Strategy Exam 2 Review

The fact that both Whole Foods (a high-end grocery store) and Aldi (an inexpensive grocery store) have a competitive advantage in the grocery store industry is an indication that

• following different generic business strategies within the same industry can lead to competitive advantages for more than one organization.

• following the same generic business strategy can allow for two firms competing in the same industry to have a competitive advantage at the same time.

• in order to evaluate whether Whole Foods has a sustained competitive advantage it is useful to compare it to Aldi from a cost perspective.

• in order to evaluate whether Aldi has a sustained competitive advantage, it is useful to compare it to Whole Foods from a differentiation perspective.

The type of customers vital to a firm introducing a new innovation are the ________, who are willing to pay higher prices and like to tinker with new products.

• laggards

• early majority

• early adopters

• late majority

After the creation of social networking websites (e.g., Facebook, TikTok) were introduced, their value increased exponentially as the number of users increased. This is the positive effect of a(n)

• network effect.

• confirmation effect.

• impression management effect.

• user effect.

Lauren is the CEO of TimeEx Inc. and is competing in an industry that is shifting due to disruptive innovation. Which of the following strategies should she consider to most appropriately respond to this disruptive innovation?

• Lauran should stop allocating her firm’s resources towards continually trying to innovate.

• Lauren should guard against the disruptive innovation by protecting the low end of the market.

• Lauren should exit the industry before her firm files for bankruptcy.

• Lauren should focus on procuring the “laggards” in her industry.

When a firm manufactures 5,000–6,000 units of a product, it incurs an average cost of $12 per unit. When it manufactures 6,000–7,000 units of the same product, the average cost per unit reduces to $7. However, manufacturing beyond 7,000 units will raise the average cost per unit to $9. Which of the following is the firm’s minimum efficient scale?

• 5,000–6,000 units

• 6,000–7,000 units

• below 2,000 units

• above 7,000 units

Which of the following best illustrates a merger between the two companies Scotfind Inc. and Inity Inc.?

• Scotfind Inc. purchases Inity Inc. for $80 billion despite Inity Inc. being against the purchase.

• Scotfind Inc. and Inity Inc. join together to form a third new entity, while they also operate separately.

• Scotfind Inc. outsources a few of its business activities to Inity Inc. for competitive advantage.

• Scotfind Inc. and Inity Inc. join together to form a single new company called ScotfindInity Inc.

The Konex Hotel Group purchased Green-Plus Hotels for an estimated value of $120 billion. All the hotels previously owned by Green-Plus Hotels are now managed by the Konex Hotel Group and are known as Konex hotels. What does this scenario best illustrate?

• a merger

• a joint venture

• an acquisition

• 
  an equity alliance

Which of the following statements about managing alliance-related tasks is true?

• Forming an alliance with another firm prohibits that firm from forming other alliances.

• Alliance-management capability is based on partner selection and alliance formation, design and governance, and post-formation alliance management.

• 
  A merger is one of the three options for alliance design and governance.

• In post-formation alliance management, none of the firms in an alliance is permitted to gain a competitive advantage.

John owns John’s Trucking Corporation and is trying to determine if his firm should engage in vertical integration and diversify the range of services his business sells. These decisions that John needs to make are associate with

• corporate level strategy.

• business level strategy.

• functional level strategy.

• geographic scope.

Silis Autos is known for its affordable and reliable brand of consumer vehicles. Because its shareholders expect to see an improved rate of growth in the coming years, Silis’ executives have decided to diversify the company’s range of products so that at least 40 percent of the firm’s revenue is generated by new business units. However, the company’s resources, capabilities, and competencies are limited to producing other forms of motorized vehicles, such as motorcycles and all-terrain vehicles (ATVs). Which type of corporate diversification strategy should Beagle pursue?

• dominant business

• related-constrained

• related-linked

• unrelated