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WorksheetsStrategic Managment Exam 2
Total questions: 61
Worksheet time: 31mins
Firms engage in an activity called forward pricing whey they establish, during the early stages of the learning curve , a price for their products that is lower than their actual costs, in anticipation of lower costs later on, after significant learning has occurred. Under which of the following conditions does forward pricing make sense?
When the firm has international expiernece
When the firm is launching a new product
When the firm has had prior experience with a similar product
when a firm can achieve low costs
which of the following statements is accurate?
cost leaders are especially vulnerable to substitute
firms with a low cost position can reduce the threat of rivalry in an industry
cost leaders are especially vulnerable to the threat of suppliers
a cost leadership competative strategy increases the threat of new entrants by lowering costs based barriers to entry.
which of the following is more likely to be a rare source of cost advantage?
technological software
economies of scale
policy choices
technological hardware
The most complicated organizational structure
the matrix structure
the functional structure
the regional structure
the U structure
A company has the achieve the lowest level of cost or the highest level of differentiation to achieve a competitive advantage?
true
false
The ability of a group of firms to work together to reduce competition in their market or industry is called
Collaboration
collusion
differentation
fragmentation
Collusion can take one of two forms, ______ collusion or _______ collusion.
Strategic; non-strategic
market; product
intra-industry; inter-industry
explicit; tacit
The reason that collusion is a difficult strategy to maintain over time is that while parties to these cooperative agreements often have strong incentives to cooperate, they also have strong incentives to ____ those cooperative agreements.
Profit from
go along with
cheat on
maintain
By increasing the perceived value of a firm's products or services, a firm will be able to
charge a higher price than it would otherwise be able to do.
gain significantly more market share than firms pursuing a cost-leadership strategy.
charge a lower price than it would otherwise be able to do.
sell its products at lower prices than firms pursuing a cost-leadership strategy.
A firm' is really no more than a socially complex relationship between firm and its customers and can serve as a basis for product differentiation.
architectural competance
consumer marketing
reputation
location
Which of the following statements regarding the impact of product differentiation on the threat of new entry is accurate?
Product differentiation increases the threat of new entry by allowing potential new entrants to avoid costs associated with overcoming incumbent firms' product-differentiation advantages.
Product differentiation has no impact on the threat of new entry.
Product differentiation helps reduce the threat of new entry by forcing potential new entrants to absorb costs associated with overcoming incumbent firms' product-differentiation advantages.
It is not possible to determine the impact of product differentiation on the threat of new entry.
in emerging industries
product-differentiation efforts are focused on product refinement as a basis of product differentiation.
firms can sometimes be tempted to exaggerate the extent to which they have refined and improved their products and services.
firms that are first movers can gain product-differentiation advantages based on perceived technological leadership
firms that are first movers are unlikely to gain product-differentiation advantages based on buyer loyalty and high switching costs.
In a declining industry
firms that are first movers can gain product-differentiation advantages based on perceived technological leadership.
highly differentiated firms may be able to gain product-differentiation advantages by preempting strategically valuable assets.
product-differentiation efforts are focused on product refinement as a basis of product differentiation.
highly differentiated firms may be able to discover a viable market niche that will enable them to survive despite the overall decline in the market.
Firms with homogeneous resources and capabilities that cooperate to reduce competition below a perfect competition level can generate economic profits, but in doing so reduce social welfare in a phenomenon called ______ loss.
abnormal
collusion
ethical
dead weight
Which of the following is NOT a way by which firms can collude to reduce the threat of new competitors?
Developing common technology standards that act as barriers to entry.
Joint lobbying to increase the cost of entry.
Working together to increase the barriers to entry
By increasing their emphasis on differentiating their individual products.
By increasing their emphasis on differentiating their individual products.
business-level strategies.
corporate-level strategies.
functional-level strategies.
macro-level strategies.
Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as
business-level strategies.
corporate-level strategies.
functional-level strategies.
macro-level strategies.
Cost-leadership and product-differentiation strategies are so widely recognized that they are often called
common business strategies.
generic corporate strategies.
generic business strategies.
common corporate strategies.
Corporate level strategies are actions firms take to gain competitive advantages in a single market or industry.
True
false
Cost leadership, flexibility, collusion, and product differentiation are so widely recognized that they are often called generic business strategies.
true
false
A firm that chooses a ________ focuses on gaining advantages by reducing its cost below all of its competitors.
diversification strategy
product-differentiation business strategy
corporate strategy
cost-leadership business strategy
The best example of a firm following a cost-leadership business strategy is
Mercedes Benz.
Macy's.
Ryanair.
Rolls Royce.
________ are said to exist when the increase in firm size (measured in terms of volume of production) are associated with lower costs (measured in terms of average costs per unit of production).
Sustainable competitive advantages
Economies of scale
Temporary competitive advantages
Economies of scope
As the volume of production in a firm increases, the average cost per unit decreases until some optimal volume of production is reached, after which the average costs of production begin to rise because of
diseconomies of scale
economies of scope
diseconomies of scope
economies of scale
The link between volume of production and the cost of building manufacturing operations is particularly important in industries characterized by
process innovations.
product manufacturing.
product innovation.
process manufacturing.
________ levels of production are associated with ________ levels of employee specialization.
High;High
High;Low
Low;High
Low;Moderate
Which of the following is NOT a potential source of diseconomies of scale?
physical limits to efficient size
worker de-motivation
distance to markets and suppliers
learning-curve economies
If Temper Company, a manufacturer of mattresses, was considering moving its production facilities to China but decided against it because the additional costs of shipping the mattresses back to the U.S. would offset the cost savings associated with moving the production facilities, the increased costs associated with shipping would be an example of
learning-curve economies.
diseconomies of scale.
economies of scale.
competitive advantages.
________ focus(es) on the relationship between the volume of production at a given point in time and average unit costs, the ________ focus(es) on the relationship between the cumulative volume of production and average unit costs.
Economies of scale; learning curve
B) Competitive advantage; economies of scale C) Learning curve; economies of scale
D) Economies of scale; competitive advantage
Competitive advantage; economies of scale
Learning curve; economies of scale
Economies of scale; competitive advantage
Which of the following statements regarding the learning curve and economies of scale is accurate?
Just as diseconomies of scale are presumed to exist if a firm gets too large, there is a corresponding increase in costs in the learning-curve model as the cumulative volume of production grows.
Where diseconomies of scale are presumed to exist if a firm gets too large, there is no corresponding increase in costs in the learning-curve model as the cumulative volume of production grows.
Where diseconomies of scale are presumed to exist if a firm gets too small, there is no corresponding increase in costs in the learning-curve model as the cumulative volume of production grows.
Just as diseconomies of scale are presumed to exist if a firm gets too small, there is a corresponding increase in costs in the learning-curve model as the cumulative volume of production grows.
Learning-curve-cost advantages are
restricted only to manufacturing firms.
restricted only to firms in services industries.
restricted only to firms in extraction industries.
not restricted to manufacturing.
________ are any supplies used by a firm in conducting its business activities.
Productive assets
Productive inputs
Productive outputs
Productive inventory
In order to create a cost advantage, the cost of acquiring low-cost productive inputs must be ________ the cost savings generated by these factors.
greater than
equal to
less than
greater than or equal to
Machines and robots are examples of
technological software.
economies of scale.
learning-curve effects.
technological hardware.
The quality of relations among labor and management, an organization's culture, and the quality of management controls are all examples of
technological hardware.
technological software.
productive inputs.
economies of scale.
Choices which firms make about the kinds of products and services they will sell that impact their relative cost position are known as
technological hardware.
policy choices.
technological software.
corporate level strategies.
Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs.
22) Sematech is pursuing which strategy?
cost-leadership business strategy
product-differentiation business strategy
cost-leadership corporate strategy
product-differentiation corporate strategy
By increasing production volume in an effort to reduce costs, Sematech is pursuing which sources of cost advantage?
size differences and diseconomies of scale
differential access to productive inputs
size differences and economies of scale
technological advantages
If Sematech's efforts to increase its production capacity resulted in increased complexity and an inability of managers to control and operate the firm efficiently, this would be an example of
physical limits to efficient size.
worker de-motivation.
distance to markets and suppliers
diseconomies of scale.
If Sematech decided to focus on building its technological hardware, it would focus on elements such as
robots
organizational culture
the quality of organizational controls
the quality of relations among labor and managment
A firm that chooses a cost-leadership business strategy focuses on gaining advantages by reducing its costs to a level equal to all of its competitors.
true
false
Firms that are successful in pursuing a cost-leadership strategy focus solely on keeping costs low and abandoning other business or corporate strategies.
true
false
In general, cost advantages are not possible when competing firms produce similar products.
true
false
Economies of scale are said to exist when the increase in firm size (measured in terms of volume of production) are associated with lower costs (measured in terms of average costs per unit of production).
true
false
Which of the following statements is accurate?
In general, economies of scale are relatively easy-to-duplicate bases of cost leadership, but diseconomies of scale are not.
In general, diseconomies of scale are relatively easy-to-duplicate bases of cost leadership, but economies of scale are not.
In general, neither economies of scale nor economies are relatively easy-to-duplicate bases of cost leadership.
In general, both economies of scale and diseconomies of scale are relatively easy-to-duplicate bases of cost leadership.
The ability of a group of firms to work together to reduce competition in their market or industry is called ________.
collaboration
fragmentation
collusion
differentiation
Which of the following is NOT an instance of collusion?.
General Motors and Ford Motor Company forming a strategic alliance to make electric cars.
Members of OPEC agreeing to reduce oil shipments in 1973.
Coca-Cola's decision to focus on the Western European market and Pepsi's decision to focus on the Russian market.
General Electric's decision to focus on large electric generation turbines and Westinghouse's decision to focus on small electric generation turbines.
Collusion can take one of two forms, ________ collusion or ________ collusion.
strategic; non-strategic
B) explicit; tacit
C) market; product
D) intra-industry; inter-industry
________ collusion exists when firms in an industry directly negotiate agreements about how to reduce competition.
Explicit
Strategic
Intra-industry
tacit
________ collusion exists when firms cooperate in reducing competition, but engage in no face to face negotiations to do so.
explicit
strategic
intra-industry
tacit
Explicit collusion is legal in most developed economies.
true
false
Tacit collusion is always illegal.
true
false
Tacit collusion requires firms to signal their willingness to cooperate to reduce competition directly.
true
false
Instead of communicating directly, ________ colluding firms send and interpret signals of intent to co-operate (or intent not to co-operate) sent by potential collusion partners.
tacitly
explicitly
strategically
operationally
n general, firms can send one of two signals to collusion partners who may cheat on their cooperative agreements: a ________ signal or a ________ signal.
explicit; implicit
explicit; tacit
visual; verbal
tough; soft
When price is likely to be the basis of competition in an industry, firms should invest proactively in ________ signals.
soft
tough
Tacit collusion is more likely when firms produce and sell ________ products or services.
similar
dissimilar
many
diverse
________ is a business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products or services relative to the perceived value of other firms' products or services.
Product differentiation
Related diversification
Cost leadership
Best-cost provider
________ is the ability to use organizational structure to facilitate coordination among specific disciplines to conduct research.
Architectural competence
B) Cross-functional linking
Organizational coordination
Managerial leverage
The ability to use organization structure to facilitate coordination among scientific disciplines to conduct research is known as architectural competence.
true
false
In emerging industries
firms that are first movers are unlikely to gain product-differentiation advantages based on buyer loyalty and high switching costs.
irms that are first movers can gain product-differentiation advantages based on perceived technological leadership.
product-differentiation efforts are focused on product refinement as a basis of product differentiation.
firms can sometimes be tempted to exaggerate the extent to which they have refined and improved their products and services.
