lawsuits over patent and copyright
infringement are more common and intense in: (Points : 1) fast-cycle
markets, because the market is innovation-driven. standard-cycle
markets, because the firm’s brand name is such an important competitive
advantage. slow-cycle
markets, because of the ability to shelter the company from imitation of its competitive advantage. standard-cycle
markets, because innovation is rare, and so gives the innovating firm a
significant competitive advantage.Question 23.23. The ultimate test of the value of a
corporate-level strategy is whether the: (Points : 1) corporation
earns a great deal of money. top-management
team is satisfied with the corporation’s performance. businesses in
the portfolio are worth more under the management of the company in question
than they would be under any other ownership. businesses in
the portfolio increase the firm’s financial returns.Question 24.24. GE has reorganized from eleven businesses
down to six core businesses. The purpose
of this reorganization was to transfer core competencies in different types of
technologies among GE’s businesses. This
is an example of: (Points : 1) increasing
market power through vertical integration. efficient
internal capital allocation. a focus on
financial economies. increasing
corporate relatedness.Question 25.25. Firms
that have selected a related diversification corporate-level strategy
seek to exploit: (Points : 1) control shared
among business-unit managers. economies of
scope between business units. the favorable
demand of buyers. market power.Question 26.26. External incentives to diversify include:
(Points : 1) the fact that
other firms in an industry are diversifying. pressure from
stockholders who are demanding that the firm diversify. changes in
antitrust regulations and tax laws. a firm’s low
performance.Question 27.27. The more sharing of resources and activities
among businesses, the more __________ is the relatedness of diversification.
(Points : 1) linked constrained integrated intenseQuestion 28.28. There are few true mergers because: (Points
: 1) few firms have
complementary resources. integration
problems are more severe than in outright acquisitions. one firm
usually dominates in terms of market
share or firm size. of managerial
resistance. True mergers result in
significant managerial-level layoffs.Question 29.29. A primary reason for a firm to pursue an
acquisition is to: (Points : 1) avoid increased
government regulation. achieve greater
market power. exit a
hyper-competitive market. achieve greater
financial returns in the short run.Question 30.30. The fastest and easiest way for a firm to
diversify its portfolio of business is through acquisition because: (Points :
1) of barriers to
entry in many industries. it is difficult
and time intensive for companies to develop products that differ from their
current product line. innovation in
both the acquired and the acquiring firm is enhanced by the exchange of
competencies resulting from acquisition. unrelated
acquisitions are usually uncomplicated because the acquired firm is allowed to
continue to function independently as it did before the acquisition.Question 31.31. An effective vision statement will specify
the market to be served. (Points : 1) True FalseQuestion 32.32. Organizational vision and mission statements
serve as emotional tools for the firm, and, as such, have little impact on firm
performance. (Points : 1) True FalseQuestion 33.33. Although organizational cultures vary
considerably, one cannot make an objective judgment that some organizational
cultures are more or less functional than others. (Points : 1) True FalseQuestion 34.34. An organization’s willingness to tolerate or
encourage unethical behavior is a reflection of its core values. (Points : 1) True FalseQuestion 35.35. The objective of assessing the external
environment is to determine the timing and significance of the effects of
environmental changes and trends on the strategic management of the firm.
(Points : 1) True FalseQuestion 36.36. Because the health of a nation’s economy
affects the performance of individual firms and industries, companies study the
economic environment to identify changes, trends, and their strategic
implications. (Points : 1) True FalseQuestion 37.37. Early adopters of new technology often
achieve higher market shares and higher returns than later adopters of the
technology. (Points : 1) True FalseQuestion 38.38. Generally, the stronger the competitive
forces, the higher the profit potential of an industry. (Points : 1) True FalseQuestion 39.39. Analyzing the internal environment enables a
firm to determine what it might do by identifying what opportunities and
threats exist. (Points : 1) True FalseQuestion 40.40. In the long run, if an organization does not
change it will fail. (Points : 1) True FalseQuestion 41.41. Outsourcing can add value to the product
provided to the customers. (Points : 1) True FalseQuestion 42.42. A competitive advantage can be created when
several resources are bundled together in a unique fashion. (Points : 1) True FalseQuestion 43.43. The fundamental object of business level
strategy is to earn above-average returns. (Points : 1) True FalseQuestion 44.44. To position itself differently from
competitors, a firm must decide to either perform activities differently or to
perform different activities. (Points : 1) True FalseQuestion 45.45. The best of the generic business strategies
is the integrated cost leadership/differentiation strategy. (Points : 1) True FalseQuestion 46.46. A low-cost leader may create entry barriers
to potential entrants by continually improving its levels of efficiency.
(Points : 1) True FalseQuestion 47.47. It is much easier for a firm to implement
strategic actions than tactical actions. (Points : 1) True FalseQuestion 48.48. Firms in a slow-cycle market are shielded
from imitators for long periods of time. (Points : 1) True FalseQuestion 49.49. The drivers of competitive behavior are
awareness of the competitor, motivation to take action or respond, and the
organization”s ability in terms of resources and flexibility. (Points : 1) True FalseQuestion 50.50. Economies of scope are cost savings
resulting from a firm successfully leveraging, either through sharing or
transferring, some of its capabilities and competencies developed in one
business to another business. (Points : 1) True FalseQuestion 51.51. Many manufacturing firms are de-integrating
and moving to independent supplier networks. (Points : 1) True FalseQuestion 52.52. Related diversification by a firm tends to
reduce a manager’s executive compensation, whereas unrelated diversification
tends to increase it because the firm has moved into new industries. (Points :
1) True FalseQuestion 53.53. Evidence suggests that acquisitions usually
lead to favorable financial outcomes, especially for the acquiring firm. (Points : 1) True FalseQuestion 54.54. Evidence suggests that returns to
shareholders of acquired firms are greater than those for acquiring firms.
(Points : 1) True FalseQuestion 55.55. Most acquisitions that are designed to
achieve greater market power entail buying a competitor, a supplier, a
distributor, or a business in a highly related industry. (Points : 1) True FalseQuestion 56.56. GE is an example of a firm following the
related constrained diversification strategy. (Points : 1) True FalseQuestion 57. 57. What is the value to the firm of having a
specified mission and vision? (Points : 3) Question 58. 58. How does an organization identify internal
strengths and weaknesses? (Points : 3) Question 59. 59. Describe the different business-level
strategies. (Points : 3) Question 60. 60. What do we mean by slow-cycle, fast-cycle,
and standard-cycle markets? (Points : 3) Question 61. 61. Provide an example of a first mover and a
second mover, and discuss how they have affected one another over time. (Points
: 3) Question 62. 62. What do we mean by operational and
corporate relatedness? (Points : 3) Question 63. 63. Describe the differences in mergers,
acquisitions, and takeovers. (Points : 3) Question 64. 64. What are some reasons why acquisitions may
or may not be successful? (Points : 3) Question 65. 65. Define restructuring and provide an
example. (Points : 3)