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WorksheetsWeek 9 Review
Total questions: 25
Worksheet time: 14mins
Which of the following fundamental insights was provided by Porter’s five forces framework from the completion of the Alta Velocidad Española (AVE)?
A strong threat of substitutes decreases the rivalry among existing competitors.
Any of the five forces on its own, if sufficiently strong, can extract industry profitability.
All of the five forces must work together to have a meaningful impact.
Competition must be defined more narrowly to remain confined to the industry’s closest competitors.
Adverse selection in a public stock company occurs when
information asymmetry increases the likelihood of selecting inferior alternatives.
a firm’s work tasks, incentives, and employment contracts minimize opportunism by agents.
a principal is not aware of the context from which information from an agent is derived.
an agent manipulates information to benefit stockholders.
Kate is the CEO of a firm. She has an opportunity to increase the competitive advantage of her company but is not sure if accepting the opportunity is ethical. Which of the following questions would help her decide if accepting the opportunity is ethical?
What are the chances that her decision to accept will make her rich?
How much profit would be made if she decided to accept the opportunity?
How would the media report her decision to accept the opportunity if it were to become public?
How long lasting would the competitive advantage be if she decided to accept the opportunity?
General Electric’s board has only one inside director, John Flannery, GE’s CEO, who also acts as chairperson of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE?
A CEO is likely to be more responsible because they are setting their own performance targets.
The CEO might be able to influence the board through setting the meeting agendas.
The CEO possesses invaluable inside information that can help them lead the board effectively.
Any CEO will suggest board appointees who will function as strategic allies.
Lawrence decided to copy the competition to gain a competitive advantage for his company. After a year, he realized his company failed to gain such an advantage. Lawrence most likely failed because of the ________ effect.
Green Pawn
grandiose
globalization
Red Queen
Earth Mother Leisure Wear had a mission to become the leading producer of environmentally friendly leggings, an emerging and in-demand category in the apparel industry. Its strategy involved leveraging a network of organic cotton farmers and suppliers of environmentally responsible synthetic materials to create a product that is durable, attractive, affordable, and 100% recyclable. However, because it did not upgrade its outdated production facilities, Earth Mother Leisure Wear could not assemble its products at a low-enough cost to offer the leggings at a price that was attractive to customers. Earth Mother Leisure Wear's strategy failed because
it failed to consider the competitive challenge.
it was not backed up with strategic commitments.
managers did not live by the company’s core values.
the company did not stake out a unique strategy position.
Given the structure of the automobile industry, entering the auto manufacturing industry seemed risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche?
capital requirements
CSV
economies of scale
customer switching cost
Limozine Inc. is a car service firm that provides high-end transportation in a major metropolitan area. It has several competitors that each offer similar services, and based on its current structure, it cannot match or beat those competitors on price. Because of long-term contracts and an increase in the cost of gasoline, it is not possible to reduce expenditures at this time. Which of these strategies should Limozine pursue instead?
Create a strategic group through mergers.
Delve into a different industry entirely
Pursue a differentiated strategy.
Close the business until the cost of gas decreases.
Which of the following statements is true about strategic groups?
It is not possible to have two different strategic groups within the same industry.
Rivalry within the same strategic group always is lower than rivalry between different strategic groups.
Profitability varies between different strategic groups.
Companies within the same strategic group are always complementors to each other.
In recent years a growing number of U.S. consumers have become more health conscious about what they eat. According to the PESTEL Framework this trend could best be classified as a ________ trend.
sociocultural
healthy eating
political
legal
Silvio is a manager at a software firm. The chief executive officer tells him that the industry as a whole has become increasingly profitable over the past five years. Based on this information, Silvio is most likely to expect
increased competition in the future, and therefore he should recommend that the company upgrade its products to slow the entry of rival companies.
increased profitability in the future, and therefore he should recommend that the company remain on its current course.
a leveling off of profitability in the next few years, and therefore he should recommend that the company cooperate with its rivals to stimulate the industry.
decreased competition in the next few years, and therefore he should recommend that the company take advantage of its pricing power.
ezTV, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, ezTV’s competitors have now begun to produce more-advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to the dynamic capabilities perspective, what should ezTV do?
ezTV should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment.
ezTV should stick to its existing core competency, that is HD LED technology, as it is the best in that segment.
ezTV should take steps to reduce the causal ambiguity and socially complexity of its core competency.
ezTV should work on enhancing the mobility of its core competency.
NovaNote's competency in designing and manufacturing efficient, long-lasting batteries has made its tablets the fastest-growing brand of computers in the market. This competency, along with highly responsive tech support, has enabled NovaNote to increase its customer base and strengthen customer loyalty. Thus, NovaNote's competency in designing and manufacturing batteries will be considered a(n) ________ resource in the VRIO framework.
valuable
substitute
imitable
organized
Which of the following describes a situation in which firms acquire resources at a low cost, laying the foundation for a competitive advantage later?
better expectations of future resource value
path dependence affecting current decisions
causal ambiguity
social complexity
Which of the following statements correctly describes the actions of a company applying a CSV perspective?
The company is externally focused to address pressures that arise.
The company maintains focus on its citizenship and philanthropic activities.
The company maintains a competitive advantage that allows it to “do good.”
The company is internally focused, and its actions derive from deeply held beliefs.
Which of the following statements correctly describes the actions of a company applying a CSV perspective?
The company is externally focused to address pressures that arise.
.
The company maintains focus on its citizenship and philanthropic activities.
The company maintains a competitive advantage that allows it to “do good.”
The company is internally focused, and its actions derive from deeply held beliefs
By selling a tablet at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1,200 – $1000) + $400, is the
opportunity cost.
economic value created.
reservation price.
consumer surplus.
If you had the following responses to a NPS questionnaire, what would the NPS be?
10s = 12 responses 9s = 9 responses
8s = 12 responses. 7s = 0 responses
6s = 4 responses 5s = 8 responses
4s = 2 responses 3s = 1 response
2 = 1 response 1 = 0 responses
0 = 1 response
2
4
8
16
32
Which of the following real-world scenarios best exemplifies formalization?
Zappos’ focus on allowing its customer service employees to use their own approach rather than depend on scripts
W. L. Gore’s associates organizing themselves in project-based teams that are led by sponsors, not bosses
Yahoo’s decision to fire its CEO after incurring huge losses
McDonald’s use of standard operating procedures across the world
Which of the following is an advantage offered by a functional structure?
It allows for an efficient top-down communication chain and thus relies on a relatively tall structure.
It facilitates a lower division of labor, which is linked to higher productivity.
It allows for a higher degree of specialization and deeper domain expertise.
It facilitates a lower level of specialization.
A defining characteristic of the pay-as-you-go business model is that the
users pay for only the services they consume.
users pay for access to a product or service whether they use it during the payment term or not.
initial product is often sold at a loss in order to drive demand for complementary goods.
the basic features of a service are provided free of charge, but the user must pay for premium services.
What do we call the board members who are part of a company’s senior management team appointed by shareholders to provide the board with necessary information pertaining to the company’s internal workings and performance?
investors
outside directors
inside directors
shareholders
Kendall, a loan officer, advises Vaughn to sign up for an exotic mortgage that turns out to be very expensive for him and probably not the best financial choice. This is an example of an action that
is legal and beneficial for Vaughn.
is legal but ethically questionable.
is illegal but meets most ethical norms.
is illegal and damaging for the company.
Greg is the president of a technology firm that has recently gone public. What action, if any, should Greg take to build the confidence of his new shareholders?
Greg needs to focus on the company’s earnings because that is what shareholders care about.
He should find out whether the majority of his shareholders want long-term steady growth or short-term spikes in the stock price.
He should discourage pension funds from investing because they are interested in safety at the expense of growth.
He should make the company stock available only to hedge funds so he will have the freedom to take risks as the firm expands.
What helps notions such as fairness, honesty, and reciprocity to be codified into law?
The notions are synonymous with law.
The notions differ to some degree in different cultures around the globe.
The notions are universal norms.
The notions are characteristics inherited by each person irrespective of the culture.
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